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EX-31.3 - CEO CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - VIVOS INCexhibit_31-3.htm
EX-31.4 - CFO CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - VIVOS INCexhibit_31-4.htm

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q /A
(Amendment No. 1)
 
(Mark One)
   
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED:  JUNE 30, 2011
   
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE TRANSITION PERIOD FROM __________ TO __________
 
COMMISSION FILE NUMBER    0-53497
 


 (Exact name of registrant as specified in its charter)

Delaware
80-0138937
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
6208 W Okanogan Ave,
Kennewick WA 99336

 (Address of principal executive offices, Zip Code)

(509) 736-4000

(Registrant’s telephone number, including area code)


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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
 
The number of shares of registrant’s common stock outstanding, as of August 4, 2011 was 70,959,896.


 
 
 
1

 
 
 
EXPLANATORY NOTE
 
The purpose of this Amendment No. 1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, as filed with the Securities and Exchange Commission on August 4, 2011, is to correct certain statements in relation to Nordion Inc. made in the second and third paragraphs under the caption “Competitors” in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Part I of that report.  No other amendments are being made to Item 2 as previously filed.
 
In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, we are filing the following additional exhibits under Item 6 of Part II:
 
31.3 CEO Certification pursuant to Section 302 of The Sarbanes-Oxley Act of 2002; and
 
31.4 CFO Certification pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
 
Except as described above, no other amendments are being made to our Form 10-Q report as filed on August 4, 2011, and this Amendment No. 1 to the Quarterly Report on Form 10-Q does not reflect the occurrence of any events after that date.  All references in Item 2 below to “this Form 10-Q” refer to our Form 10-Q report as amended by this Amendment No. 1.
 
 
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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

General Development of Business

Advanced Medical Isotope Corporation (the “Company”) was incorporated under the laws of Delaware on December 23, 1994 as Savage Mountain Sports Corporation (“SMSC”) for the purpose of acquiring or investing in businesses which were developing and marketing active sports products, equipment, and apparel.  In April 2000, Earth Sports Products, Inc (“ESP”), a corporation registered in Washington, merged with SMSC.  In April 2000, HHH Entertainment, Inc (“HHH”), a Nevada corporation, merged with SMSC.  As of the date of merger, HHH was the only stockholder of SMSC.
 
SMSC had limited activity from inception and was considered dormant from the period May 1, 2000 through December 31, 2005.  On September 6, 2006, SMSC changed its name to Advanced Medical Isotope Corporation.  
 
On September 27, 2006, the Company acquired the assets of Neu-Hope Technologies, Inc (“NHTI”), a Florida corporation and a subsidiary of UTEK Corporation (“UTEK”), a Delaware Corporation, and $310,000 from UTEK in exchange for 100,000 shares of Series A Preferred Stock (which Series A Preferred Stock was later converted to shares of the Company’s common stock in March 2009).  The Company conducted the acquisition in order to obtain cash and NHTI’s technology.  

On June 13, 2007, the Company acquired the assets of the life sciences business segment of Isonics Corporation (Isonics), a California corporation.  The Company acquired the assets in exchange for $850,000 cash payment for the purpose of combining the assets into our business of marketing medical isotopes.  The assets acquired consist of intellectual property, agreements with third party companies for purchase and marketing of isotopes, customer lists, and equipment located in Buffalo, New York.

On August 1, 2007 the Company began renting office and warehouse space, known as the Production Facility located in Kennewick, Washington. Through this facility and the use of a proton linear accelerator, on June 30, 2008 we began offering regional distribution of F-18 (FDG).

 
2

 

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

General Development of Business - continued

On October 28, 2010, the Company received $1,215,000 net proceeds from the Department of Energy grant for the Proposed Congressionally Directed Project entitled “Research to Develop and Test an Advanced Resorbable Brachytherapy Seed Research for Controlled Delivery of Yttrium-90 Microspheres in Cancer Treatment.” This grant reimburses the Company for anticipated expenditures related to the development of its Brachytherapy project over the period April 1, 2010 through March 31, 2012. The Company projects this project could cost approximately $5,500,000 however recognizes the costs could be as high as $8,000,000 before it gets to production.

On October 29, 2010, the Company received notification it had been awarded $244,479 grant funds from the Qualified Therapeutic Discovery Project Program for this same Brachytherapy Project. The $244,479 grant was received February 4, 2011. This grant reimburses the Company for eligible expenditures made during the twelve months ended December 31, 2010.

On October 29, 2010, the Company received notification it had been awarded $244,479 grant funds from the Qualified Therapeutic Discovery Project Program for the Molybdenum Project. On December 3, 2010, the Company received $205,129 and the remaining $39,350 of the grant was received February 4, 2011. The grant funds received in 2010 and received in February 2011 reimburses the Company for eligible expenditures made during the twelve months ended December 31, 2010.

The Company has never filed for bankruptcy and has never been subject to receivership or similar proceedings.

Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has a limited amount of revenue which has accumulated deficits since inception.  If we cannot obtain sufficient funding, we may have to delay the implementation of our business strategy.  

Narrative Description of Business
 
We are engaged in the production and distribution of medical isotopes and medical isotope technologies that are changing the practice of medicine and ushering in a new era of improved patient care.  Isotopes are a form of chemical element with the same atomic number as another element but with a different atomic mass.  Medical isotopes are used in molecular imaging, therapy, and nuclear medicine to diagnose, manage and treat diseases.

