What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-04-10 compared with 2023-03-31 · 492 added, 197 removed, 440 unchanged (61% of the section changed)

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Report of Independent Registered Public Accounting Firm (PCAOB ID 274 )

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements

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ASP Isotopes Inc

and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ASP Isotopes Inc.

and Subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the year ended December 31, 2022 and the period from September 13, 2021 (inception) through December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of their operations and their cash flows for the year ended December 31, 2022 and the period from September 13, 2021 (inception) through December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has incurred recurring operating losses and negative cash flows from operating activities, which raises substantial doubt about its ability to continue as a going concern.

Management’s plans in regards to these matters are also described in Note 1.

As discussed in Note 1 to the financial statements, the Company has incurred recurring operating losses and negative cash flows from operating activities that raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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Iselin, New Jersey

March 31, 2023

April 10, 2024

ASP Isotopes Inc.

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Current assets:

Accounts receivable

Receivable from noncontrolling interests

Prepaid expenses and other current assets

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Property and equipment, net

Operating lease right-of-use asset

Operating lease right-of-use assets, net

Other noncurrent assets

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Notes payable

Operating lease liability – current

Finance lease liabilities – current

Operating lease liabilities – current

Deferred revenue

Other current liabilities

Share liability

Total current liabilities

Operating lease liability – noncurrent

Deferred tax liabilities

Finance lease liabilities – noncurrent

Operating lease liabilities – noncurrent

Other liabilities

Total liabilities

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Preferred stock, $ 0.01 par value;

10,000,000 shares authorized, no shares issued and outstanding at December 31, 2022 and 2021

10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2023 and 2022

Common stock, $ 0.01 par value;

500,000,000 shares authorized, 35,907,127 and 20,652,500 shares issued and outstanding at December 31, 2022 and 2021, respectively

500,000,000 shares authorized, 48,923,276 and 35,907,127 shares issued and outstanding as of December 31, 2023 and 2022, respectively

Additional paid-in capital

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( 7,553,066 )

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Total ASP Isotopes stockholders’ equity

Noncontrolling interests

Total stockholders’ equity

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Year Ended December 31,

For The Period From

September 13,

2021 (Inception) Through December 31, 2021

Year Ended December 31,

Cost of goods sold

Operating expenses:

Research and development

General and administrative

Selling, general and administrative

Total operating expenses

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( 5,099,048 )

Other income:

Other income (expense):

Foreign exchange transaction gain

Change in fair value of share liability

Interest income

Total other income

Interest expense

Total other (expense) income

Loss before income tax expense

( 16,300,259 )

( 4,945,139 )

Net loss per share, basic and diluted

Income tax provision

Net loss before allocation to noncontrolling interests

( 16,294,126 )

( 4,945,139 )

Net loss attributable to noncontrolling interests

Net loss attributable to ASP Isotopes Inc.

$ ( 16,286,234 )

$ ( 4,945,139 )

Net loss per share attributable to ASP Isotopes Inc.

shareholders, basic and diluted

Weighted average shares of common stock outstanding, basic and diluted

Other comprehensive loss:

Comprehensive loss:

Net loss before allocation to noncontrolling interests

( 16,294,126 )

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Foreign currency translation

Total comprehensive loss

( 1,176,012 )

Total comprehensive loss before allocation to noncontrolling interests

( 17,470,138 )

( 4,708,832 )

Comprehensive loss attributable to noncontrolling interests

Comprehensive loss attributable to ASP Isotopes Inc.

$ ( 17,497,393 )

$ ( 4,708,832 )

The accompanying notes are an integral part of these consolidated financial statements.

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Consolidated Statements of Changes in Stockholders’ Equity

Accumulated Other

Comprehensive

Stockholders’

Balance at September 13, 2021 (Inception)

Issuance of common stock to founders

Issuance of restricted common stock

Issuance of common stock, net of issuance costs totaling $342,200

Issuance of warrants to purchase common stock

Noncontrolling

Total Stockholders’

Balance as of December 31, 2021

$ ( 2,607,927 )

Issuance of common stock, net of issuance costs of $380,747

Issuance of common stock in connection with initial public offering, net of issuance costs of $1,209,496

Issuance of common stock upon exercise of warrants

Issuance of restricted shares

Stock-based compensation

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( 4,945,139 )

Balance at December 31, 2021

Balance as of December 31, 2022

( 7,553,066 )

Issuance of common stock, net of issuance costs of $563,473

Issuance of common stock in connection with initial public offering, net of issuance costs of $ 1,209,496

Issuance of common stock upon exercise of warrants

Issuance of common stock for non-cash issuance costs

Issuance of common stock to settle share liability

Settlement of liability with related parties

Settlement of liability with consultants

Cancellation of common stock received in exchange for issuance of convertible preferred stock in subsidiary

( 3,000,000 )

Issuance of restricted shares

Stock-based compensation

Noncontrolling interest in ASP Rentals

Acquisition of PET Labs

Foreign currency translation

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( 1,176,012 )

Balance at December 31, 2022

( 16,286,234 )

( 16,294,126 )

Balance as of December 31, 2023

$ ( 920,982 )

$ ( 23,839,300 )

The accompanying notes are an integral part of these consolidated financial statements.

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Consolidated Statements of Cash Flows

September 13,

2021 (Inception)

Cash flows from Operating activities

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Adjustments to reconcile net loss to cash used in operating activities:

Foreign exchange transaction gain from intercompany

Stock-based compensation

Issuance of common stock to founders

Issuance of warrant to purchase common stock

Issuance of common stock to consultant

Change in fair value of share liability

Change in right-of-use lease asset

Changes in operating assets and liabilities:

Change in right-of-use lease assets

Change in deferred tax liability

Changes in operating assets and liabilities, net of acquisition amounts:

Accounts receivable

Prepaid expenses and other current assets

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Accrued expenses

Lease liability

Operating lease liability

Tax liability current

Deferred revenue

Other current liabilities

Net cash used in operating activities

( 5,412,392 )

( 2,939,893 )

Cash flows from investing activities

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( 4,473,164 )

Cash paid for acquisition of business, net of cash acquired

Net cash used in investing activities

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Proceeds from issuance of notes payable

Repayment of notes payable

Payments of notes payable

Payment of bank loan

Payment of principal portion of finance leases

Net cash provided by financing activities

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Effect of exchange rate changes on cash

Cash – beginning of period

Cash – end of period

Cash – beginning of year

Cash – end of y ear

Supplemental disclosures of non-cash investing and financing activities:

Issuance of common stock in lieu of commissions

Settlement of liabilities with related party

Share liability for non-cash issuance costs

Seller financed portion of investment in PET Labs Pharmaceuticals

Purchase of property and equipment included in accounts payable

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ASP Isotopes Inc.

was incorporated in the state of Delaware on September 13, 2021 and has its principal operations in Boca Raton, Florida.

