10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY Report PURSUANT TO Section 13 or 15(d) of the Securities Exchange Act of 1934

 For the quarterly period ended December 31, 2014

or

¨ 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)

Minnesota	41-1458152
(State or other jurisdiction of incorporation or	(I.R.S. Employer
organization)	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

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨

Smaller reporting company x

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

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

Class	Outstanding as of February 11, 2015
Common stock, $0.001 par value	54,883,445

ISORAY, INC.

Table of Contents

PART I	FINANCIAL INFORMATION
Item 1	Consolidated Unaudited Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations (Unaudited)	2
	Consolidated Statements of Cash Flows (Unaudited)	3
	Notes to Consolidated Unaudited Financial Statements	4
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4	Controls and Procedures	22
PART II	OTHER INFORMATION
Item 1A	Risk Factors	22
Item 6	Exhibits	22
Signatures		23

PART I – FINANCIAL INFORMATION

IsoRay, Inc. and Subsidiaries

Consolidated Balance Sheets

	(Unaudited)
	December 31,			June 30,
	2014			2014
ASSETS
Current assets:
Cash and cash equivalents	$	1,336,853		$	7,680,073
Certificates of deposit (Note 3)		10,047,298			10,002,912
Accounts receivable, net of allowance for doubtful accounts of $30,000 and $38,607, respectively		797,381			913,049
Inventory		411,420			359,737
Other receivables		10,978			53,082
Prepaid expenses and other current assets		221,167			206,047
Total current assets		12,825,097			19,214,900
Fixed assets, net of accumulated depreciation and amortization		761,425			1,017,915
Certificates of deposit, non-current (Note 3)		10,096,680			5,401,398
Restricted cash		181,235			181,208
Inventory, non-current		469,758			469,758
Other assets, net of accumulated amortization		250,903			264,076
Total assets	$	24,585,098		$	26,549,255
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	488,321		$	574,855
Accrued protocol expense		90,380			80,433
Accrued radioactive waste disposal		108,068			141,592
Accrued payroll and related taxes		146,745			236,282
Accrued vacation		108,378			120,765
Total current liabilities		941,892			1,153,927
Warrant derivative liability		209,000			573,000
Asset retirement obligation		906,294			866,560
Total liabilities		2,057,186			2,593,487
Commitments and contingencies (Note 7)
Shareholders' equity:
Preferred stock, $.001 par value; 7,001,671 shares authorized:
Series A: 1,000,000 shares allocated; no shares issued and outstanding		-			-
Series B: 5,000,000 shares allocated; 59,065 shares issued and outstanding		59			59
Series C: 1,000,000 shares allocated; no shares issued and outstanding		-			-
Series D: 1,671 and 0 shares allocated; no shares issued and outstanding		-			-
Common stock, $.001 par value; 192,998,329 & 193,000,000 shares authorized; 54,883,445 and 54,701,708 shares issued and outstanding		54,883			54,702
Treasury stock, at cost, 13,200 shares		(8,390	)		(8,390	)
Additional paid-in capital		82,224,632			81,959,853
Accumulated deficit		(59,743,272	)		(58,050,456	)
Total shareholders' equity		22,527,912			23,955,768
Total liabilities and shareholders' equity	$	24,585,098		$	26,549,255

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

1

IsoRay, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	Three months ended December 31,						Six months ended December 31,
	2014			2013			2014			2013
Product sales, net	$	1,065,585		$	1,085,408		$	2,107,686		$	2,135,323
Cost of product sales		1,103,549			1,119,314			2,200,452			2,246,537
Gross loss		(37,964	)		(33,906	)		(92,766	)		(111,214	)
Operating expenses:
Research and development expenses		140,627			170,030			317,237			317,020
Sales and marketing expenses		303,783			326,467			657,526			685,652
General and administrative expenses		537,940			513,964			1,113,891			1,165,000
Total operating expenses		982,350			1,010,461			2,088,654			2,167,672
Operating loss		(1,020,314	)		(1,044,367	)		(2,181,420	)		(2,278,886	)
Non-operating income (expense):
Interest income		72,360			481			145,055			835
Change in fair value of warrant derivative liability		41,000			117,000			347,000			81,000
Financing and interest expense		-			(86	)		(3,451	)		(827	)
Non-operating income (expense), net		113,360			117,395			488,604			81,008
Net loss		(906,954	)		(926,972	)		(1,692,816	)		(2,197,878	)
Preferred stock dividends (Note 10)								-			(726,378	)
Preferred stock dividends		(2,658	)		(2,658	)		(5,316	)		(5,316	)
Net loss applicable to common shareholders	$	(909,612	)	$	(929,630	)	$	(1,698,132	)	$	(2,929,572	)
Basic and diluted loss per share	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.08	)
Weighted average shares used in computing net loss per share: Basic and diluted		54,883,445			38,419,502			54,875,749			37,133,875

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

2

IsoRay, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Six months ended December 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,692,816	)	$	(2,197,878	)
Adjustments to reconcile net loss to net cash used by operating activities:
Allowance for doubtful accounts		(8,607	)		(20,083	)
Depreciation and amortization of fixed assets		305,147			349,232
Amortization other assets		15,469			15,371
Change in fair value of warrant derivative liability		(347,000	)		(81,000	)
Accretion of asset retirement obligation		39,734			36,326
Share-based compensation		42,907			51,786
Changes in operating assets and liabilities:
Accounts receivable, gross		124,275			26,641
Inventory		(51,683	)		(20,762	)
Other receivables		42,104			1,438
Prepaid expenses and other current assets		(15,120	)		46,515
Accounts payable and accrued expenses		(86,534	)		(2,273	)
Accrued protocol expense		9,947			21,668
Accrued radioactive waste disposal		(33,524	)		24,000
Accrued payroll and related taxes		(89,537	)		13,663
Accrued vacation		(12,387	)		(2,646	)
Net cash used by operating activities		(1,757,625	)		(1,738,002	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets		(48,657	)		(14,419	)
Additions to licenses and other assets		(2,296	)		(1,562	)
Proceeds from the maturity of certificates of deposit		5,013,694			-
Purchases of certificates of deposit		(5,058,080	)		-
Purchases of certificates of deposit - non-current		(4,695,282	)		-
Change in restricted cash		(27	)		(32	)
Net cash used by investing activities		(4,790,648	)		(16,013	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred dividends paid		(10,632	)		(10,632	)
Proceeds from sales of preferrred stock, pursuant to underwritten offering, net		-			1,478,712
Proceeds from sales of common stock, pursuant to underwritten offering, net		-			1,800,580
Proceeds from sales of common stock, pursuant to exercise of warrants, net		70,411			-
Proceeds from sales of common stock, pursuant to exercise of options		145,274			-
Net cash provided by financing activities		205,053			3,268,660
Net increase (decrease) in cash and cash equivalents		(6,343,220	)		1,514,645
Cash and cash equivalents, beginning of period		7,680,073			2,899,927
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	1,336,853		$	4,414,572
Non-cash investing and financing activities:
Reclassification of derivative warrant liability to equity on exercise	$	17,000		$	-
Total non-cash investing and financing activities	$	17,000		$	-

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

3

IsoRay, Inc.

Notes to the Consolidated Unaudited Financial Statements

For the three and six months ended December 31, 2014 and 2013

1. Basis of Presentation

The accompanying consolidated financial statements are those of IsoRay, Inc., and its wholly-owned subsidiaries (IsoRay or the Company). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts in the prior-year financial statements have been reclassified to conform to the current year presentation.

In the opinion of management, the accompanying unaudited interim consolidated financial statements and notes to the interim consolidated financial statements contain all adjustments, consisting of normal recurring items, necessary to present fairly, in all material respects, the financial position of IsoRay, Inc. and its wholly-owned subsidiaries.  These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related footnotes as set forth in the Company’s annual report filed on Form 10-K for the year ended June 30, 2014, as it may be amended from time to time.

The results of operations for the periods presented may not be indicative of those which may be expected for a full year.  The unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures are adequate for the information not to be misleading.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures of contingent liabilities.  Accordingly, ultimate results could differ materially from those estimates.

2. New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09), which supersedes the revenue recognition requirements in FASB Accounting Standards Codification (ASC) Topic 605, "Revenue Recognition". The guidance requires that an entity recognize revenue in a way that depicts the transfer of promised goods or services to customers in the amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services. The guidance will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. The Company is currently evaluating the new standard and its impact on the Company's consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15—Presentation of Financial Statements—Going Concern. The guidance requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). If conditions or events exist that raise substantial doubt about an entity’s ability to continue as a going concern, the guidance requires disclosure in the financial statements. The guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the new standard and its impact on the Company’s consolidated financial statements.

4

3. Certificates of Deposit

Remaining time	Under 90		91 days to		Six months to
to maturity	days		six months		1 year		1 to 3 years
Certificates of Deposit1	$	5,014,366	$	5,032,932	$	-	$	10,096,680

¹ - Certificate of Deposit Account Registry Service (CDARS), which is a system method by which the Company may access multi-million-dollar Certificates of Deposit (CDs) deposits in principal and interest amounts that are fully insured by the Federal Deposit Insurance Corporation (FDIC) with original maturities that were greater than three months and up to three years at the time of purchase.

4. Loss per Share

Basic earnings per share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding, and does not include the impact of any potentially dilutive common stock equivalents. Common stock equivalents, including warrants and options to purchase the Company's common stock, are excluded from the calculations when their effect is antidilutive. At December 31, 2014 and 2013, the calculation of diluted weighted average shares did not include preferred stock, common stock warrants, or options that are potentially convertible into common stock as those would be antidilutive due to the Company’s net loss position.

Securities not considered in the calculation of diluted weighted average shares are presented on an as converted to common stock basis which could be dilutive in the future as of December 31, 2014 and 2013, were as follows:

	December 31,
	2014		2013
Series B preferred stock		59,065		59,065
Series D preferred stock		-		3,121,480
Common stock warrants		396,574		7,605,771
Common stock options		2,180,858		2,370,072
Total potential dilutive securities		2,636,497		13,156,388

5. Inventory

Inventory consisted of the following at December 31, 2014 and June 30, 2014:

	December 31,		June 30,
	2014		2014
Raw materials	$	191,581	$	173,417
Work in process		191,229		151,321
Finished goods		28,610		34,999
Total inventory	$	411,420	$	359,737

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6. Share-Based Compensation

The following table presents the share-based compensation expense recognized during the three and six months ended December 31, 2014 and 2013:

	Three months				Six months
	ended December 31,				ended December 31,
	2014		2013		2014		2013
Cost of product sales	$	7,972	$	4,499	$	15,945	$	8,921
Research and development expenses		3,117		3,482		6,235		6,965
Sales and marketing expenses		2,158		879		4,317		1,757
General and administrative expenses		8,206		4,572		16,410		34,143
Total share-based compensation	$	21,453	$	13,432	$	42,907	$	51,786

As of December 31, 2014, total unrecognized compensation expense related to stock-based options was $297,591 and the related weighted-average period over which it is expected to be recognized is approximately 2.05 years.

