What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-09-27 compared with 2020-09-25 · 191 added, 272 removed, 958 unchanged (33% of the section changed)

19 unchanged sentences

The directors serving the Company as of June 30, 2021 were as follows:

Michael McCormick, Chairman

Lori Woods, Chief Executive Officer

1 unchanged sentence

Alan Hoffmann

Michael McCormick, Chairman

Each member of the Board of Directors serves a one-year term and is subject to reelection at the Company’s Annual Meeting of Stockholders held each year.

3 unchanged sentences

There are also no arrangements, agreements or understandings between non-management stockholders that may directly or indirectly participate in or influence the management of the Company’s affairs.

Michael McCormick – Mr.

McCormick has been a Director of the Company since June 2015 and brings over 25 years of senior executive positions in global management, sales, and marketing to the Company.

He was appointed Chairman of the Board effective as of June 4, 2018.

He serves as a founder and partner of GO Intellectual Capital, which offers marketing services with a focus on the medical and aviation industries, as well as financial services.

Previous to his service with GO, Mr.

McCormick served as Executive Vice President of Global Sales and Marketing for Columbia Sportswear from 2006-2012, where his team successfully launched several new patented technologies, including Omni-Heat® Reflective and Omni-Freeze® Zero.

McCormick’s tenure, Columbia built an intellectual property portfolio with over 200 patents.

McCormick started his career with Nike, working in several senior management roles and ultimately becoming the Director of National Sales, U.S., prior to his departure in 1999.

He also served as Chief Marketing Officer of Golf Galaxy from 2003-2006 and Executive Vice President of Global Sales and Marketing of Callaway Golf from 2000-2003.

McCormick brings over 26 years of marketing experience in a diverse group of industries to his service on the Company’s Board.

Lori Woods – Ms.

48 unchanged sentences

Hoffmann brings to the Board his experience as a public accountant and understanding of oversight and review of financial statements prepared by the Chief Financial Officer.

Michael McCormick – Mr.

McCormick has been a Director of the Company since June 2015 and brings over 25 years of senior executive positions in global management, sales, and marketing to the Company.

He was appointed Chairman of the Board effective as of June 4, 2018.

He serves as a founder and partner of GO Intellectual Capital, which offers marketing services with a focus on the medical and aviation industries, as well as financial services.

Previous to his service with GO, Mr.

McCormick’s tenure, Columbia built an intellectual property portfolio with over 200 patents.

McCormick started his career with Nike, working in several senior management roles and ultimately becoming the Director of National Sales, U.S., prior to his departure in 1999.

He also served as Chief Marketing Officer of Golf Galaxy from 2003-2006 and Executive Vice President of Global Sales and Marketing of Callaway Golf from 2000-2003.

McCormick brings over 26 years of marketing experience in a diverse group of industries to his service on the Company’s Board.

Executive Officers

5 unchanged sentences

Mark Austin 2

Controller, Co-Principal Financial and Principal Accounting Officer, Corporate Secretary

Vice President of Finance and Corporate Controller, Co-Principal Financial and Principal Accounting Officer, Corporate Secretary

William Cavanagh III

Chief Research and Development Officer

Michael Krachon 3

Executive Vice President, Sales and Marketing

Jennifer Streeter

Chief Operating Officer, Vice President, Human Resources

Krista Cline 5

Director of Operations

Woods’ biographical information is incorporated by reference in the board membership section of Part III, Item 10.

Effective September 15, 2020, Mr.

Austin was appointed Corporate Secretary.

Effective June 23, 2020, Mr.

Krachon was appointed Executive Vice President of Sales and Marketing.

Effective June 23, 2020, Mrs.

Streeter was appointed Chief Operating Officer.

Cline also served as Corporate Secretary until September 15, 2020.

Effective August 16, 2021, Mr.

Austin was appointed Vice President of Finance and Corporate Controller.

Jonathan Hunt – Mr.

12 unchanged sentences

Austin was appointed Corporate Secretary.

On August 16, 2021, Mr.

Austin was appointed Vice President of Finance and Corporate Controller.

Prior to joining the Company, Mr.

22 unchanged sentences

in Biology from the University of Portland (Oregon) and attended two years of medical school before beginning his career in research management.

Michael Krachon – Mr.

Krachon brings more than 20 years’ experience of progressive growth in sales and marketing in the medical industry to the Company.

He joined Isoray in March 2016 as Vice President, Sales and Marketing and on June 23, 2020, was appointed Executive Vice President of Sales and Marketing.

Prior to joining Isoray, Mr.

Krachon was employed by C.R.

since 2001, and was a key member of the Bard Urological and Medical Division which developed brachytherapy devices and delivery systems for the U.S.

and international markets.

He was the leader of the brachytherapy commercial team, which grew to be the global brachytherapy market leader.

Krachon assisted in the business unit’s strategic planning, development of the international business segment and creating and delivering the international product launches which resulted in market leadership across Europe, Japan and Africa.

His responsibilities included:

the development of strategic brachytherapy sales and marketing programs;

the implementation of industry leading national and international training programs;

and supporting the product development process.

Krachon has been instrumental in successfully supporting the industry through congressional lobbying efforts to establish and maintain reimbursement codes for brachytherapy.

He served as Chairman of the Coalition for Advancement of Brachytherapy from 2009 to 2016 and has been recognized as a national speaker for brachytherapy by the industry.

Krachon received a B.S.E.

in biomedical engineering from Duke University and his M.B.A.

from the Goizueta Business School at Emory University.

Jennifer Streeter – Mrs.

10 unchanged sentences

Streeter received her Bachelor’s Degree in Management/Marketing and her Master’s Degree in Leadership Studies from Baker College, in Michigan.

Krista Cline – Ms.

Cline joined Isoray Medical in 2005 and has since held multiple senior management positions.

In January 2016, Ms.

Cline was appointed Director of Operations and in July 2018, Ms.

Cline was appointed Senior Director of Operations.

Cline has guided many of Isoray’s operational improvements and milestones including:

automation, 510(k) clearances and CE Marks, and FDA and ISO audits of Isoray’s products.

Her strong commitment to fostering innovation, leadership and her understanding of business strategies have propelled her into her current management role.

At Isoray, she is responsible for the overall management and execution of the manufacture and distribution of Isoray’s products.

Cline also assists in the coordination of multiple projects for new product development.

She holds a Bachelor of Science in Biochemistry from Washington State University.

There are no agreements or understandings for any officer or director to resign at the request of another person, and none of the officers or directors is acting on behalf of, or will act at the direction of, any other person.

4 unchanged sentences

The information in this section is based solely upon a review of Forms 3, Forms 4, and Forms 5 received by us.

We believe that Isoray’s executive officers, directors and 10% stockholders timely complied with their filing requirements during the year ended June 30, 2020.

We believe that Isoray’s executive officers, directors and 10% stockholders timely complied with their filing requirements during the year ended June 30, 2021 except as follows – Lori Woods (one Form 4 with two transactions), Michael McCormick (two Form 4s with three transactions), Alan Hoffmann (two Form 4s with three transactions), Philip Vitale (two Form 4s with three transactions), Jonathan Hunt (one Form 4 with two transactions), Mark Austin (one Form 4 with two transactions), Michael Krachon (one Form 4 with two transactions), and William Cavanagh (one Form 4 with two transactions).

Each of these Form 4s was filed late.

Code of Ethics

10 unchanged sentences

The Audit Committee Charter lists the purposes of the Audit Committee as overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company and providing assistance to the Board of Directors in monitoring (1) the integrity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence, and (4) the performance of the Company’s internal audit function, if any, and independent auditor.

Hoffman, and Mr.