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 Holdings Limited (“ASP Guernsey”), has its principal operations in Guernsey.

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Enriched Energy, LLC, a wholly-owned subsidiary of the Company, was incorporated in January 2022.

ASP Isotopes Inc.

and its subsidiaries are collectively referred to as “the Company” throughout these consolidated statements.

The Company is a pre-commercial 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.

ASP Rentals Proprietary Limited (“ASP Rentals”) a variable interest entity (“VIE”) of ASP South Africa, has its principal 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 has an exclusive license to use proprietary technology, the Aerodynamic Separation Process (“ASP technology”), originally developed and licensed to the Company by Klydon Proprietary Ltd (“Klydon”), for the production, distribution, marketing and sale of all isotopes.

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The Company has experienced net losses and negative cash flows from operating activities since its inception.

The Company incurred net losses of $ 4,945,139 for the year ended December 31, 2022 and $ 2,607,927 for the period from September 13, 2021 (inception) through December 31, 2021.

The Company incurred net losses of $ 16,294,126 and $ 4,945,139 for the years ended December 31, 2023 and 2022, respectively.

The Company anticipates it will need to continue to raise capital through additional equity and/or debt financings and/or collaborative development agreements to fund its operations.

The Company currently expects that its cash of $ 2,389,140 as of December 31, 2022, along with gross proceeds of $5.0 million received in March 2023 through the issuance of 3,164,557 shares of the Company's common stock at a purchase price of $ 1.58 per share and warrants to purchase up to an aggregate of 3,164,557 shares of its common stock with an exercise price of $ 1.75 per share, will not be sufficient to fund its operating expenses and capital requirements for more than 12 months from the date the financial statements are issued.

The Company currently expects that its cash of $ 7,908,181 as of December 31, 2023, along with gross proceeds of $20,550,000 received in March 2024 through the issuance of convertible promissory notes and gross proceeds of approximately $5,500,000 received in April 2024 through the issuance of common stock from the exercise of warrants (see Note 16), will not be sufficient to fund its operating expenses and capital requirements for more than 12 months from the date the financial statements are issued.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Additional funding will be necessary to complete construction of the first enrichment facility and begin operations, and although the Company has plans to seek additional funding, these plans are not currently probable.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

There can be no assurance that the Company will achieve or sustain positive cash flows from operations or profitability.

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If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required to further scale back or discontinue the advancement of product candidates, further reduce headcount, reorganize, merge with another entity, or cease operations.

Coronavirus Pandemic

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

In order to mitigate the spread of COVID-19, governments have imposed unprecedented restrictions on business operations, travel and gatherings, resulting in a global economic downturn and other adverse economic and societal impacts.

The COVID-19 pandemic and its impacts continue to evolve.

We cannot predict the scope and severity of disruptions as a result of COVID-19 or their impacts on us, but business disruptions for us or any of the third parties with whom we engage, including the collaborators, contract organizations, third-party manufacturers, suppliers, regulators and other third parties with whom we conduct business could materially and negatively impact our ability to conduct our business in the manner and on the timelines presently planned.

The extent to which the COVID-19 pandemic may impact our business and financial performance will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope and duration of the pandemic, the extent and effectiveness of government restrictions and other actions, including relief measures, implemented to address the impact of the pandemic, and resulting economic impacts.

The actual and perceived impact of the COVID-19 pandemic is changing daily, and its ultimate effect on our business cannot be predicted.

As a result, there can be no assurance that we will not experience negative impacts associated with COVID-19, which could be significant.

The COVID-19 pandemic may negatively impact our business, financial condition and results of operations, causing interruptions or delays in the Company’s programs and services.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Basis of Presentation and Summary of Significant Accounting Policies

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The preparation of the Company’s 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 consolidated financial statements and accompanying notes.

The most significant estimates in the Company’s consolidated financial statements relate to the valuation of equity instruments and estimating our accrued research and development expenses.

The most significant estimates in the Company’s consolidated financial statements relate to stock based compensation and the accounting for the acquisition.

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 consolidated financial statements include the accounts of ASP Isotopes Inc.

and its subsidiaries.

The Company’s consolidated financial statements include the accounts of ASP Isotopes Inc., its subsidiaries and, beginning in 2023, the 80% owned Enlightened Isotopes, the 51% owned PET Labs Pharmaceuticals (see Note 11) and the 24% owned ASP Rentals (see Note 11).

All intercompany balances and transactions have been eliminated in consolidation.

For the year ended December 2023, there was no corporate activity for Enlightened Isotopes other than its formation and therefore there was no non-controlling interest to report on the consolidated balance sheet and no net loss attributable to non-controlling interest on the consolidated statement of operations and comprehensive loss to report.

Currency and Currency Translation

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and ASP Guernsey is the U.S.

The functional currency of the Company’s subsidiary ASP South Africa is the South African Rand.

The functional currency of the Company’s subsidiary ASP South Africa and PET Labs Pharmaceuticals 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 ASP South Africa are recorded in their South African Rand functional currency and translated into the U.S.

Assets and liabilities of ASP South Africa and PET Labs Pharmaceuticals are recorded in their South African Rand functional currency and translated into the U.S.

dollar reporting currency of the Company at the exchange rate on the balance sheet date.

Revenue, when recorded, and expenses of ASP South Africa are recorded in their South African Rand functional currency and translated into the U.S.