The August 9, 2009 issue of the Los Angeles Times reported that there are currently more than 15 million nuclear medicine procedures are performed each year in the U.S.  Approximately one-third of all patients admitted to U.S. hospitals undergo at least one medical procedure that employs the use of medical isotopes.

We employ innovative production methods to offer a wide range of reliable, domestically produced medical isotopes as well as in vivo delivery systems to aid medical practitioners and medical researchers in the timely diagnosis and effective treatment of diseases such as cancer, heart disease, neurological disorders, and many other medical conditions. 

Our objective is to empower physicians, medical researchers, and ultimately, patients, by providing them with essential medical isotopes that, until now, have not been practical or economical to produce, in an effort to detect, manage, and cure human disease, and improve the lives of patients.

Accordingly, the Company is reviewing possible acquisition candidates.


 
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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Products

We currently offer the following products:

Stable Isotopes:

We currently offer worldwide distribution of O-18 enriched water and a wide range of other stable isotopes.  Our product line of stable isotopes includes the following elements: Antimony, Barium, Cadmium, Calcium, Cerium, Chromium, Copper, Dysprosium, Erbium, Europium, Gadolinium, Gallium, Germanium, Hafnium, Indium, Iron, Krypton, Lanthanum, Lead, Lutetium, Magnesium, Mercury, Molybdenum, Neodymium, Nickel, Osmium, Palladium, Platinum, Potassium, Rhenium, Rubidium, Ruthenium, Samarium, Selenium, Silicon, Silver, Strontium, Sulphur, Tellurium, Thallium, Tin, Titanium, Tungsten, Vanadium, Xenon, Ytterbium, Zinc, and Zirconium.

Radiopharmaceuticals:

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

F-18 FDG: We currently offer regional distribution of F-18 FDG from our Kennewick, WA production facility.  Other regional production facilities are being considered throughout the U.S. and abroad.

Radio Chemicals:

 F-18:  We currently offer regional distribution of F-18 from our Kennewick, WA production facility.   Other regional production facilities are planned throughout the U.S. and abroad.  This is the primary PET imaging isotope. It is used for medical and diagnostic purposes, such as cancer detection, heart imaging, and brain imaging.

Strontium-82: Used as a myocardial imaging agent, early detection of coronary artery disease, PET imaging, blood flow tracers

Germanium-68: It is used for study of thrombosis and atherosclerosis, PET imaging, detection of pancreatic cancer, and attenuation correction.

Actinium-225: Used for advanced research in therapy of leukemia and other cancers. It holds great promise for treating HIV/AIDS, and we are negotiating with a foreign manufacturer to commence U.S. shipments.


 
4

 


Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Products - continued

Generators:

Strontium-82/Rubidium-82 generators: Used as a myocardial imaging agent, early detection of coronary artery disease, PET imaging, blood flow tracers. We have access via a foreign manufacturer.

Germanium-68/Gallium-68 generators: It is used for study of thrombosis and atherosclerosis, PET imaging, detection of pancreatic cancer, and attenuation correction. We have access via a foreign manufacturer.
 
Actinium-225/Bismuth-213 generators: Actinium-225 is the parent of Bismuth-213, an isotope which has been used in animal trials to kill human HIV virus.  Bismuth-213 has been used in human clinical trials for the treatment of Acute Myelogenous Leukemia (AML). We are negotiating with a foreign manufacturer for a new patented process to commence manufacturing in the U.S.

Status of New Products

Within the next three years, we intend to offer the following isotopes:

Carbon-11: Used in cancer diagnosis/staging. Radiotracer in PET scans to study normal/abnormal brain functions related to various drug addictions and is also used to evaluate disease such as Alzheimer’s, epilepsy, Parkinson’s and heart disease.

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

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

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

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

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

Iodine-124:  This is a radiotracer primarily used in PET imaging and to create images of human thyroid. Other treatment uses include apoptosis, cancer biotherapy, glioma, heart disease, mediastinal micrometastases, and thyroid cancer.

Indium-111:   In-111 Chloride bulk solution for U.S. distribution.  This radio chemical is used for infection imaging, cancer treatments, and tracer studies.




 
5

 


Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Manufacturing

The cornerstone equipment selected for our production center is a proton linear accelerator.  Our proton linear accelerator is designed to replace large and demanding cyclotron systems for the production of positron emitting isotopes. Large amounts of fluorine-18, carbon-11, nitrogen-13, and oxygen-15 can be produced for synthesis into compounds used in oncology, cardiology, neurology, and molecular imaging. The radio-labeled glucose analog, FDG, can be synthesized and distributed for use in Positron Emission Tomography.

Based on our experience in the industry, it is our belief that no other accelerator in North America has sufficient flexibility to produce the full spectrum of PET imaging radioisotopes, as well as other high-demand isotopes, both short and long lived, for diagnostic and therapeutic applications.

We are also engaged in a number of collaborative efforts with U.S. national laboratories and universities, along with several international teaming partners.  These collaborative effort projects include complementary isotope manufacturing technologies as well as isotope devices.  We have entered into agreements to produce isotopes in conjunction with the University of Missouri at Columbia, Pacific Northwest National Laboratory, operated by Battelle, and the University of Utah. These regional university centers will allow us to become a local supplier for the short-lived isotopes like Fluorine 18 as well as being a domestic supplier of several other isotopes in demand by the medical community.