The Company currently provides stock-based compensation under four equity incentive plans approved by the Board of Directors. Options granted under each 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 on the date of the grant, and varying vesting periods as determined by the Board. For stock options with graded vesting terms, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award.

A summary of stock options within the Company’s share-based compensation plans as of December 31, 2014 was as follows:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Term		Value
Outstanding at December 31, 2014		2,057,620	$	1.98		4.43	$	672,597
Vested and expected to vest at  December 31, 2014		1,988,995	$	2.00		4.35	$	645,947
Vested and exercisable at  December 31, 2014		1,821,504	$	1.96		3.83	$	644,927

There were 133,564 options exercised during the six months ended December 31, 2014 and no options exercised during the six months ended December 31, 2013. The Company’s current policy is to issue new shares to satisfy option exercises. The intrinsic value of the employee options exercised during the six months ended December 31, 2014 was $252,308.

There were no stock option awards granted and 65,000 stock option awards granted during the six months ended December 31, 2014 and 2013, respectively.

There were 84,236 stock option awards forfeited and no stock option awards forfeited by former employees during the six months ended December 31, 2014 and 2013, respectively.

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There were 39,002 stock option awards which expired and no stock option awards which expired during the six months ended December 31, 2014 and 2013, respectively.

There were 50,000 director stock options issued to the Chief Executive Officer and Chairman on September 5, 2013 with an exercise price of $0.58 per share which was the closing price of the Company common stock on the day of issuance. The fair value of the stock options issued on September 5, 2013 using a Black Scholes model was $25,150 utilizing the closing price on the day of grant of $0.58 per share as the grant and exercise price, a five- year term, volatility of 132.31% and a discount rate of 1.85%.

There were 15,000 employee stock options issued to three members of management on September 6, 2013 with an exercise price of $0.59 per share which was the closing price of the Company common stock on the day of issuance. The fair value of the stock options issued on September 6, 2013 using a Black Scholes model was $6,906 utilizing the closing price on the day of grant of $0.59 per share as the grant and exercise price, a five year term, volatility of 132.31% and a discount rate of 1.77%.

7. Commitments and Contingencies

Patent and Know-How Royalty License Agreement

The Company is the holder of an exclusive license to use certain “know-how” developed by one of the founders of a predecessor to the Company and licensed to the Company by the Lawrence Family Trust, a Company shareholder. The terms of this license agreement require the payment of a royalty based on the Net Factory Sales Price, as defined in the agreement, of licensed product sales. Because the licensor’s patent application was ultimately abandoned, only a 1% “know-how” royalty based on Net Factory Sales Price, as defined in the agreement, remains applicable. To date, management believes that there have been no product sales incorporating the “know-how” and therefore no royalty is due pursuant to the terms of the agreement. Management believes that ultimately no royalties should be paid under this agreement as there is no intent to use this “know-how” in the future.

The licensor of the “know-how” has disputed management’s contention that it is not using this “know-how”. On September 25, 2007 and again on October 31, 2007, the Company participated in nonbinding mediation regarding this matter; however, no settlement was reached with the Lawrence Family Trust. After additional settlement discussions, which ended in April 2008, the parties failed to reach a settlement. The parties may demand binding arbitration at any time.

8. Fair Value Measurements

The table below sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2014 and June 30, 2014, respectively, and the fair value calculation input hierarchy level the Company has determined applies to each asset and liability category.  

	Balance at		Balance at		Input
Description	December 31, 2014		June 30, 2014		Hierarchy Level
Assets:
Cash and cash equivalents	$	1,336,853	$	7,680,073	Level 1
Restricted cash		181,235		181,208	Level 1
Liabilities:
Warrant derivative liability	$	209,000	$	573,000	Level 2

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9. Preferred Dividends

On December 17, 2014, the Board of Directors declared a dividend on the Series B Preferred Stock of all currently payable and accrued outstanding and cumulative dividends through December 31, 2014 in the amount of $10,632. Dividends on the Series B Preferred Stock were last declared by the Board of Directors on December 19, 2013 in the amount of $10,632. The dividends outstanding and cumulative through December 31, 2014 of $10,632 and through December 31, 2013 of $10,632 were paid as of those dates.

10. Shareholders’ Equity

Common and preferred stock transactions

On August 29, 2013, the Company entered into an agreement to sell 3,800,985 common units, each consisting of 1 share of common stock and a warrant to purchase 0.816 shares of common stock (the Common Units), and 1,670 preferred units, each consisting of 1 share of Series D Convertible Preferred Stock and a warrant to purchase 1,525.23 shares of common stock (the Preferred Units) on a firm commitment underwritten basis. The Common Units were sold at an initial per unit purchase price of $0.535 and the Preferred Units were sold at an initial per unit purchase price of $1,000. The warrants were all exercisable at $0.72 per share and had a twenty-four month term. Each share of the Series D Convertible Preferred Stock was convertible into 1,869.15 shares of common stock at any time at the option of the holder, subject to adjustment. The Series D Preferred Shares which were convertible into shares of common stock contain a beneficial conversion feature of $726,378 which was recognized as a deemed dividend to the Series D preferred shareholders on the date of issuance. This public offering resulted in gross proceeds of $3.7 million. The offering yielded approximately $3,279,292 in cash after expenses.

Gross proceeds from public offering	$	3,703,527
Underwriting discount		(185,176	)
Legal and accounting expense		(184,514	)
Listing expense		(48,500	)
Other expense		(6,045	)
Net proceeds	$	3,279,292

Warrant liability and related offering cost deferral

Based on the guidance contained in ASC 815 “Derivatives and Hedging”, management has concluded that the warrants issued in the October 13, 2011 underwritten registered offering of 2,500,000 shares of common stock should be classified as a derivative liability and has recorded a liability at fair value. The Company determined the fair value of the warrants using the Black-Scholes fair value model. The Company determined the fair value of the warrants on the date of the offering to be as disclosed in the tables below. The Company has recognized a change in fair value as described in the table below:

Change in fair value of the derivative warrant liability for the three months ended December 31, 2014 and 2013, respectively.

	Three months ended			Three months ended
	December 31, 2014			December 31, 2013
Change in fair value	$	(41,000	)	$	(117,000	)

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Purchaser warrants and underwriter warrants issued in October 2011 and December 2011:

	Three months ended					Three months ended
	December 31, 2014					December 31, 2013
	Quantity1		Amount			Quantity1		Amount
Balance, beginning of period		229,861	$	250,000			713,601	$	140,000
Change in fair value				(41,000	)				(117,000	)
Balance, end of period		229,861	$	209,000			713,601	$	23,000

Change in fair value of the derivative warrant liability for the six months ended December 31, 2014 and 2013, respectively.

	Six months ended			Six months ended
	December 31, 2014			December 31, 2013
Change in fair value	$	(347,000	)	$	(81,000	)

Purchaser warrants and underwriter warrants issued in October 2011 and December 2011:

	Six months ended						Six months ended
	December 31, 2014						December 31, 2013
	Quantity1			Amount			Quantity1		Amount
Balance, beginning of period		238,296		$	573,000			713,601	$	104,000
Change in fair value					(347,000	)				(81,000	)
Warrants exercised		(8,435	)		(17,000	)		-		-
Balance, end of period		229,861		$	209,000			713,601	$	23,000

¹ The quantity of warrants either exercised or outstanding as of the date of valuation.

Warrants

The following table summarizes the warrants outstanding as of the beginning of the fiscal year, warrants exercised and warrants issued during the period and weighted average prices for each category.

				Weighted average
	Warrants			exercise price
Outstanding as of June 30, 2014		444,747		$	1.43
Warrants exercised		(48,173	)		1.45
Outstanding as of December 31, 2014		396,574		$	1.22

Warrants outstanding as of December 31, 2014

Quantity		Expiration date	Exercise price1
	6,000	June 8, 2015	$	1.18
	25,000	July 27, 2015		2.00
	130,713	November 21, 2015		1.56
	204,211	October 19, 2016		0.94
	25,650	December 7, 2016		0.94
	5,000	June 27, 2017		0.98
	396,574		$	1.22

¹ – Amounts are rounded to the nearest whole cent

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11. Related Party Transaction

During the six months ended December 31, 2014 and 2013, the Company continued to engage the services of APEX Data Systems, Inc., owned by Dwight Babcock, the Company’s Chairman and Chief Executive Officer, to modify and maintain the Company’s web interfaced data collection application to aggregate patient data in a controlled environment. The Audit Committee and Board of Directors approved the use of the ongoing services of APEX Data Systems. Mr. Babcock recused himself from the Board vote due to his conflict of interest. The cost recorded during the six months ended December 31, 2014 and 2013 from APEX Data Systems, Inc. for the maintenance of the web interfaced data collection application was $6,000 and $9,720. An additional $6,000 was spent on the implementation and maintenance of Customer Relationship Management software during the six months ended December 31, 2014 and 2013, respectively.

ITEM 2 – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Caution Regarding Forward-Looking Information

In addition to historical information, this Form 10-Q contains certain “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.

All statements contained in this Form 10-Q, other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," and similar expressions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties described under “Risk Factors” under Part II, Item 1A below and in the “Risk Factors” section of our Form 10-K for the fiscal year ended June 30, 2014 that may cause actual results to differ materially.

Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations. Readers are cautioned not to place undue reliance on such forward-looking statements as they speak only of the Company's views as of the date the statement was made. 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.

10

Critical Accounting Policies and Estimates

The discussion and analysis of the Company’s financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, management evaluates past judgments and estimates, including those related to bad debts, inventories, accrued liabilities, and contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies and related risks described in the Company’s annual report on Form 10-K as filed with the Securities and Exchange Commission on September 29, 2014 are those that depend most heavily on these judgments and estimates. As of December 31, 2014, there had been no material changes to any of the critical accounting policies contained therein.

Cash Management

Company management has determined the appropriate amount of cash that is to be maintained for operational use and has determined that the remainder should be invested in certificates of deposit with varying maturities up to three years in order to balance return and risk. At December 31, 2014, the Company had $1.34 million of operating cash on hand, $10.05 million of cash invested in certificates of deposit which mature within the current operating cycle and $10.1 million of cash invested in certificates of deposit which mature beyond the current operating cycle. Cash and cash equivalents and the cash invested in certificates of deposit totaled approximately $21.5 million at December 31, 2014.

Results of Operations

Three months ended December 31, 2014 compared to three months ended December 31, 2013.

Revenues. During the three months ended December 31, 2014, total revenue decreased from the three months ended December 31, 2013.

