UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________
FORM
____________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________________ to __________________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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| (Nasdaq Capital Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 12, 2024, the registrant had
Table of Contents
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “would,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:
· | our ability to achieve or sustain positive cash flows from operations or profitability; |
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· | our ability to complete the construction of, commission and successfully operate isotope enrichment plants in a cost-effective manner; |
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· | our ability to meet, and to continue to meet, applicable regulatory requirements for the use of the isotopes we may produce using the ASP technology or the Quantum Enrichment process; |
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· | our ability to obtain regulatory approvals for the production and distribution of isotopes; |
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· | our ability to comply on an ongoing basis with the numerous regulatory requirements applicable to the ASP technology, the Quantum Enrichment process and our enrichment facilities in South Africa; |
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· | the introduction, market acceptance and success of Mo-100 that we may produce using ASP technology as an alternative and potentially more convenient production route for Tc-99m; |
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· | the success or profitability of our future offtake arrangements with respect to various isotopes that we may produce using ASP technology or the Quantum Enrichment process; |
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· | a failure of demand for various isotopes that we may produce using ASP technology or the Quantum Enrichment process; |
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· | our future capital requirements and sources and uses of cash; |
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· | our ability to obtain funding for our operations and future growth; |
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· | the extensive costs, time and uncertainty associated with new technology development; |
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· | our ability to implement and maintain effective internal controls; |
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· | developments and projections relating to our competitors and industry; |
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· | the ability to recognize the anticipated benefits of acquisitions, including our acquisition of assets of Molybdos (Pty) Limited in the “business rescue” auction, the assets and intellectual property we acquired from Klydon Proprietary Ltd, and our investment in PET Labs Pharmaceuticals; |
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· | problems with the performance of the ASP technology or the Quantum Enrichment process in the enrichment of isotopes; |
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· | our dependence on a limited number of third-party suppliers for certain components; |
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· | our inability to adapt to changing technology and diagnostic landscape, such as the emergence of new diagnostic scanners or tracers; |
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· | our expected dependence on a limited number of key customers for isotopes that we may produce using ASP technology or the Quantum Enrichment process; |
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· | our inability to protect our intellectual property and the risk of claims that we have infringed on the intellectual property of others; |
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· | our inability to compete effectively; |
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· | risks associated with the current economic environment; |
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· | risks associated with our international operations; |
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· | our credit counterparty risks; |
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· | geopolitical risk and changes in applicable laws or regulations; |
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· | our inability to adequately protect our technology infrastructure; |
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· | our inability to hire or retain skilled employees and the loss of any of our key personnel; |
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· | operational risk; |
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· | costs and other risks associated with becoming a reporting company and becoming subject to the Sarbanes-Oxley Act; and |
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· | other factors that are described in “Risk Factors,” on page 44. |
These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those set forth in Part I, Item 1A - “Risk Factors” below and for the reasons described elsewhere in this Quarterly Report on Form 10-Q. Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current view with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, industry, and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
This Quarterly Report on Form 10-Q also contains estimates, projections, and other information concerning our industry, our business, and the potential markets for certain isotopes, including data regarding the estimated size of those markets, their projected growth rates, and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections, or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by third parties, industry, medical and general publications, government data, and similar sources. In some cases, we do not expressly refer to the sources from which these data are derived.
Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, “we,” “us,” “our,” “ASP Isotopes,” and the “Company” refer to ASP Isotopes Inc. and, where appropriate, its consolidated subsidiaries.
Trademarks
All trademarks, service marks, and trade names included in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this report may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
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PART I-FINANCIAL INFORMATION
Item 1. Financial Statements.
ASP Isotopes Inc.
Condensed Consolidated Balance Sheets
(unaudited)
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| June 30, 2024 |
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| December 31, 2023 |
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Assets |
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Current assets: |
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Cash |
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Accounts receivable |
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Receivable from noncontrolling interests |
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Prepaid expenses and other current assets |
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Deferred offering costs |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets, net |
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Goodwill |
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Other noncurrent assets |
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Total assets |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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Accrued expenses |
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Notes payable |
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Finance lease liabilities – current |
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Operating lease liabilities – current |
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Deferred revenue |
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Other current liabilities |
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Share liability |
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Total current liabilities |
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Deferred tax liabilities |
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Convertible notes payable, at fair value |
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Finance lease liabilities – noncurrent |
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Operating lease liabilities – noncurrent |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies (Note 8) |
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Stockholders’ equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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Total ASP Isotopes stockholders’ equity |
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Noncontrolling interests |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
| $ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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ASP Isotopes Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
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| Three Months Ended June 30, |
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| Six Months Ended June 30, |
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Revenue |
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Cost of goods sold |
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Gross profit |
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Operating expenses: |
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Research and development |
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Selling, general and administrative |
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Total operating expenses |
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Loss from operations |
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Other (expense) income: |
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Foreign exchange transaction gain (loss) |
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Change in fair value of share liability |
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Change in fair value of convertible notes payable |
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Interest income |
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Interest expense |
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Total other (expense) income |
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Loss before income tax (expense) benefit |
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Income tax provision |
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Net loss before allocation to noncontrolling interests |
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Less: Net income attributable to noncontrolling interests |
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Net loss attributable to ASP Isotopes Inc. shareholders before deemed dividend on inducement warrant for common stock |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Deemed dividend on inducement warrant for common stock |
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Net loss attributable to ASP Isotopes Inc. shareholders |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Net loss per share, attributable to ASP Isotopes Inc. shareholders, basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Weighted average shares of common stock outstanding, basic and diluted |
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Comprehensive loss: |
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Net loss before allocation to noncontrolling interests |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Foreign currency translation |
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Total comprehensive loss before allocation to noncontrolling interests |
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Less: Comprehensive income attributable to noncontrolling interests |
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Total comprehensive loss |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6 |
Table of Contents |
ASP Isotopes Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)
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| Common Stock |
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| Additional Paid-in |
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| Accumulated Other Comprehensive (Loss) |