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

In June 2008, we entered into a research agreement with the University of Missouri related to the production of radio isotopes.  Pursuant to the research agreement, we will pay total project costs that will not exceed $75,000.  We also entered into a one year option agreement in June 2008, which was extended for another year in June 2009, with the University of Missouri.  The option agreement gives us the option to enter into a licensing agreement to utilize certain intellectual property held by the University of Missouri for the production of medical, research, and industrial radioisotopes.  In May 2010, we exercised our option agreement by entering into a license agreement with the University of Missouri. This license agreement calls for an upfront license fee and a royalty based on a percent of net sales for licensed products sold. If the University of Missouri’s intellectual property functions as early analysis have indicated, this production facility could be a manufacturing source of critical health care radioisotopes.

In August 2010, we entered into an exclusive license agreement with Battelle Memorial Institute related to patents for the production of radioisotopes. This license agreement calls for an upfront license fee and a royalty based on a percent of net sales for licensed products sold; however the license agreement contains a minimum royalty amount to be paid each year starting with 2012.

In February 2011, we entered into a one year option agreement to negotiate an exclusive license agreement with Battelle Memorial Institute related to patents for the production of radioisotopes. This option agreement calls for an upfront option fee.

Competitors

The suppliers of radioisotopes for diagnosis, treatment, and research for a wide variety of diseases, in particular cancer, vary in size and product offerings.  Competition is limited because there are many barriers to entry, including regulatory hurdles, including licensing, government approvals and capital outlays associated with starting an isotope company.  Many current competitors are international companies.

Further, competition is limited as some suppliers are closing their facilities or limiting their production .  At one time, the U.S. government was supposed to be the source of medical isotopes, but over the course of the last two decades, it has either closed or failed to adequately fund its production facilities.

About 90% of all the non PET radioisotopes used in the United States are imported from two companies , Nordion Inc. (formerly MDS Inc.) and Covidien (formerly Mallinkrodt).  Atomic Energy of Canada Limited’s National Research Universal reactor returned to operation in August, 2010 after a temporary shut down, and accordingly, Nordion resumed its role in the medical isotope supply chain and continues to be a supplier to the U.S. market.   The remaining 10% that are produced in the United States are manufactured in a fragmented, piecemeal manner with companies producing a single isotope instead of a wide variety.


 
6

 


Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued
 
Employees

As of June 30, 2011, we had thirteen employees.  At any given time, we utilize eight to ten independent contractors to assist with the company operations.  We do not have a collective bargaining agreement with any of our employees and we believe our relations with our employees are good.

Raw Materials

Some of the materials used in the products we manufacture are currently available only from a limited number of suppliers; many of which are from international suppliers.  We obtain many of our stable isotopes from suppliers in Russia.  The Company plans to expand the availability of its supplies and products utilizing manufacturing capability at reactors located at the U.S. Department of Energy's National Laboratories (“National Laboratories”) as well as production capabilities at various universities and foreign countries other than Russia.  This strategy will reduce the risk associated with concentrating isotope production at a single facility.  We obtain supplies, hardware, handling equipment and packaging from several different U.S. suppliers.

Customers

Our customers include a broad range of hospitals, universities, research centers and national laboratories, in addition to academic and government institutions.  These customers are located in essentially all major U.S. and international markets.  Sales for the years ended December 31, 2007 consisted mainly of imported stable isotopes. 

In July 2008, we began production of F-18 in our production facilities in Kennewick, Washington.  Sales of F-18 for the year ended December 31, 2008 totaled approximately 29% of total revenue.  

Our sales for 2009 consisted of both F-18 (70.3% of total revenues) and stable isotopes (29.7% of total revenues). Sales to customers whose sales were greater than 10% of our total sales for the year ended December 31, 2009 totaled 70.3%.

Our sales for 2010 consisted of F-18 (61.3% of total revenues) and Consulting Income (38.7% of total revenues). We had no sales of stable isotopes in 2010 due to the decrease in profit margins for that product; however we are looking into selling more stable isotopes in 2011 and beyond due to the possibility of obtaining lower prices from our vendors. Sales of F-18 for 2010 were 100% to one customer located close to the production facility. Consulting revenues consist of providing a company with assistance in strategic targetry services, and research into production of radiophamaceuticals and the operations of radioisotope production facilities. No proprietary information belonging to our Company is shared during the process of this Consulting.

The company is also working with United Pharmacy Partners Inc (UPPI). UPPI has a network of approximately 120 nuclear pharmacies within the United States. We have entered into an affiliation agreement with UPPI to provide to the UPPI network preferred prices and special terms and conditions for certain products that we anticipate to manufacture or re-sell during 2011.