Prostate revenue generated by the top five customers continues to make up a significant portion of the total revenue. These customers increased their overall contribution to 62% of total revenue during the three months ended December 31, 2014 compared to 52% of total revenue during the three months ended December 31, 2013. Revenue created by the top 15 customers remains materially unchanged in the three months ended December 31, 2014 when compared to the three months ended December 31, 2013. The application of seed brachytherapy to non-prostate body sites increased approximately 13% during the three months ended December 31, 2014 when compared to the three months ended December 31, 2013 but continues to represent the same proportion of total revenue in each three month period. GliaSite^® Radiation Therapy System (GliaSite^® RTS) revenue, which decreased by approximately 30%, was significantly impacted by the reduction in the purchasing volume of a distributor and partially offset by purchases made by new customers purchasing an inventory of catheters required for these new customers to be positioned to treat cases using the GliaSite^® RTS.

11

Seed brachytherapy treatments classified as Product Sales (Other) when combined with the revenue generated by the GliaSite^® RTS product line represent more developmental applications of our product which may not lead to either a long-term revenue source or a significant product line and therefore revenue fluctuation in this segment is expected to be subject to more significant variation from quarter to quarter. Company management is actively pursuing alternative uses for the Company’s brachytherapy seeds in treatments consistent with the FDA clearance granted permitting the Company to utilize other FDA cleared application methods as a means of administering the treatments. New treatments such as those being initiated by the Company can be expected to experience a staged entry to market in which primary adopters demonstrate the suitability of a treatment, after which wider adoption is possible. The products being implemented by the Company are very dependent on first adopters as a source of revenue to partially offset some of the developmental cost, and there is initially a significant change in revenue period over period that will reach a plateau due to treatment capacity and quantity of cases available to the first adopters until the mainstream adoption occurs, when and if there is favorable publication of the experiences and treatment outcomes of the first adopters. However, to date the Company has only experienced minimal sales to first adopters.

Management believes that the overall market for prostate brachytherapy has continued to receive increased pressure from other treatment options with higher reimbursement rates such as intensity modulated radiation therapy (IMRT) and robotics but management believes that combining treatments incorporating brachytherapy with other modalities in the prostate, the addition of new treatment facilities, and treatment of other body sites with brachytherapy have the potential to continue to increase revenue.

During the three months ended December 31, 2014 and 2013, respectively, all product sales were generated by the brachytherapy seeds and the related methods of application except for the revenue generated by the sales of GliaSite^® RTS which include the sale of the Cesitrex^® solution, Iotrex^® solution, catheter trays and access trays. The conversion of prospects to new GliaSite^® RTS customers has been a longer process than originally anticipated by the Company. The Company has experienced lengthy timelines in the internal processes of the medical facilities in reviewing and approving the use of the product at the request of their physician(s). These longer than anticipated internal processes are compounded by uncertain timelines and delays in receiving the approval for the requested modification of each facility's nuclear materials license, which is required to begin using GliaSite^® RTS and is dependent on external government regulators.

Key operating factors

	Three months		Three months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Product Sales (Prostate)	$	916,694	$	936,806	$	(20,112	)		(2	)%
Product Sales (Other)		148,891		148,602		289			0	%
Total product sales	$	1,065,585	$	1,085,408	$	(19,823	)		(2	)%

Cost of product sales.

Cost of product sales nominally decreased during the three months ended December 31, 2014 compared to the three months ended December 31, 2013.

Cost of product sales related to brachytherapy seed production increased by one percent during the three months ended December 31, 2014 when compared to the three months ended December 31, 2014. No summary line item within cost of product sales changed by greater than one percent as a percentage of total cost of product sales during the three months ended December 31, 2014 when compared to the three months ended December 31, 2013, except depreciation and amortization expense which decreased by four percent as fixed assets continue to reach the end of their depreciable lives. Cost of product sales related to GliaSite^® RTS decreased by 72% during the three months ended December 31, 2014 when compared to the three months ended December 31, 2013 primarily as the result of recovering a portion of the minimum royalty payment due on a licensing agreement and the lack of an inventory impairment during the three months ended December 31, 2014 compared to the three months ended December 31, 2014.

12

Key operating factors

	Three months		Three months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Depreciation and amortization		131,585		169,054		(37,469	)		(22	)%
Other cost of product sales (Seeds)		961,254		912,078		49,176			5	%
GliaSite® RTS		10,710		38,182		(27,472	)		(72	)%
Total cost of product sales	$	1,103,549	$	1,119,314	$	(15,765	)		(1	)%

Gross loss.  Gross loss for the three months ended December 31, 2014 increased compared to the three month period ended December 31, 2013 as a result of decreased revenue from product sales partially offset by decreased cost of product sales.

Key operating factor

	Three months			Three months
Description	ended 12-31-14			ended 12-31-13			Variance ($)			Variance (%)
Gross loss	$	(37,964	)	$	(33,906	)	$	(4,058	)		12	%
Gross loss percentage		(4	)%		(3	)%

Research and development. Research and development costs decreased during the three months ended December 31, 2014 compared to the three months ended December 31, 2013. The single category which changed significantly was protocol expense. The Company continues to invest in aggregating data regarding the performance of its products. During the three months ended December 31, 2014, the Company did not incur a one-time payment for initiating a protocol which it did incur during the three months ended December 31, 2013.

Key operating factors

	Three months		Three months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Protocol expense	$	28,084	$	53,792	$	(25,708	)		(48	)%
Other research-development expense		112,543		116,238		(3,695	)		(3	)%
Total research and development	$	140,627	$	170,030	$	(29,403	)		(17	)%

Sales and marketing expenses. Sales and marketing expenses were reduced during the three months ended December 31, 2014 compared to the three months ended December 31, 2013. The single category which changed nominally was payroll, taxes, benefits and share-based compensation expense, primarily as a function of the Company having fewer sales personnel during the three months ended December 31, 2014 when compared to the three months ended December 31, 2013.

Key operating factors

	Three months		Three months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Payroll, taxes, benefits and
share-based compensation	$	198,430	$	215,079	$	(16,649	)		(8	)%
Other sales and marketing expense		105,353		111,388		(6,035	)		(5	)%
Total sales and marketing	$	303,783	$	326,467	$	(22,684	)		(7	)%

13

General and administrative expenses. General and administrative expenses increased in the three months ended December 31, 2014 compared to the three months ended December 31, 2013. The single operating factor that changed materially was public company expense, which was partially offset by a combination of nominal changes in other cost categories. This increase in estimate of allowance for doubtful accounts resulted in an unusually large expense being recognized in the statement of operations during the three months ended December 31, 2014. Public company expense was reduced during the three months ended December 31, 2014, as the Company had two independent directors compared to three independent directors during the three months ended December 31, 2013, and had reduced costs related to investor relations and SEC filing fees.

Key operating factors

	Three months		Three months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Public company expense		46,380		69,273		(22,893	)		(33	)%
General and administrative (Other)		491,560		444,691		46,869			11	%
Total general and administrative	$	537,940	$	513,964	$	23,976			5	%

Operating loss. Operating loss for the three months ended December 31, 2014 increased compared to the three months ended December 31, 2013 primarily as the result of the decrease in product sales coupled with an increase in operating expenses which were partially reduced by a decrease in cost of product sales.

Key operating factor

	Three months			Three months
Description	ended 12-31-14			ended 12-31-13			Variance ($)			Variance (%)
Operating loss	$	(1,069,874	)	$	(1,044,367	)	$	(25,507	)		2	%

Interest income. Interest income increased during the three months ended December 31, 2014 when compared to the three months ended December 31, 2013 as the result of the investment of excess cash in laddered certificates of deposit in amounts that are fully FDIC insured.

Key operating factor

	Three months		Three months
Description	ended 12-31-14		ended 12-31-13		Variance ($)		Variance (%)
Interest income	$	72,360	$	481	$	71,879		14,944	%

Change in fair value of warrant liability. During the three months ended December 31, 2011, there was a warrant derivative liability established upon issuance of warrants during 2011 to purchasers in the Company’s registered offering. The warrant liability requires periodic evaluation for changes in fair value. As required at December 31, 2014 and December 31, 2013, the Company evaluated the fair value of the warrant derivative liability using the Black-Scholes option pricing model and applied updated inputs as of those dates. The resulting change in fair value was recorded as of December 31, 2014 and December 31, 2013.

14

Key operating factor

	Three months		Three months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Change in fair value of warrant liability	$	41,000	$	117,000	$	(76,000	)		(65	)%

Six months ended December 31, 2014 compared to six months ended December 31, 2013.

Revenues. Revenue decreased by a nominal amount during the six months ended December 31, 2014 when compared to the six months ended December 31, 2013. The overall decrease in revenue was the direct result of the decrease in revenue from product sales – other during the six months ended December 31, 2014 when compared to the six months ended December 31, 2013. Revenue generated by prostate brachytherapy experienced a nominal increase while the industry continued to experience a decrease as a whole. The revenue increase is primarily the result of increased purchases by the five highest volume users during the six months ended December 31, 2014 when compared with the six months ended December 31, 2013. This increase in the five highest volume users increased their percentage of the total revenue from 57% to 59% during the six months ended December 31, 2014 and 2013, respectively.

Product sales - other include the revenue generated from the sale of brachytherapy seeds for non-prostate applications including the treatment of brain, lung, head and neck and other cancers as well as the revenue from the sale of the GliaSite^® RTS. Product sales - other decreased during the six months ended December 31, 2014 when compared with the six months ended December 31, 2013. The decrease in the revenue from product sales - other is due to decreased sales of the GliaSite^® RTS. Revenues for the non-prostate applications of the Company’s brachytherapy seeds decreased by an insignificant amount during the six months ended December 31, 2014 when compared with the six months ended December 31, 2013. The decrease in revenue from the sale of the GliaSite^® RTS came from the decrease in revenue generated from sales to foreign distributors during the six months ended December 31, 2014 when compared with the six months ended December 31, 2013. Revenues from domestic sales remained unchanged. Company management is actively pursuing alternative uses for the Company’s brachytherapy seeds in treatments consistent with the FDA clearance granted permitting the Company to utilize other FDA cleared application methods as a means of administering the treatments as previously identified and management continues to due diligence new applications in coordination with physicians.

Management believes that the overall market for prostate brachytherapy has continued to receive increased pressure from other treatment options with higher reimbursement rates such as IMRT and robotics but that combination treatments incorporating brachytherapy with other modalities in the prostate and treatment of other body sites with brachytherapy have the potential to continue to increase.

Key operating factors

	Six months		Six months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Product Sales (Prostate)	$	1,832,321	$	1,789,559	$	42,762			2	%
Product Sales (Other)		275,365		345,764		(70,399	)		(20	)%
Total product sales	$	2,107,686	$	2,135,323	$	(27,637	)		(1	)%

15

Cost of product sales. Cost of product sales related to brachytherapy seed sales decreased by a nominal amount during the six months ended December 31, 2014 compared to the six months ended December 31, 2013 as the result of a combination of individually nominal cost increases which are described as other cost of product sales (seeds) and an increase in pre-loading expense, which were partially offset by the decrease in depreciation and amortization expense. The increase in pre-loading expense was the result of being required to use a third-party loader for a specific customer until such time as it is cost effective to proceed through the 510(k) process to be able to load seeds with the C4 markers in our own facility, combined with the increase in the cost of certain materials such as needles and stranding materials, an increase in repairs and maintenance to equipment and an increased cost of product testing in the sterilization process. Depreciation and amortization expense decreased as equipment continues to reach the end of its depreciable lives without requiring replacement. Cost of product sales related to GliaSite^® RTS decreased as a function of the decreased volume of revenue.