Revenue, when recorded, and expenses of ASP South Africa and PET Labs Pharmaceuticals are recorded in their South African Rand functional currency 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 to other comprehensive income (loss).

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Concentration of Credit Risk and other Risks

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The Company had no cash equivalents as of December 31, 2023 and 2022.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

As of December 31, 2023, the Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions, specialist isotopes and related services.

The financial information is regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources.

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Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

There was no share liability as of December 31, 2023.

The Company’s share liability (Note 12) measured at Level 3 fair value on a recurring basis was $ 140,455 as of December 31, 2022.

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The following table provides a reconciliation of the Company’s liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 1):

Balance, September 13, 2021

Addition on issuance of common stock

Balance, December 31, 2021

Addition on issuance of common stock

Balance as of December 31, 2021

Additional liability for issuance of common stock

Fair value adjustment

Balance, December 31, 2022

Balance as of December 31, 2022

Additional liability for issuance of common stock

Settlement of share liability with issuance of common stock

( 1,004,695 )

Fair value adjustment

Balance as of December 31, 2023

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 51% ownership on October 31, 2023 (Note 11).

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

The Company enters into transactions with radiopharmacy companies that are within the scope of ASC 606.

The terms of these transactions include payment for delivery of nuclear medical doses for PET scanning in South Africa.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

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.

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.

The Company’s 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 collectibility 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 collectibility issues.

In determining the amount of the allowance for credit losses, we consider historical collectibility 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.

At December 31, 2023 and 2022 there was no allowance for expected credit losses.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Property and Equipment

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Depreciation is recorded using the straight-line method.

Construction in progress (Note 3) is carried at cost and consists of specifically identifiable direct and indirect development and construction costs.

Construction in progress (see 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.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016 02, “Leases” (“ASC 842”), which establishes a right-of-use model (“ROU”) that requires a lessee to recognize an ROU asset and corresponding lease liability on the balance sheet for all leases with a term longer than 12 months.

Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement as well as the reduction of the right-of-use asset.

The new standard provides a number of optional practical expedients in transition.

The Company has elected to apply (i) the practical expedient, which allows us to not separate lease and non-lease components, for new leases and (ii) the short-term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new standard.

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.

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.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

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.

The Company accounts for leases 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.

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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.

Operating leases are recognized on the balance sheet as ROU lease assets, operating lease liabilities current and operating 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.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

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

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Fair value would be assessed using a discounted cash flows or other appropriate measures of fair value.

The Company did not recognize any impairment losses for the year ended December 31, 2022 and the period from September 13, 2021 (inception) through December 31, 2021.

The Company did not recognize any impairment losses for the years ended December 31, 2023 and 2022.

Research and Development Costs

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All research and development costs are expensed as incurred.

General and Administrative Costs

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.

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.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Stock-based Compensation

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To determine the fair value of the Company’s common stock underlying option grants, the board of directors considered, among other things, input from management and recent third-party financings consummated by the Company.

In connection with the preparation of the financial statements for the year ended December 31, 2022 and the period from September 13, 2021 (inception) through December 31, 2021, the Company performed a retrospective review of the fair value of its common stock related to the current events available.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

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.

The Company has generated net losses since inception and accordingly has not recorded a provision for income taxes.

Prior to the acquisition of 51% of PET Labs Pharmaceuticals, 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.

The Company follows the provisions of ASC 740-10, Uncertainty in Income Taxes, or ASC 740-10.

3 unchanged sentences

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, Florida, South Africa and Guernsey as its major tax jurisdictions.

The Company has identified the United States, South Africa and Guernsey as its major tax jurisdictions.

Refer to Note 15 for further details.

5 unchanged sentences

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.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

In connection with our acquisition of 51 % ownership of PET Labs Pharmaceuticals, we manufacture and sell nuclear medical doses for PET scanning in South Africa.

During the period October 31, 2023 through December 31, 2023, the Company recognized revenue of $ 443,026 .

The following table presents changes in the Company’s accounts receivable from the PET Labs Pharmaceuticals acquisition date of October 31, 2023 through December 31, 2023:

Balance as of October 31, 2023

Balance as of December 31, 2023

Accounts receivable

$ ( 676,687 )

Property and Equipment

Property and equipment consist of construction in progress totaling $ 8,200,595 and $ 2,988,210 at December 31, 2022 and December 31, 2021, respectively.

The Company is currently building out the plant and office space in South Africa.

All costs incurred are considered construction in progress because the work is not complete as of December 31, 2022 and 2021.

There was no depreciation expense for the year ended December 31, 2022 and the period from September 13, 2021 (inception) through December 31, 2021.

Property and equipment as of December 31, 2023 and 2022 consisted of the following:

Useful Lives (Years)

Construction in progress

Tools, machinery and equipment

Computer equipment

Office furniture

Leasehold improvements

Property and equipment, at cost

Less accumulated depreciation

Property and equipment, net

The Company is currently building out plants in Pretoria, South Africa and all costs incurred are considered construction in progress because the work is not complete as of December 31, 2023 and 2022.

There was no depreciation expense as it relates to the construction in progress for the year ended December 31, 2023 and 2022.

Depreciation expense for all other asset categories was $ 37,433 for the year ended December 31, 2023.

No depreciation expense was recorded for the year ended December 31, 2022.

Accrued Expenses

Accrued expenses consisted primarily of accrued professional fees and employee compensation costs at December 31, 2022.

Accrued expenses consisted of accrued employee compensation costs at December 31, 2021.

Accrued expenses as of December 31, 2023 and 2022 consisted of the following:

Accrued professional

Accrued salaries and other employee costs

Accrued other

Total accrued expenses

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Notes Payable

2 unchanged sentences

Subsequent to the issuance of the notes payable, one of the individuals became an officer of the Company.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

In March 2022, one of the promissory notes totaling $ 13,046 (10,000 GBP) was repaid in full.

1 unchanged sentence

As of December 31, 2023, the total promissory notes payable balance was $ 31,827 .

In conjunction with the acquisition of 51 % of PET Labs Pharmaceuticals, ASP assumed a liability to a bank.