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| Accumulated |
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| Noncontrolling |
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| Total Stockholders' |
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| Shares |
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| Amount |
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| Capital |
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| Income |
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| Deficit |
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| Interests |
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| Equity |
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Balance as of December 31, 2023 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ |
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Retired unvested restricted shares |
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Stock-based compensation |
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Distribution to noncontrolling interest of VIE |
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Foreign currency translation |
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Net loss |
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Balance as of March 31, 2024 |
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Issuance of common stock from warrant exercise |
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Issuance of restricted common stock |
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Issuance of common stock to consultant |
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Settlement of liabilities with consultants |
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Board fee liabilities to be settled with shares |
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Stock-based compensation |
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Contribution from noncontrolling interest in VIE |
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Distribution to noncontrolling interest of VIE |
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| - |
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Foreign currency translation |
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| - |
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Net loss |
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| - |
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Balance as of June 30, 2024 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ |
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Balance as of December 31, 2022 |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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Issuance of common stock and warrants, net of issuance costs of $506,390 |
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Cancellation of common stock received in exchange for issuance of preferred stock in subsidiary |
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Issuance of common stock in lieu of commissions |
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Issuance of restricted common stock |
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Stock-based compensation |
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Foreign currency translation |
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| - |
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Net loss |
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| - |
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Balance as of March 31, 2023 |
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Settlement of liabilities with related party |
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| - |
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Stock-based compensation |
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| - |
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Foreign currency translation |
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| - |
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Net loss |
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| - |
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Balance as of June 30, 2023 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ |
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| $ |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
7 |
Table of Contents |
ASP Isotopes Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
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| 2024 |
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| 2023 |
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Cash flows from Operating activities |
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Net loss |
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Adjustments to reconcile net loss to cash used in operating activities: |
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Depreciation |
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Loss on disposal of property and equipment |
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Stock-based compensation |
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Convertible note payable for non-cash issuance costs |
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Share liability for non-cash consultant expense |
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Change in fair value of share liability |
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Change in fair value of convertible notes payable |
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Change in right-of-use lease asset |
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Change in deferred tax liabilities |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Prepaid expenses and other current assets |
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Other noncurrent assets |
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Accounts payable |
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Accrued expenses |
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Operating lease liability |
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Other current liabilities |
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Net cash used in operating activities |
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Cash flows from investing activities |
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Purchases of property and equipment |
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Net cash used in investing activities |
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Cash flows from financing activities |
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Proceeds from issuance of common stock |
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Proceeds from noncontrolling interest in VIE |
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Proceeds from collection of receivable from noncontrolling interest in VIE |
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Common stock issuance costs |
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Payment of deferred issuance costs |
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Distribution to noncontrolling interest in VIE |
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Proceeds from issuance of convertible notes payable |
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Payment of notes payable |
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Payment of principal portion of finance leases |
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Net cash provided by financing activities |
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Net change in cash and cash equivalents |
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Effect of exchange rate changes on cash and cash equivalents |
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Cash and cash equivalents - beginning of period |
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Cash and cash equivalents - end of period |
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Supplemental disclosures of non-cash investing and financing activities: |
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Settlement of liabilities with related party |
| $ |
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Right-of-use asset obtained in exchange for operating lease liability |
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Right-of-use asset obtained in exchange for finance lease liability |
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Purchase of property and equipment included in accounts payable |
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Purchase of property and equipment included in other noncurrent liabilities |
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Deemed dividend on inducement warrant |
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Board fees to be settled with common stock |
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Issuance of common stock in lieu of commissions |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
8 |
Table of Contents |
ASP Isotopes Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization
Description of Business
ASP Isotopes Inc. was incorporated in the state of Delaware on September 13, 2021, and has its principal operations in Washington, DC. ASP Isotopes Inc.’s subsidiary ASP Isotopes Guernsey Limited (“ASP Guernsey”), has its principal operations in Guernsey. ASP Guernsey’s subsidiary, ASP Isotopes South Africa Proprietary Limited (“ASP South Africa”), has its principal operations in South Africa. ASP Rentals Proprietary Limited (“ASP Rentals”), a variable interest entity (“VIE”) of ASP South Africa, has its principal operations in South Africa. Enlightened Isotopes (Pty) Ltd (“Enlightened Isotopes”), an 80% owned subsidiary of ASP South Africa, was formed in March 2023 and began operations in January 2024. ASP Isotopes UK Ltd, a subsidiary of ASP Guernsey, was incorporated in July 2022. PET Labs Pharmaceuticals Proprietary Limited (“PET Labs”), a 51% owned subsidiary of ASP Isotopes Inc. operates in South Africa. ASP Isotopes Inc.’s subsidiary, Quantum Leap Energy LLC, was formed in the state of Delaware in September 2023 and began operations in February 2024. Quantum Leap Energy LLC’s subsidiary Quantum Leap Energy Proprietary Limited (“Quantum Leap Energy South Africa”), has its operations in South Africa. ASP Isotopes Inc., its subsidiaries and ASP Rentals are collectively referred to as “the Company” throughout these consolidated statements.
The Company is a development stage advanced materials company dedicated to the development of technology and processes that, if successful, will allow for the enrichment of natural isotopes into higher concentration products, which could be used in several industries. The Company’s proprietary technology, the Aerodynamic Separation Process (“ASP technology”), originally developed by Klydon Proprietary Ltd (“Klydon”), is designed to enable the production of isotopes used in several industries. The Company’s initial focus is on the production and commercialization of enriched Carbon-14 (“C-14”), Molybdenum-100 (“Mo-100”) and Silicon-28 (“Si-28”). The Company has commissioned an isotope enrichment plant for the enrichment of C-14 located in Pretoria, South Africa, which will be ready for production upon the final installation of essential components, and we expect to start commercial supply of C-14 during second half of 2024. The Company anticipates completion and commissioning of a multi-isotope enrichment plant in Pretoria, South Africa during second half 2024, and the Company expects to start initial commercial supply of Si-28 during second half 2024. In addition, the Company has started planning additional isotope enrichment plants. The Company believes the C-14 it may develop using the ASP technology may be used in the development of new pharmaceuticals and agrochemicals. The Company believes that the Mo-100 it may develop using the ASP technology has significant potential advantages for use in the preparation of nuclear imaging agents by radiopharmacies and others in the medical industry. The Company believes the Si-28 it may develop using the ASP technology may be used to develop advanced semiconductors and in quantum computing. In addition, the Company is considering the future development of the ASP technology for the separation of Zinc-68, Xenon-129/136 for potential use in the healthcare end market, Germanium 70/72/74 for possible use in the semiconductor end market, and Chlorine-37 for potential use in the nuclear energy end market.