Key operating factors

	Six months		Six months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Depreciation and amortization expense	$	297,964	$	341,369	$	(43,405	)		(13	)%
Pre-loading expense		173,312		138,316		34,996			25	%
GliaSite® RTS		22,614		81,071		(58,457	)		(72	)%
Other cost of product sales (Seeds)		1,706,562		1,685,781		20,781			1	%
Total cost of product sales	$	2,200,452	$	2,246,537	$	(46,085	)		(2	)%

Gross loss.  Gross loss for the six month period ended December 31, 2014 decreased compared to the six month period ended December 31, 2013 primarily as a result of the decreased product sales offset by a greater reduction in cost of product sales.

Key operating factor

	Six months			Six months
Description	ended 12-31-14			ended 12-31-13			Variance ($)		Variance (%)
Gross loss	$	(92,766	)	$	(111,214	)	$	18,448		(17	)%
Gross loss percentage		(4	)%		(5	)%

Research and development. Research and development costs increased by a nominal amount in the six months ended December 31, 2014 compared to the six months ended December 31, 2013. Two operating factors changed in research and development expense which net to an insignificant change overall. Protocol expense decreased during the six months ended December 31, 2014, as the Company did not incur a one-time payment initiating a protocol which it did incur during the six months ended December 31, 2013. Legal expense related to intellectual property increased during the six months ended December 31, 2014 when compared to the six months ended December 31, 2013.

Key operating factors

	Six months		Six months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Protocol expense	$	58,888	$	87,613	$	(28,725	)		(33	)%
Legal expense		33,057		1,032		32,025			3,103	%
Research and development  (Other)		225,292		228,375		(3,083	)		(1	)%
Total research and development	$	317,237	$	317,020	$	217			0	%

16

Sales and marketing expenses. Sales and marketing expenses decreased during the six months ended December 31, 2014 compared to the six months ended December 31, 2013. Payroll, benefits and share-based compensation increased partially as a function of a decreased number of sales employees in the field and also as a function of decreased auto allowance expense as the Company transitioned to primarily a mileage reimbursement model. Travel expense increased as the result of the Company transitioning to a mileage reimbursement model from an auto allowance model of reimbursement which was approximately cost neutral without factoring in payroll tax savings. Tradeshows and convention expense increased primarily as the result of increased attendance at society meetings, conventions and tradeshows as the Company works to develop additional revenue sources.

Key operating factors

	Six months		Six months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Travel expense	$	121,821	$	113,627	$	8,194			7	%
Payroll, benefits and share-based compensation		421,254		452,137		(30,883	)		(7	)%
Convention and tradeshow expense		58,638		46,492		12,146			26	%
Sales and marketing (Other)		55,813		73,396		(17,583	)		(24	)%
Total sales and marketing	$	657,526	$	685,652	$	(28,126	)		(4	)%

General and administrative expenses.General and administrative expenses decreased nominally in the six months ended December 31, 2014 compared to the six months ended December 31, 2013 primarily as a result of three operating factors. As of December 31, 2014, there was a significant increase in the amounts classified by management for inclusion in the allowance for doubtful accounts when compared to the balance as of June 30, 2014. This increase in estimate of allowance for doubtful accounts resulted in an unusually large expense being recognized in the statement of operations during the six months ended December 31, 2014. Public company expense was reduced during the six months ended December 31, 2014, as the Company had two independent directors compared to three independent directors during the six months ended December 31, 2013, along with reduced costs related to investor relations which were partially offset by increased SEC filing fees related to the registration statement for the Employee Stock Option Plan approved by the shareholders at the fiscal year 2014 annual shareholder meeting. Payroll, benefits and share-based compensation expense decreased partially as the result of no option grants being made in the six months ended December 31, 2014 compared to the six months ended December 31, 2013 during which options were granted to purchase 65,000 shares of common stock, of which 50,000 were immediately vested and the full expense recognized in that period. The remaining 15,000 options were subject to a 3-year vesting schedule and the expense will be recognized proportionally throughout the vesting period. The additional savings were the result of a favorable renewal of the Company’s medical insurance coverage which reduced both the employee and employer cost of coverage prior to the complete implementation of the Affordable Care Act in combination with certain employees retiring, and employees or their dependents gaining coverage elsewhere.

Key operating factors

	Six months		Six months
Description	ended 12-31-14		ended 12-31-13		Variance ($)			Variance (%)
Payroll, taxes, benefits and share-based compensation		526,626		569,526		(42,900	)		(8	)%
Public company expense		107,181		140,854		(33,673	)		(24	)%
General and administrative (Other)		488,692		474,603		25,464			6	%
Total general and administrative	$	1,113,891	$	1,165,000	$	(51,109	)		(4	)%

17

Operating loss. Operating loss for the six months ended December 31, 2014 decreased compared to the six months ended December 31, 2013 primarily as a result of a decrease in the cost of product sales which exceeded the decreased revenue and the overall decrease in operating expenses which was primarily from the decreases associated with sales and marketing.

Key operating factor

	Six months			Six months
Description	ended 12-31-14			ended 12-31-13			Variance ($)		Variance (%)
Operating loss	$	(2,181,420	)	$	(2,278,886	)	$	97,466		(4	)%

Interest income. Interest income increased during the six months ended December 31, 2014 when compared to the six months ended December 31, 2013 as the result of the investment of excess cash in laddered certificates of deposit in amounts that are fully insured by the FDIC.

Key operating factor

	Six months		Six months
Description	ended 12-31-14		ended 12-31-13		Variance ($)		Variance (%)
Interest income	$	145,055	$	835	$	144,220		17,272	%

Change in fair value of warrant liability. During the three months ended December 31, 2011, there were warrant liabilities established upon issuance of warrants to the purchasers and underwriters in the Company’s registered offering during 2011. Per ASC 820, the warrant liability requires periodic evaluation for changes in fair value. As required at December 31, 2014 and December 31, 2013, the Company evaluated the fair value of the warrant liability using the Black-Scholes option pricing model on which the original warrant liability was based and applied updated inputs as of those dates. The resulting change in fair value was recorded as of December 31, 2014 and December 31, 2013.

Key operating factor

	Six months		Six months
Description	ended 12-31-14		ended 12-31-13		Variance ($)		Variance (%)
Change in fair value of warrant liability	$	347,000	$	81,000	$	266,000		328	%

Liquidity and capital resources. The Company has historically financed its operations through cash investments from shareholders. During the six months ended December 31, 2014 and December 31, 2013, the Company primarily used existing cash reserves to fund its operations and capital expenditures.

Cash flows from operating activities

The net loss was adjusted by a net decrease in the non-cash items and a net increase in non-cash changes in operating assets and liabilities, which resulted in an overall increase in net cash used by operating activities for the six months ended December 31, 2014 when compared to the six months ended December 31, 2013. The decreased net loss during the six months ended December 31, 2014 when compared to the six months ended December 31, 2013 was primarily the result of the non-cash change in fair value of derivative warrant liabilities. The change in the fair value of the warrant liability is a model driven item contained in the statement of operations which is primarily impacted by the market price of the stock, the volatility of the market price and the remaining life of the warrant derivative liability. Cash used by operating activities adjusted for the change in the fair value of the derivative warrant liability increased during the six months ended December 31, 2014 compared to the six months ended December 31, 2013. The items that created the increased use of cash in operating activities were the changes in gross accounts receivable, accounts payable and accrued expenses and accrued payroll and related taxes during the six months ended December 31, 2014 compared to the six months ended December 31, 2013.

18

Key operating factors

	Six months			Six months
Description	ended 12-31-14			ended 12-31-13			Variance ($)			Variance (%)
Net loss	$	(1,742,375	)	$	(2,197,878	)	$	455,503			(21	)%
Non-cash items		97,209			351,632			(254,423	)		(72	)%
Non-cash changes in operating assets and liabilities		(112,459	)		108,244			(220,703	)		(204	)%
Net cash used by operating activities	$	(1,757,625	)	$	(1,738,002	)	$	(19,623	)		1	%

Cash flows from investing activities

Cash used by investing activities during the six months ended December 31, 2014 was primarily related to the addition of capitalized equipment, purchases of certificates of deposit and purchases of certificates of deposit – non-current and was partially reduced by the proceeds from the maturity of certificates of deposit. During the six months ended December 31, 2013, cash used by investing activities was primarily related to the addition of capitalized equipment. The amounts recorded as change in restricted cash in both periods are the accrual of interest earned on certificates of deposit with two financial institutions that are a requirement of the Washington State Department of Health.

Key operating factors

	Six months			Six months
Description	ended 12-31-14			ended 12-31-13			Variance ($)			Variance (%)
Purchases of fixed assets	$	(48,657	)	$	(14,419	)	$	(34,238	)		237	%
Additions to licenses and other assets		(2,296	)		(1,562	)		(734	)		47	%
Proceeds from the maturity of certificates of deposit		5,013,694			-			5,103,694			(100	)%
Purchases of certificates of deposit		(5,058,080	)		-			(5,058,080	)		100	%
Purchases of certificates of Deposit – non-current		(4,695,282	)		-			(4,695,282	)		100	%
Change in restricted cash		(27	)		(32	)		5			(16	)%
Net cash used by  investing activities	$	(4,790,648	)	$	(16,013	)	$	(4,774,635	)		29,817	%

Cash flows from financing activities

Cash provided by financing activities in the six months ended December 31, 2014 was provided by proceeds from the exercise of warrants and the exercise of employee stock options. During the six months ended December 31, 2013, cash provided by financing activities was the result of the sales of common stock through registered direct and underwritten offerings. Cash used during the six months ended December 31, 2014 and 2013 was the result of dividend payments to the Series B preferred shareholders.

19

Key operating factor

	Six months			Six months
Description	ended 12-31-14			ended 12-31-13			Variance ($)			Variance (%)
Preferred dividend payments	$	(10,632	)	$	(10,632	)	$	-			-	%
Proceeds from sale of preferred stock pursuant to underwritten offering, net		-			1,478,712			(1,478,712	)		(100	)%
Proceeds from sale of common stock pursuant to underwritten offering, net		-			1,800,580			(1,800,580	)		(100	)%
Proceeds from sale of common stock pursuant to exercise of warrants		70,411			-			70,411			100	%
Proceeds from sale of common stock pursuant to exercises of options		145,274						145,274			100	%
Net cash provided by financing activities	$	205,053		$	3,268,660		$	(3,063,607	)		(94	)%

Projected Fiscal Year 2015 Liquidity and Capital Resources

At December 31, 2014, the Company held cash and cash equivalents of $1,336,852 as compared to $7,680,073 of cash and cash equivalents at June 30, 2014.