Prior to December 31, 2023, the bank loan balance of $ 609,500 was paid off entirely.

In November 2023, the Company executed a promissory note payable with a finance company for $ 526,282 .

This note bears interest at an annual rate of 8.74 % and six monthly installment payments which began in December 2023.

The Company recorded interest expense of $ 2,249 for the year ended December 31, 2023.

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 $ 882,000 in September 2023, as an advance towards future revenue.

The Company has recorded $ 882,000 as deferred revenue on the balance sheet as of December 31, 2023.

The Company did not recognize any deferred revenue as of December 31, 2022 or January 1, 2022.

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.

The Company is obligated to purchase this equipment and recorded the other asset and other liability for the full cost of $ 1,653,000 on the consolidated balance sheet as of December 31, 2023.

Klydon Proprietary Limited

10 unchanged sentences

In connection therewith, also on November 30, 2022, ASP South Africa and Klydon entered into a Deed of Security Agreement whereby, if Klydon failed to complete its obligations under the Turnkey Contract by December 31, 2022, all of Klydon’s rights of any nature to and interests of any nature in the Pledged Assets would be transferred to ASP South Africa.

Klydon failed to complete its obligations under the Turnkey Contract by December 31, 2022, and the Company plans to perfect its interests in the assets as soon as practicable.

The Company does not believe that the amounts owed by Klydon are realizable, nor does the Company know the timing of any recovery payments.

Therefore, a loss recovery receivable was not recorded at December 31, 2022.

Two individuals who are officers and board members of Klydon received warrants to purchase common stock of the Company.

Klydon failed to complete its obligations under the Turnkey Contract by December 31, 2022, however, the Company did not perfect its interests in the assets until April 4, 2023.

The Company did not believe that the amounts owed by Klydon were realizable, nor did the Company know the timing of any recovery payments.

Therefore, a loss recovery receivable was not recorded at any time prior to April 4, 2023.

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 $ 626,223 .

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.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Contingencies

3 unchanged sentences

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 believe these claims have no merit.

The Company accounts for leases in accordance with ASC 842 (Note 2).

The Company is party to one operating lease in Pretoria, South Africa for office and laboratory space.

The lease commenced in October 2021 with the initial term set to expire in December 2030.

The Company recorded legal costs totaling $ 78,304 which was paid to Klydon’s attorneys to settle this claim.

As of December 31, 2023, Radfarma has relinquished all claims and ASP Isotopes owns the rights to the licenses originally held by Klydon and acquired by ASP Isotopes.

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 December 2030 .

The Company has applied the guidance in ASC 842 and has determined that it should be classified as an operating lease.

The Company’s incremental borrowing rate is approximately 7.5 % based on the remaining lease term of the applicable lease.

Consequently, a ROU lease asset of approximately $ 952,521 with a corresponding lease liability of approximately $ 952,521 based on the present value of the minimum rental payments of such lease was recorded at the inception of the lease.

In the consolidated balance sheet at December 31, 2022, the Company has a ROU asset balance of $ 853,889 and a current and non-current lease liability of $ 45,903 and $ 742,443 , respectively, relating to the ROU lease asset.

The balance of both the ROU lease asset and the lease liabilities primarily consists of future payments under the Company’s lease in South Africa.

The Company’s incremental borrowing rate for this lease is 7.5 % based on the remaining lease term of the applicable lease.

Consequently, a ROU lease asset of $ 952,521 with a corresponding lease liability of $ 952,521 based on the present value of the minimum rental payments of such lease was recorded at the inception of the lease.

In the consolidated balance sheet as of December 31, 2023, the Company has a ROU asset balance of $ 626,548 and a current and non-current lease liability of $ 53,504 and $ 637,348 , respectively, relating to this ROU lease asset.

In the consolidated balance sheet as of December 31, 2022, the Company has a ROU asset balance of $ 853,889 and a current and non-current lease liability of $ 45,903 and $ 742,443 , respectively.

A lease for additional production space in Pretoria, South Africa commenced in April 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 and expenses the monthly payments as incurred.

A lease for laboratory space in Pretoria, South Africa commenced in November 2023 with the initial term set to expire in October 2026 .

The Company has applied the guidance in ASC 842 and has determined that it should be classified as an operating lease.

The Company’s incremental borrowing rate for this lease is 13.16 % based on the remaining lease term of the applicable lease.

Consequently, a ROU lease asset of $ 70,607 with a corresponding lease liability of $ 70,607 based on the present value of the minimum rental payments of such lease was recorded at the inception of the lease.

In the consolidated balance sheet as of December 31, 2023, the Company has a ROU asset balance of $ 68,089 and a current and non-current lease liability of $ 19,608 and $ 48,805 , respectively, relating to this ROU lease asset.

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 March 2026 .

The Company has applied the guidance in ASC 842 and has determined that it should be classified as an operating lease effective on the date of ASP Isotopes acquisition of 51% of PET Labs Pharmaceuticals.

The Company’s incremental borrowing rate is approximately 12.875 % based on the expected remaining lease term of the applicable lease.

Consequently, a ROU lease asset of $ 592,304 which reflects an 84,858 unfavorable adjustment based on the fair value of the lease terms and a corresponding lease liability of $ 677,163 based on the present value of the minimum rental payments of such lease was recorded at the date of ASP Isotopes acquisition of 51% of PET Labs Pharmaceuticals.

In the consolidated balance sheet as of December 31, 2023, the Company has a ROU asset balance of $ 564,064 and a current and non-current lease liability of $ 263,452 and $ 380,494 , respectively, relating to this ROU lease asset.

Gerdus Kemp, an officer of PET Labs Pharmaceuticals and an employee of ASP Isotopes UK Ltd is the sole owner of the facility under this lease agreement.