The Company is also developing quantum enrichment technology to produce enriched Ytterbium-176 (“Yb-176”), Nickel-64, Lithium6, Lithium-7 and Uranium-235 (“U-235”). Quantum enrichment is an advanced isotope enrichment technique that is currently in development that uses lasers. The Company believes that the U-235 it may develop using quantum enrichment technology may be commercialized as a nuclear fuel component for use in the new generation of high-assay low-enriched uranium (HALEU)-fueled small modular reactors that are now under development for commercial and government uses. The Company’s first quantum enrichment facility is expected to complete construction and commissioning during fourth quarter 2024 with first commercial production of Yb-176 also expected during fourth quarter 2024.
Liquidity
The Company has experienced net losses and negative cash flows from operating activities since its inception. The Company incurred net losses of $
The Company currently expects that its cash and cash equivalents of $
There can be no assurance that the Company will achieve or sustain positive cash flows from operations or profitability. The Company is in the process of seeking additional debt and equity financing. However, such funding may not be available on a timely basis on terms acceptable to the Company, or at all. If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required to scale back or discontinue the advancement of product candidates, reduce headcount, reorganize, merge with another entity, or cease operations.
9 |
Table of Contents |
2. Basis of Presentation and Summary of Significant Accounting Policies
Unaudited Financial Information
The Company’s unaudited condensed consolidated financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States of America, or GAAP, and pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. In the Company’s opinion, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the financial position and results of operations for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2023.
Basis of Presentation and Use of Estimates
The Company’s condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and disclosure in the Company’s condensed consolidated financial statements and accompanying notes. The most significant estimates in the Company’s consolidated financial statements relate to stock based compensation, the accounting for the acquisition of PET Labs Pharmaceuticals and fair value measurement of the convertible notes payable and warrants. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may materially differ from these estimates and assumptions.
Principles of consolidation
The Company’s condensed consolidated financial statements include the accounts of ASP Isotopes Inc., its wholly-owned subsidiaries, the 80% owned Enlightened Isotopes, the 51% owned PET Labs Pharmaceuticals and the 24% owned VIE ASP Rentals. All intercompany balances and transactions have been eliminated in consolidation.
Currency and currency translation
The condensed consolidated financial statements are presented in U.S. dollars, the Company’s reporting currency. The functional currency of ASP Isotopes Inc. and ASP Guernsey is the U.S. dollar. The functional currency of the Company’s subsidiaries ASP South Africa and Quantum Leap Energy South Africa is the South African Rand. The functional currency of the 80% owned Enlighted Isotopes, the 51% owned PET Labs Pharmaceuticals and the 24% owned VIE ASP Rentals is the South African Rand. Adjustments that arise from exchange rate changes on transactions of each group entity denominated in a currency other than the functional currency are included in other income and expense in the consolidated statements of operations. Assets and liabilities of the entities with functional currency of South African Rand are recorded in South African Rand and translated into the U.S. dollar reporting currency of the Company at the exchange rate on the balance sheet date. Revenue and expenses of the entities with functional currency of South African Rand are recorded in South African Rand and translated into the U.S. dollar reporting currency of the Company at the average exchange rate prevailing during the reporting period. Resulting translation adjustments are recorded separately in stockholders’ equity as a component of accumulated other comprehensive (loss) income.
Concentration of Credit Risk and other Risks
Cash balances maintained at U.S. financial institutions may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit of $
Our foreign subsidiaries held cash of approximately $
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Table of Contents |
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents are stated at fair value and may include money market funds, U.S. Treasury and U.S. government-sponsored agency securities, corporate debt, commercial paper and certificates of deposit. The Company had cash equivalents of $
Segment Information
As of December 31, 2023, we managed our operations as a single segment, specialist isotopes and related services. Beginning in 2024, primarily as a result of increased business activities of our subsidiary, Quantum Leap Energy LLC, we have two operating segments: (i) nuclear fuels, and (ii) specialist isotopes and related services.
The nuclear fuels segment is focused on research and development of technologies and methods used to produce high-assay low-enriched uranium (HALEU) and Lithium-6 for the advanced nuclear fuels target end market.
The specialist isotopes and related services segment is focused on research and development of technologies and methods used to separate high-value, low-volume isotopes (such as C-14, Mo-100 and Si-28) for highly specialized target end markets other than advanced nuclear fuels, including pharmaceuticals and agrochemicals, nuclear medical imaging and semiconductors, as well as services related to these isotopes, and this segment includes PET Labs Pharmaceuticals.
The financial information is regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources. The Company’s CODM is its chief executive officer.
The Company manages assets on a total company basis, not by operating segment, as the assets are shared or commingled. Therefore, the chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, asset information is not reported on a segment basis.
Select income statement information as of the three months ended June 30, 2024 and 2023 is as follows:
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Segment |
| Three Months Ended June 30, 2024 |
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| Three Months Ended June 30, 2023 |
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| Three Months Ended June 30, 2023 |
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Specialist isotopes and related services |
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Nuclear fuels |
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Select income statement information as of the six months ended June 30, 2024 and 2023 is as follows:
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Segment |
| Six Months Ended June 30, 2024 |
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Specialist isotopes and related services |
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Nuclear fuels |
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11 |
Table of Contents |
Fair Value of Financial Instruments
Accounting guidance defines fair value, establishes a consistent framework for measuring fair value, and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| Level 1: | Observable inputs such as quoted prices in active markets; |
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| Level 2: | Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
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| Level 3: | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
The Company’s share liability (Note 12) is measured as a Level 1 fair value on a recurring basis and was $
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Balance as of December 31, 2022 |
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Fair value at issuance |
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Fair value adjustment |
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Settlement of liability |
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Balance as of December 31, 2023 |
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Fair value at issuance |
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Fair value adjustment |
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Settlement of liability |
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Balance as of June 30, 2024 |
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The carrying amounts of accounts payable, accrued expenses and notes payable are considered to be representative of their respective fair values because of the short-term nature of those instruments.
Revenue Recognition
The Company’s revenue relates to PET Labs Pharmaceuticals, in which the Company acquired
Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, the Company performs the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect consideration it is entitled to in exchange for the goods or services it transfers to the customer.
12 |
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The Company evaluates a transaction’s performance obligations to determine if promised goods or services in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, the Company considers whether the goods or services are integral or dependent to other goods or services in the contract.
The Company determines the transaction price based on the agreed government rates for the promised goods in the contract.
The consideration is recognized as revenue when control is transferred for the related goods.