Hoffmann, and Mr.

McCormick are each members of the Audit Committee.

10 unchanged sentences

William Cavanagh

Michael Krachon

Amounts represent the ASC 718 , Compensation – Stock Compensation valuation for the fiscal years 2020 and 2019, respectively.

Options awarded vest in three to five equal annual installments and expire ten years after the date of grant.

Jennifer Streeter

COO and VP of HR

Amounts represent the ASC 718 , Compensation – Stock Compensation valuation for the fiscal years 2020.

Options awarded vest in four equal annual installments and expire ten years after the date of grant.

All options were granted at the fair market value of the Company’s stock on the date of grant and the Company used a Black-Scholes methodology as discussed in the footnotes to the financial statements to value the options.

Effective June 23, 2020, Mr.

Krachon was appointed Executive Vice President of Sales and Marketing.

During fiscal year 2019, the vacation policy was changed for these individuals to an unlimited vacation policy with no accrual.

The amounts represent vacation accrued under the prior policy.

Cavanagh’s includes $10,000 to assist with his relocation to Richland, WA.

Outstanding Equity Awards at Fiscal Year-End

4 unchanged sentences

William Cavanagh

Michael Krachon

Jennifer Streeter

COO and VP of HR

Represents a June 27, 2017, grant, all of which are exercisable as of June 27, 2020.

1 unchanged sentence

Represents a June 17, 2014, grant, all of which were exercisable as of June 17, 2017.

Represents a June 13, 2018, grant, one-fourth of which became exercisable on December 13, 2018, one-fourth of which became exercisable on June 13, 2019, one-fourth of which became exercisable on June 13, 2020, and the final fourth will become exercisable on June 13, 2021.

Represents a June 13, 2018, grant, one-fourth of which became exercisable on June 13, 2018, one-fourth of which became exercisable on June 13, 2019, one-fourth of which became exercisable on June 13, 2020, and the final fourth became exercisable on June 13, 2021.

Represents a June 18, 2019, grant, one-fourth of which became exercisable on June 18, 2019, one-fourth of which became exercisable on June 18, 2020, one-fourth of which became exercisable on June 18, 2021, and the final fourth will become exercisable on June 18, 2022.

Represents a June 23, 2020, grant, one-fourth of which became exercisable on June 23, 2020, one-fourth of which became exercisable on June 23, 2021, one-fourth of which will become exercisable on June 23, 2022, and the final fourth will become exercisable on June 23, 2023.

Represents a June 23, 2020, grant, one-fourth of which became exercisable on June 23, 2020, one-fourth of which will become exercisable on June 23, 2021, one-fourth of which will become exercisable on June 23, 2022, and the final fourth will become exercisable on June 23, 2023.

The Company has a 401(k) plan that covers all eligible full-time employees of the Company.

32 unchanged sentences

Overall, the study suggested that total direct compensation was below the 25 th percentile market levels.

In June 2020, the Compensation Committee of the Company set the annual base salary for fiscal 2021 for Lori Woods, our Chief Executive Officer and Director, at $347,173 (10% increase), for William Cavanagh, Chief Research and Development Officer, at $240,080 (9% increase) and for Michael Krachon, our Vice President Sales and Marketing, at $267,670 (10% increase).

Pearl Meyer was not retained in the fiscal 2021 year to update its 2020 compensation analysis.

Due to the competitive market demand for executives surging in the initial post-COVID environment, the Compensation Committee determined it needed to institute significant raises as soon as possible before the typical raises slated for June of 2021 to pay compensation in line with its competitors and other companies actively recruiting executive level employees.

In May 2021, the Compensation Committee of the Company increased the annual base salary for Lori Woods, our Chief Executive Officer and Director, to $439,810 (26.7% increase), for William Cavanagh, Chief Research and Development Officer, to $300,000 (25.0% increase) and for Jennifer Streeter, our Chief Operating Officer and Vice President of Human Resources, to $337,840 (34.7% increase), effective May 24, 2021.

Effective July 1, 2021, options to purchase common stock were allocated to each of the following employees in the following amounts:

William Cavanagh:

Jennifer Streeter:

Director compensation for fiscal 2021 is set forth below.

Fiscal Year 2021 Director Compensation

6 unchanged sentences

Vitale had stock options to purchase 145,000 shares of common stock.

Each non-employee director was granted options to purchase 135,000 shares of the Company’s common stock on July 1, 2021.

During the fiscal year 2021, the independent directors received $3,000 per month for their service.

In addition, each non-employee director received $1,000 per Board meeting attended in person or $500 per Board meeting attended via telephone and $500 per committee meeting attended.

Beginning in fiscal year 2022, the independent directors now receive $5,000 per month for their service and no per meeting fees.

Employee directors do not receive any compensation for their service on the Board.

3 unchanged sentences

Annual incentive awards are awarded at the sole determination of the Compensation Committee (on behalf of the Board) based on the actual and measurable performance of the Company based on a set of corporate objectives for the previous year.

For fiscal year 2020, the bonus plan was such that the Chief Executive Officer had an opportunity to earn a bonus of seven percent (7%) of his or her annual base salary and each other named officer had an opportunity to earn a bonus of five percent (5%) of his or her annual base salary by meeting the following parameters:

half of the bonus was paid if the Company had a twenty-five percent (25%) increase in revenue from the prior year’s comparable quarter;

one quarter of the bonus was paid if the Company had a gross margin percentage of fifty percent (50%) or higher in the applicable quarter;

and one quarter of the bonus was paid if the Company had a net loss margin of negative forty percent (-40%) or less in the applicable quarter.

Additionally, the Chief Executive Officer had an opportunity to earn a bonus of seven percent (7%) of his or her annual base salary and each other named officer had an opportunity to earn a bonus of five percent (5%) of his or her annual base salary by meeting the following parameters:

half of the bonus was paid if the Company had a twenty-five percent (25%) increase in revenue from the prior fiscal year;

one quarter of the bonus was paid if the Company had a gross margin percentage of fifty percent (50%) or higher in the fiscal year;

and one quarter of the bonus was paid if the Company had a net loss margin of negative forty percent (-40%) or less in the fiscal year.

For fiscal year 2020, all of the metrics were met for the first and third fiscal quarters as well as for the full fiscal year.

During the second fiscal quarter for 2020, fifty percent (50%) of the metrics were acheived.

For fiscal year 2021, the bonus plan was revised so that the Chief Executive Officer had an opportunity to earn a bonus of eight percent (8%) of her annual base salary and each other named officer had an opportunity to earn a bonus of six percent (6%) of his or her annual base salary by meeting the following parameters:

half of the bonus would be paid if the Company had a twenty-five percent (25%) increase in revenue from the prior year’s comparable quarter;

one quarter of the bonus would be paid if the Company had a gross margin percentage of fifty-five percent (55%) or higher in the applicable quarter;

and one quarter of the bonus would be paid if the Company had a net loss margin of negative twenty-five percent (-25%) or less in the applicable quarter.

Additionally, the Chief Executive Officer had an opportunity to earn a bonus of eight percent (8%) of her annual base salary and each other named officer had an opportunity to earn a bonus of six percent (6%) of his or her annual base salary by meeting the following parameters:

half of the bonus would be paid if the Company had a twenty-five percent (25%) increase in revenue from the prior fiscal year;

one quarter of the bonus would be paid if the Company had a gross margin percentage of fifty-five percent (55%) or higher in the fiscal year;

and one quarter of the bonus would be paid if the Company had a net loss margin of negative twenty-five percent (-25%) or less in the fiscal year.

