isr20180930_10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

	☑	QUARTERLY Report PURSUANT TO Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended September 30, 2022

	☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from __________ to ____________

Commission File No. 001-33407

ISORAY, INC.

(Exact name of registrant as specified in its charter)

Delaware	41-1458152
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

350 Hills St., Suite 106, Richland, Washington	99354
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (509) 375-1202

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	ISR	NYSE American

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

Number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date:

Class	Outstanding as of November 10, 2022
Common stock, $0.001 par value	142,112,766

PART I	FINANCIAL INFORMATION

Item 1	Financial Statements	1

	Consolidated Balance Sheets (Unaudited)	1

	Consolidated Statements of Operations (Unaudited)	2

	Consolidated Statements of Cash Flows (Unaudited)	3

	Consolidated Statements of Changes in Stockholders' Equity (Unaudited)	4

	Notes to the Consolidated Financial Statements (Unaudited)	5

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4	Controls and Procedures	21

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	22

Item 1A	Risk Factors	22

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 3	Defaults Upon Senior Securities	23

Item 4	Mine Safety Disclosures	23

Item 5	Other Information	23

Item 6	Exhibits	24

Signatures		25

	September 30,			June 30,
	2022			2022
ASSETS
Current assets:
Cash and cash equivalents	$	18,989		$	55,890
Short-term investments		35,123			-
Accounts receivable, net		1,213			1,608
Inventory		1,553			1,396
Prepaid expenses and other current assets		662			435

Total current assets		57,540			59,329

Property and equipment, net		1,999			1,976
Right of use asset, net (Note 9)		445			512
Restricted cash		182			182
Inventory, non-current		2,271			2,333
Other assets, net		101			107

Total assets	$	62,538		$	64,439

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	2,495		$	966
Lease liability (Note 9)		272			268
Accrued protocol expense		201			150
Accrued radioactive waste disposal		125			120
Accrued payroll and related taxes		637			509
Accrued vacation		271			253

Total current liabilities		4,001			2,266
Non-current liabilities:
Lease liability, non-current (Note 9)		186			256
Asset retirement obligation		649			640

Total liabilities		4,836			3,162
Commitments and contingencies (Note 8)

Stockholders' equity:
Preferred stock, $.001 par value; 7,000,000 shares authorized: Series B: 5,000,000 shares allocated; no shares issued and outstanding		-			-
Common stock, $.001 par value; 200,000,000 shares authorized; 142,112,766 and 142,040,266 shares issued and outstanding		142			142
Additional paid-in capital		160,225			159,732
Accumulated deficit		(102,665	)		(98,597	)

Total stockholders' equity		57,702			61,277

Total liabilities and stockholders' equity	$	62,538		$	64,439

	Three months ended
	September 30,
	2022			2021

Sales, net	$	1,717		$	2,564
Cost of sales		1,303			1,535
Gross profit		414			1,029

Operating expenses:
Research and development		708			702
Sales and marketing		800			761
General and administrative		3,114			1,840
Total operating expenses		4,622			3,303

Operating loss		(4,208	)		(2,274	)

Non-operating income:
Interest income		140			31
Non-operating income		140			31

Net loss	$	(4,068	)	$	(2,243	)

Basic and diluted loss per share	$	(0.03	)	$	(0.02	)

Weighted average shares used in computing net loss per share:
Basic and diluted		142,072			141,915

	Three months ended September 30,
	2022			2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,068	)	$	(2,243	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation expense		68			59
Amortization of other assets		6			10
Accretion of asset retirement obligation		8			8
Accrued interest on short-term investments		(47	)		-
Share-based compensation		465			596
Changes in operating assets and liabilities:
Accounts receivable, net		395			111
Inventory		(95	)		(796	)
Prepaid expenses and other current assets		(227	)		175
Accounts payable and accrued expenses		1,530			40
Accrued protocol expense		52			22
Accrued radioactive waste disposal		5			2
Accrued payroll and related taxes		127			(62	)
Accrued vacation		18			(6	)

Net cash used by operating activities		(1,763	)		(2,084	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(90	)		(54	)
Purchases of short-term investments		(35,076	)		-

Net cash used by investing activities		(35,166	)		(54	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock, pursuant to exercise of options		28			-

Net cash provided by financing activities		28			-

Net (decrease) in cash, cash equivalents, and restricted cash		(36,901	)		(2,138	)
Cash, cash equivalents, and restricted cash beginning of period		56,072			64,010
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH END OF PERIOD	$	19,171		$	61,872

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets:
Cash and cash equivalents	$	18,989		$	61,690
Restricted cash		182			182
Total cash, cash equivalents, and restricted cash shown on the consolidated statements of cash flows	$	19,171		$	61,872

	Common Stock
	Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total

Balances at June 30, 2021		141,915,266	$	142	$	158,589	$	(91,325	)	$	67,406

Share-based compensation						596					596
Net loss								(2,243	)		(2,243	)