The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company receives payments from its customers based on billing schedules established in each contract. Upfront payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for expected credit losses is estimated for those accounts receivable considered to be uncollectible based upon historical experience and management's evaluation of outstanding accounts receivable. We maintain an allowance for expected credit losses for accounts receivable, which is recorded as an offset to accounts receivable, and changes in such are classified as selling, general and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss. We assess collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status and make judgments about the creditworthiness of customers based on ongoing credit evaluations. We also consider customer-specific information, current market conditions, and reasonable and supportable forecasts of future economic conditions. Bad debts are written off against the allowance when identified. As of June 30, 2024, December 31, 2023 and January 1, 2023 there was no allowance for expected credit losses.
Property and Equipment
Property and equipment include costs of assets constructed, purchased or leased under a finance lease, related delivery and installation costs and interest incurred on significant capital projects during their construction periods. Expenditures for renewals and betterments also are capitalized, but expenditures for normal repairs and maintenance are expensed as incurred. Costs associated with yearly planned major maintenance are generally deferred and amortized over 12 months or until the same major maintenance activities must be repeated, whichever is shorter. The cost and accumulated depreciation applicable to assets retired or sold are removed from the respective accounts, and gains or losses thereon are included in the statement of operations and comprehensive loss.
We assign the useful lives of our property and equipment based upon our internal engineering estimates, which are reviewed periodically. The estimated useful lives of our property and equipment range from
Construction in progress (Note 4) is carried at cost and consists of specifically identifiable direct and indirect development and construction costs. While under construction, costs of the property are included in construction in progress until the property is placed in service, at which time costs are transferred to the appropriate property and equipment account, including, but not limited to, leasehold improvements or other such accounts.
Property and equipment acquired from the PET Labs Pharmaceutical Acquisition was measured at fair value on October 31, 2023. The fair value forms the new basis of these assets and is depreciated over the remaining estimated useful lives of the related assets.
Business Combination and Asset Acquisitions
The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business. If determined to be a business combination, the Company accounts for the transaction under the acquisition method of accounting in accordance with ASC 805 Business Combinations, which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquiree and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, and non-controlling interest in the acquiree based on the fair value estimates as of the date of acquisition. In accordance with ASC 805, the Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.
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The consideration for the Company’s business acquisitions may include future payments that are contingent upon the occurrence of a particular event or events. The obligations for such contingent consideration payments are recorded at fair value on the acquisition date. The contingent consideration obligations are then evaluated each reporting period. Changes in the fair value of contingent consideration, other than changes due to payments, are recognized as a gain or loss and recorded within change in the fair value of deferred and contingent consideration liabilities in the consolidated statements of comprehensive loss.
If determined to be an asset acquisition, the Company accounts for the transaction under ASC 805-50, which requires the acquiring entity in an asset acquisition to recognize assets acquired and liabilities assumed based on the cost to the acquiring entity on a relative fair value basis, which includes transaction costs in addition to consideration given. No gain or loss is recognized as of the date of acquisition unless the fair value of non-cash assets given as consideration differs from the assets’ carrying amounts on the acquiring entity’s books. Consideration transferred that is non-cash will be measured based on either the cost (which shall be measured based on the fair value of the consideration given) or the fair value of the assets acquired and liabilities assumed, whichever is more reliably measurable. Goodwill is not recognized in an asset acquisition and any excess consideration transferred over the fair value of the net assets acquired is allocated to the identifiable assets based on relative fair values.
Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the consideration is paid or becomes payable (unless the contingent consideration meets the definition of a derivative, in which case the amount becomes part of the basis in the asset acquired). Upon recognition of the contingent consideration payment, the amount is included in the cost of the acquired asset or group of assets.
Goodwill
Goodwill represents the amount of consideration paid in excess of the fair value of net assets acquired as a result of the Company’s business acquisitions accounted for using the acquisition method of accounting. Goodwill is not amortized and is subject to impairment testing at a reporting unit level on an annual basis or when a triggering event occurs that may indicate the carrying value of the goodwill is impaired. An entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The Company will perform its annual test for goodwill as of October 31.
Variable Interest Entities
The Company accounts for the investments it makes in certain legal entities in which equity investors do not have (1) sufficient equity at risk for the legal entity to finance its activities without additional subordinated financial support, or (2) as a group, the holders of the equity investment at risk do not have either the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impact the entity’s economic performance, or (3) the obligation to absorb the expected losses of the legal entity or the right to receive expected residual returns of the legal entity. These certain legal entities are referred to as “variable interest entities” or “VIEs.”
The Company would consolidate the results of any such entity in which it determined that it had a controlling financial interest. The Company would have a “controlling financial interest” in such an entity if the Company had both the power to direct the activities that most significantly affect the VIE’s economic performance and the obligation to absorb the losses of, or right to receive benefits from, the VIE that could be potentially significant to the VIE. On a quarterly basis, the Company will reassess whether it has a controlling financial interest in any investments it has in these certain legal entities.
Convertible Notes Payable
Convertible notes payable are accounted for in accordance with ASC 825, Financial Instruments.
Upon issuance the Company has elected the fair value option to account for the convertible notes payable. Changes in fair value during the reporting period are recognized in other income (expense) in the consolidated statement of operations and comprehensive loss.
Leases
Leases are accounted for in accordance with ASC 842, Leases.
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on specific facts and circumstances, the existence of an identified asset(s), if any, and the Company’s control over the use of the identified asset(s), if applicable. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company will utilize the incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment, and considering the region in which the ROU asset and liabilities are located.
The Company has elected to combine lease and non-lease components as a single component. Operating leases are recognized on the balance sheet as ROU lease assets, lease liabilities current and lease liabilities non-current. Fixed rents are included in the calculation of the lease balances, while variable costs paid for certain operating and pass-through costs are excluded. Lease expense is recognized over the expected term on a straight-line basis.
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Finance leases are recognized on the balance sheet as property and equipment, finance lease liabilities current and finance lease liabilities non-current. Finance lease ROU assets and the related lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The finance lease ROU assets are amortized on a straight-line basis over the lease term with the related interest expense of the lease liability payment recognized over the lease term using the effective interest method.
Impairment of Long-lived Assets
Long-lived assets consist primarily of property and equipment. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset is not recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value of the assets. The Company did not recognize any impairment losses for the three and six months ended June 30, 2024 or 2023.
Research and Development Costs
Research and development costs consist primarily of fees paid to consultants, license fees and facilities costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. All research and development costs are expensed as incurred.