For fiscal year 2021, twelve and one-half percent (12.5%) of the metrics were achieved for the first, second, third, and fourth quarters as well as for the full fiscal year resulting in the bonuses set forth below.

2021 Bonus ($)

1 unchanged sentence

William Cavanagh – CRDO

Michael Krachon - Executive Vice President Sales and Marketing

For fiscal year 2021, the bonus plan was revised so that the Chief Executive Officer has an opportunity to earn a bonus of eight percent (8%) of his or her annual base salary and each other named officer has an opportunity to earn a bonus of six percent (6%) of his or her annual base salary by meeting the following parameters:

Jennifer Streeter – COO and VP of HR

For fiscal year 2022, the bonus plan was revised so that the Chief Executive Officer has an opportunity to earn a bonus of ten percent (10%) of her annual base salary and each other named officer has an opportunity to earn a bonus of eight percent (8%) of his or her annual base salary by meeting the following parameters:

half of the bonus will be paid if the Company has a twenty-five percent (25%) increase in revenue from the prior year’s comparable quarter;

one quarter of the bonus will be paid if the Company has a gross margin percentage of fifty-five percent (55%) or higher in the applicable quarter;

and one quarter of the bonus will be paid if the Company has a net loss margin of negative twenty-five percent (-25%) or less in the applicable quarter.

Additionally, the Chief Executive Officer has an opportunity to earn a bonus of eight percent (8%) of his or her annual base salary and each other named officer has an opportunity to earn a bonus of six percent (6%) of his or her annual base salary by meeting the following parameters:

one quarter of the bonus will be paid if the Company has a gross margin percentage of fifty percent (50%) or higher in the applicable quarter;

and one quarter of the bonus will be paid if the Company has selling, general and administrative expenses as a percentage of revenue that is less than targets set by the Board of Directors for each quarter.

Additionally, the Chief Executive Officer has an opportunity to earn a bonus of ten percent (10%) of her annual base salary and each other named officer has an opportunity to earn a bonus of eight percent (8%) of his or her annual base salary by meeting the following parameters:

half of the bonus will be paid if the Company has a twenty-five percent (25%) increase in revenue from the prior fiscal year;

one quarter of the bonus will be paid if the Company has a gross margin percentage of fifty-five percent (55%) or higher in the fiscal year;

and one quarter of the bonus will be paid if the Company has a net loss margin of negative twenty-five percent (-25%) or less in the fiscal year.

On June 23, 2020, the Committee approved stock option grants to our named executive officers outlined in the table below, at an exercise price of $0.61, our closing stock price on June 23, 2020.

Option grant (# of

Lori Woods – CEO and Director

William Cavanagh – CRDO

Michael Krachon - Executive Vice President Sales and Marketing

one quarter of the bonus will be paid if the Company has a gross margin percentage of fifty percent (50%) or higher in the fiscal year;

Risks Related to Compensation Policies and Practices

8 unchanged sentences

The following tables set forth certain information regarding the beneficial ownership of the Company’s common stock and preferred stock as of September 23, 2021 for (a) each person known by the Company to be a beneficial owner of five percent or more of the outstanding common or preferred stock of the Company, (b) each executive officer, director and nominee for director of the Company, and (c) directors and executive officers of the Company as a group.

As of September 21, 2020, the Company had 68,897,779 shares of common stock and 59,065 shares of Series B preferred stock outstanding.

As of September 23, 2021, the Company had 141,915,266 shares of common stock outstanding.

Except as otherwise indicated below, the address for each listed beneficial owner is c/o Isoray, Inc., 350 Hills Street, Suite 106, Richland, Washington 99354.

6 unchanged sentences

William Cavanagh III

Michael Krachon

Jonathan Hunt

4 unchanged sentences

Shares of Common Stock subject to stock options which are currently exercisable or will become exercisable within 60 days after September 23, 2021 are deemed outstanding for computing the percentage ownership of the person or group holding such options but are not deemed outstanding for computing the percentage ownership of any other person or group.

Purchased pursuant to public offering that closed on October 22, 2020.

Each share of common stock purchased included one-half of a warrant.

Each whole warrant is exercisable to purchase one share of common stock at an exercise price of $0.57 per share.

Each warrant is immediately exercisable, and will expire October 22, 2025.

Series B Preferred Stock Share Ownership

Name of Beneficial Owner

Aissata Sidibe 2

William and Karen Thompson Trust 3

Jamie Granger 4

Hostetler Living Trust 5

Leslie Fernandez 6

Percentage ownership is based on 59,065 shares of Series B Preferred Stock outstanding on September 21, 2020.

The address of Aissata Sidibe is 99302 E Sidibe PR SE, Kennewick, WA 99338.

The address of the William and Karen Thompson Trust is 285 Dondero Way, San Jose, CA 95119.

The address of Jamie Granger is 53709 South Nine Canyon Road, Kennewick, WA 99337.

The address of the Hostetler Living Trust is 9327 NE 175th Street, Bothell, WA 98011.

The address of Leslie Fernandez is 2615 Scottsdale Place, Richland, WA 99352.

No officers or directors beneficially own shares of any class of Preferred Stock.

There is no preferred stock outstanding as of June 30, 2021.

59,065 shares of Series B preferred stock automatically converted into 59,065 shares of common stock as a result of the October 22, 2020 offering.

Securities Authorized for Issuance Under Equity Compensation Plans

The “Securities Authorized for Issuance Under Equity Compensation Plans” contained in Item 5 of this Form 10-K is hereby incorporated by reference into this Item 12.

28 unchanged sentences

ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Company paid or accrued the following fees in each of the prior two fiscal years to its principal accountant, DeCoria, Maichel & Teague, P.S.

(in thousands):

The Company paid or accrued the following fees in each of the prior two fiscal years to its principal accountant, Assure CPA, LLC (formerly DeCoria, Maichel & Teague, P.S.) (in thousands):

For the Year Ended June 30,

Audit-Related Fees

All other Fees

2 unchanged sentences

All other fees are from consulting costs created by the review of documents related to equity offerings.

As part of its responsibility for oversight of the independent registered public accountants, the Audit Committee has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants, DeCoria, Maichel & Teague, P.S.

In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Audit Committee.

1 unchanged sentence

All services pre-approved by the Chairman of the Audit Committee must be presented at the next Audit Committee meeting for review and ratification.

All of the services provided by DeCoria, Maichel & Teague, P.S.

All of the services provided by Assure CPA, LLC.

described above were approved by our Audit Committee.

The Company’s principal accountant, DeCoria, Maichel & Teague, P.S., did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.

The Company’s principal accountant, Assure CPA, LLC, did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.

ITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

12 unchanged sentences

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

Warrant to Purchase Common Stock, dated May 20, 2018, incorporated by reference to Exhibit 10.2 of the Form 8-K filed on May 21, 2018.

Warrant to Purchase Common Stock, dated October 3, 2017, incorporated by reference to Exhibit 10.2 of the Form 8-K filed on October 10, 2017.

Form of Warrant, dated July 11, 2018, incorporated by reference to Exhibit 10.3 of the Form 8-K filed on July 11, 2018.

Royalty Agreement of Invention and Patent Application, dated July 12, 1999 between Lane A.

Bray and Isoray LLC, incorporated by reference to Exhibit 10.3 of the Form SB-2 filed on November 10, 2005 (Reg.

Form of Warrant, incorporated by reference to Exhibit A of Exhibit 10.1 of the Form 8-K filed on October 22, 2020.

Section 510(k) Clearance from the Food and Drug Administration to market Lawrence CSERION Model CS-1, dated March 28, 2003, incorporated by reference to Exhibit 10.5 of the Form SB-2 filed on November 10, 2005 (Reg.

