ISR IsoRay Inc

 

United States Securities And Exchange Commission
Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported):  February 10, 2016

 

ISORAY, INC. (Exact name of registrant as specified in its charter)
Minnesota (State or other jurisdiction of incorporation)	001-33407 (Commission File Number)	41-1458152 (IRS Employer Identification No.)

 

350 Hills Street, Suite 106, Richland, Washington 99354

(Address of principal executive offices) (Zip Code)

 

(509) 375-1202

(Registrant's telephone number)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨

Written communications pursuant to Rule 425 under the Securities Act

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

 

 

Item 2.02.

Results of Operations and Financial Condition

 

On February 10, 2016, IsoRay, Inc. (the "Company") issued a press release announcing its financial results for the quarter and six months ended December 31, 2015, the text of which is attached hereto as Exhibit 99.1.

 

The information in this Current Report on Form 8-K, including the exhibit, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

In addition to historic information, this report, including the exhibit, contains forward-looking statements regarding events, performance and financial trends. Various factors could affect future results and could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Some of those factors are identified in the Company’s periodic reports filed with the Securities and Exchange Commission, the most recent of which are the Company’s Annual Report on Form 10-K for the year ended June 30, 2015 and the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2015.

 

Item 9.01.

Financial Statements and Exhibits

 

(d)

Exhibits

 

Exhibit		Description
99.1		Press release issued by IsoRay, Inc., dated February 10, 2016.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: February 10, 2016

 

	IsoRay, Inc., a Minnesota corporation
	By:	/s/ Brien Ragle
		Brien Ragle, CFO

 

 

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

ISORAY REPORTS SECOND QUARTER FISCAL 2016 FINANCIAL RESULTS

 

12% Revenue Growth in The 2^nd Quarter 2016 Over 2^nd Quarter 2015

 

RICHLAND, Washington (February 10, 2016) - IsoRay, Inc. (NYSE MKT: ISR), a medical technology company and innovator in seed brachytherapy and medical radioisotope applications for the treatment of prostate, brain, lung, head and neck and gynecological cancers, today announced its financial results for the second quarter and six months of fiscal 2016, which ended December 31, 2015.

 

Revenue was $1.19 million for the second quarter of fiscal 2016, which ended December 31, 2015, a 12% increase compared to $1.07 million for the second quarter of fiscal 2015, which ended December 31, 2014. Operating expenses were $1.44 million compared to $0.98 million in the second quarter of last fiscal year. Operating loss was $1.41 million compared to $1.02 million loss in the comparable period of the last fiscal year. The increased operating loss for the quarter is attributed to an increase in legal costs of approximately $0.2 million and accrual of $0.3 million for CEO severance costs. The increased legal costs are a result of the Company’s defense of its pending class action lawsuit. By the end of the second quarter of fiscal 2016, the Company had incurred all but approximately $40k of its self-insurance retention to defend this lawsuit, and once these amounts have been paid, all future costs are expected to be paid out of the Company’s directors and officers insurance coverage. IsoRay had cash and cash equivalents and certificates of deposits of $17.76 million as of December 31, 2015 and no debt.

 

Revenue was $2.45 million for the six months ended December 31, 2015, a 16% increase compared to $2.11 million for the six months ended December 31, 2014. Operating expenses were $2.61 million compared to $2.09 million in the six months ended December 31, 2015 and 2014, respectively. Operating loss was $2.50 million compared to $2.18 million loss in the six months ended December 31, 2015 and 2014, respectively. The increased operating loss for the six month period ended December 31, 2015 is attributed to an increase in legal costs of approximately $ .2 million and $.3 million related to CEO severance costs. These increases in costs are considered non-recurring expenses.

 

In January 2016, the Company announced Thomas LaVoy, Chairman of the Board, will assume the position of IsoRay’s Chief Executive Officer. Mr. LaVoy will take office effective February 15, 2016. Mr. LaVoy stated, “I am pleased to have been appointed by the Board of Directors to lead IsoRay to the next level of growth. We have a strong balance sheet on which we will build. I have met with the management team, and beginning February 16, 2016 we will begin a complete, top to bottom, 90 day strategic review of the entire Company. During that period, the team will determine the best allocation of resources to coincide with our growth strategy. We intend to revise our sales, marketing and communications platforms while aligning all parts of our business. In addition, we will determine if we need to create and fill additional positions to ensure the most effective and efficient operation of IsoRay.”

 

Mr. LaVoy added, “The use of our Cesium-131 brachytherapy seeds continues to attract the interest of the medical community. Three peer reviewed studies that focused on brain surgery, one in Neurosurgery and two in the Journal of Neuro-Oncology, have been released since mid-December 2015. These studies, published in two of the leading scientific journals in this field, presented discussions on: the excellent response rates with minimal toxicity, dose homogeneity and minimizing the risk of radiation induced injury, and the cost effectiveness of Cesium-131 in intraoperative brachytherapy. We look forward to additional scientific papers and publications that apprise members of the medical community on the significance of brachytherapy using Cesium-131 seeds.”