Selling, General and Administrative Costs
Selling, general and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation, related to our executive, finance, business development, legal, human resources and support functions. Other general and administrative expenses include professional fees for auditing, tax, consulting and patent-related services, rent and utilities and insurance.
Stock-based Compensation
Stock-based compensation expense represents the cost of the grant date fair value of employee stock awards recognized over the requisite service period of the awards (usually the vesting period) on a straight-line basis. The Company estimates the fair value of each stock-based award on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model incorporates various assumptions, such as the value of the underlying common stock, the risk-free interest rate, expected volatility, expected dividend yield, and expected life of the options. Forfeitures are recognized as a reduction of stock-based compensation expense as they occur.
The Company also awards restricted stock to employees and directors. Restricted stock is generally subject to forfeiture if employment terminates prior to the completion of the vesting restrictions. The Company expenses the cost of the restricted stock, which is determined to be the fair market value of the shares of common stock underlying the restricted stock at the date of grant, ratably over the period during which the vesting restrictions lapse.
Equity-based compensation expense is classified in the statement of operations and comprehensive loss in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified.
Income Taxes
Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
Prior to the acquisition of 51% of PET Labs Pharmaceuticals in October 2023, the Company had generated net losses since inception and accordingly had not recorded a provision for income taxes. Subsequent to the acquisition of 51% of PET Labs Pharmaceuticals, the Company records the provision for income taxes for the activity from PET Labs Pharmaceuticals operations.
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The Company follows the provisions of ASC 740-10, Uncertainty in Income Taxes, or ASC 740-10. The Company has not recognized a liability for any uncertain tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits and penalties in income tax expense.
The Company has identified the United States, South Africa and Guernsey as its major tax jurisdictions. Refer to Note 15 for further details.
Comprehensive Loss
Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive loss is comprised of net loss and the effect of currency translation adjustments.
Recently Issued Accounting Pronouncements
The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any recently issued pronouncements to have a material impact on its results of operations or financial position.
3. Revenue
In connection with our acquisition of
The following table presents changes in the Company’s accounts receivable for the six months ended June 30, 2024:
|
| Balance as of December 31, 2023 |
|
| Additions |
|
| Deductions |
|
| Balance as of June 30, 2024 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounts receivable |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
4. Property and Equipment
Property and equipment as of June 30, 2024 and December 31, 2023 consisted of the following:
|
| Useful Lives (Years) |
|
| June 30, 2024 |
|
| December 31, 2023 |
| |||
Construction in progress |
|
| - |
|
| $ |
|
| $ |
| ||
Tools, machinery and equipment |
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| ||||
Computer equipment |
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| ||||
Vehicles |
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| |||
Software |
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| |||
Office furniture |
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| |||
Leasehold improvements |
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| |||
Property and equipment, at cost |
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| ||
Less accumulated depreciation |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
Property and equipment, net |
|
|
|
|
| $ |
|
| $ |
|
The Company is currently building three plants in Pretoria, South Africa: a Carbon-14 plant, a multi-isotope plant and a laser isotope separation plan using quantum enrichment technology. The Carbon-14 plant was completed in June 2024 and depreciation will begin in July 2024. Costs incurred for the other two plants are considered construction in progress because the work is not complete as of June 30, 2024. Costs incurred for the plants as of December 31, 2023 are considered construction in progress. There was no depreciation expense as it relates to the construction in progress for the three and six months ended June 30, 2024 and 2023. Depreciation expense for all other asset categories was $
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5. Accrued Expenses
Accrued expenses as of June 30, 2024 and December 31, 2023 consisted of the following:
|
| June 30, 2024 |
|
| December 31, 2023 |
| ||
Accrued professional |
| $ |
|
| $ |
| ||
Accrued salaries and other employee costs |
|
|
|
|
|
| ||
Accrued other |
|
|
|
|
|
| ||
Total accrued expenses |
| $ |
|
| $ |
|
6. Notes Payable
Convertible Notes Payable
In March 2024, the Company issued convertible notes payable (“March 2024 Convertible Notes”) totaling $
In June 2024, the Company issued additional convertible notes payable (“June 2024 Convertible Notes”) totaling $
The Convertible Notes are recorded on the condensed consolidated balance sheet at their fair values. The fair value of the March Convertible Notes upon the date of issuance was $
Promissory Note Payable
During 2021, the Company executed a promissory note payable with an aggregate principal balance of $
As of June 30, 2024 and December 31, 2023, the promissory note payable balance was $
In November 2023, the Company executed a promissory note payable with a finance company to fund its D&O insurance policy for $
17 |
Table of Contents |
7. Deferred Revenues
In June 2023, the Company entered into a Supply Agreement with a customer for the delivery of Molybdenum-100 and molybdenum-98 beginning in 2024. In conjunction with the Supply Agreement, the Company received $
8. Commitments and Contingencies
Purchase of Cyclotron
In November 2023, the cyclotron that the Company ordered was shipped. As of December 31, 2023, the equipment had not been delivered. As of December 31, 2023 the Company was obligated to purchase this equipment and recorded the other asset and other liability for the full cost of $
In March 2024, the cyclotron was received by the Company and is recorded as property and equipment. The financing company has paid the vendor, however, it is still working on finalizing the note payable with the Company as of June 30, 2024 and therefore the liability of $
Klydon Proprietary Limited
In November 2021, the Company entered into an agreement with Klydon Proprietary Limited (“Klydon”) to design and build a plant to enrich Molybdenum in South Africa. The initial phase of the project included the building of a plant that can support the production of at least 5kgs of Mo-100. The contracted cost for this phase was $
Klydon performed a portion of the services required under the Turnkey Contract; however, services were incomplete and many of the services were not completed within the time frame required. As a result, Klydon and ASP South Africa entered into an Acknowledgement of Debt Agreement dated November 30, 2022, whereby Klydon (i) agreed to pledge its assets (the “Pledged Assets”) to ASP South Africa to secure its performance of the Turnkey Contract by December 31, 2022, and (ii) acknowledged that ASP South Africa would suffer damages in the amount of $
On April 4, 2023, the Company perfected its interest under the Acknowledgement of Debt Agreement, pursuant to which the Company acquired certain intellectual property from Klydon (“Klydon Settlement”). In addition, the Company acquired Klydon's interest in four entities which are inactive and in the process of being dissolved. The Company has concluded that the Klydon Settlement is accounted for under ASC 805, Business Combinations as an asset acquisition since the assets acquired were concentrated in a single identifiable asset from a related party. In conjunction with the Klydon Settlement, the Company recorded an increase to additional paid-in capital for the settlement of all liabilities owed to Klydon at the time of settlement totaling $
Two individuals who are officers and board members of Klydon, one who is now an officer of ASP Isotopes Inc. and the other who is now a scientific advisor of ASP Isotopes Inc., received warrants to purchase common stock of the Company and therefore are considered related parties. See Notes 10 and 12.