 
7

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Patents, Trademarks, Licenses

License Agreement:

On September 27, 2006, we acquired the assets of NHTI from UTEK.  Included in the acquired assets was a Non-Exclusive License Agreement with the Regents of the University of California (“University”) for a neutron generator in exchange for preferred stock.  NHTI paid a non-refundable fee in the amount of $25,000 in connection with the license agreement.  The license fee is non-refundable unless our commercialization plan is deemed unacceptable by the University.  If the plan is deemed unacceptable, the license agreement will terminate.  To date, no commercialization plan has been deemed acceptable or unacceptable.  In consideration for the license, we agreed to pay royalties equal to the greater of three percent of the selling price of each licensed product we sell or the maintenance fee according to the following schedule:

2008
 
$
10,000
*
2009
 
$
15,000
*
2010
 
$
15,000
*
2011
 
$
45,000
 
2012 and each year thereafter
 
$
60,000
 
   
$
145,000
 
                                 * These items have not been paid to date.

The License Agreement may be cancelled by giving 90 days written notice to the University.  We did not have a relationship with UTEK before the acquisition of Neu-Hope Technologies and we do not currently have any business relationship or affiliation with UTEK.  In fact, in 2008, due to the Company’s lack of funds to act upon the patent license for the neutron generator and develop the technology, the Company lost considerable ground towards the advantages of utilization of the patent license.

Additionally the Company has made the following investments in patent licenses and intellectual property during 2010:

The Company made a $10,000 investment in 2010 for a patent license regarding its technology for the production of Mo-99. In May 2010 the Company entered into a License Agreement for the Patent Rights in the area of radioisotope production using electron beam accelerator(s) for creating short lived radioisotopes such as molybdenum-99 and technetium-99 with the University of Missouri. This Agreement calls for a $10,000 nonrefundable fee paid upon execution, a royalty agreement on sales, and an equipment licensing fee on equipment sales. Additionally the Agreement calls for a milestone payment of $250,000, due and payable five years after execution of this agreement and a milestone payment of $250,000, due and payable upon reaching $50,000,000 in cumulative net sales. The $10,000 nonrefundable fee paid upon execution was capitalized as License Fees and is amortized on the straight line basis over a three year life.

The Company made a $10,000 investment in 2010 for an exclusive patent license with Battelle Memorial Institute regarding its technology for the production of Brachytherapy. In September 2010 the Company entered into a License Agreement for the Patent Rights in the area of a resorbable brachytherapy seed. This Agreement calls for a $10,000 nonrefundable fee upon execution, a royalty agreement on sales and on funds received from any sublicenses. The $10,000 nonrefundable fee paid upon execution was capitalized as License Fees and is amortized on the straight line basis over a three year life. Additionally the Agreement calls for a minimum annual fee as follows:

Calendar Year
 
Minimum Royalties per Calendar Year
2010
 
$
-
2011
 
$
-
2012
 
$
2,500
2013
 
$
5,000
2014
 
$
7,500
2015
 
$
10,000
2016 and each calendar year thereafter
 
$
25,000

 
8

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Patents, Trademarks, Licenses - continued

The amortization of these items is computed using the straight-line method over the following estimated useful lives:

 
o
Intellectual property ……..….. 3 years
 
o
Contracts and agreements …. 3 years
 
o
Customer lists …………..…… 2 years

Patents:

Patent filing costs totaling $67,935, and $24,037, were capitalized during the six months ended June 30, 2011, and 2010; resulting in a total $287,738 of capitalized patents at June 30, 2011.  The patents are pending and are being developed, as such, they are not being amortized.  Management has determined that the economic life of the patents to be 10 years and amortization, over such 10-year period and on a straight-line basis, will begin once the patents have been issued and the Company begins utilization of the patents through production and sales, resulting in revenues.  The Company evaluates the recoverability of intangible assets, including patents on a continual basis. Several factors are used to evaluate intangibles, including, but not limited to, management’s plans for future operations, recent operating results and projected and expected undiscounted future cash flows.

Research and Development

We spent approximately $1,168,422, $67,006 and $90,150 during the years ended December 31, 2010, 2009 and 2008, respectively, on research and development.  The costs incurred in 2008 and 2009 were to a University for tests involved in the making of isotopes. The costs incurred in 2010 consisted of $513,416 towards the Brachytherapy Project and $655,006 towards the Molybdenum Project.

The costs expensed in the six months ended June 30, 2011 and 2010 were $213,826 and $519,573, respectively. The $213,826 spent for the six months ended June 30, 2011 consist of the following:

   
Brachytherapy
   
Molybdenum
 
Supplies
 
$
4,815
   
$
390
 
Amortization
   
1,666
     
1,666
 
Conferences & seminars
   
7,087
     
9,432
 
Dues & subscriptions
   
-
     
32
 
Marketing
   
8,287
     
15,658
 
Office Supplies
   
117
     
180
 
Payroll and benefits
   
14,764
     
45,707
 
Consulting fees
   
45,500
     
26,900
 
Consulting fees – stock based
   
6,000
     
-
 
Legal fees
   
-
     
6,000
 
Research
   
17,606
     
-
 
Stock options granted
   
50
     
750
 
Telephone
   
328
     
342
 
Travel
   
-
     
549
 
               Total
 
$
106,220
   
$
107,606
 



 
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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations – Six Months Ended

The following table sets forth information from our statements of operations for the six months ended June 30, 2011 and 2010.