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 two months ended December 31, 2023.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Quantitative information regarding the Company’s lease is as follows:

period from September 13,

2021 (inception)

through December 31,

Quantitative information regarding the Company’s operating lease liabilities is as follows:

Year Ended December 31, 2023

Year Ended December 31, 2022

Operating Lease Cost

Operating lease cost

Other Information

1 unchanged sentence

Operating lease liabilities arising from obtaining right-of-use assets

Remaining lease term (years)

Discount rate

Future lease payments under noncancelable leases are as follows at December 31, 2022:

Weighted average remaining lease term (years)

Weighted average discount rate

Future lease payments under noncancelable operating lease liabilities are as follows as of December 31, 2023:

Operating Leases

Future Lease Payments

4 unchanged sentences

Lease liability – noncurrent

The Company records the expense from short term leases as incurred.

For the year ending December 31, 2023, the Company recorded $ 121,312 in rent expense from its short term leases in Pretoria, South Africa.

The remaining lease payments due in 2024 are $ 37,263 .

The Company accounts for finance leases in accordance with ASC 842 (Note 2).

Subsequent to the acquisition of 51% of PET Labs Pharmaceuticals, the Company is party to nine finance leases in South Africa for certain fixed assets.

Quantitative information regarding the Company’s finance lease liabilities is as follows:

Year Ended December 31, 2023

Year Ended December 31, 2022

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

Future lease payments under noncancelable finance lease liabilities are as follows as of December 31, 2023:

Finance Leases

Future Lease Payments

Total lease payments

imputed interest

Total lease liabilities

Less current portion

Lease liability – noncurrent

ASP Isotopes Inc.

6 unchanged sentences

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”).

12 unchanged sentences

The $ 400,000 due to Klydon is in accounts payable as of December 31, 2022.

In July 2022, ASP South Africa acquired assets comprising a dormant Silicon-28 aerodynamic separation processing plant from Klydon for ZAR 6,000,000 (which at the then current exchange rate was approximately $ 354,000 ), which was recorded to property and equipment, will be payable to Klydon on the later of 180 days of the acquisition and the date on which the assets generate any revenues of any nature.

In July 2022, ASP South Africa acquired assets comprising a dormant Silicon-28 aerodynamic separation processing plant from Klydon for ZAR 6,000,000 (which at the then current exchange rate was approximately $ 354,000 ), which was recorded to property and equipment, would have been payable to Klydon on the later of 180 days of the acquisition and the date on which the assets generate any revenues of any nature.

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.

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 51 % of the common shares issued and outstanding for total purchase consideration of $ 2,000,000 in cash of which $ 500,000 was paid up front and the balance of $ 1,500,000 is expected to be paid in the second half of 2024.

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 $ 2,200,000 .

No consideration or value relating to this option was recognized as it was not considered probable at the time of acquisition and as of December 31, 2023.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

The Company incurred approximately $ 4,000 in transaction costs related to the PET Labs Acquisition, which is recorded in general and administrative expenses in Consolidated Statement of Operations and Comprehensive Loss in the year ended December 31, 2023.

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 49% ownership of PET Labs Pharmaceuticals.

The following table summarizes the preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed:

Consideration

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

( 1,248,699 )

Right of use liabilities

Total identifiable net assets

Noncontrolling interest

Goodwill arising from the acquisition as of October 31, 2023 of $ 3,205,227 was attributable mainly to certain existing doctor and service center relationships, which are not identifiable as a separate intangible asset, along with buyer specific synergies expected to arise from the acquisition.

The Company expects that no goodwill from this acquisition will be deductible for income tax purposes.

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 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

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information shows the results of the Company’s operations for the years ended December 31, 2023 and 2022 as if the acquisition had occurred on January 1, 2022.

The unaudited pro forma financial information is presented for information purposes only and is not necessarily indicative of the Company’s performance had the acquisition occurred as of that date.

The unaudited pro forma information is also not intended to be a projection of future results due to the integration of the acquired operations of PET Labs Pharmaceuticals.

The unaudited pro forma information reflects the effects of applying the Company’s accounting policies to the combined historical financial information of the Company and PET Labs Pharmaceuticals.

$ ( 15,783,485 )

$ ( 4,291,993 )

Net loss per common share

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

In December 2023, the Company entered into Shareholders Agreement (“ASP Rentals Shareholders Agreement”) with ASP Rentals, an equipment financing service provider in South Africa.

In conjunction with the ASP Rental Shareholders Agreement, the Company entered into an Asset Sale Agreement and an Asset Rental Agreement in order to facilitate the financing of energy equipment recently purchased by ASP South Africa.

ASP Rentals is considered a variable interest entity, and the Company is the primary beneficiary and therefore ASP Rentals has been consolidated in accordance with ASC 810.

Pursuant to the terms of the ASP Rentals Shareholders Agreement, as of December 31, 2023 ASP South Africa is obligated to acquire and ASP Rentals is obligated to issue 24% of the common shares of ASP Rentals to be issued and outstanding for total purchase consideration of ZAR 3,300,829 (which at the exchange rate as of December 31, 2023 was $180,387) .

As of December 31, 2023 these amounts are eliminated in consolidation.

As of December 31, 2023, ASP Rentals has a receivable and an obligation to issue 76 % of the common shares of ASP Rentals with non-affiliates for an aggregate of ZAR 13,203,317 (which at the exchange rate as of December 31, 2023 was $ 721,548 ).

As of December 31, 2023, the Company has recorded $ 721,548 as a receivable from noncontrolling interest in current assets and a non-controlling interest in equity.

Consideration for all common shares of ASP Rentals was received in January 2024.

In January 2024, a total of ZAR 14,351,431 (which at the exchange rate as of December 31, 2023 was $784,291) was transferred between ASP Rentals and ASP South Africa per the terms of the ASP Sale Agreement and Asset Rental Agreement, excluding VAT .

Therefore, no interest income nor interest expense was recognized for the year ended December 31, 2023.

Stockholders’ Equity

Preferred stock

The Company has 10,000,000 shares of preferred stock authorized, of which no shares were issued and outstanding at December 31, 2022 and December 31, 2021.

The Company has 500,000,000 shares of common stock authorized, of which 35,907,127 shares were issued and outstanding at December 31, 2022.

The Company has 10,000,000 shares of preferred stock authorized, of which no shares were issued and outstanding as of December 31, 2023 and December 31, 2022.

The Company has 500,000,000 shares of common stock authorized, of which 48,923,276 shares were issued and outstanding as of December 31, 2023.