Share Purchase Agreement relating to PET Labs
On October 31, 2023, the Company entered into a Share Purchase Agreement with Nucleonics Imaging Proprietary Limited, a company incorporated in the Republic of South Africa (the “Seller”), relating to the purchase and sale of ordinary shares in the issued share capital of Pet Labs Pharmaceuticals Proprietary Limited, a company incorporated in the Republic of South Africa (“PET Labs”). PET Labs is a South African radiopharmaceutical operations company, dedicated to nuclear medicine and the science of radiopharmaceutical production.
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Under the Purchase Agreement, the Company has agreed to purchase from the Seller 51 ordinary shares in the issued share capital of PET Labs (the “Initial Sale Shares”) (representing 51% of the issued share capital of PET Labs) and has an option to purchase from the Seller the remaining 49 ordinary shares in the issued share capital of PET Labs (the “Option Shares”) (representing the remaining 49% of the issued share capital of PET Labs). The Company agreed to pay to the Seller an aggregate of $
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues liabilities for such matters when future expenditures are probable and such expenditures can be reasonably estimated.
On October 25, 2022, the Company received a letter from a law firm acting on behalf of Norsk medisinsk syklotronsenter AS (“NMS”), asserting, among other things, that the grant of a license to the ASP technology to the Company by Klydon violates a pre-existing exclusive sub-license to the ASP technology granted to Radfarma. The asserted claims, arbitration and/or litigation could include claims against the Company, the Company’s licensor (Klydon), or Klydon’s present or former sub-licensors alleging infringement of intellectual property rights with respect to the ASP technology on which our company relies. The Company recorded legal costs totaling $
9. Leases
The Company accounts for facility leases in accordance with ASC 842 (Note 2). The Company is party to five facility leases in South Africa for office, manufacturing and laboratory space.
A lease for office and laboratory space in Pretoria, South Africa commenced in October 2021 with the initial term set to expire in
A lease for additional production space in Pretoria, South Africa commenced in April 2023 with the initial term set to expire in March 2024. Effective February 1, 2024, this lease was amended such that the new term begins on February 1, 2024 and expires in
A lease for laboratory space in Pretoria, South Africa commenced in November 2023 with the initial term set to expire in
A lease for office and production space in Pretoria, South Africa commenced prior to October 31, 2023 with the initial term set to expire in
19 |
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A summary of long leases in the condensed consolidated balance sheet as of June 30, 2024 is as follows:
|
| ROU Asset |
|
| Operating Lease Liability - Current |
|
| Operating Lease Liability – Non-Current |
|
| Total Operating Lease Liability |
| ||||
Lease: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Office and laboratory, Pretoria, South Africa |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Additional production, Pretoria, South Africa |
|
|
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|
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|
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|
| ||||
Laboratory, Pretoria, South Africa |
|
|
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|
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|
|
| ||||
Office and production, Pretoria, South Africa |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
A summary of long-term leases in the condensed consolidated balance sheet as of December 31, 2023 is as follows:
|
| ROU Asset |
|
| Operating Lease Liability - Current |
|
| Operating Lease Liability – Non-Current |
|
| Total Operating Lease Liability |
| ||||
Lease: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Office and laboratory, Pretoria, South Africa |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Laboratory, Pretoria, South Africa |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Office and production, Pretoria, South Africa |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
A lease for additional production space in Pretoria, South Africa commenced prior to October 31, 2023 with the initial term expiring in March 2024 and the Company is maintaining the lease under the agreed upon monthly extensions. The Company has applied the guidance in ASC 842 and has determined that this lease is a short term lease effective on the date of ASP Isotopes acquisition of 51% of PET Labs Pharmaceuticals and expensed the monthly payments for the three and six months ended June 30, 2024 and the two months ended December 31, 2023.
Quantitative information regarding the Company’s operating lease liabilities is as follows:
|
| Three Months Ended June 30, 2024 |
|
| Three Months Ended June 30, 2023 |
|
| Six Months Ended June 30, 2024 |
|
| Six Months Ended June 30, 2023 |
| ||||
Operating Lease Cost |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating lease cost |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Other Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows paid for amounts included in the measurement of lease liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Operating lease liabilities arising from obtaining right-of-use assets |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Weighted average remaining lease term (years) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average discount rate |
|
| % |
|
| % |
|
| % |
|
| % |
20 |
Table of Contents |
Future lease payments under noncancelable operating lease liabilities as of June 30, 2024 are as follows:
|
| Operating Leases |
| |
Future Lease Payments |
|
|
| |
2024 (remaining six months) |
| $ |
| |
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
Thereafter |
|
|
| |
Total lease payments |
| $ |
| |
Less: imputed interest |
|
| ( | ) |
Total lease liabilities |
| $ |
| |
Less current portion |
|
| ( | ) |
Lease liability – noncurrent |
| $ |
|
The Company records the expense from short term leases as incurred. For the three and six months ended June 30, 2024, the Company recorded $
The Company accounts for finance leases in accordance with ASC 842 (Note 2). Subsequent to the acquisition of 51% of PET Labs Pharmaceuticals on October 31, 2023, the Company is party to nine ongoing finance leases in South Africa for certain fixed assets. In addition, In June 2024, the Company entered into a new finance lease for additional equipment.