   
Six Months Ended
June 30, 2011
 
Six Months Ended
June 30, 2010
Revenues
 
$
290,483
   
$
202,663
 
Cost of goods sold
   
36,538
     
29,938
 
Gross profit
   
253,945
     
172,725
 
Operating expenses
   
1,542,912
     
1,644,024
 
Operating loss
   
(1,288,967
)
   
(1,471,299
)
Non-operating expenses
   
-
     
-
 
Recognized income from grants
   
106,220
         
Interest expense
   
(202,044
)
   
(404,713
)
Net income (loss)
 
$
(1,384,791
)
 
$
(1,876,012
)

Details related to Revenues and Cost of Goods Sold for the six months ended June 30, 2011 and 2010 are as follows:

     
Six Months Ended
June 30, 2011
 
Six Months Ended
June 30, 2010
Revenues
             
Consulting
   
$
176,114
   
$
86,863
 
Stable Isotopes
     
15,769
     
-
 
F-18
     
98,600
     
 115,800
 
Total Revenue
   
$
290,483
   
$
202,663
 
                   
Cost of Goods Sold
                 
Stable Isotopes
   
$
13,191
   
$
-
 
F-18
     
23,347
     
 29,938
 
Total Cost of Goods Sold
   
$
36,538
   
$
29,938
 

Revenue

Revenue was $290,453 for the six months ended June 30, 2011 and $202,663 for the six months ended June 30, 2010.  The increase was the result of consulting revenues.  In July 2008 we established our linear accelerator production center and began the production and marketing of F-18 in August 2008.  F-18 sales accounted for $98,600 of the total six months ended June 30, 2011 revenues and $115,800 of the total six months ended June 30, 2010 revenues.  Revenues for F-18 were lower in the six months ended June 30, 2011 as a result of a reduction in price to our sole customer effective April 2010 and a reduction in the number of doses sold for the six months ended June 30, 2011 (341) from the six months ended June 30, 2010 (382). The reason the number of doses sold was lower is due to one week of lost production due to annual maintenance and two weeks of lost production due to a part that stopped working and was back ordered. Stable isotope sales were $15,769 and $0 for the six months ended June 30, 2011 and 2010 respectively.  The Company discontinued the sale of stable isotopes in the six months ended June 30, 2010 due to the reduction in profitability of that line of product. The Company intends to continue to minimize stable isotope sales at this time due to the low profitability. Consulting revenues consisted of $176,114 and $86,863 of the total six months ended June 30, 2011 and 2010 revenues. Consulting revenues consist of providing a company with assistance in strategic targetry services, and research into production of radiophamaceuticals and the operations of radioisotope production facilities. No proprietary information belonging to our Company is shared during the process of this consulting.

Cost of Goods Sold

Cost of Goods Sold for the six months ended June 30, 2011 was $36,538, or 12.6% of total revenues.  Cost of Goods Sold for the six months ended June 30, 2010 was $29,938, or 14.8% of total revenues.  Cost for the F-18 production (consisting mostly of supplies) was $23,347 for the six months ended June 30, 2011, which was 23.7% of total F-18 revenues.  Cost for the stable isotopes we purchased from our vendors was $13,191 for the six months ended June 30, 2011, which was 83.6% of total stable isotopes revenues. Cost for the F-18 production (consisting mostly of supplies) was $29,938 for the six months ended June 30, 2010, which was 25.8% of total F-18 revenues.  

 
10

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Operating Expenses

Operating expenses for the six months ended June 30, 2011 and 2010 was $1,542,912 and $1,644,024 respectively.  The decrease in operating expenses from 2010 to 2011 can be attributed to the reduction in Stock Options Granted expense ($0 for the six months ended June 30, 2011 versus $137,886 for the six months ended June 30, 2010) and the reduction of Professional Fees ($500,566 for the six months ended June 30, 2011 versus $580,603 for the six months ended June 30, 2010). Part of this reduction in expenses was offset by an increase in Payroll expenses ($412,417 for the six months ended June 30, 2011 versus $345,125 for the six months ended June 30, 2010).

   
Six Months Ended
June 30, 2011
   
Six Months Ended
June 30, 2010
 
Depreciation and amortization expense
 
$
273,192
   
$
271,617
 
Professional fees
   
500,566
     
580,603
 
Stock options granted
   
-
     
137,886
 
Payroll expenses
   
412,417
     
345,125
 
General and administrative expenses
   
298,148
     
292,836
 
Sales and marketing expense
   
58,589
     
15,957
 
   
$
1,542,912
   
$
1,644,024
 

Non-Operating Expense

Non-operating expense for the six months ended June 30, 2011 and 2010 was $98,824 and $404,713, respectively. The decrease in non-operating expense was due to a decrease in interest expense ($202,044 for the six months ended June 30, 2011 versus $404,713 for the six months ended June 30, 2010) and an increase in grant income recognized ($106,220 for the six months ended June 30, 2011 versus $0 for the six months ended June 30, 2010).

Net Loss

Our net loss for the six months ended June 30, 2011 and 2010 was $1,384,791 and $1,876,012, respectively.