The Company had approximately $1.06 million of cash and cash equivalents as of January 23, 2015, and had certificates of deposit in the amount of $5.02 million as of December 31, 2014 which will continue to earn interest from January 1, 2015 until maturity on March 19, 2015. There are additional certificates of deposit of $5.03M as of December 31, 2014 which will continue to earn interest from January 1, 2015 to maturity on June 18, 2015. The Company had approximately $10.1 million in certificates of deposit, non-current as of December 31, 2014. The investment of excess cash is classified on the balance sheet as certificates of deposit and certificates of deposit, non-current which are fully insured by the FDIC.

The Company’s monthly required cash operating expenditures were approximately $294,000 in the six months ended December 31, 2014, which represents a 1% increase or approximately $4,000 from average monthly cash operating expenditures of $290,000 in the six months ended December 31, 2013. Management believes that there will not be a significant requirement for capital equipment with the exception of the production of liquid Cesium-131 for use in the GliaSite^® RTS which is expected to be less than $50,000, however, there is no assurance that unanticipated needs for capital equipment may not arise for other needs.

Management intends to continue its existing protocol studies and to begin new protocol studies on lung and inter-cranial cancer treatments using Cesium-131 brachytherapy seeds and the GliaSite^® RTS. The Company continues to believe that approximately $180,000 in expense will be incurred during fiscal year 2015 related to protocol expenses relating to lung cancer, intra-cranial cancer and both dual therapy and mono-therapy prostate cancer protocols but there is no assurance that unanticipated needs for additional protocols in support of the development of new applications of our existing products may not arise.

Based on the foregoing assumptions, management believes that the cash and cash equivalents of approximately $1.06 million as of January 23, 2015, certificates of deposit in the amount of $5.02 million that mature on March 19, 2015 and $5.03 million that mature on June 18, 2015, and certificates of deposit, non-current of $10.1 million at December 31, 2014 will be sufficient to meet our anticipated cash needs, assuming both revenue and expenses remain at current levels, for at least the next five years.

Management plans to attain breakeven and generate additional cash flows by increasing revenues from both new and existing customers (through our direct sales channels and through our distributors), increasing sales of the Company’s GliaSite^® RTS, expanding into other market applications which initially will include inter-cranial, head and neck, and lung implants, while maintaining the Company's focus on cost control. However, there can be no assurance that the Company will attain profitability or that the Company will be able to attain increases in its revenue. Sales in the prostate market have not shown the increases necessary to breakeven during the past seven fiscal years.

20

For the six months ended December 31, 2014, revenue from other treatment modalities with brachytherapy seeds has decreased by 1% when compared to the six months ended December 31, 2013. When including the revenue from the sale of GliaSite^® RTS, revenue from non-prostate treatments has decreased 20% in the six months ended December 31, 2014 compared to the six months ended December 31, 2013. These non-prostate brachytherapy treatments are in the early stages of application in the clinical setting and the purchasing patterns are subject to the influence of a few key physicians which can significantly influence revenue from quarter to quarter. Management is focused on increasing revenue from head and neck, colorectal, lung and brain applications of Cesium-131 brachytherapy seeds in addition to increasing the number of cases treated with the GliaSite^® RTS. Management has not been successful in doing so during the six months ended December 31, 2014 when compared to the six months ended December 31, 2013. Management believes that the Company has sufficient cash and cash equivalents to sustain protocols, marketing staff, production staff and production equipment as it works to make these new applications successful.

There was no material change in the use of proceeds from our public offerings as described in our final prospectus supplements filed with the SEC pursuant to Rule 424(b) on August 29, 2013 and March 24, 2014. Through December 31, 2014, the Company had used the net proceeds raised through the August 2013 and March 2014 offerings as described in the table below and held the remaining net proceeds in cash and cash equivalents and certificates of deposit. No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning ten percent or more of any class of our equity securities or to any other affiliates.

Offering description	Period	Net proceeds		Remaining net proceeds
Underwritten offering	August 2013	$	3,279,292	$	1,155,989
Registered direct offering	March 2014		13,814,742		13,814,742
Total			17,094,034		14,970,731

The Company expects to finance its future cash needs through sales of equity, possible strategic collaborations, debt financing or through other sources that may be dilutive to existing shareholders Management anticipates that if it raises additional financing that it will be at a discount to the market price and it will be dilutive to shareholders.

Other Commitments and Contingencies

The Company is subject to various local; state; and federal environmental regulations and laws due to the isotopes used to produce the Company’s products. As part of normal operations, amounts are expended to ensure that the Company is in compliance with these laws and regulations. While there have been no reportable incidents or compliance issues, the Company believes that if it relocates its current production facilities then certain decommissioning expenses will be incurred. An asset retirement obligation was established in the first quarter of fiscal year 2008 for the Company’s obligations at its current production facility. This asset retirement obligation will be for obligations to remove any residual radioactive materials and to remove all leasehold improvements.

The industry that the Company operates in is subject to product liability litigation. Through its production and quality assurance procedures, the Company works to mitigate the risk of any lawsuits concerning its products.

The Company also carries product liability insurance to help protect it from this risk. The Company has no off-balance sheet arrangements.

21

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, the Company is not required to provide Part I, Item 3 disclosure in this Quarterly Report.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the design and operation of our disclosure controls and procedures, as such term is defined under Rules 13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of December 31, 2014. Based on that evaluation, our principal executive officer and our principal financial officer concluded that the design and operation of our disclosure controls and procedures were effective. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, management believes that our system of disclosure controls and procedures is designed to provide a reasonable level of assurance that the objectives of the system will be met.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1A – RISK FACTORS

There have been no material changes for the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended June 30, 2014.

ITEM 6. EXHIBITS

Exhibits:
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 Principal Financial Officer
32*	Section 1350 Certifications
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Furnished herewith.

22

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 thereunto duly authorized.

Dated: February 17, 2015

ISORAY, INC., a Minnesota corporation
By	/s/ Dwight Babcock
	Dwight Babcock, Chief Executive Officer (Principal Executive Officer)
By	/s/ Brien Ragle
	Brien Ragle, Chief Financial Officer
	(Principal Financial and Accounting Officer)

23

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Dwight Babcock certify that:

1.          I have reviewed this quarterly report on Form 10-Q of IsoRay, Inc.;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.          The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 17, 2015

/s/ Dwight Babcock

Dwight Babcock

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Brien L. Ragle certify that: 

1.          I have reviewed this quarterly report on Form 10-Q of IsoRay, Inc.;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.          The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 17, 2015

/s/ Brien L. Ragle

Brien L. Ragle

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32

Exhibit 32

Section 1350 Certifications

Pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of IsoRay, Inc., a Minnesota corporation (the "Company"), hereby certify that:

To my knowledge, the Quarterly Report on Form 10-Q of the Company for the quarterly period ended December 31, 2014 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February  17, 2015
	/s/ Dwight Babcock
	DWIGHT BABCOCK
	CHIEF EXECUTIVE OFFICER (Principal Executive Officer)
Dated: February  17, 2015
	/s/ Brien Ragle
	BRIEN RAGLE
	CHIEF FINANCIAL OFFICER (Principal Financial and Accounting Officer)

XML

Shareholders' Equity (Schedule of Derivative Warrant Liability) (Details) (USD $)	3 Months Ended				6 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2014		Dec. 31, 2013
Class of Warrant or Right [Line Items]
Balance, beginning of period					444,747
Warrants exercised					(48,173)
Balance, end of period	396,574				396,574
Value of warrants issued:
Change in fair value	$ (41,000)		$ (117,000)		$ (347,000)		$ (81,000)
Derivative Warrants [Member]
Class of Warrant or Right [Line Items]
Balance, beginning of period	229,861	[1]	713,601	[1]	238,296	[1]	713,601	[1]
Warrants exercised					(8,435)	[1]
Balance, end of period	229,861	[1]	713,601	[1]	229,861	[1]	713,601	[1]
Value of warrants issued:
Balance, beginning of period	250,000		140,000		573,000		104,000
Change in fair value	(41,000)		(117,000)		(347,000)		(81,000)
Warrants exercised					(17,000)
Balance, end of period	$ 209,000		$ 23,000		$ 209,000		$ 23,000

[1] The quantity of warrants either exercised or outstanding as of the date of valuation.

XML

Inventory (Details) (USD $)	Dec. 31, 2014	Jun. 30, 2014
Inventory [Abstract]
Raw materials	$ 191,581	$ 173,417
Work in process	191,229	151,321
Finished goods	28,610	34,999
Total inventory	$ 411,420	$ 359,737

XML

Loss Per Share

6 Months Ended

Dec. 31, 2014

Loss Per Share [Abstract]

Loss Per Share

4. Loss per Share

Basic earnings per share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding, and does not include the impact of any potentially dilutive common stock equivalents. Common stock equivalents, including warrants and options to purchase the Company's common stock, are excluded from the calculations when their effect is antidilutive. At December 31, 2014 and 2013, the calculation of diluted weighted average shares did not include preferred stock, common stock warrants, or options that are potentially convertible into common stock as those would be antidilutive due to the Company's net loss position.

Securities not considered in the calculation of diluted weighted average shares are presented on an as converted to common stock basis which could be dilutive in the future as of December 31, 2014 and 2013, were as follows:

	December 31,
	2014		2013
Series B preferred stock		59,065		59,065
Series D preferred stock		-		3,121,480
Common stock warrants		396,574		7,605,771
Common stock options		2,180,858		2,370,072
Total potential dilutive securities		2,636,497		13,156,388

XML

Commitments and Contingencies (Royalty Agreements) (Details)	Dec. 31, 2014
Commitments and Contingencies [Abstract]
Percentage of royalty payment	1.00%

XML

Share-Based Compensation (Narrative) (Details) (USD $)	6 Months Ended
	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense related to stock-based options and awards	$ 297,591
Unrecognized compensation expense related to stock-based options and awards, weighted-average recognition period	2 years 18 days

XML

Fair Value Measurements (Details) (Fair Value, Measurements, Recurring [Member], USD $)	Dec. 31, 2014	Jun. 30, 2014
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 1,336,853	$ 7,680,073
Restricted cash	181,235	181,208
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrant derivative liability	$ 209,000	$ 573,000

XML

Preferred Dividends (Details) (USD $)	6 Months Ended		12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2012
Dividends Payable [Line Items]
Preferred dividends paid	$ 10,632	$ 10,632
Series B Preferred Stock [Member]
Dividends Payable [Line Items]
Preferred dividends paid			$ 10,632	$ 10,632

XML

Certificates of Deposit

6 Months Ended

Dec. 31, 2014

Certificates of Deposit [Abstract]

Certificates of Deposit

3. Certificates of Deposit

Remaining time	Under 90		91 days to		Six months to
to maturity	days		six months		1 year		1 to 3 years
Certificates of Deposit1	$	5,014,366	$	5,032,932	$	-	$	10,096,680

¹-

Certificate of Deposit Account Registry Service (CDARS), which is a system method by which the Company may access multi-million-dollar Certificates of Deposit (CDs) deposits in principal and interest amounts that are fully insured by the Federal Deposit Insurance Corporation (FDIC) with original maturities that were greater than three months and up to three years at the time of purchase.