Quantitative information regarding the Company’s finance lease liabilities is as follows:
|
| Three Months Ended June 30, 2024 |
|
| Three Months ended June 30, 2023 |
|
| Six Months Ended June 30, 2024 |
|
| Six Months Ended June 30, 2023 |
| ||||
Finance Lease Cost |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest on lease liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Other Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows paid for amounts included in the measurement of finance lease liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Amortization of right-of-use assets |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Weighted average remaining lease term (years) |
|
|
|
|
| — |
|
|
|
|
|
| — |
| ||
Weighted average discount rate |
|
| % |
| — | % |
|
| % |
| % |
21 |
Table of Contents |
Future lease payments under noncancelable finance lease liabilities are as follows as of June 30, 2024:
|
| Finance Leases |
| |
Future Lease Payments |
|
|
| |
2024 (remaining six months) |
| $ |
| |
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
Thereafter |
|
|
| |
Total lease payments |
| $ |
| |
Less: imputed interest |
|
| ( | ) |
Total lease liabilities |
| $ |
| |
Less current portion |
|
| ( | ) |
Lease liability – noncurrent |
| $ |
|
10. License Agreements
In September 2021, the Company licensed certain intellectual property from Klydon for the development, production distribution, marketing and sale of Mo-100. The license term is 999 years, unless terminated earlier by either party under certain provisions. Any development efforts improving the intellectual property performed by either Klydon or the Company will be the property of Klydon. There are no upfront, milestone payments, nor royalties on product sales over the term of the license. Two individuals who are officers and board members of Klydon received warrants to purchase common stock of the Company. (See Note 12.)
In January 2022, the Company licensed certain intellectual property from Klydon for the development, production distribution, marketing and sale of uranium isotope U-235 (“U-235”). The license term is 999 years, unless terminated earlier by either party under certain provisions. Any development efforts improving the intellectual property performed by either Klydon or the Company will be the property of Klydon. The Company paid an upfront fee of $
In July 2022, ASP Isotopes UK Ltd (a subsidiary of the Company) entered into a license agreement with Klydon, as licensor, pursuant to which ASP Isotopes UK Ltd acquired from Klydon an exclusive license to use, develop, modify, improve, subcontract and sublicense certain intellectual property rights relating to the ASP technology for the production, distribution, marketing and sale of all isotopes produced using the ASP technology (the “Klydon license agreement”). The Klydon license agreement superseded and replaced the Mo-100 license and U-235 license described in Note 8 above. The Klydon license agreement is royalty-free, has a term of 999 years and is worldwide for the development of the ASP technology and the distribution, marketing and sale of isotopes. Future production of isotopes is limited to member countries of the Nuclear Suppliers Group. In connection with the Klydon license agreement the Company agreed to make an upfront payment of $
In July 2022, ASP South Africa acquired assets comprising a dormant Silicon-28 aerodynamic separation processing plant from Klydon for ZAR
On April 4, 2023, the Company perfected its interest under the Acknowledgement of Debt Agreement (see Note 8), pursuant to which the Company acquired certain intellectual property from Klydon (“Klydon Settlement”). The Company concluded that the Klydon Acquisition is accounted for under ASC 805, Business Combinations as an asset acquisition since the assets acquired were concentrated in a single identifiable asset from a related party. In conjunction with the Klydon Settlement, the Company recorded an increase to additional paid-in capital for the settlement of all liabilities owed to Klydon at the time of settlement totaling $
22 |
Table of Contents |
11. Acquisitions
PET Labs Pharmaceuticals
In October 2023, the Company completed the PET Labs Pharmaceuticals Acquisition, a provider of nuclear medical doses for use in PET scans in South Africa. The acquisition of PET Labs Pharmaceuticals was intended to accelerate the distribution of the Company’s pipeline. The acquisition of PET Labs Pharmaceuticals has been accounted for as a business combination in accordance with ASC 805.
Pursuant to the terms of the agreement, the Company acquired
In addition to the purchase consideration, the Company has an option to purchase the remaining 49% of the issued and outstanding shares for an agreed consideration totaling $
Dr. Gerdus Kemp is an officer of PET Labs Pharmaceuticals and, effective November 1, 2023, an employee of ASP Isotopes UK Ltd. In addition, Dr. Kemp controls the remaining
The following table summarizes the preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed:
Consideration
Cash |
| $ |
| |
Present value of balance due |
|
|
| |
|
| $ |
|
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash and cash equivalents |
| $ |
| |
Accounts receivable |
|
|
| |
Other current assets |
|
|
| |
Property and equipment |
|
|
| |
Right of use assets |
|
|
| |
Financial liabilities |
|
| ( | ) |
Right of use liabilities |
|
| ( | ) |
Total identifiable net assets |
|
|
|
Noncontrolling interest |
|
| (1,821,021 | ) |
Goodwill |
|
|
| |
|
| $ |
|
Goodwill arising from the acquisition as of October 31, 2023 of $
The Company considered the contractual value of accounts receivable to be the same as the fair value and expects the full amount to be collected.
The results of PET Labs Pharmaceuticals have been included in the consolidated financial statements from the date of the acquisition.
The Company accounts for business combinations in accordance with Accounting Standards Update ("ASU") No. 2015-16, Business Combinations (Topic 805), which requires an acquirer to retrospectively adjust provisional amounts recognized in a business combination during the measurement period (which represents a period not to exceed one year from the date of the acquisition), in the reporting period in which the adjustment is determined, as well as present separately on the face of the income statement or as a disclosure in the notes to the consolidated financial statements, the portion of the amount recorded in current period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.
23 |
Table of Contents |
The changes to the carrying value of goodwill is as follows:
Balance as of October 31, 2023 (acquisition date) |
| $ |
| |
Translation adjustment |
|
|
| |
Balance as of December 31, 2023 |
|
|
| |
Translation adjustment |
|
|
| |
Balance as of June 30, 2024 |
| $ |
|
ASP Rentals
In December 2023, ASP South Africa entered into a Shareholders Agreement (“ASP Rentals Shareholders Agreement”) with ASP Rentals, a newly formed equipment financing service provider formed for the sole purpose of providing financing to ASP South Africa for its significant asset purchases in South Africa. In accordance with the terms of the ASP Rentals Shareholders Agreement,
In June 2024, ASP Rentals issued additional capital stock to support additional financing to ASP South Africa and PET Labs Pharmaceuticals. Per the terms of the ASP Rentals Shareholder Agreement,
In addition to issuance of these shares, future ASP South Africa and PET Labs Pharmaceutical equipment purchases may also be financed by ASP Rentals through the issuance of additional shares. ASP South Africa will only be entitled to dividend distributions upon the two third party entities receiving a designated return on their investment.
In conjunction with the ASP Rental Shareholders Agreement, ASP South Africa and PET Labs Pharmaceuticals have both entered into an Asset Sale Agreement and an Asset Rental Agreement with ASP Rentals in order to facilitate the financing of equipment recently purchased by ASP South Africa and PET Labs Pharmaceuticals. As a result of the transactions contemplated by these agreements, collectively, ASP Rentals is considered a variable interest entity. In addition, since the only function of ASP Rentals is to provide financing to ASP South Africa and PET Labs Pharmaceuticals, ASP Isotopes is considered to be the primary beneficiary of ASP Rentals. Therefore, ASP Rentals has been consolidated in accordance with ASC 810.