 
11

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations – Three Months Ended

The following table sets forth information from our statements of operations for the three months ended June 30, 2011 and 2010 are as follows:

   
Three Months Ended
June 30, 2011
 
Three Months Ended
June 30, 2010
Revenues
 
$
139,926
   
$
138,193
 
Cost of goods sold
   
11,464
     
14,476
 
Gross profit
   
128,462
     
123,717
 
Operating expenses
   
700,106
     
553,804
 
Operating loss
   
(571,644
)
   
(430,087
)
Non-operating income
   
43,125
     
-
 
Interest expense
   
(103,003
)
   
(213,415
)
Net income (loss)
 
$
(631,522
)
 
$
(643,502
)

Details related to Revenues and Cost of Goods Sold for the three months ended June 30, 2011 and 2010 are as follows:

     
Three Months Ended
June 30, 2011
 
Three Months Ended
June 30, 2010
Revenues
             
Consulting
   
$
88,057
   
$
86,863
 
Stable Isotopes
     
2,569
     
-
 
F-18
     
49,300
     
 51,330
 
Total Revenue
   
$
139,926
   
$
138,193
 
                   
Cost of Goods Sold
                 
Stable Isotopes
   
$
1,850
   
$
-
 
F-18
     
9,614
     
 14,476
 
Total Cost of Goods Sold
   
$
11,464
   
$
14,476
 

Revenue

Revenue was $139,926 for the three months ended June 30, 2011 and $138,193 for the three months ended June 30, 2010. During 2007 we began our stable isotope marketing program which was acquired through the purchase of the Life Science division of Isonics, Inc. During the three months ended June 30, 2011, we continued the stable isotope marketing program generating $2,569 in stable isotope revenues for that period compared to $0 for the three months ended June 30, 2010. The Company has minimized the sales of stable isotopes due to the decrease in profitability of sales of stable isotopes. In July 2008 we established our linear accelerator production center and began the production and marketing of F-18 in August 2008, accounting for $49,300 of the total revenues for the three months ended June 30, 2011 and for $51,330 of the total revenues for the three months ended June 30, 2010. During the three months ended June 30, 2010 we began generating consulting revenue, which accounted for $86,863 of the total revenues for those three months and $88,057 of the total revenues for the three months ended June 30, 2011.

Cost of Goods Sold

Cost of Goods Sold for the three months ended June 30, 2011 was $11,464, or 8.2% of total revenues.  Cost of Goods Sold for the three months ended June 30, 2010 was $14,476, or 10.5% of total revenues. Cost for the F-18 production (consisting mostly of supplies) was $9,614 for the three months ended June 30, 2011, which was 19.5% of total F-18 revenues. Cost for the stable isotopes we purchased from our vendors was $1,850 for the three months ended June 30, 2011, which was 72.0% of total stable isotopes revenues. Cost for the F-18 production (consisting mostly of supplies) was $14,476 for the three months ended June 30, 2010, which was 28.2% of total F-18 revenues


 
12

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Operating Expenses

Operating expenses for the three months ended June 30, 2011 and 2010 was $700,106 and $553,804 respectively.  The increase in operating expenses from 2010 to 2011 can be attributed largely to the increase in cost of Sales and Marketing Expenses ($35,298 for the three months ended June 30, 2011 and $4,636 for the three months ended June 30, 2010), Professional Fees ($220,478 for the three months ended June 30, 2011 and $101,472 for the three months ended June 30, 2010), Payroll expenses ($166,216 for the three months ended June 30, 2011 and $121,576 for the three months ended June 30, 2010), offset by a reduction in Stock Options Granted (negative expense of $12,350 for the three months ended June 30, 2011 versus $50,630 for the three months ended June 30, 2010).

   
Three Months Ended
June 30, 2010
   
Three Months Ended
June 30, 2009
 
Depreciation and amortization expense
 
$
136,596
   
$
135,117
 
Professional fees
   
220,478
     
101,472
 
Stock options granted
   
(12,350
)
   
50,630
 
Payroll expenses
   
166,216
     
121,576
 
General and administrative expenses
   
153,868
     
140,373
 
Sales and marketing expense
   
35,298
     
4,636
 
   
$
700,106
   
$
553,804
 

Non-Operating Expense

Non-operating expense for the three months ended June 30, 2011 and 2010 was $59,878 and $213,415, respectively. The decrease in non-operating expense was due to a decrease in interest expense ($103,003 for the three months ended June 30, 2011 versus $213,415 for the three months ended June 30, 2010) and an increase in grant income recognized ($43,125 for the three months ended June 30, 2011 versus $0 for the three months ended June 30, 2010).

Net Loss

Our net loss for the three months ended June 30, 2011 and 2010 was $631,522 and $643,502, respectively.




 
13

 

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Liquidity and Capital Resources

At June 30, 2011, we had negative working capital of $4,337,105, as compared to $3,410,628 December 31, 2010. During the six months ended June 30, 2011 we experienced negative cash flow from operations of $360,784, and we expended $67,935 for investing activities and another $155,539 from financing activities.  As of June 30, 2011, we had $0 commitments for capital expenditures.

We have generated material operating losses since inception. We have incurred a net loss of $19,829,600 from inception through June 30, 2011, including a net loss of $1,384,791 for the six months ended June 30, 2011. We expect to continue to experience net operating losses. Historically, we have relied upon outside investor funds to maintain our operations and develop our business. We anticipate raising additional capital within the next twelve months from investors for working capital as well as business expansion and we can provide no assurance that additional investor funds will be available on terms acceptable to us. If we are unable to obtain additional financing to meet our working capital requirements, we may have to curtail our business.
 