XML

Shareholders' Equity (Common and Preferred Stock Offerings) (Details) (USD $)	0 Months Ended	3 Months Ended			6 Months Ended			3 Months Ended
	Aug. 29, 2013	Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2011	Jun. 30, 2014
Class of Stock [Line Items]
Warrants issued, exercise price		$ 1.22	[1]		$ 1.22	[1]			$ 1.43
Beneficial conversion feature	$ 726,378						$ 726,378
Gross cash proceeds	3,703,527
Underwriter discount	(185,176)
Legal and accounting expense	(184,514)
Listing expense	(48,500)
Other expense	(6,045)
Net proceeds	$ 3,279,292
Common Unit Warrants [Member]
Class of Stock [Line Items]
Number of shares covered by each warrant	0.816
Stock issued, price per share	$ 0.72
Warrant term	24 months
Preferred Unit Warrants [Member]
Class of Stock [Line Items]
Number of shares number of shares covered by warrant	1,525.23
Stock issued, price per share	$ 0.72
Warrant term	24 months
Common Stock [Member]
Class of Stock [Line Items]
Issuance of common stock pursuant to underwritten public offering, net, shares	3,800,985							2,500,000
Stock issued, price per share	$ 0.535
Series D Preferred Stock [Member]
Class of Stock [Line Items]
Issuance of common stock pursuant to underwritten public offering, net, shares	1,670
Stock issued, price per share	$ 1,000
Number of common shares issuable upon conversion	1,869.15

[1] Amounts are rounded to the nearest whole cent

XML

Consolidated Balance Sheets (USD $)	Dec. 31, 2014	Jun. 30, 2014
Current assets:
Cash and cash equivalents	$ 1,336,853	$ 7,680,073
Certificates of deposit (Note 3)	10,047,298	10,002,912
Accounts receivable, net of allowance for doubtful accounts of $30,000 and $38,607, respectively	797,381	913,049
Inventory	411,420	359,737
Other receivables	10,978	53,082
Prepaid expenses and other current assets	221,167	206,047
Total current assets	12,825,097	19,214,900
Fixed assets, net of accumulated depreciation and amortization	761,425	1,017,915
Certificates of deposit, non-current (Note 3)	10,096,680	5,401,398
Restricted cash	181,235	181,208
Inventory, non-current	469,758	469,758
Other assets, net of accumulated amortization	250,903	264,076
Total assets	24,585,098	26,549,255
Current liabilities:
Accounts payable and accrued expenses	488,321	574,855
Accrued protocol expense	90,380	80,433
Accrued radioactive waste disposal	108,068	141,592
Accrued payroll and related taxes	146,745	236,282
Accrued vacation	108,378	120,765
Total current liabilities	941,892	1,153,927
Warrant derivative liability	209,000	573,000
Asset retirement obligation	906,294	866,560
Total liabilities	2,057,186	2,593,487
Commitments and contingencies (Note 7)
Shareholders' equity:
Preferred stock, $.001 par value; 7,001,671 shares authorized:	59	59
Common stock, $.001 par value; 192,998,329 & 193,000,000 shares authorized; 54,883,445 and 54,701,708 shares issued and outstanding	54,883	54,702
Treasury stock, at cost, 13,200 shares	(8,390)	(8,390)
Additional paid-in capital	82,224,632	81,959,853
Accumulated deficit	(59,743,272)	(58,050,456)
Total shareholders' equity	22,527,912	23,955,768
Total liabilities and shareholders' equity	24,585,098	26,549,255
Series A Preferred Stock [Member]
Shareholders' equity:
Preferred stock, $.001 par value; 7,001,671 shares authorized:
Series B Preferred Stock [Member]
Shareholders' equity:
Preferred stock, $.001 par value; 7,001,671 shares authorized:	59	59
Series C Preferred Stock [Member]
Shareholders' equity:
Preferred stock, $.001 par value; 7,001,671 shares authorized:
Series D Preferred Stock [Member]
Shareholders' equity:
Preferred stock, $.001 par value; 7,001,671 shares authorized:

XML

Basis of Presentation

6 Months Ended

Dec. 31, 2014

Basis of Presentation [Abstract]

Basis of Presentation

1. Basis of Presentation

The accompanying consolidated financial statements are those of IsoRay, Inc., and its wholly-owned subsidiaries (IsoRay or the Company). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts in the prior-year financial statements have been reclassified to conform to the current-year presentation.

In the opinion of management, the accompanying unaudited interim consolidated financial statements and notes to the interim consolidated financial statements contain all adjustments, consisting of normal recurring items, necessary to present fairly, in all material respects, the financial position of IsoRay, Inc. and its wholly-owned subsidiaries.  These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related footnotes as set forth in the Company's annual report filed on Form 10-K for the year ended June 30, 2014, as it may be amended from time to time.

The results of operations for the periods presented may not be indicative of those which may be expected for a full year.  The unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures are adequate for the information not to be misleading.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures of contingent liabilities.  Accordingly, ultimate results could differ materially from those estimates.

XML

Shareholders' Equity (Additional Information about Warrants) (Details) (USD $)	6 Months Ended
	Dec. 31, 2014		Jun. 30, 2014
Class of Warrant or Right [Line Items]
Number of Warrants	396,574		444,747
Range of Exercise Prices	$ 1.22	[1]	$ 1.43
Range of Exercise Price One [Member]
Class of Warrant or Right [Line Items]
Number of Warrants	6,000
Range of Exercise Prices	$ 1.18	[1]
Expiration Date	2015-06
Range of Exercise Price Two [Member]
Class of Warrant or Right [Line Items]
Number of Warrants	25,000
Range of Exercise Prices	$ 2.00	[1]
Expiration Date	2015-07
Range of Exercise Price Three [Member]
Class of Warrant or Right [Line Items]
Number of Warrants	130,713
Range of Exercise Prices	$ 1.56	[1]
Expiration Date	2015-11
Range of Exercise Price Four [Member]
Class of Warrant or Right [Line Items]
Number of Warrants	204,211
Range of Exercise Prices	$ 0.94	[1]
Expiration Date	2016-10
Range of Exercise Price Five [Member]
Class of Warrant or Right [Line Items]
Number of Warrants	25,650
Range of Exercise Prices	$ 0.94	[1]
Expiration Date	2016-12
Range of Exercise Price Six [Member]
Class of Warrant or Right [Line Items]
Number of Warrants	5,000
Range of Exercise Prices	$ 0.98	[1]
Expiration Date	2017-06

[1] Amounts are rounded to the nearest whole cent

XML

Shareholders' Equity (Tables)

6 Months Ended

Dec. 31, 2014

Shareholders' Equity [Abstract]

Schedule of Proceeds from Common Stock Offering

Gross proceeds from public offering	$	3,703,527
Underwriting discount		(185,176	)
Legal and accounting expense		(184,514	)
Listing expense		(48,500	)
Other expense		(6,045	)
Net proceeds	$	3,279,292

Schedule of Fair Value of Warrants

Change in fair value of the derivative warrant liability for the three months ended December 31, 2014 and 2013, respectively.

	Three months ended		Three months ended
	December 31, 2014		December 31, 2013
Change in fair value	$	(41,000	)	$	(117,000)

Purchaser warrants and underwriter warrants issued in October 2011 and December 2011:

	Three months ended					Three months ended
	December 31, 2014					December 31, 2013
	Quantity1		Amount			Quantity1		Amount
Balance, beginning of period		229,861	$	250,000			713,601	$	140,000
Change in fair value				(41,000	)				(117,000	)
Balance, end of period		229,861	$	209,000			713,601	$	23,000

Change in fair value of the derivative warrant liability for the six months ended December 31, 2014 and 2013, respectively.

	Six months ended			Six months ended
	December 31, 2014			December 31, 2013
Change in fair value	$	(347,000	)	$	(81,000	)

Purchaser warrants and underwriter warrants issued in October 2011 and December 2011:

	Six months ended						Six months ended
	December 31, 2014						December 31, 2013
	Quantity1			Amount				Quantity1		Amount
Balance, beginning of period		238,296		$	573,000				713,601	$	104,000
Change in fair value					(347,000	)					(81,000)
Warrants exercised		(8,435	)		(17,000	)			-		-
Balance, end of period		229,861		$	209,000				713,601	$	23,000

¹

The quantity of warrants either exercised or outstanding as of the date of valuation.

Schedule of Warrants Activity

				Weighted average
	Warrants			exercise price
Outstanding as of June 30, 2014		444,747			$	1.43
Warrants exercised		(48,173	)			1.45
Outstanding as of December 31, 2014		396,574			$	1.22

Schedule of Additional Information about Warrants Outstanding

Quantity	Expiration date	Exercise price1
6,000	June 8, 2015	$	1.18
25,000	July 27, 2015		2.00
130,713	November 21, 2015		1.56
204,211	October 19, 2016		0.94
25,650	December 7 2016		0.94
5,000	June 27, 2017		0.98
396,574		$	1.22

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Related Party Transaction (Details) (USD $)	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Maintenance costs	$ 6,000	$ 9,720
Software implementation costs	$ 6,000	$ 6,000

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Loss Per Share (Details)	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive securities	2,636,497	13,156,388
Series B Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive securities	59,065	59,065
Series D Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive securities		3,121,480
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive securities	396,574	7,605,771
Common Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential dilutive securities	2,180,858	2,370,072

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New Accounting Pronouncements

6 Months Ended

Dec. 31, 2014

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

2. New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09), which supersedes the revenue recognition requirements in FASB Accounting Standards Codification (ASC) Topic 605, "Revenue Recognition". The guidance requires that an entity recognize revenue in a way that depicts the transfer of promised goods or services to customers in the amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services. The guidance will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. The Company is currently evaluating the new standard and its impact on the Company's consolidated financial statements.  