As of December 31, 2023, ASP Rentals had a receivable and an obligation to issue
In January 2024,
12. Stockholders’ Equity
Preferred stock
ASP Isotopes Inc. has
24 |
Table of Contents |
Common stock
The Company has
As of December 31, 2022, the Company owed a placement agent, as amended,
In November 2022, the Company was required to issue shares of common stock with a then fair value totaling $
In February 2023, the Company was required to issue an aggregate of
In March 2023, the Company was required to issue an aggregate of
In March 2023, an officer and scientific advisor of the Company exchanged an aggregate of
In May 2023, the Company was required to issue an aggregate of
In May 2023, the Company was required to issue an aggregate of
The Company’s non-employee board members agreed to receive the 2022 and 2023 cash director fees totaling $
In March 2023, the Company issued
In October 2023, the Company entered into Securities Purchase Agreements with certain institutional and other accredited investors and certain directors of the Company to issue and sell an aggregate of
25 |
Table of Contents |
In January 2024, the Company was required to issue an aggregate of
In April 2024, the Company was required to issue an aggregate of
In June 2024, the Company issued an aggregate of
Activity of the share liabilities for the six months ended June 30, 2024 is as follows:
|
| Share Liability as of December 31, 2023 |
|
| New Share Liabilities in 2024 |
|
| Mark to Market Adjustments in 2024 |
|
| Liabilities Settled in 2024 |
|
| Share Liabilities as of June 30, 2024 |
| |||||
Share liabilities originated in 2024 |
| $ | |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
Activity of the share liabilities for the six months ended June 30, 2023 is as follows:
|
| Share Liability as of December 31, 2022 |
|
| New Share Liabilities in 2023 |
|
| Mark to Market Adjustments in 2023 |
|
| Liabilities Settled in 2023 |
|
| Share Liabilities as of June 30, 2023 |
| |||||
Share liabilities originated in 2022 |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||
Share liabilities originated in 2023 |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ||||
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ |
|
In July 2024, the Company issued
Common Stock Warrants
The fair value of the warrants to purchase
Expected volatility |
|
| % | |
Weighted-average risk-free rate |
|
| % | |
Expected term in years |
|
|
| |
Expected dividend yield |
|
| % |
In April 2024, a warrant to purchase
26 |
Table of Contents |
The fair value of the Inducement Warrant was determined to be $
Expected volatility |
|
| % | |
Weighted-average risk-free rate |
|
| % | |
Expected term in years |
|
|
| |
Expected dividend yield |
|
| % |
The fair value of the Inducement Warrant is considered the deemed dividend and is removed from net loss for the purpose of determining the earnings per share on a basic and fully diluted basis.
13. Stock Compensation Plan
Equity Incentive Plan
In October 2021, the Company adopted the 2021 Stock Incentive Plan (“2021 Plan”) that provided for the issuance of common stock to employees, nonemployee directors, and consultants. Recipients of incentive stock options are eligible to purchase shares of common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The 2021 Plan provided for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock awards and stock appreciation rights. The maximum contractual term of options granted under the 2021 Plan is ten years. The maximum number of shares initially available for issuance under the 2021 Plan was
In November 2022, the Company adopted the 2022 Equity Incentive Plan (“2022 Plan”) that provides for the issuance of common stock to employees, nonemployee directors, and consultants. Recipients of incentive stock options are eligible to purchase shares of common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The 2022 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock awards and stock appreciation rights. The maximum contractual term of options granted under the 2022 Plan is ten years. The number of shares of the Company’s common stock initially reserved for issuance under the 2022 Plan is equal to
In June 2024, the Company adopted the 2024 Inducement Equity Incentive Plan (“2024 Plan”). The 2024 Plan will be used exclusively for the grant of equity awards to individuals who were not previously employees or directors of the Company, or following a bona fide period of non-employment, as an inducement material to such individuals entering into employment with the Company, pursuant to Nasdaq Listing Rule 5635(c)(4). Recipients of stock options are eligible to purchase shares of common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The 2024 Plan provides for the grant of non-statutory stock options, restricted stock, restricted stock units, stock awards and stock appreciation rights. The maximum contractual term of options granted under the 2024 Plan is ten years. The number of shares of the Company’s common stock initially reserved for issuance under the 2024 plan is equal to
27 |
Table of Contents |
Stock Options
The following table sets forth the activity for the Company’s stock options during the periods presented:
|
| Number of Options |
|
| Weighted- Average Exercise Price per Share |
|
| Weighted Average Remaining Contractual Term (in Years) |
|
| Aggregate Intrinsic Value |
| ||||
Outstanding as of December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Granted |
|
| - |
|
| $ |
|
|
|
|
|
|
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Forfeited |
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| ( | ) |
| $ |
|
|
|
|
|
|
|
|
| |
Outstanding as of June 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
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|
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|
|
|
|
|
|
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|
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|
|
|
|
Exercisable as of June 30, 2024 |
|
|
|
| $ |
|
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|
| $ |
| ||||
Vested or expected to vest as of June 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
|
For the six months ended June 30, 2024, no options were granted.
The Company recorded stock compensation from options of $
Stock Awards
In October 2021, the Company issued
In October 2021, the Company issued
In July 2022, the Company issued
In July 2022, the Company issued
In November 2022, the Company issued
In December 2022, the Company issued an aggregate of
In March 2023, the Company issued an aggregate of
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Table of Contents |
In August 2023, the Company issued
In October 2023, the Company was obligated to issue $
In March 2024, the Company was obligated to issue
In March 2024, the Company was obligated to issue
In January 2024, the Company was obligated to issue $
In June 2024, the Company awarded and issued an aggregate of
The Company recorded stock compensation from stock awards totaling $
The following table summarizes vesting of restricted common stock:
|
| Number of Shares |
|
| Weighted Average Grant Date Fair Value Per Share |
| ||
Unvested as of December 31, 2023 |
|
|
|
| $ |
| ||
Granted |
|
|
|
| $ |
| ||
Vested |
|
| ( | ) |
| $ |
| |
Forfeited and retired |
|
| ( | ) |
| $ |