Based on the current cash run rate, approximately $1,000,000 will be needed to fund operations for an additional year.  As disclosed in the risk factors, we are presently taking steps to raise additional funds to continue operations for the next 12 months and beyond.  We will need to raise an additional $15,000,000 in the next year to develop an infrastructure for Brachytherapy production and distribution as well as to initiate a Molybdenum 99 production facility.  We may, however, choose to further modify our growth and operating plans to the extent of available funding, if any.

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

Contractual Obligations (payments due by period as of June 30, 2011)

Contractual Obligation
 
Total Payments Due
   
Less than 1 Year
   
1-3 Years
 
3-5 Years
   
More than 5 Years
Capital Lease Obligation
 
$
1,238,792
   
$
417,000
   
$
778,700
 
$
43,092
 
$
Production center lease
 
$
61,550
   
$
56,788
   
$
4,762
 
$
 
$
License agreement with Regents of the University of California
 
$
505,000
   
$
85,000
   
$
180,000
 
$
180,000
 
$
60,000 each year
License Agreement with Battelle Memorial Institute
 
$
125,000
   
$
    2,500
   
$
 22,500
 
$
 75,000
 
$
25,000 each year 

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

We began renting office and warehouse space effective August 1, 2007, located in Kennewick, Washington from a non-affiliated shareholder.  The lease agreement calls for monthly rental payments starting at $3,500, increasing every August 1st until they become $4,762 as of August 1, 2011.  During the year ended December 31, 2010 the Company incurred rent expenses for this facility totaling $50,622.  During the six months ended June 30, 2011 and 2010 the Company incurred rent expenses for this facility totaling $26,454 and $24,494, respectively. In addition, the lease agreement calls for the issuance of $187,500 in common stock valued at $0.40 per share for a total of 416,667 shares.  The company recognized the issuance of all 416,667 shares in 2007 and will amortize the $187,500 value of that stock over the sixty month term of the lease.  For the twelve months ended December 31, 2010 the Company amortized $37,500, of this stock issuance and recognized it as rent expense. For the six months ended June 30, 2011 and 2010 the Company amortized $18,750 and $18,750, respectively, of this stock issuance and recognized it as rent expense.



 
14

 

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Critical Accounting Policies

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

Use of Estimates

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

Cash Equivalents

For the purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivables are stated at the amount that management of the Company expects to collect from outstanding balances. Management provides for probable uncollectible amounts through an allowance for doubtful accounts. Additions to the allowance for doubtful accounts are based on management’s judgment, considering historical write-offs, collections and current credit conditions. Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to the applicable accounts receivable. Payments received subsequent to the time that an account is written off are considered bad debt recoveries. As of June 30, 2011, the Company has experienced no bad debt write offs from operations.

Inventory

Inventory is reported at the lower of cost or market, determined using the first-in, first-out basis, or net realizable value. All inventories consist of Finished Goods. The company had no Raw Materials or Work in Process.

Fixed Assets

Fixed assets are carried at the lower of cost or net realizable value. Production equipment with a cost of $2,500 or greater and other fixed assets with a cost of $1,500 or greater are capitalized. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations.

Depreciation is computed using the straight-line method over the following estimated useful lives:

Production equipment 
// @bgcolor
3 to 7 years
Office equipment 
// @bgcolor
2 to 5 years
Furniture and fixtures 
// @bgcolor
2 to 5 years

Leasehold improvements and capital lease assets are amortized over the shorter of the life of the lease or the estimated life of the asset.

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


 
15

 

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Fixed Assets - continued

The types of events and circumstances that management believes could indicate impairment are as follows:

 
·
A significant decrease in the market price of a live-lived asset.
 
·
A significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition.
 
·
A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator.
 
·
An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset.
 
·
A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset.
 
·
A current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

The fair value of assets is first determined by quoted market prices, if available. Otherwise, the estimate of fair value is based on the best information available in the circumstances, including prices for similar assets and the results of using other valuation techniques. If quoted market prices are not available a present value technique is often the best available valuation technique with which to estimate fair value. It is believed that an expected present value technique is superior to a traditional present value technique, especially in situations in which the timing or amount of estimated future cash flows is certain.

The traditional approach is useful for many measurements, especially those in which comparable assets and liabilities can be observed in the marketplace. However the traditional approach does not provide the tools needed to address some complex measurement problems, including the measurement of nonfinancial assets and liabilities for which no market for the item or a comparable item exists. The traditional approach places most of the emphasis on selection of an interest rate. A proper search for “the rate commensurate with the risk” requires analysis of at least two items – one asset or liability that exists in the marketplace and has an observed interest rate and the asset or liability being measured. The appropriate rate of interest for the cash flows being measured must be inferred from the observable rate of interest in some other asset or liability and, to draw that inference, the characteristics of the cash flows must be similar to those of the asset being measured.

Although management has made its best estimate of the factors that affect the carrying value based on current conditions, it is reasonably possible that changes could occur which could adversely affect management’s estimate of net cash flows expected to be generated from its assets, and necessitate asset impairment write-downs.

License Fees

License fees are stated at cost, less accumulated amortization. Amortization of license fees is computed using the straight-line method over the estimated economic useful life of the assets.  The Company periodically reviews the carrying values of patents and any impairments are recognized when the expected future operating cash flows to be derived from such assets are less than their carrying value.