Common stockholders are entitled to one vote for each share of outstanding common stock held at all meetings of stockholders and written actions in lieu of meetings.

1 unchanged sentence

No dividends have been declared or paid by the Company through December 31, 2023.

From September 2021 through early November 2021, the Company issued 15,100,000 shares of common stock at $0.25 per share.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

From November 2021 through December 2021, the Company issued 1,452,500 shares of common stock at $2.00 per share.

The Company incurred $ 226,000 in cash issuance costs and is required to issue 58,100 shares of common stock to the placement agent with an initial fair value of $ 116,200 , which is recorded as a share liability on the balance sheet.

During 2022, prior to the IPO, the Company issued 1,559,780 shares of common stock at $2.00 per share for gross proceeds of $ 3,119,560 .

The Company incurred $ 255,965 in cash issuance costs and is required to issue 62,391 shares of common stock to the placement agent with an initial fair value of $ 124,782 , which is recorded as a share liability on the consolidated balance sheet.

In October 2022, the Company amended its agreement with the placement agent for the shares issued from November 2021 through April 2022.

The Company incurred $ 255,965 in cash issuance costs and is required to issue 120,491 shares of common stock to the placement agent with an initial fair value of $ 240,982 .

In October 2022, the Company amended its agreement with the placement agent for the shares issued from November 2021 through the first nine months of 2022.

The shares of common stock issuable to the placement agent was reduced from 120,491 shares to 57,250 shares.

The fair value of the 57,250 shares issuable to the placement agent as of December 31, 2022 was $ 90,455 , resulting in a change in fair value of share liability of $ 150,527 for the year ended December 31, 2022.

The fair value of the 57,250 shares issuable to the placement agent as of December 31, 2022 was $ 90,455 .

The fair value of the 57,250 shares issuable to the placement agent just prior to settlement in March 2023 was $ 75,570 , resulting in a change in fair value of share liability of $ 14,885 for the three months ended March 31, 2023.

In March 2023, the Company settled this share liability by issuing 57,250 shares of common stock.

In November 2022, the Company was required to issue shares of common stock with a fair value totaling $50,000 to a consultant.

As of December 31, 2022, these shares had yet to be issued.

In November 2022, the Company completed its IPO, selling an aggregate of 1,250,000 shares of common stock at a price to the public of $ 4 .00 per share.

In November 2022, the Company was required to issue shares of common stock with a then fair value totaling $ 50,000 to a consultant.

The fair value of the 12,500 shares issued in August 2023 was $ 18,125 .

The resulting change in fair value income of the share liability was $ 31,875 for the year ended December 31, 2023.

In November 2022, the Company completed its IPO, selling an aggregate of 1,250,000 shares of common stock at a price to the public of $ 4.00 per share, not including 187,500 shares of common stock issuable pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock.

The Company received net proceeds from the IPO, after deducting underwriting discounts and commissions but before deducting offering costs, of approximately $ 3.8 million.

Founder Stock

In September 2021, the Company awarded 2,000,000 shares of common stock to its founders for no cash consideration.

The Company determined that the fair value of these shares was $ 0.25 per share and recorded stock compensation expense of $ 500,000 in 2021.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

In February 2023, the Company was required to issue an aggregate of 100,000 shares of common stock to two consultants.

The Company determined that the fair value of these two awards was $ 1.55 and $ 1.90 per share, respectively, for a total value of $ 172,500 .

The fair value of these shares issued in August 2023 to the two consultants was $ 145,000 .

The resulting change in fair value income of the share liability was $ 27,500 for the year ended December 31, 2023.

In March 2023, the Company was required to issue an aggregate of 100,000 shares of restricted common stock pursuant to a settlement agreement that vests immediately.

The Company determined that the fair value of this award was $ 0.94 per share for a total value of $ 93,700 .

The fair value of these shares issued in August 2023 was $ 145,000 .

The resulting change in fair value of the share liability expense was $ 51,300 for the year ended December 31, 2023, respectively.

In March 2023, an officer and scientific advisor of the Company exchanged an aggregate of 3,000,000 shares of ASP Isotopes Inc.

common stock for 2,500 shares of Enlighted Isotopes convertible preferred stock.

In conjunction with the exchange, Enlighted Isotopes transferred the common shares of ASP Isotopes Inc.

to ASP Isotopes and then ASP Isotopes immediately cancelled all 3,000,000 shares.

The Company will report the non-controlling interest of future net income or loss on the consolidated balance sheet and statement of operations and comprehensive loss.

As of December 31, 2023, negligible activity has been recorded for Enlighted Isotopes.

In March 2023, the Company’s non-employee board members agreed to receive the 2022 cash director fees totaling $ 45,000 in shares of common stock.

As of December 31, 2023, these shares had yet to be issued.

In March 2023, the Company issued 3,164,557 shares of the Company’s common stock at a purchase price of $ 1.58 per share and warrants to purchase up to an aggregate of 3,164,557 shares of its common stock with an exercise price of $ 1.75 per share for gross proceeds of $ 5,000,000 .

The Company incurred $ 506,390 in cash issuance costs and issued warrants to purchase up to an aggregate of 221,519 shares of common stock with an exercise price of $ 1.975 per share to the placement agent with an initial fair value of $ 179,116 .

In May 2023, the Company was required to issue an aggregate of 100,000 shares of restricted common stock pursuant to a consultant.

The Company determined that the fair value of this award was $ 0.65 per share for a total value of $ 65,100 .

The fair value of these shares issued in November 2023 was $ 152,000 .

The resulting change in fair value of the share liability expense was $ 86,900 for the year ended December 31, 2023.

In May 2023, the Company was required to issue an aggregate of 50,000 shares of restricted common stock pursuant to a consultant.

The Company determined that the fair value of this award was $ 0.62 per share for a total value of $ 30,900 .

The fair value of these shares issued in November 2023 was $ 76,000 .

The resulting change in fair value of the share liability expense was $ 45,100 for the year ended December 31, 2023.

In July 2023, the Company was required to issue an aggregate of 150,000 shares to consultants.

The Company determined that the fair value of these awards was $ 1.21 for a total value of $ 181,500 .