1 unchanged sentence

State of Washington Radioactive Materials License dated October 6, 2005, incorporated by reference to Exhibit 10.18 of the Form SB-2 filed on November 10, 2005 (Reg.

Form of Officer and Director Indemnification Agreement, incorporated by reference to Exhibit 10.35 of the Form SB-2 Post-Effective Amendment No.

2 filed on October 13, 2006 (Reg.

Stipulation of Settlement, dated September 23, 2016, by and between Isoray, Inc., Dwight Babcock, and the settlement class, incorporated by reference to Exhibit 10.1 of the Form 10-Q filed on November 9, 2016.

Irradiation Services Agreement, dated November 29, 2016, between The Curators of the University of Missouri and Isoray Medical, Inc.

(confidential treatment granted for redacted portions), incorporated by reference to Exhibit 10.

1 of the Form 10-Q filed on February 9, 2017.

Contract Modification, entered into on November 15, 2016 with an effective date of November 1, 2016, to Contract No.

X-40403 between Energy Northwest and Isoray Medical, Inc., incorporated by reference to Exhibit 10.2 of the Form 10-Q filed on February 9, 2017.

Separation Agreement, dated February 28, 2017, between Brien Ragle and Isoray, Inc., incorporated by reference to Exhibit 10.1 of the Form 8-K filed on March 3, 2017.

2017 Equity Incentive Plan (incorporated by reference to Appendix B to Isoray, Inc.’s Definitive Proxy Statement on Schedule 14A, filed on May 17, 2017).

Rescission and Release Agreement, dated May 2, 2017, between Isoray Medical, Inc., and the Port of Benton, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on June 8, 2017.

Separation Agreement, dated May 1, 2017, between Matthew Branson and Isoray, Inc., incorporated by reference to Exhibit 10.1 of the Form 8-K filed on June 23, 2017.

Form of Isoray, Inc.

Stock Option Agreement and Notice of Grant of Stock Option, by and between each grantee thereunder and Isoray, Inc., incorporated by reference to Exhibit 10.1 of the Form 8-K filed on June 30, 2017.

Employment Agreement, dated June 30, 2017, between Mark Austin and Isoray, Inc., incorporated by reference to Exhibit 10.1 of the Form 8-K filed on July 7, 2017.

Consignment Agreement, dated August 25, 2017, between Isoray Medical, Inc.

6 unchanged sentences

and GammaTile, LLC, incorporated by reference to Exhibit 10.2 of the Form 8-K filed on January 8, 2018.

Sales Agreement between Isoray, Inc.

Wainwright & Co., LLC, dated May 8, 2018, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on May 8, 2018.

Lease Agreement, dated effective May 2, 2007, between Isoray Medical, Inc.

and Energy Northwest, incorporated by reference to Exhibit 10.42 of the Form 8-K filed on May 8, 2007.

Employment Agreement, dated effective June 13, 2018, between Lori A.

Woods and Isoray, Inc., incorporated by reference to Exhibit 10.1 of the Form 8-K filed on June 19, 2018.

Stock Option Agreement and Notice of Grant of Stock Option to Lori A.

Woods, dated June 13, 2018, incorporated by reference to Exhibit 10.2 of the Form 8-K filed on June 19, 2018.

Separation Agreement, dated June 25, 2018, between Thomas C.

LaVoy and Isoray, Inc., incorporated by reference to Exhibit 10.1 of the Form 8-K filed on June 29, 2018.

Letter Agreement, dated July 9, 2018, between H.C.

Wainwright & Co.

LLC and Isoray, Inc., incorporated by reference to Exhibit 10.1 of the Form 8-K filed on July 11, 2018.

Form of Securities Purchase Agreement, dated July 9, 2018, incorporated by reference to Exhibit 10.2 of the Form 8-K filed on July 11, 2018.

Professional Services Agreement, dated August 15, 2018, between Isoray Medical, Inc.

Squared Partners, Inc., DBA Global IR Group, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on September 25, 2018.

Services Agreement, dated August 13, 2018, between Isoray Medical, Inc.

and Schultz Public Relations, LLC, incorporated by reference to Exhibit 10.2 of the Form 8-K filed on September 25, 2018.

Form of Employment Agreement, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on October 12, 2018.

Employment Agreement, dated effective December 3, 2018, between Jonathan Hunt and Isoray, Inc., incorporated by reference to Exhibit 10.1 of the Form 8-K filed on December 3, 2018.

Employment Agreement between Isoray, Inc.

Woods, dated effective January 1, 2019, incorporated by reference to the Form 8-K filed on December 17, 2018.

Amendment to Exhibit B of Manufacturing and Supply Agreement between Isoray Medical, Inc.

and GT Medical Technologies, Inc., dated December 28, 2018 (confidential treatment granted for redacted portions), incorporated by reference to Exhibit 10.5 of the Form 10-Q filed on February 13, 2019.

Employment Agreement between Isoray, Inc.

and Michael Krachon, dated effective February 6, 2019, incorporated by reference to the Form 8-K filed on February 12, 2019.

Amended and Restated Manufacturing and Supply Agreement, dated April 26, 2019, between Isoray Medical, Inc.

2 unchanged sentences

and GT Medical Technologies, Inc., dated December 28, 2018 (confidential treatment granted for redacted portions), incorporated by reference to the Form 8-K filed on May 28, 2019.

Revision to Bonus Plan for fiscal year 2020, dated June 18, 2019, incorporated by reference to Item 5.02 of the Form 8-K filed on June 24, 2019.

Amended and Restated Employment Agreement between Isoray Inc.

and Jennifer Streeter, dated effective July 19, 2019, incorporated by reference to the Form 8-K filed on July 24, 2019.

Supply Contract, dated July 30, 2019, between Isoray Medical, Inc., and Joint Stock Company «Isotope» (confidential portions of the exhibit have been omitted), incorporated by reference to the Form 8-K filed on August 5, 2019.

Contract Modification, entered into on November 15, 2016 with an effective date of November 1, 2016, to Contract No.

3 unchanged sentences

2020 Equity Incentive Plan, incorporated by reference to Appendix A to Isoray, Inc.'s Definitive Proxy Statement on Schedule 14A filed on October 25, 2019.

Form of Amendment to Employment Agreement, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on December 17, 2019.

Amendment to Exhibit A and Amendment No.

3 unchanged sentences

Equity Distribution Agreement, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on April 6, 2020.

Amendment to Employment Agreement between Isoray, Inc.

and Jennifer Streeter, dated June 25, 2020 , incorporated by reference to Exhibit 10.1 of the Form 8-K filed on June 26, 2020.

Second Amendment to Employment Agreement between Isoray, Inc.

and Michael Krachon, dated June 25, 2020, incorporated by reference to Exhibit 10.2 of the Form 8-K filed on June 26,2020 .

Supply Contract, dated August 26, 2020, between Isoray Medical, Inc., and Joint Stock Company «Isotope», incorporated by reference to Exhibit 10.1 of the Form 8-K filed on August 31, 2020 (confidential portions of the exhibit have been omitted) .

1, dated August 5, 2019, to the Supply Contract dated July 30, 2019, between Isoray Medical, Inc., and Joint Stock Company «Isotope».

2, dated August 14, 2020, to the Supply Contract dated July 30, 2019, between Isoray Medical, Inc., and Joint Stock Company «Isotope» (confidential portions of the exhibit have been omitted).

Supply Contract, dated August 26, 2020, between Isoray Medical, Inc., and Joint Stock Company « Isotope » , incorporated by reference to Exhibit 10.1 of the Form 8-K filed on August 31, 2020 (confidential portions of the exhibit have been omitted).