Patents

The Company  has determined that the economic life of its patents to be 10 years and will begin amortization over such 10-year period and on a straight-line basis once the patents have been issued and the Company begins utilization of the patents through production and sales, resulting in revenues.  The Company evaluates the recoverability of intangible assets, including patents on a continual basis. Several factors are used to evaluate intangibles, including, but not limited to, management’s plans for future operations, recent operating results and projected and expected undiscounted future cash flows.

Revenue Recognition

The Company recognized revenue related to product sales when (i) persuasive evidence of the arrangement exists, (ii) shipment has occurred, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured.

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


 
16

 

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Income from Grants and Deferred Income

The Company has chosen to recognize grant money received as income as it incurs costs associated with those grants, and until such time as it recognizes the grant as income those funds received will be classified as Deferred Income on the balance sheet.

Net Loss Per Share

The Company accounts for its income (loss) per common share by replacing primary and fully diluted earnings per share with basic and diluted earnings per share. Basic earnings/loss per share is computed by dividing income (loss) available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period, and does not include the impact of any potentially dilutive common stock equivalents. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued.

Securities, all of which represent common stock equivalents, that could be dilutive in the future as of June 30, 2011 and December 31, 2010 are as follows:

   
June 30, 2011
   
December 31, 2010
 
Convertible debt
   
6,919,058
     
4,775,415
 
Common stock options
   
9,590,000
     
9,295,912
 
Total potential dilutive securities
   
16,509,058
     
14,071,327
 

Research and Development Costs

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

Advertising and Marketing Costs

Advertising and marketing costs are expensed as incurred except for the cost of tradeshows which are deferred until the tradeshow occurs. There were $12,675 tradeshow expenses incurred and not expensed as of the year ended December 31, 2010 which are prepayment costs for 2011 tradeshow expenses. During the six months ended June 30, 2011 and 2010 the Company incurred $58,589 and $15,957, respectively, in advertising and marketing costs.

Shipping and Handling Costs

Shipping and handling costs are expensed as incurred and included in cost of product sales.

Legal Contingencies

In the ordinary course of business, the Company is involved in legal proceedings involving contractual and employment relationships, product liability claims, patent rights, and a variety of other matters. The Company records contingent liabilities resulting from asserted and unasserted claims against it, when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. The Company discloses contingent liabilities when there is a reasonable possibility that the ultimate loss will exceed the recorded liability. Estimated probable losses require analysis of multiple factors, in some cases including judgments about the potential actions of third-party claimants and courts. Therefore, actual losses in any future period are inherently uncertain. Currently, the Company does not believe any probable legal proceedings or claims will have a material impact on its financial position or results of operations. However, if actual or estimated probable future losses exceed the Company’s recorded liability for such claims, it would record additional charges as other expense during the period in which the actual loss or change in estimate occurred.



 
17

 

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Income Taxes

To address accounting for uncertainty in tax positions, the Company clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. The Company also provides guidance on de-recognition, measurement, classification, interest, and penalties, accounting in interim periods, disclosure and transition.
 
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and Delaware.  The Company did not have any tax expense for the year ended December 31, 2010.  The Company did not have any deferred tax liability or asset on its balance sheet on December 31, 2010.

Interest costs and penalties related to income taxes, if any, will be classified as interest expense and general and administrative costs, respectively, in the Company's financial statements. For the year ended December 31, 2010, the Company did not recognize any interest or penalty expense related to income taxes. The Company believes that it is not reasonably possible for the amounts of unrecognized tax benefits to significantly increase or decrease during the year 2011.

Fair Value of Financial Instruments

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

Stock-Based Compensation

The Company recognizes in the financial statements compensation related to all stock-based awards, including stock options, based on their estimated grant-date fair value. The Company has estimated expected forfeitures and is recognizing compensation expense only for those awards expected to vest. All compensation is recognized by the time the award vests.

We account for equity instruments issued in exchange for the receipt of goods or services from non-employees. Costs are measured at the fair market value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of the date on which there first exists a firm commitment for performance by the provider of goods or services or on the date performance is complete.  The Company recognizes the fair value of the equity instruments issued that result in an asset or expense being recorded by the company, in the same period(s) and in the same manner, as if the Company has paid cash for the goods or services.

Recently Issued Accounting Pronouncements

The Company reviews recently issued account pronouncements on a quarterly basis. As of June 30, 2011 there are no recently issued accounting pronouncements that the Company believes are applicable or would have a material impact on the financial statements of the Company.

Off-Balance Sheet Arrangements

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



 
18

 


PART II

Item 6.    Exhibits.
 
(a)
 
Exhibits
   
         
   
Number
 
Description
   
31.1
 
CEO certification pursuant to Section 302 of  The Sarbanes – Oxley Act of 2002 *
   
31.2
 
CFO certification pursuant to Section 302 of  The Sarbanes – Oxley Act of 2002 *
     
     
   
32.1
 
CEO and CFO certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

_____________
*  Previously filed.

 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to this report on Form 10-Q to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
ADVANCED MEDICAL ISOTOPE CORPORATION
     
Date:   September 16 , 2011
By:
/s/   James C. Katzaroff
 
Name:
James C. Katzaroff 
 
Title:
Chairman and Chief Executive Officer



19