The fair value of these shares issued in August 2023 was $248,000 .

The resulting change in fair value of the share liability expense was $ 66,500 for the year ended December 31, 2023.

In August 2023, the Company was required to issue an aggregate of 100,000 shares of restricted common stock pursuant to consultants.

The Company determined that the fair value of this award was $ 1.26 per share for a total value of $ 126,000 .

The fair value of the shares issued in August was $ 145,000 .

This resulted in a change in fair value expense of the share liability of $ 19,000 for the year ended December 31, 2023.

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 9,952,510 shares of the Company’s common stock, for aggregate cash consideration of $ 9,129,495 , as follows:

(i) 8,459,093 shares to investors at a purchase price per share of $0.9105, (ii) 1,190,239 shares to investors at a purchase price per share of $0.9548, and (iii) 303,178 shares to directors at a purchase price per share of $0.96 .

The Company incurred issuance costs equivalent to 5% of the gross proceeds from new investors which was settled in stock through the issuance of 472,582 shares to the placement agent and additional cash issuance costs totaling $ 57,083 .

Activity of the share liabilities for the year ended December 31, 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 December 31, 2023

Share liabilities originated in 2022

Share liabilities originated in 2023

( 1,004,695 )

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Common Stock Warrants

2 unchanged sentences

The Company determined that the fair value of common stock was $ 0.25 per share.

The fair value of these warrants was determined to be $ 1,735,841 and was recorded as general and administrative expense.

The fair values of the warrants were estimated based on the Black-Scholes model, using the following assumptions:

The fair value of these warrants was initially determined to be $ 1,735,841 and was recorded as general and administrative expense.

In January 2022, these warrants were net share settled into 7,194,847 shares of common stock per the terms of the underlying warrant agreements.

The fair values of the warrants to purchase 3,386,076 shares of common stock issued in the year ended December 31, 2023 were estimated based on the Black-Scholes model, using the following assumptions:

Expected volatility

2 unchanged sentences

Expected dividend yield

In January 2022, warrants to purchase 7,230,822 shares of common stock were net share settled into 7,194,847 shares of common stock per the terms of the underlying warrant agreements.

No warrants were exercised in 2021.

Stock Compensation Plan

6 unchanged sentences

No further options were available to be issued under the 2021 Plan.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

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.

6 unchanged sentences

The following table sets forth the activity for the Company’s stock options during the periods presented:

Number of Options

Weighted- Average

Exercise Price

Weighted Average

Term (in Years)

Outstanding at September 13, 2021 (inception)

Outstanding at December 31, 2021

Outstanding at December 31, 2022

Exercisable at December 31, 2022

Vested or expected to vest at December 31, 2022

Aggregate Intrinsic

Outstanding as of December 31, 2021

Outstanding as of December 31, 2022

Outstanding as of December 31, 2023

Exercisable as of December 31, 2023

Vested or expected to vest as of December 31, 2023

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

The fair values of the options granted were estimated based on the Black-Scholes model, using the following assumptions:

Year Ended December 31, 2022

Expected volatility

6 unchanged sentences

The weighted average grant date fair value of options granted during 2022 was $ 1.18 .

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

During 2021, the Company granted 400,000 options with an exercise price of $0.25 per share that vest monthly over three years.

The weighted-average grant date fair value of options granted during 2021 was $ 0.15 .

The Company recorded stock compensation from options of $ 923,581 and $ 4,894 for the year ended December 31, 2022 and the period September 13, 2021 (inception) through December 31, 2021, respectively.

No options were granted in the year ended December 31, 2023.

The Company recorded stock compensation from options of $ 973,844 and $ 923,581 for the year ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, there was $ 1,268,758 of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan, which is expected to be recognized over a weighted average period of approximately 1.3 years.

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The Company determined that the fair value of this award was $ 0.25 per share for a total value of $ 375,000 .

Upon reaching the performance condition, which has not been met as of December 31, 2022, the Company will recognize stock compensation expense over the remaining measurement period.

Upon the performance condition being considered probable, which has not been met as of December 31, 2023, the Company will recognize stock compensation expense over the remaining measurement period.

In October 2021, the Company issued 600,000 shares of restricted common stock to a consultant who is also a member the board of directors, that vest annually over three years.

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The Company determined that the fair value of these awards was $ 1.58 per share for a total value of $ 2,449,000 .

The Company recorded stock compensation from stock awards totaling $ 1,075,732 and $ 8,333 for the year ended December 31, 2022 and the period September 13, 2021 (inception) through December 31, 2021.

At December 31, 2022, there is $ 10,804,935 of unrecognized compensation cost related to the non-vested portion of stock awards that is expected to be recognized over the next 2.6 years.

In March 2023, the Company issued an aggregate of 1,256,750 shares of restricted common stock to its Chief Executive Officer and Chairman and a director that vests quarterly over one year from the date of the grant.

The Company determined that the fair value of these awards was $ 1.80 per share for a total value of $ 2,262,150 .

In August 2023, the Company issued 300,000 and 200,000 shares of restricted common stock pursuant to one employee and one director for employment services, respectively.

The Company determined that the fair value of these awards was $ 0.55 per share and $ 1.22 per share, respectively for a total combined value of $ 409,000 .

In October 2023, the Company was obligated to issue $ 100,000 to a board member for his services.

These shares were not awarded as of December 31, 2023, however, stock based compensation was recorded totaling $ 100,000 .

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

The following table summarizes vesting of restricted common stock:

The Company recorded stock compensation from stock awards totaling $ 7,669,955 and $ 1,075,732 for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, there is $ 5,806,129 of unrecognized compensation cost related to the non-vested portion of stock awards that is expected to be recognized over the next 1.5 years.

