ASP Isotopes(ASPI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited H1 2025 financials show increased assets and liabilities, a widened net loss, and revenue growth Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $67,679 | $61,890 | | Note receivable | $30,364 | $0 | | Total current assets | $101,589 | $65,744 | | Property and equipment, net | $27,600 | $22,354 | | Total assets | $135,914 | $94,348 | | Liabilities & Equity | | | | Total current liabilities | $6,904 | $7,058 | | Convertible notes payable, at fair value | $98,148 | $33,433 | | Total liabilities | $107,603 | $43,182 | | Total stockholders' equity | $28,311 | $51,166 | | Total liabilities and stockholders' equity | $135,914 | $94,348 | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations Highlights (in thousands) | Income Statement Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $1,198 | $1,022 | $2,300 | $1,863 | | Gross profit | $572 | $421 | $899 | $700 | | Total operating expenses | $12,541 | $7,878 | $20,820 | $13,972 | | Loss from operations | ($11,969) | ($7,457) | ($19,921) | ($13,272) | | Change in fair value of convertible notes payable | ($63,758) | ($1,575) | ($64,715) | ($2,529) | | Net loss attributable to ASP Isotopes Inc. shareholders | ($75,063) | ($11,713) | ($83,509) | ($18,661) | | Net loss per share, basic and diluted | ($1.03) | ($0.24) | ($1.17) | ($0.40) | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($11,071) | ($8,095) | | Net cash used in investing activities | ($34,108) | ($3,868) | | Net cash provided by financing activities | $50,781 | $32,415 | | Net change in cash and cash equivalents | $5,602 | $20,452 | | Cash and cash equivalents - end of period | $67,679 | $28,262 | - Investing activities for the six months ended June 30, 2025, included a $30 million cash advance for a note receivable, related to the Renergen transaction[27] - Financing activities for the six months ended June 30, 2025, were primarily driven by $50 million in proceeds from the issuance of common stock and $4.9 million from the exercise of warrants[27] Notes to Unaudited Condensed Consolidated Financial Statements - The company is a development-stage advanced materials company focused on enriching isotopes like Carbon-14, Silicon-28, Ytterbium-176, and Uranium-235 using its proprietary ASP and QE technologies[31][34] - As of June 30, 2025, the company had $67.7 million in cash and cash equivalents, with management expecting these funds to be sufficient to fund operations and capital requirements for more than 12 months[35] - The company has two operating segments as of 2024: 'nuclear fuels' (focused on HALEU and Lithium-6) and 'specialist isotopes and related services' (including C-14, Si-28, and PET Labs operations)[98][99] - The fair value of convertible notes payable increased to $98.1 million as of June 30, 2025, resulting in a non-cash expense of $64.7 million for the change in fair value during the first six months of 2025[50][116] - The company entered into a loan agreement to provide Renergen with $30 million to fund its operations, which was fully paid by June 2025, in connection with a potential acquisition[125] - The company is facing a putative securities class action lawsuit filed in December 2024, alleging misleading statements regarding its business, and intends to defend itself vigorously[127] - In May 2025, the company entered into a loan agreement with TerraPower for up to $22 million to partially fund a new uranium enrichment facility, along with two HALEU supply agreements[148][149] - Subsequent to the quarter end, in July 2025, the company raised approximately $56.4 million in net proceeds from a registered direct offering of 7.5 million shares of common stock at $8.00 per share[192] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses isotope development, strategic initiatives, increased revenue, a widened net loss, and strengthened liquidity Overview - The company is a development-stage advanced materials company focusing on the production and commercialization of enriched isotopes like Carbon-14, Silicon-28, and Ytterbium-176, with enrichment facilities commencing commercial production in South Africa[200][201] - A key strategic initiative is the enrichment of Uranium-235 (HALEU) for small modular reactors, supported by an agreement with TerraPower for funding and offtake[203] - The company plans to spin out its nuclear fuels subsidiary, Quantum Leap Energy (QLE), as a separate public company to allow for independent management and financing, distinct from its medical and specialist isotope business[206] - The company entered into a Firm Intention Agreement to acquire Renergen Limited in an all-stock transaction, expected to result in Renergen shareholders owning approximately 16% of the combined company[222][225] Results of Operations Comparison of Results for the Three Months Ended June 30 (in thousands) | Metric (in thousands) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $1,198 | $1,022 | $176 | | Gross Profit | $572 | $421 | $151 | | Research and Development | $880 | $473 | $407 | | Selling, General and Administrative | $11,661 | $7,405 | $4,256 | | Loss before income tax expense | ($75,062) | ($8,868) | ($66,194) | Comparison of Results for the Six Months Ended June 30 (in thousands) | Metric (in thousands) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2,300 | $1,863 | $437 | | Gross Profit | $899 | $700 | $199 | | Research and Development | $2,410 | $688 | $1,722 | | Selling, General and Administrative | $18,410 | $13,284 | $5,126 | | Loss before income tax expense | ($83,594) | ($15,880) | ($67,714) | - The increase in R&D expenses for Q2 2025 was primarily driven by a $456,069 increase in facility and depreciation expenses related to expanded development space and activities[254] - The increase in SG&A expenses for Q2 2025 was mainly due to a $3.1 million rise in personnel-related costs from increased headcount and a $1.3 million increase in professional fees for corporate development and system implementation[255] - The significant increase in net loss for both the three and six-month periods of 2025 was overwhelmingly driven by a non-cash expense related to the change in fair value of convertible notes payable, amounting to $63.8 million and $64.7 million, respectively[256][263] Liquidity and Capital Resources - The company has financed its operations primarily through the issuance of common stock and convertible notes payable[266] - As of June 30, 2025, the company had cash and cash equivalents of $67.7 million, with management believing these funds are sufficient to cover operating expenses and capital expenditures for at least the next 12 months[267][269] Summary of Cash Flows for the Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in Operating activities | ($11,071) | ($8,095) | | Net cash used in Investing activities | ($34,108) | ($3,868) | | Net cash provided by Financing activities | $50,781 | $32,415 | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide market risk disclosures - As a smaller reporting company, ASP Isotopes Inc. is not required to provide quantitative and qualitative disclosures about market risk[291] Item 4. Controls and Procedures Management concluded disclosure controls were ineffective as of June 30, 2025, due to a material weakness, and is working on remediation - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective due to a previously identified material weakness in internal control over financial reporting[293] - Remediation efforts include enhancing formal documentation of internal controls and hiring additional accounting, finance, and IT resources with public company experience[293] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is defending against a securities class action lawsuit filed in December 2024, alleging misleading statements - A securities class action lawsuit was filed against the company and certain officers on December 4, 2024, alleging misleading statements or omissions regarding the company's business during a specific period in late 2024[298] - The complaint seeks unspecified compensatory damages, and the company states its intention to vigorously defend against the action[298] Item 1A. Risk Factors New risks primarily relate to the proposed Renergen acquisition, covering valuation uncertainty, integration challenges, and transaction completion risks - The acquisition consideration for Renergen is based on a fixed exchange ratio, meaning Renergen shareholders cannot be certain of the final market value of the ASPI common stock they will receive[301] - There are significant risks that the anticipated benefits and cost savings from the Renergen transaction may not be realized due to difficulties in successfully combining the businesses[303] - Failure to complete the transaction could negatively impact both companies' stock prices and business results, and ASPI may not be able to recover the $30 million advanced to Renergen under the loan agreement[307][310] - The transaction is subject to numerous closing conditions, including obtaining consents from Renergen's lenders and various regulatory approvals, which may not be satisfied[316] - The combined company will be subject to all risks faced by both ASPI and Renergen, including Renergen's specific risks related to its debt, funding challenges, project execution, and commodity price volatility[332][333] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the period - There were no unregistered sales of equity securities during the period[339] Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the period - There were no defaults upon senior securities during the period[340] Item 4. Mine Safety Disclosures No mine safety disclosures were reported during the period - No mine safety disclosures were reported[341] Item 5. Other Information CEO and COO adopted Rule 10b5-1 trading plans to cover tax obligations from restricted stock award vesting - During the quarter, CEO Paul E. Mann and COO Robert Ainscow adopted Rule 10b5-1 trading plans for the potential sale of up to 711,459 and 292,504 shares, respectively[343] - The purpose of these trading plans is to cover estimated tax withholding obligations that arise from the vesting of their restricted stock awards (RSAs)[345] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including key agreements and officer certifications