Amendment to Amended and Restated Manufacturing and Supply Agreement between Isoray Medical, Inc.

and GT Medical Technologies, Inc., dated October 16, 2020, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on October 19, 2020.

Underwriting Agreement between Isoray, Inc.

and Oppenheimer & Co.

Inc., dated October 20, 2020, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on October 22, 2020.

Underwriting Agreement between Isoray, Inc.

and Oppenheimer & Co.

Inc., dated February 4, 2021, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on February 4, 2021.

1 to Supply Contract, dated February 10, 2021, by and between Isoray Medical, Inc.

and Joint Stock Company.

incorporated by reference to Exhibit 10.1 of the Form 8-K filed on February 12, 2021.

Supply Contract, dated March 18, 2021, between Isoray Medical, Inc., and Joint Stock Company « Isotope » , incorporated by reference to Exhibit 10.1 of the Form 8-K filed on March 23, 2021 (confidential portions of the exhibit have been omitted).

Form of Executive Employment Agreement, dated effective May 24, 2021, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on May 28, 2021.

Lease Modification, dated May 27, 2021, between Energy Northwest and Isoray Medical, Inc.

, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on June 3, 2021.

Code of Conduct and Ethics, incorporated by reference to Exhibit 14.1 of the Form 10-KSB filed on October 11, 2005.

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Subsidiaries of the Company.

Consent of DeCoria, Maichel & Teague, P.S.

Consent of Assure CPA, LLC.

Rule 13a-14(a)/15d-14(a) Certification - Chief Executive Officer.

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We have audited the accompanying consolidated balance sheets of Isoray, Inc.

and Subsidiaries (the "Company") as of June 30, 2020 and 2019, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended June 30, 2020, and the related notes (collectively referred to as the "financial statements").

and Subsidiaries (“the Company”) as of June 30, 2021 and 2020, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended June 30, 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 June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America

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We believe that our audits provide a reasonable basis for our opinion.

/s/ DeCoria, Maichel & Teague, P.S.

Critical Audit Matters

Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Assure CPA, LLC (formerly DeCoria, Maichel & Teague, P.S.)

We have served as the Company's independent auditor since 2005.

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Total current assets

Non-current assets:

Property and equipment, net

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5,000,000 shares allocated;

59,065 shares issued and outstanding

no and 59,065 shares issued and outstanding

Common stock, $.001 par value;

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General and administrative

Gain on equipment disposals

(Gain) loss on equipment disposals

Change in estimate of asset retirement obligation (Note 8)

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Issuance of common stock pursuant to exercise of options

Issuance of common stock pursuant to at the market offering, net

Issuance of common stock pursuant to exercise of warrants

Issuance of common stock pursuant to registered direct offering, net

Payment of dividend to preferred stockholders

Share-based compensation

Share-based compensation for third party services

Adoption of ASU 2016-09

Balances at June 30, 2019

Issuance of common stock pursuant to exercise of options

Issuance of common stock, pursuant to registered direct offering, net

Issuance of common stock pursuant to at the market offering, net

Payment of dividend to preferred stockholders

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Balances at June 30, 2020

Conversion of preferred stock to common stock

Issuance of common stock pursuant to exercise of options

Issuance of common stock pursuant to at the market offering, net

Issuance of common stock pursuant to underwritten offering, net

Issuance of common stock pursuant to exercise of warrants

Payment of dividend to preferred stockholders

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Share-based compensation

Share-based compensation for third party services

Changes in operating assets and liabilities:

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Additions to other assets

Proceeds from sale of equipment

Proceeds from disposal of equipment

Proceeds from maturity of certificates of deposit

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Preferred dividends paid

Proceeds from sales of common stock, pursuant to underwritten offering, net

Proceeds from sales of common stock, pursuant to registered direct offering, net

Proceeds from sales of common stock, pursuant to at the market offering, net

Proceeds from sales of common stock, pursuant to exercise of warrants, net

Proceeds from sales of common stock, pursuant to exercise of warrants

Proceeds from sales of common stock, pursuant to exercise of options

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Cash and cash equivalents are held in various financial institutions in the United States.

Investments with original maturities greater than three months and remaining maturities less than one year are classified as “Short-term investments” and included in current assets.

Investments in debt securities with original maturities greater than three months and remaining maturities less than one year are classified as “Short-term investments” and included in current assets.

Investments with remaining maturities greater than one year are classified as “Investments, non-current” and are included in noncurrent assets.

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Property and Equipment

Fixed assets are capitalized and carried at cost less accumulated depreciation.

Property and Equipment is capitalized and carried at cost less accumulated depreciation.

Depreciation expense is recorded to cost of sales and operating expenses.

Normal maintenance and repairs are charged to expense as incurred.

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Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset.

P roperty and equipment that is acquired but not yet placed in service is recorded on the balance sheets at cost and no depreciation expense or accumulated depreciation is recognized until the property and equipment is placed in service.

Management periodically reviews the net carrying value of all of its long-lived assets on an asset by asset basis.

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The Company amortizes the initial amount capitalized to property and equipment and recognizes accretion expense in connection with the discounted liability over the estimated remaining useful life of the leased assets.

Adjustments and changes to either the timing or amount of the original present value estimate underlying the obligation are made in the period incurred.

Financial Instruments

The Company discloses the fair value of financial instruments, both assets and liabilities, recognized and not recognized in the balance sheet, for which it is practicable to estimate the fair value.

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than a forced liquidation sale.

At June 30, 2020 and 2019, the carrying value of financial instruments, which include U.S.

Treasury Securities and restricted cash, approximated fair value.

At June 30, 2021 and 2020, the carrying value of financial instruments, which included restricted cash, approximated fair value.

Fair Value Measurement

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that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment).

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

(In thousands)

Fair value at June 30, 2020

Cash, cash equivalents, and restricted cash

Fair value at June 30, 2019

Cash, cash equivalents, and restricted cash

The Company’s cash and cash equivalent instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

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Research and Development - Collaborative Arrangement

Research and development costs incurred and shared in connection with a collaborative research and development project are separately stated in the consolidated statement of operation under “Research and development:

Collaboration arrangements, net of reimbursement.”

Research and development costs incurred and shared in connection with a collaborative research and development project are separately stated in the consolidated statements of operation under “Research and development:

Collaboration arrangements, net of reimbursement” and are expensed as incurred.

Advertising and Marketing Costs

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Under this method, the Company provides deferred income taxes for temporary differences that will result in taxable or deductible amounts in future years based on the reporting of certain costs in different periods for financial statement and income tax purposes.

This method also requires the recognition of future tax benefits such as net operating loss carry-forwards, to the extent that realization of such benefits is more likely than not.

This method also requires the recognition of future tax benefits such as net operating loss carry-forwards, to the extent that realization of such benefits is not subject to an allowance.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

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For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term.

For finance leases, interest on the lease liability and the amortization of the right-of-use asset results in front-loaded expense over the lease term.

Variable lease expenses are recorded when incurred.

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Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 Leases (Subtopic 842), which will require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by most leases.

The update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The modified retrospective transition approach is required.

The Company adopted the new standard in the first quarter of fiscal year 2020 and the most significant effects of this ASU relate to the recognition of a new right-of-use asset and corresponding lease liability.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808):

Accounting Standards Updates Adopted

In November 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction Between Topic 808 and Topic 606, which, among other things, provides guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606.

The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.

The Company is in the process of evaluating the impact the standard will have on its financial statements.

The update was adopted on July 1, 2020 and had no effect on the consolidated financial statements.

Accounting Standards Updates to Become Effective in Future Periods

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

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The Company anticipates obtaining enough Cesium-131 under this arrangement to obtain approximately 4,000 curies of Cesium-131.