In August 2014, the FASB issued ASU No. 2014-15—Presentation of Financial Statements—Going Concern.   The guidance requires an entity's management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable).  If conditions or events exist that raise substantial doubt about an entity's ability to continue as a going concern, the guidance requires disclosure in the financial statements.   The guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.  The Company is currently evaluating the new standard and its impact on the Company's consolidated financial statements.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2014	Jun. 30, 2014
Accounts receivable, allowance for doubtful accounts	$ 30,000	$ 38,607
Preferred stock, par or stated value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	7,001,671	7,001,671
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	192,998,329	193,000,000
Common stock, shares issued	54,883,445	54,701,708
Common stock, shares outstanding	54,883,445	54,701,708
Treasury stock, shares	13,200	13,200
Series A Preferred Stock [Member]
Preferred stock, par or stated value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series B Preferred Stock [Member]
Preferred stock, par or stated value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	59,065	59,065
Preferred stock, shares outstanding	59,065	59,065
Series C Preferred Stock [Member]
Preferred stock, par or stated value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series D Preferred Stock [Member]
Preferred stock, par or stated value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,671	0
Preferred stock, shares outstanding	0	0
Common stock, shares issued	0	0

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Certificates of Deposit (Tables)

6 Months Ended

Dec. 31, 2014

Certificates of Deposit [Abstract]

Schedule of Certificates of Deposit

Remaining time	Under 90		91 days to		Six months to
to maturity	days		six months		1 year		1 to 3 years
Certificates of Deposit1	$	5,014,366	$	5,032,932	$	-	$	10,096,680

¹-

Certificate of Deposit Account Registry Service (CDARS), which is a system method by which the Company may access multi-million-dollar Certificates of Deposit (CDs) deposits in principal and interest amounts that are fully insured by the Federal Deposit Insurance Corporation (FDIC) with original maturities that were greater than three months and up to three years at the time of purchase.

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Document and Entity Information	6 Months Ended
	Dec. 31, 2014	Feb. 11, 2015
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Entity Registrant Name	IsoRay, Inc.
Entity Central Index Key	0000728387
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		54,883,445

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Loss Per Share (Tables)

6 Months Ended

Dec. 31, 2014

Loss Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Loss per Share

	December 31,
	2014		2013
Series B preferred stock		59,065		59,065
Series D preferred stock		-		3,121,480
Common stock warrants		396,574		7,605,771
Common stock options		2,180,858		2,370,072
Total potential dilutive securities		2,636,497		13,156,388

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Consolidated Statements of Operations (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements of Operations [Abstract]
Product sales, net	$ 1,065,585	$ 1,085,408	$ 2,107,686	$ 2,135,323
Cost of product sales	1,103,549	1,119,314	2,200,452	2,246,537
Gross loss	(37,964)	(33,906)	(92,766)	(111,214)
Operating expenses:
Research and development expenses	140,627	170,030	317,237	317,020
Sales and marketing expenses	303,783	326,467	657,526	685,652
General and administrative expenses	537,940	513,964	1,113,891	1,165,000
Total operating expenses	982,350	1,010,461	2,088,654	2,167,672
Operating loss	(1,020,314)	(1,044,367)	(2,181,420)	(2,278,886)
Non-operating income (expense):
Interest income	72,360	481	145,055	835
Change in fair value of warrant derivative liability	41,000	117,000	347,000	81,000
Financing and interest expense		(86)	(3,451)	(827)
Non-operating income (expense), net	113,360	117,395	488,604	81,008
Net loss	(906,954)	(926,972)	(1,692,816)	(2,197,878)
Preferred stock dividends (Note 10)				(726,378)
Preferred stock dividends	(2,658)	(2,658)	(5,316)	(5,316)
Net loss applicable to common shareholders	$ (909,612)	$ (929,630)	$ (1,698,132)	$ (2,929,572)
Basic and diluted loss per share	$ (0.02)	$ (0.02)	$ (0.03)	$ (0.08)
Weighted average shares used in computing net loss per share:
Basic and diluted	54,883,445	38,419,502	54,875,749	37,133,875

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Commitments and Contingencies

6 Months Ended

Dec. 31, 2014

Commitments and Contingencies [Abstract]

Commitments and Contingencies

7. Commitments and Contingencies

Patent and Know-How Royalty License Agreement

The Company is the holder of an exclusive license to use certain “know-how” developed by one of the founders of a predecessor to the Company and licensed to the Company by the Lawrence Family Trust, a Company shareholder. The terms of this license agreement require the payment of a royalty based on the Net Factory Sales Price, as defined in the agreement, of licensed product sales. Because the licensor's patent application was ultimately abandoned, only a 1% “know-how” royalty based on Net Factory Sales Price, as defined in the agreement, remains applicable. To date, management believes that there have been no product sales incorporating the “know-how” and therefore no royalty is due pursuant to the terms of the agreement. Management believes that ultimately no royalties should be paid under this agreement as there is no intent to use this “know-how” in the future.

The licensor of the “know-how” has disputed management's contention that it is not using this “know-how”. On September 25, 2007 and again on October 31, 2007, the Company participated in nonbinding mediation regarding this matter; however, no settlement was reached with the Lawrence Family Trust. After additional settlement discussions, which ended in April 2008, the parties failed to reach a settlement. The parties may demand binding arbitration at any time.

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Share-Based Compensation

6 Months Ended

Dec. 31, 2014

Share-Based Compensation [Abstract]

Share-Based Compensation

6. Share-Based Compensation

The following table presents the share-based compensation expense recognized during the three and six months ended December 31, 2014 and 2013:

	Three months ended December 31,					Six months ended December 31,
			2014		2013	2014		2013
Cost of product sales		$	7,972	$	4,499	$	15,945		$	8,921
Research and development expenses			3,117		3,482		6,235			6,965
Sales and marketing expenses			2,158		879		4,317			1,757
General and administrative expenses			8,206		4,572		16,410			34,143
Total share-based compensation		$	21,453	$	13,432	$	42,907		$	51,786

As of December 31, 2014, total unrecognized compensation expense related to stock-based options was $297,591 and the related weighted-average period over which it is expected to be recognized is approximately 2.05 years.

The Company currently provides stock-based compensation under four equity incentive plans approved by the Board of Directors. Options granted under each 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 on the date of the grant, and varying vesting periods as determined by the Board. For stock options with graded vesting terms, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award.  

A summary of stock options within the Company's share-based compensation plans as of December 31, 2014 was as follows:

			Weighted		Weighted
			Average		Average
			Exercise		Remaining		Aggregate
	Number of		Price		Contractual		Intrinsic
	Options				Term		Value
Outstanding at December 31, 2014		2,057,620	$	1.98		4.43	$	672,597
Vested and expected to vest at December 31, 2014		1,988,995	$	2.00		4.35	$	645,947
Vested and exercisable at December 31, 2014		1,821,504	$	1.96		3.83	$	644,927

There were 133,564 options exercised during the six months ended December 31, 2014 and no options exercised during the six months ended December 31, 2013. The Company's current policy is to issue new shares to satisfy option exercises. The intrinsic value of the employee options exercised during the six months ended December 31, 2014 was $252,308.

There were no stock option awards granted and 65,000 stock option awards granted during the six months ended December 31, 2014 and 2013, respectively.

There were 84,236 stock option awards forfeited and no stock option awards forfeited by former employees during the six months ended December 31, 2014 and 2013, respectively.

There were 39,002 stock option awards which expired and no stock option awards which expired during the six months ended December 31, 2014 and 2013, respectively.

There were 50,000 director stock options issued to the Chief Executive Officer and Chairman on September 5, 2013 with an exercise price of $0.58 per share which was the closing price of the Company common stock on the day of issuance. The fair value of the stock options issued on September 5, 2013 using a Black Scholes model was $25,150 utilizing the closing price on the day of grant of $0.58 per share as the grant and exercise price, a five year term, volatility of 132.31% and a discount rate of 1.85%.

There were 15,000 employee stock options issued to three members of management on September 6, 2013 with an exercise price of $0.59 per share which was the closing price of the Company common stock on the day of issuance. The fair value of the stock options issued on September 6, 2013 using a Black Scholes model was $6,906 utilizing the closing price on the day of grant of $0.59 per share as the grant and exercise price, a five year term, volatility of 132.31% and a discount rate of 1.77%.

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Certificates of Deposit (Details) (USD $)	Dec. 31, 2014
Under 90 Days [Member]
Summary of Investment Holdings [Line Items]
Certificates of Deposit	$ 5,014,366	[1]
91 Days to Six Months [Member]
Summary of Investment Holdings [Line Items]
Certificates of Deposit	5,032,932	[1]
Six Months to 1 Year [Member]
Summary of Investment Holdings [Line Items]
Certificates of Deposit		[1]
1 to 3 Years [Member]
Summary of Investment Holdings [Line Items]
Certificates of Deposit	$ 10,096,680	[1]

[1] Certificate of Deposit Account Registry Service (CDARS), which is a system method by which the Company may access multi-million-dollar Certificates of Deposit (CDs) deposits in principal and interest amounts that are fully insured by the Federal Deposit Insurance Corporation (FDIC) with original maturities that were greater than three months and up to three years at the time of purchase.

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Inventory (Tables)

6 Months Ended

Dec. 31, 2014

Inventory [Abstract]

Schedule of Components of Inventory

Inventory consisted of the following at December 31, 2014 and June 30, 2014:

	December 31, 2014			June 30, 2014
Raw materials	$	191,581	$	173,417
Work in process		191,229		151,321
Finished goods		28,610		34,999
Total inventory	$	411,420	$	359,737

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Shareholders' Equity

6 Months Ended

Dec. 31, 2014

Shareholders' Equity [Abstract]

Shareholders' Equity

10. Shareholders' Equity

Common and preferred stock transactions

On August 29, 2013, the Company entered into an agreement to sell 3,800,985 common units, each consisting of 1 share of common stock and a warrant to purchase 0.816 shares of common stock (the Common Units), and 1,670 preferred units, each consisting of 1 share of Series D Convertible Preferred Stock and a warrant to purchase 1,525.23 shares of common stock (the Preferred Units) on a firm commitment underwritten basis. The Common Units were sold at an initial per unit purchase price of $0.535 and the Preferred Units were sold at an initial per unit purchase price of $1,000. The warrants were all exercisable at $0.72 per share and had a twenty-four month term. Each share of the Series D Convertible Preferred Stock was convertible into 1,869.15 shares of common stock at any time at the option of the holder, subject to adjustment. The Series D Preferred Shares which were convertible into shares of common stock contain a beneficial conversion feature of $726,378 which was recognized as a deemed dividend to the Series D preferred shareholders on the date of issuance. This public offering resulted in gross proceeds of $3.7 million. The offering yielded approximately $3,279,292 in cash after expenses.

Gross proceeds from public offering	$	3,703,527
Underwriting discount		(185,176	)
Legal and accounting expense		(184,514	)
Listing expense		(48,500	)
Other expense		(6,045	)
Net proceeds	$	3,279,292

Warrant liability and related offering cost deferral

Based on the guidance contained in ASC 815 “Derivatives and Hedging”, management has concluded that the warrants issued in the October 13, 2011 underwritten registered offering of 2,500,000 shares of common stock should be classified as a derivative liability and has recorded a liability at fair value. The Company determined the fair value of the warrants using the Black-Scholes fair value model. The Company determined the fair value of the warrants on the date of the offering to be as disclosed in the tables below. The Company has recognized a change in fair value as described in the table below:

Change in fair value of the derivative warrant liability for the three months ended December 31, 2014 and 2013, respectively.