 

Mr. LaVoy concluded, “The IsoRay team was pleased to staff an exhibition booth to raise the visibility of our Cesium-131 seeds during the 52nd Annual Meeting of The Society of Thoracic Surgeons (STS 52nd Annual Meeting and STS/AATS Tech-Con 2016), which was held in Phoenix, Arizona, January 23-27, 2016. Positive feedback was expressed by many conference attendees and management continues to follow-up on industry leads generated during the event. The Company will continue to build our presence at industry events and build out our relationships with members of the medical and scientific community. As so many continue to face the challenges of combatting cancer, the entire team at IsoRay is committed to work together to help patients and their caregivers achieve better outcomes.”

 

 

IsoRay, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited) 

 

		Three months ended December 31,								Six months ended December 31,
		2015				2014				2015				2014
Product sales		$	1,189,008			$	1,065,585			$	2,450,330			$	2,107,686
Cost of product sales			1,162,097				1,103,549				2,339,960				2,200,452
Gross profit / (loss)			26,911				(37,964	)			110,370				(92,766	)
Operating expenses:
Research and development			58,235				140,627				202,138				317,237
Sales and marketing			254,471				303,783				532,892				657,526
General and administrative			1,124,683				537,940				1,876,395				1,113,891
Total operating expenses			1,437,389				982,350				2,611,425				2,088,654
Operating loss			(1,410,478	)			(1,020,314	)			(2,501,055	)			(2,181,420	)
Non-operating income (expense):
Interest income			55,890				72,360				113,307				145,055
Change in fair value of warrant derivative liability			43,000				41,000				58,000				347,000
Financing and interest expense			-				-				(950	)			(3,451	)
Non-operating income / (expense), net			98,890				113,360				170,357				488,604
Net loss			(1,311,588	)			(906,954	)			(2,330,698	)			(1,692,816	)
Preferred stock dividends			(2,658	)			(2,658	)			(5,316	)			(5,316	)
Net loss applicable to common shareholders		$	(1,314,246	)		$	(909,612	)		$	(2,336,014	)		$	(1,698,132	)
Basic and diluted loss per share		$	(0.02	)		$	(0.02	)		$	(0.04	)		$	(0.03	)
Weighted average shares used in computing net loss per share:
Basic and diluted			55,013,553				54,883,445				55,013,227				54,875,749

 

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

 

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About IsoRay, Inc.
IsoRay, Inc., through its subsidiary, IsoRay Medical, Inc. is the exclusive producer of Cesium-131 internal radiation therapy, which is expanding brachytherapy options throughout the body. Learn more about this innovative Richland, Washington company and explore the many benefits and uses of Cesium-131 by visiting www.isoray.com.

 

Contact:

PCG Advisory Group:

Investors: Stephanie Prince

Managing Director

Phone: 646-762-4518

 

Media: Sean Leous

Managing Director

Phone: 646-863-8998

 

Safe Harbor Statement

Statements in this news release about IsoRay's future expectations, including: the advantages of our products and their delivery systems; future demand for IsoRay's products; whether IsoRay will be able to continue to expand its base beyond prostate cancer; whether sales and use of our products will continue at historic levels or increase; whether awareness of our products in the medical community will continue or increase; whether our sales, marketing and communications efforts will be successful; whether additional studies will be published or presented with favorable outcomes from treatment with our products; whether the Company’s educational efforts will continue or be successful; whether the planned strategic review of the Company will be completed as planned or will result in any favorable changes; whether the increases in legal costs and CEO severance costs will continue to be non-recurring expenses; whether future costs of the pending class action lawsuit will be covered by insurance; and all other statements in this release, other than historical facts, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). This statement is included for the express purpose of availing IsoRay, Inc. of the protections of the safe harbor provisions of the PSLRA. It is important to note that actual results and ultimate corporate actions could differ materially from those in such forward-looking statements based on such factors as physician acceptance, training and use of IsoRay’s products, changing levels of demand for IsoRay’s current and proposed future products, IsoRay’s ability to reduce or maintain expenses while increasing sales, patient results achieved using our products in both the short and long term, success of future research and development activities, patient results achieved when our products are used for the treatment of cancers and malignant diseases beyond prostate cancer, IsoRay’s ability to successfully manufacture, market and sell its products, IsoRay’s ability to manufacture its products in sufficient quantities to meet demand within required delivery time periods while meeting its quality control standards, the success of our sales and marketing efforts, IsoRay’s ability to enforce its intellectual property rights, changes in reimbursement rates, changes in laws and regulations applicable to our products, whether additional studies and protocols are released and support the conclusions of past studies and protocols, whether ongoing patient results with our products are favorable and in line with the conclusions of clinical studies and initial patient results, whether we, our distributors and our customers will successfully obtain and maintain all required regulatory approvals and licenses to market, sell and use our products in their various forms, continued compliance with ISO standards as audited by BSI, and other risks detailed from time to time in IsoRay’s reports filed with the SEC. Unless required to do so by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.