During the year ended June 30, 2020, the Company obtained 31 curies under this agreement which has been used in production.

During the year ended June 30, 2021 and 2020, the Company obtained zero and 31 curies, respectively, under this agreement which has been used in production.

At June 30, 2021, the Company estimates that the remaining enriched barium will result in 894 curies;

approximately 62 of which will be obtained in the year ended June 30, 2021 and 832 will be obtained after June 30, 2020.

approximately all of which will be obtained in the year ended June 30, 2022.

There is no assurance as to whether the agreement will be terminated before this full amount is obtained and other supply sources are used, nor is there assurance that the third-party reactor which relies on this Consignment Agreement will be used by the Cesium-131 supplier under contract with the Company.

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The new production facility is currently on hold as the Company has sufficient production capacity to meet future demands and while the Company focuses its resources on revenue growth.

It is anticipated that the Company will continue work on the new production facility process in the next four to five years.

It is anticipated that the Company will continue work on the new production facility process in the next three to five years.

Restricted Cash

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As of the date of adoption, a right of use asset and a corresponding lease liability of approximately $1.2 million were recognized on the balance sheet based upon the present value of the future base payments discounted at a 6% discount rate using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment as the lease does not provide an implicit discount rate.

The weighted average remaining term and discount rate as of June 30, 2020 was 3.85 years.

For the fiscal year ended June 30, 2020, 2019, and 2018 our operating lease expense was approximately $294,000, $285,000, and $285,000 respectively, and is recognized in the statement of operations in cost of sales and general and administrative expenses.

The weighted average remaining term and discount rate as of June 30, 2021 was 2.8 years and 6%, respectively.

For the fiscal years ended June 30, 2021, 2020, and 2019 our operating lease expense was approximately $304,000, $294,000, and $285,000 respectively, and is recognized in the statement of operations in cost of sales and general and administrative expenses.

For the fiscal years ended June 31, 2021, 2020 and 2019 our operating lease expense recognized in cost of sales was approximately $195,000, $187,000 and $184,000 respectively and our lease expense recognized in general and administrative expense was approximately $109,000, $107,000 and $101,000 respectively.

The following table presents the future operating lease payments and lease liability included on the consolidated balance sheet related to the Company’s operating lease as of June 30, 2021 (in thousands):

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Non-current Lease Liability

Asse t Retirement Obligation

Asset Retirement Obligation

The Company has an asset retirement obligation (ARO) associated with the facility it currently leases.

In connection with the lease modification executed in July 2019, and the accretion of the lease liability, the ARO changed as follows (in thousands):

The following table presents the change in the ARO (in thousands):

Year ended June 30,

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2020 Equity Incentive Plan (2020 Incentive Plan).

The 2006 Director Plan allowed the Board of Directors to grant options to purchase up to 1,000,000 shares of common stock to directors of the Company.

The plan expired on August 16, 2016.

Options granted prior to fiscal 2017 were made pursuant to plans that have expired or were terminated.

The Company’s stockholders approved the 2017 Incentive Plan (“2017 Plan”) in June 2017.

The 2017 Plan allows the Board of Directors to grant up to 4,000,000 shares of common stock to directors, officers, employees and consultants in a combination of equity incentive forms including incentive stock options (ISO), non-qualified stock options (NQSO), stock appreciation right (SAR) or restricted shares (RSU) of common stock.

The Company’s stockholders approved the 2020 Incentive Plan (“2020 Plan”) in December 2019.

The 2020 Plan allows the Board of Directors to grant up to 6,000,000 shares of common stock to directors, officers, employees and consultants in a combination of equity incentive forms including incentive stock options (ISO), non-qualified stock options (NQSO), stock appreciation right (SAR) or restricted shares (RSU) of common stock.

Options granted under all of the Plans have a ten year maximum term, an exercise price equal to at least the fair market value of the Company’s common stock (based on the trading price on the NYSE American) on the date of the grant, and with varying vesting periods as determined by the Board.

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The Company’s current policy is to issue new shares to satisfy option exercises.

On July 1, 2021, the Company granted 2,841,600 stock option awards to employees and directors.

Stockholders’ Equity

The authorized capital structure of the Company consists of $.001 par value preferred stock and $.001 par value common stock.

On January 23, 2020, the Company filed a Form S-3 registration statement which became effective on February 4, 2020, with the potential to register up to $80 million of equity securities.

On March 31, 2020, the Company entered into an Equity Distribution Agreement (the “Agreement”) with Oppenheimer & Co., Inc.

(“Oppenheimer”).

The common stock sold pursuant to the Agreement will be distributed at the market prices prevailing at the time of sale.

The Agreement provides that Oppenheimer will be entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold plus reimbursement of certain expenses.

Net proceeds from the sale of the Shares will be used for general corporate purposes.

As of June 30, 2020, the Company had sold an aggregate of 1,247,232 shares under the distribution agreement at an average price of approximately $0.738 per common share for gross proceeds of approximately $920,000 and net proceeds of approximately $874,000.

On May 8, 2018, the Company entered into a Sales Agreement with H.C.

Wainwright & Co., LLC (“Wainwright”).

The common stock sold in the Sales Agreement was distributed at the market prices prevailing at the time of sale.

As of June 30, 2018, the Company had sold an aggregate of 980,918 shares under the Sales Agreement at an average price of approximately $0.515 per common share for gross proceeds of approximately $505,000.

Net proceeds from this raise totaled approximately $479,000.

No additional sales were made in July 2018 and this offering was suspended on July 9, 2018.

On July 11, 2018, the Company sold 11,000,000 shares of its common stock at a price of $0.75 per share, for aggregate gross proceeds of $8.25 million.

Additionally, the Company issued to the purchasers unregistered warrants to purchase up to 5,500,000 shares of common stock.

The warrants have an exercise price of $0.75 per share common stock, are exercisable commencing six months following the issuance date, and expire five and one-half years from the issuance date.

The Company also issued warrants to purchase up to 330,000 shares of common stock of the Company, at an exercise price of $0.9375, to representatives of Wainwright, the placement agent for the registered direct offering, as part of its compensation.

The common stock sold pursuant to the Agreement was distributed at the market prices prevailing at the time of sale.

The Agreement provided that Oppenheimer was entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold plus reimbursement of certain expenses.

As of June 30, 2020, the Company had sold an aggregate of 1,247,232 shares under the Agreement at an average price of approximately $0.738 per common share for gross proceeds of approximately $920,000 and net proceeds of approximately $874,000.

No shares were sold under this Agreement during fiscal year 2021.

On October 19, 2020, the Company terminated the Agreement, effective on the same date.

On October 22, 2020, the Company sold 18,269,230 shares of its common stock at a price of $0.52 per share, for aggregate gross proceeds of $9,500,000, pursuant to the registration statement on Form S-3 that became effective on February 4, 2020.

The net proceeds from the offering were approximately $8,471,000.

Additionally, the Company issued to the purchasers warrants to purchase up to 9,134,615 shares of common stock.

The warrants have an exercise price of $0.57 per share of common stock, are exercisable immediately, and expire five years from the date of issuance.

If exercised for cash, future exercises of these warrants will provide additional capital to the Company.

The Company evaluated the warrants under ASC 815 , Derivatives and Hedging, and ASC 480, Distinguishing Liabilities from Equity.

Based on the guidance from ASC 815 and ASC 480, the warrants meet the requirement for equity classification as they meet the definition of a derivative, are indexed to the Company's own stock and cannot be net cash settled.

The fair value of the warrants with an exercise price of $0.75 was estimated to be $2.8 million and the fair value of the warrants with an exercise price of $0.9375 was estimated to be $0.2 million on the issuance date using a Black-Scholes valuation model.