Balances at September 30, 2021		141,915,266	$	142	$	159,185	$	(93,568	)	$	65,759

	September 30,
	2022		2021
Common stock warrants		2,646		2,646
Common stock options		10,806		7,326
Total potential dilutive securities		13,452		9,972

	September 30,		June 30,
	2022		2022
Raw materials	$	912	$	911
Work in process		614		462
Finished goods		27		23
Total inventory, current	$	1,553	$	1,396

	September 30, 2022				June 30, 2022
	Carrying Value Total		Fair Value Total		Carrying Value Total		Fair Value Total
U.S. Treasury Bills	$	35,123	$	35,123	$	-	$	-

	For the Three Months Ended September 30,
	2022			2021
Weighted average fair value		$0.26			$0.58
Options issued		4,235,000			2,951,600
Exercise price	$0.33	to	$0.36	$0.69	to	$0.79
Expected term (in years)		5			5
Risk-free rate	2.97%	to	3.00%	0.73%	to	0.22%
Volatility	100%	to	101%		99%

	Three Months ended September 30,
	2022		2021
Cost of sales	$	8	$	44
Research and development expenses		106		130
Sales and marketing expenses		36		49
General and administrative expenses		315		373
Total share-based compensation	$	465	$	596

	September 30,			June 30,
	2022			2022
Land	$	366		$	366
Equipment		4,552			4,438
Leasehold improvements		4,143			4,143
Other¹		499			525
Property and equipment		9,560			9,472
Less accumulated depreciation		(7,561	)		(7,496	)
Property and equipment, net	$	1,999		$	1,976

					Weighted
			Weighted		Average
	Number of		Exercise		Contractual		Intrinsic
As of September 30, 2022	Options		Price		Term (Years)		Value
Outstanding		10,806	$	0.56		8.18	$	-
Vested and expected to vest		10,806	$	0.56		8.18	$	-
Vested and exercisable		5,953	$	0.62		7.17	$	-

Year Ending June 30,
2023 (remaining nine months)		219
2024		264
Total		483
Less: imputed interest		(25	)
Total lease liability		458
Less current portion		(272	)
Non-current lease liability	$	186

	Three Months Ended September 30,
Facilities and Customers	2022 % of total revenue			2021 % of total revenue
GT Medical Technologies		22.6	%		15.0	%
El Camino, Los Gatos, & other facilities (1)		16.3	%		28.5	%

	Three months ended September 30,
	2022						2021						2022 - 2021
	Amount			% (a)			Amount			% (a)			% Change
Sales, net	$	1,717			100		$	2,564			100			(33	)
Cost of sales		1,303			76			1,535			60			(15	)
Gross profit		414			24			1,029			40			(60	)

Operating expenses:
Research and development expenses		708			41			702			27			1
Sales and marketing expenses		800			47			761			30			5
General and administrative expenses		3,114			181			1,840			72			69

Total operating expenses		4,622			269			3,303			129			40
Operating loss	$	(4,208	)		(245	)	$	(2,274	)		(89	)		85

	Three months
	ended September 30,
	2022			2021
Net cash (used) by operating activities	$	(1,763	)	$	(2,084	)
Net cash (used) by investing activities		(35,166	)		(54	)
Net cash provided by financing activities		28			-
Net increase (decrease) in cash and cash equivalents	$	(36,901	)	$	(2,138	)

		As of
		September 30, 2022		June 30, 2022
Working capital	$	53,539	$	57,063
Current ratio		14.38		26.18

Exhibits:
3(i)		Certificate of Incorporation, incorporated by reference to Exhibit A of the Form Def 14A filed on November 9, 2018.

3(ii)		Bylaws, incorporated by reference to Exhibit C of the Form Def 14A filed on November 9, 2018.


2.1		Agreement and Plan of Merger, dated September 27, 2022, by and between Isoray, Inc., Isoray Acquisition Corp., Viewpoint Molecular Targeting, Inc., and Cameron Gray, incorporated by reference to Exhibit 2.1 of the Form 8-K filed on September 28, 2022.

2.2		First Amendment to Agreement and Plan of Merger, dated October 21, 2022, between Isoray, Inc., Isoray Acquisition Corp., Viewpoint Molecular Targeting, Inc., and Cameron Gray, incorporated by reference to Exhibit 2.1 of the Form 8-K filed on October 24, 2022.

31.1*		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2*		Rule 13a-14(a)/15d-14(a) Certification of Co-Principal Financial Officer

31.3*		Rule 13a-14(a)/15d-14(a) Certification of Co-Principal Financial Officer

32.1**		Section 1350 Certifications

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Dated: November 14, 2022
		ISORAY, INC., a Delaware corporation
		/s/ Lori A. Woods
		Lori A. Woods
		Chief Executive Officer (Principal Executive Officer)

		/s/ Jonathan Hunt
		Jonathan Hunt
		Chief Financial Officer (Co-Principal Financial Officer)

		/s/ Mark J. Austin
		Mark J. Austin
		Vice President of Finance and Corporate Controller (Co-Principal Financial Officer, Principal Accounting Officer, Corporate Secretary)

SEC Form 10-Q filed by IsoRay Inc.