The following table summarizes awards and vesting of restricted common stock:

Number of Shares

Weighted Average Grant

Date Fair Value

Unvested at September 13, 2021 (inception)

Unvested at December 31, 2021

Unvested at December 31 2022

Weighted Average Grant Date

Unvested as of December 31, 2021

Unvested as of December 31, 2022

( 4,267,564 )

Unvested as of December 31 2023

Stock-based Compensation Expense

Stock-based compensation expense for all stock awards recognized in the accompanying consolidated statements of operations is as follows:

For The Period From September 13, 2021 (Inception) Through December 31,

General and administrative

Year Ended December 31,

Selling, general and administrative

Research and development

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Because the Company has reported net losses since inception, these potential shares of Common Stock have been anti-dilutive and basic and diluted loss per share were the same for all periods presented.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

The following table sets forth the computation of basic and diluted net loss per share:

Year Ended December 31, 2023

For The Period From September 13, 2021 (Inception) Through December 31,

Year Ended December 31,

Net loss attributable to ASP Isotopes shareholders

$ ( 16,286,234 )

$ ( 4,945,139 )

Weig hted average common stock outstanding, basic and diluted

Ne t loss per share, basic and diluted

Weighted average common stock outstanding, basic and diluted

Net loss per share, basic and diluted

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive:

For The Period From September 13, 2021 (Inception) Through December 31, 2021

Year Ended December 31,

Options to purchase common stock

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Year Ended December 31,

For the Period From September 13, 2021 (Inception) Through December 31, 2021

Year Ended December 31,

$ ( 12,892,377 )

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( 3,407,882 )

( 1,739,797 )

Total net loss before taxes

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$ ( 4,945,139 )

The effective tax rate of the Company’s provision for income taxes differs from the federal statutory rate for the year ended December 31, 2022 and the period September 13, 2021 (inception) through December 31, 2021 as follows:

December 31, 2022

For The Period From September 13, 2021 (Inception) Through December 31, 2021

The effective tax rate of the Company’s provision for income taxes differs from the federal statutory rate for the year ended December 31, 2023 and 2022 as follows:

Year Ended December 31,

Tax computed at federal statutory rate

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federal tax rate

Non-deductible stock compensation expense

Permanent differences

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Income tax expense

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

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Share-based compensation

Accruals and reserves

Right-of-use lease liability

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Deferred tax liabilities:

Shar e-based compensation

R ight-of-use lease asset

Property and equipment, net

Right-of-use lease asset

Total deferred tax liabilities

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valuation allowance

Net deferred taxes

The Company has no income tax expense due to operating losses incurred for the year ended December 31, 2022 and the period from September 13, 2021 (inception) through December 31, 2021.

The Company has provided a full valuation allowance on the net deferred tax asset because management has determined that it is more-likely-than-not that the Company will not earn income sufficient to realize the deferred tax assets during a future period.

The valuation allowance increased by $ 926,104 in 2022 due to the increase in the net deferred tax assets by the same amount;

primarily due to net operating loss carryforwards and the mandatory capitalization of qualified research and development expenses in 2022.

As of December 31, 2022, the Company has federal, state and South Africa NOLs available of approximately $ 1,657,883 , $ 1,657,883 and $ 459,680 , respectively, to offset future taxable income, if any, for federal and state income tax purposes.

( 2,159,799 )

Net deferred taxes (liabilities) assets

$ ( 110,578 )

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

The Company recorded income tax income totaling $ 6,133 from the activities of PET Labs Pharmaceuticals for the two months ended December 31, 2023.

The Company has no income tax expense due to operating losses incurred for the year ended December 31, 2022.

The valuation allowance increased by $ 1,182,177 and $ 926,104 in 2023 and 2022, respectively, due to the increase in the net deferred tax assets by the same amount;

primarily due to net operating loss carryforwards.

As of December 31, 2023, the Company has federal, state and South Africa NOLs available of $ 5,993,571 , $ 332,933 and $ 2,271,489 , respectively, to offset future taxable income, if any, for federal and state income tax purposes.

The state NOLs are carried forward indefinitely until used and never expire.

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The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company had no accrual for interest and penalties on the Company’s balance sheets and has not recognized interest and/or penalties in the statements of operations and comprehensive loss for the year ended December 31, 2022 and for the period from September 13, 2021 (inception) through December 31, 2021.

Uncertain tax positions are evaluated based upon the facts and circumstances that exist at each reporting period.

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As of December 31, 2023 and December 31, 2022, there were no uncertain tax positions.

ASP Isotopes Inc.

Notes to Consolidated Financial Statements (continued)

Ownership changes, as defined in the IRC, may limit the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income pursuant to IRC Section 382 or similar provisions.

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Subsequent Events

In March 2023, the Company received gross proceeds of $ 5.0 million through the issuance of 3,164,557 shares of its common stock at a purchase price of $ 1.58 per share and warrants to purchase up to an aggregate of 3,164,557 shares of its common stock with an exercise price of $ 1.75 per share.

The Company paid the placement agent (i) a total cash fee equal to 7.0 % of the aggregate gross proceeds of the offering;

(ii) a management fee of 1.0 % of the aggregate gross proceeds of the offering;

and (iii) reimbursement of certain expenses.

In addition, the Company issued to the Placement Agent (“PA”) warrants to purchase up to 221,519 shares of the Company’s common stock at an exercise price of $ 1.975 per share.

The PA Warrants are exercisable on or after September 17, 2023 and will expire on September 18, 2028.

The Company has evaluated subsequent events through March 31, 2023, the date on which the accompanying financial statements were issued, and no other events were noted.

On March 7, 2024, the Company’s wholly owned subsidiary Quantum Leap Energy received gross proceeds of $ 20,550,000 through the issuance of Convertible Promissory Notes with a stated interest rate of 6 % for the first year and 8 % thereafter.

The maturity date of the Convertible Promissory Notes is March 7, 2029 .

The Convertible Promissory Notes automatically convert into common shares upon Quantum Leap Energy’s closing of an IPO or other qualifying public transaction at 80 % of the share price taking into consideration a valuation cap.

On April 9, 2024, the Company received approximately $ 5,500,000 from the issuance of 3,164,557 shares of common stock upon the exercise of a warrant held by an institutional investor.

In conjunction with the exercise of the warrants, the same investor received a new warrant to purchase 1,225,000 shares of common stock at $ 3.90 per share.

This new warrant becomes exercisable 6 months after issuance and expires on the fifth anniversary of the initial exercise date .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data