The assumptions used in the Black-Scholes valuation model are in the table below.

On February 8, 2021, the Company sold 36,000,000 shares of its common stock at a price of $1.25 per share for aggregate gross proceeds of approximately $45,000,000, pursuant to the registration statement on Form S-3 that became effective on February 4, 2020.

Additionally, the Company granted the underwriters an option to purchase an additional 5,400,000 shares of common stock at a purchase price of $1.25 per share for the purpose of covering overallotments, which was exercised on February 8, 2021 and generated gross proceeds of approximately $6,750,000.

Total gross proceeds from the offering were approximately $51,750,000 and total net proceeds were approximately $47,904,000.

During Fiscal 2021, the Company received approximately $7.8 million as a result of the exercise of 12,318,877 warrants to purchase common stock and $0.5 million as a result of the exercise of 970,315 options to purchase common stock.

Preferred Stock

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There were no shares issued under these Series.

Series B is the remaining Series authorized at June 30, 2020 and had 59,065 issued and outstanding shares at June 30, 2020.

Series B is the remaining Series authorized at June 30, 2021 and had no issued and outstanding shares at June 30, 2021.

Series B preferred shares are entitled to a cumulative 15% dividend annually on the stated par value per share.

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Upon liquidation of the Company, the Company’s assets are first distributed ratably to the Series B preferred stockholders and then to the holders of the Common Stock.

On December 10 , 2019, the Board of Directors declared a dividend on the Series B Preferred Stock of all outstanding and cumulative dividends through December 31, 2019.

Pursuant to the terms of the 59,065 shares of Series B preferred stock issued and outstanding they were converted to common stock as a result of the “firm” underwritten offering in October 2020.

On December 8 , 2020, the Board of Directors declared a dividend on the Series B Preferred Stock of all outstanding and cumulative dividends through October 22, 2020.

The total dividends of $9,000 were paid as of December 31, 2020.

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The total dividends of $11,000 were paid as of December 31, 2019.

At June 30, 2020 and 2019, there were 59,065 Series B preferred shares outstanding and cumulative dividends in arrears were $5,000.

At June 30, 2021 and 2020, there were zero and 59,065 Series B preferred shares outstanding and cumulative dividends in arrears were $0 and $5,000 respectively.

During the year ended June 30, 2020 the Company did not issue any warrants.

During the year ended June 30, 2019 the Company issued a total of 5,830,000 warrants in connection with the registered direct offering that was completed on July 11, 2018.

The weighted average fair value of warrants issued and the key assumptions used in the Black-Scholes valuation model to calculate the fair value, are as follows:

Weighted average fair value

Warrants issued

Exercise price

Expected term (in years)

Risk-free rate

During the year ended June 30, 2018, the Company issued warrants as share-based compensation for third party services, principally marketing.

The weighted average fair value of warrants issued and the key assumptions used in the Black-Scholes valuation model to calculate the fair value, are as follows:

Weighted average fair value

During the year ended June 30, 2021 the Company issued a total of 9,134,615 warrants in connection with the public offering that was completed on October 22, 2020.

The key assumptions used in the Black-Scholes valuation model to calculate the fair value of the warrants issued, are as follows:

Warrants issued

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Warrants issued

Warrants exercised

Balance at June 30, 2019

Warrants Issued

Balance at June 30, 2020

Warrants issued

Warrants exercised

Warrants expired

Balance at June 30, 2021

Weighted average exercise price per share.

As of June 30, 2020, the Company had 6,080,000 common warrants outstanding exercisable on or before January 11, 2024 with a weighted average remaining contractual life of 3.37 years.

As of June 30, 2021, the Company had 272,250 common warrants outstanding exercisable on or before July 10, 2023, 1,375,000 common warrants outstanding exercisable on or before January 11, 2024, and 998,488 common warrants outstanding exercisable on or before October 22, 2025 with a weighted average remaining contractual life of 3.15 years.

Due to net losses, the Company did not record an income tax provision or benefit for the years ending June 30, 2021, 2020 and 2019.

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These net operating loss carryforwards expire at various times through the years 2025 to 2038.

Additionally, the Company has federal net operating loss carryforwards of approximately $7.7 million on June 30, 2020 that can be used to offset future regular taxable income that do not have an expiration date.

Additionally, the Company has federal net operating loss carryforwards of approximately $11.4 million on June 30, 2021 that can be used to offset 80% of future regular taxable income that do not have an expiration date.

The Company has a research credit carryforward of approximately $0.3 million on June 30, 2021 that expire at various times through the years 2037 to 2041.

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the "Act") resulting in significant modifications to existing law.

The Company did not incur any income tax benefit or provision for the year ended June 30, 2018 as a result of the changes to tax laws and tax rates under the Act.

The Company’s net deferred tax asset was reduced by approximately $9.5 million during the year ended June 30, 2018, which consisted primarily of the remeasurement of federal deferred tax assets and liabilities from 35% to 21%.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "Cares Act") was enacted.

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Non-deductible penalties

Impact on the change in income tax rate

Change in estimate

Incentive stock options

Research credit

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Income tax expense (benefit)

The Company has reviewed the tax positions taken and concluded that it does not have to book a liability for uncertain tax positions.

The Company has reviewed the tax positions taken and concluded that it does not have a potential liability for uncertain tax positions.

Currently, tax years 2019-2021 remain open for examination by United States taxing authorities.

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As the Company elected to not renew its CE mark in fiscal 2019, distribution will be limited to those countries outside the European Union.

Commi tments and Contingencies

Commitments and Contingencies

Royalty Agreement for Invention and Patent Application

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During fiscal years 2021, 2020 and 2019, the Company recorded royalty expenses of $0, $0, and $33,000, respectively.

Irradiation Services Agreement

On November 29, 2016, Medical, a wholly owned subsidiary of Isoray, entered into an Irradiation Services Agreement (MURR Agreement) with the Curators of the University of Missouri, a public corporation of the State of Missouri, on behalf of its University of Missouri Research Reactor (MURR).

The MURR Agreement provides Medical with access to reactor space for the irradiation of natural or enriched barium to produce Ba-131, which is used by Medical to produce Cesium-131 for use in its product.

The MURR Agreement has a term of five years concluding November 29, 2021 and will automatically renew for successive twelve-month periods unless terminated by either party, and can be terminated by either party upon three months written notice.

The MURR Agreement does not require minimum orders or obligate Medical to future minimum payments.

After a thorough review of the capacity and quality of production at the MURR facility, the Company determined to terminate its supply agreement with MURR and the last shipment of isotope from MURR was received in January 2019.

Isotope Purchase Agreement

In December 2015, the Company completed negotiations with The Open Joint Stock Company (located in Russia) for the purchase of Cesium-131 manufactured by the Institute of Nuclear Materials.

The purchase agreement provided the Company with one year’s supply of Cesium-131.

The original agreement was due to expire on March 31, 2017, but in December 2016 an addendum was signed extending it until December 31, 2017.

On October 23, 2017, the Company, together with The Open Joint Stock Company, signed an addendum to the contract to include Cesium-131 manufactured at RIAR and extending it until December 31, 2018.

On December 24, 2018, an addendum was signed extending the term of the supply contract through December 31, 2019 and modifying the volume of additional shipments of Cesium-131.

Under the addendum, current pricing and volumes for Cesium-131 purchases remained in place until May 31, 2019.

On July 11, 2019, another addendum was signed extending the pricing terms until August 4, 2019.