	Three months ended		Three months ended
	December 31, 2014		December 31, 2013
Change in fair value	$	(41,000	)	$	(117,000)

Purchaser warrants and underwriter warrants issued in October 2011 and December 2011:

	Three months ended					Three months ended
	December 31, 2014					December 31, 2013
	Quantity1		Amount			Quantity1		Amount
Balance, beginning of period		229,861	$	250,000			713,601	$	140,000
Change in fair value				(41,000	)				(117,000	)
Balance, end of period		229,861	$	209,000			713,601	$	23,000

Change in fair value of the derivative warrant liability for the six months ended December 31, 2014 and 2013, respectively.

	Six months ended			Six months ended
	December 31, 2014			December 31, 2013
Change in fair value	$	(347,000	)	$	(81,000	)

Purchaser warrants and underwriter warrants issued in October 2011 and December 2011:

	Six months ended						Six months ended
	December 31, 2014						December 31, 2013
	Quantity1			Amount				Quantity1		Amount
Balance, beginning of period		238,296		$	573,000				713,601	$	104,000
Change in fair value					(347,000	)					(81,000)
Warrants exercised		(8,435	)		(17,000	)			-		-
Balance, end of period		229,861		$	209,000				713,601	$	23,000

¹

The quantity of warrants either exercised or outstanding as of the date of valuation.

Warrants

The following table summarizes the warrants outstanding as of the beginning of the fiscal year, warrants exercised and warrants issued during the period and weighted average prices for each category.

				Weighted average
	Warrants			exercise price
Outstanding as of June 30, 2014		444,747			$	1.43
Warrants exercised		(48,173	)			1.45
Outstanding as of December 31, 2014		396,574			$	1.22

Warrants outstanding as of December 31, 2014

Quantity	Expiration date	Exercise price1
6,000	June 8, 2015	$	1.18
25,000	July 27, 2015		2.00
130,713	November 21, 2015		1.56
204,211	October 19, 2016		0.94
25,650	December 7 2016		0.94
5,000	June 27, 2017		0.98
396,574		$	1.22

¹ 

Amounts are rounded to the nearest whole cent

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Fair Value Measurements

6 Months Ended

Dec. 31, 2014

Fair Value Measurements [Abstract]

Fair Value Measurements

8. Fair Value Measurements

The table below sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2014 and June 30, 2014, respectively, and the fair value calculation input hierarchy level the Company has determined applies to each asset and liability category.

	Balance at		Balance at		Input
Description	December 31, 2014		June 30, 2014		Hierarchy Level
Assets:
Cash and cash equivalents	$	1,336,853	$	7,680,073	Level 1
Restricted cash		181,235		181,208	Level 1
Liabilities:
Warrant derivative liability	$	209,000	$	573,000	Level 2

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Preferred Dividends

6 Months Ended

Dec. 31, 2014

Preferred Dividends [Abstract]

Preferred Dividends

9. Preferred Dividends

On December 17, 2014, the Board of Directors declared a dividend on the Series B Preferred Stock of all currently payable and accrued outstanding and cumulative dividends through December 31, 2014 in the amount of $10,632. Dividends on the Series B Preferred Stock were last declared by the Board of Directors on December 19, 2013 in the amount of $10,632. The dividends outstanding and cumulative through December 31, 2014 of $10,632 and through December 31, 2013 of $10,632 were paid as of those dates.

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Related Party Transaction

6 Months Ended

Dec. 31, 2014

Related Party Transaction [Abstract]

Related Party Transaction

11. Related Party Transaction

During the six months ended December 31, 2014 and 2013, the Company continued to engage the services of APEX Data Systems, Inc., owned by Dwight Babcock, the Company's Chairman and Chief Executive Officer, to modify and maintain the Company's web interfaced data collection application to aggregate patient data in a controlled environment. The Audit Committee and Board of Directors approved the use of the ongoing services of APEX Data Systems. Mr. Babcock recused himself from the Board vote due to his conflict of interest. The cost recorded during the six months ended December 31, 2014 and 2013 from APEX Data Systems, Inc. for the maintenance of the web interfaced data collection application was $6,000 and $9,720. An additional $6,000 was spent on the implementation and maintenance of Customer Relationship Management software during the six months ended December 31, 2014 and 2013, respectively.

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Shareholders' Equity (Schedule of Warrant Activity) (Details) (USD $)	6 Months Ended
	Dec. 31, 2014
Warrants
Balance, beginning of period	444,747
Warrants exercised	(48,173)
Balance, end of period	396,574
Price
Beginning balance outstanding	$ 1.43
Warrants exercised	$ 1.45
Ending balance outstanding	$ 1.22	[1]

[1] Amounts are rounded to the nearest whole cent

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Fair Value Measurement (Tables)

6 Months Ended

Dec. 31, 2014

Fair Value Measurements [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Balance at		Balance at		Input
Description	December 31, 2014		June 30, 2014		Hierarchy Level
Assets:
Cash and cash equivalents	$	1,336,853	$	7,680,073	Level 1
Restricted cash		181,235		181,208	Level 1
Liabilities:
Warrant derivative liability	$	209,000	$	573,000	Level 2

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Share-Based Compensation (Schedule of Share-Based Compensation Expense) (Details) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	$ 21,453	$ 13,432	$ 42,907	$ 51,786
Cost of Product Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	7,972	4,499	15,945	8,921
Research and Development Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	3,117	3,482	6,235	6,965
Sales and Marketing Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	2,158	879	4,317	1,757
General and Administration Expenses [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation	$ 8,206	$ 4,572	$ 16,410	$ 34,143

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Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,692,816)	$ (2,197,878)
Adjustments to reconcile net loss to net cash used by operating activities:
Allowance for doubtful accounts	(8,607)	(20,083)
Depreciation and amortization of fixed assets	305,147	349,232
Amortization of other assets	15,469	15,371
Change in fair value of warrant derivative liability	(347,000)	(81,000)
Accretion of asset retirement obligation	39,734	36,326
Share-based compensation	42,907	51,786
Changes in operating assets and liabilities:
Accounts receivable, gross	124,275	26,641
Inventory	(51,683)	(20,762)
Other receivables	42,104	1,438
Prepaid expenses and other current assets	(15,120)	46,515
Accounts payable and accrued expenses	(86,534)	(2,273)
Accrued protocol expense	9,947	21,668
Accrued radioactive waste disposal	(33,524)	24,000
Accrued payroll and related taxes	(89,537)	13,663
Accrued vacation	(12,387)	(2,646)
Net cash used by operating activities	(1,757,625)	(1,738,002)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets	(48,657)	(14,419)
Additions to licenses and other assets	(2,296)	(1,562)
Proceeds from the maturity of certificates of deposit	5,013,694
Purchases of certificates of deposit	(5,058,080)
Purchases of certificates of deposit - non-current	(4,695,282)
Change in restricted cash	(27)	(32)
Net cash used by investing activities	(4,790,648)	(16,013)
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred dividends paid	(10,632)	(10,632)
Proceeds from sales of preferred stock, pursuant to underwritten offering, net		1,478,712
Proceeds from sales of common stock, pursuant to underwritten offering, net		1,800,580
Proceeds from sales of common stock, pursuant to exercise of warrants, net	70,411
Proceeds from sales of common stock, pursuant to exercise of options	145,274
Net cash provided by financing activities	205,053	3,268,660
Net increase (decrease) in cash and cash equivalents	(6,343,220)	1,514,645
Cash and cash equivalents, beginning of period	7,680,073	2,899,927
CASH AND CASH EQUIVALENTS, END OF PERIOD	1,336,853	4,414,572
Non-cash investing and financing activities:
Reclassification of derivative warrant liability to equity on exercise	17,000
Total non-cash investing and financing activities	$ 17,000

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Inventory

6 Months Ended

Dec. 31, 2014

Inventory [Abstract]

Inventory

5.    Inventory

Inventory consisted of the following at December 31, 2014 and June 30, 2014:

	December 31, 2014			June 30, 2014
Raw materials	$	191,581	$	173,417
Work in process		191,229		151,321
Finished goods		28,610		34,999
Total inventory	$	411,420	$	359,737

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Share-Based Compensation (Schedule of Stock Option Activity) (Details) (USD $)	0 Months Ended		6 Months Ended
	Sep. 05, 2013	Sep. 06, 2013	Dec. 31, 2014	Dec. 31, 2013
Number of Options
Outstanding at December 31, 2014			2,057,620
Vested and expected to vest at December 31, 2014			1,988,995
Vested and exercisable at December 31, 2014			1,821,504
Weighted Average Exercise Price
Outstanding at December 31, 2014			$ 1.98
Vested and expected to vest at December 31, 2014			$ 2.00
Vested and exercisable at December 31, 2014			$ 1.96
Weighted Average Remaining Contractual Term
Outstanding at December 31, 2014			4 years 5 months 5 days
Vested and expected to vest at December 31, 2014			4 years 4 months 6 days
Vested and exercisable at December 31, 2014			3 years 9 months 29 days
Average Intrinsic Value
Outstanding at December 31, 2014			$ 672,597
Vested and expected to vest at December 31, 2014			645,947
Vested and exercisable at December 31, 2014			644,927
Options exercised			133,564
Aggregate intrinsic value of option exercised			252,308
Stock options granted	50,000	15,000		65,000
Stock options issued, exercise price	$ 0.58	$ 0.59
Fair value of stock options granted	$ 25,150	$ 6,906
Stock options forfeited			84,236
Stock options expired			39,002
Exercise price	$ 0.58	$ 0.59
Expected term	5 years	5 years
Volatility	132.31%	132.31%
Discount rate	1.85%	1.77%

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Share-Based Compensation (Tables)

6 Months Ended

Dec. 31, 2014

Share-Based Compensation [Abstract]

Schedule of Share-Based Compensation Expense

	Three months ended December 31,					Six months ended December 31,
			2014		2013	2014		2013
Cost of product sales		$	7,972	$	4,499	$	15,945		$	8,921
Research and development expenses			3,117		3,482		6,235			6,965
Sales and marketing expenses			2,158		879		4,317			1,757
General and administrative expenses			8,206		4,572		16,410			34,143
Total share-based compensation		$	21,453	$	13,432	$	42,907		$	51,786

Schedule of Stock Option Within Share-Based Compensation Plans

			Weighted		Weighted
			Average		Average
			Exercise		Remaining		Aggregate
	Number of		Price		Contractual		Intrinsic
	Options				Term		Value
Outstanding at December 31, 2014		2,057,620	$	1.98		4.43	$	672,597
Vested and expected to vest at December 31, 2014		1,988,995	$	2.00		4.35	$	645,947
Vested and exercisable at December 31, 2014		1,821,504	$	1.96		3.83	$	644,927