On July 30, 2019, a new supply contract was signed with The Open Joint Stock Company for a term of August 2019 to December 2020 as the Company had purchased the maximum amount of Cesium-131 permitted under the prior agreement.

On August 6, 2019, an addendum was signed adding a manufacturer of Cesium-131.

On August 14, 2020, another addendum was signed modifying the volume of additional shipments of Cesium-131.

On August 26, 2020, a new supply contract was signed with The Open Joint Stock Company for a term of August 2020 to December 2021 as the Company had purchased the maximum amount of Cesium-131 permitted under the prior agreement.

On February 10, 2021, an addendum was signed updating delivery locations.

On March 18, 2021, the Company entered into a new supply contract with JSC Isotope pursuant to which the Company will purchase Cesium-131 for a term from March 18, 2021 through March 31, 2023.

On July 29, 2021, an addendum was signed that adds a manufacturer, adds a shipper of goods, and increases the amount of Cesium-131 the Company can purchase.

On August 19, 2021, an addendum was signed that adds MedikorPharma-Ural LLC, a company incorporated in accordance with the laws of Russia (“Medikor”), as a supplier to supply enriched barium carbonate for the manufacture of Cesium-131 to JSC Isotope on behalf of the Company.

Research and Development - Collaborative Arrangement

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Concentrations of Credit and Other Risks

The Company’s financial instruments that were exposed to concentrations of credit risk consist primarily of cash and cash equivalents, U.S.

Treasury securities, and accounts receivable.

The Company’s financial instruments that were exposed to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable.

The Company’s cash and cash equivalents were maintained with high-quality financial institutions at June 30, 2021 and 2020, respectively.

At June 30, 2020 and 2019, respectively, all cash balances were guaranteed by the Federal Deposit Insurance Corporation (FDIC) and all cash equivalents consisted of U.S.

Treasury securities.

At June 30, 2021 and 2020, respectively, all cash balances were guaranteed by the Federal Deposit Insurance Corporation (FDIC) and there were no cash equivalents.

The Company routinely assesses the financial strength of its customers and provides an allowance for doubtful accounts as necessary.

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For customers without separate agreements, we have a standard list price established for all products and our invoices contain standard terms and conditions that are applicable to those customers where a separate agreement is not controlling.

Our performance obligations are established when a customer submits a purchase order or e-mail notification (in writing or electronically) for goods, and we accept the order.

Our performance obligations are established when a customer submits an order for goods, and we accept the order.

We identify performance obligations as the sale of our products and services as requested from our customers.

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International revenues in all periods was immaterial.

For the fiscal year 2020, prostate brachytherapy comprised 86% of our revenue while other revenue comprised 14% compared to 89% and 11%, respectively, in the fiscal year 2019 and 86% and 14%, respectively, in the fiscal year 2018.

For the fiscal year 2021, prostate brachytherapy comprised 78% of our revenue while other revenue, which includes but is not limited to brain, lung, head/neck, gynecological, pelvic treatments, and services, comprised 22% compared to 86% and 14%, respectively, in the fiscal year 2020 and 89% and 11%, respectively, in the fiscal year 2019.

Contract Balances

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Returns after shipment may result in a 50% restocking fee.

Significant Judgments in the Application of the Guidance in ASC 606

There are no significant judgments associated with the satisfaction of our performance obligations.

We generally satisfy performance obligations upon shipment of the product to the customer.

This is consistent with the time in which the customer obtains control of the products.

Therefore, the value of unsatisfied performance obligations at the end of any reporting period is generally immaterial.

We use historical information along with an analysis of the expected value to properly calculate and to consider the need to constrain estimates of variable consideration.

Such amounts are included as a reduction to revenue from the sale of products in the periods in which the related revenue is recognized and adjusted in future periods as necessary.

Commissions and Contract Costs

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Concentration of Customers

One group of customers, facilities or physician practices has revenues that aggregate to greater than 10% of total Company sales.

This group of facilities individually do not aggregate to more than 10% of total Company sales.

They are serviced by the same physician group, one of whom is our Medical Director:

The following are the Company’s top customers, facilities or physician practices that utilize multiple surgical facilities shown as a percentage of total sales for the twelve months ended June 30, 2021:

Year ended June 30,

El Camino, Los Gatos, & other facilities 1

GT Medical Technologies

The head of the single largest physician practice also serves as the Company’s medical director.

As the medical director, this physician advises the Company Board of Directors and management, provides technical advice related to product development and research and development, and provides internal training to the Company sales staff and professional training to our sales staff and to other physicians.

None of these facilities individually make up more than 10% of our revenue or accounts receivable.

The following is the Company’s top customer shown as a percentage of total accounts receivable for the twelve months ended June 30, 2021:

Year ended June 30,

accounts receivable

GT Medical Technologies

Subsequent Events

On July 1, 2021, the Company granted 2,841,600 stock option awards to employees and directors.

On July 29, 2021, the Company entered into Addendum No.

1 to its supply contract with Joint Stock Company, a Russian company, originally dated March 18, 2021, for the purchase of Cesium-131.

The Addendum adds a manufacturer, adds a shipper of goods, and increases the amount of Cesium-131 the Company can purchase.

On August 19, 2021, the Company entered into Addendum No.

2 to its supply contract with Joint Stock Company, a Russian company, originally dated March 18, 2021, for the purchase of Cesium-131.

The Addendum adds MedikorPharma-Ural LLC, a company incorporated in accordance with the laws of Russia , as a supplier to supply enriched barium carbonate for the manufacture of Cesium-131 to JSC Isotope on behalf of the Company.

On September 9, 2021, the Company entered into a Consignment Agreement with MedikorPharma-Ural LLC, a company incorporated in accordance with the laws of Russia.

The Company’s source of supply of Cesium-131 is produced using two Russian nuclear reactors which supply the neutron irradiation needed for Cesium-131 production.

One of the Russian nuclear reactors will be working at a reduced capacity and be shut down later in calendar year 2021.

As a result of the upcoming shutdown, only one of the Company’s historic suppliers of Cesium-131 will be available during these periods.

To help mitigate this situation, pursuant to the Consignment Agreement, the Company will purchase 6000 mg of enriched barium carbonate for $720,000, which is needed for the manufacture of Cesium-131, and consign this inventory to Medikor.

It is expected that beginning in October 2021, Medikor will use the barium carbonate consigned by the Company and contract with a third-party manufacturer to produce Cesium-131.

Pursuant to the Consignment Agreement, Medikor will pay the Company varying US dollar amounts per curie of Cesium-131 the Company purchases.

The amount varies based on how many curies of Cesium-131 the Company purchases.

It is further expected that a separate third-party contractor will receive the Cesium-131 produced by the third-party manufacturer and will sell the Cesium-131 exclusively to the Company.

This arrangement would have the effect of minimizing the impact on the Company of the temporary shutdown of one of the nuclear reactors that serves as its source of Cesium-131 from Russia.

The Company anticipates obtaining enough Cesium-131 under this arrangement to obtain over 5,000 curies of Cesium-131 through the end of the term, December 31, 2030, but there is no assurance as to whether the Consignment Agreement will be terminated before this full amount is obtained and other supply sources are used, nor is there assurance that the agreements with the third-parties will be executed.

ITEM 16 – FORM 10-K SUMMARY

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By /s/ Mark J.

Austin, Controller,

Austin, Vice President of Finance and Corporate Controller,

Co-Principal Financial and Principal Accounting Officer, Corporate Secretary

5 unchanged sentences

Co-Principal Financial Officer

Austin, Controller,

Austin, Vice President of Finance and Corporate Controller,

Co-Principal Financial and Principal Accounting Officer, Corporate Secretary

6 unchanged sentences

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 9A. Controls and Procedures