<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended April 30, 1996
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-26670
NORTH AMERICAN SCIENTIFIC, INC.
(Name of small business as specified in its charter)
Delaware 51-0366422
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7435 Greenbush Avenue
North Hollywood, CA 91605
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code:
(818) 503-9201
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that 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
--- ---
At April 30, 1996, there were 2,983,201 shares of the registrant's
common stock outstanding.
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NORTH AMERICAN SCIENTIFIC, INC.
SECOND QUARTER ENDED APRIL 30, 1996
DESCRIPTION PAGE
- - ----------- ----
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET
April 30, 1996 and October 31, 1995 1
CONSOLIDATED STATEMENT OF OPERATIONS
6 mos. and 3 mos. ended April 30, 1996
and April 30, 1995 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
6 mos. ended April 30, 1996 and
April 30, 1995 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4
Item 2. Managements's Discussion and Analysis of Financial 5
Condition and Results of Operations
PART II OTHER INFORMATION 6
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NORTH AMERICAN SCIENTIFIC, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
October 31, April 30,
1995 1996
----------- -----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 491,000 $ 647,400
Investments 25,000 25,600
Accounts receivable, less allowance for doubtful
accounts of $1,700 and $1,700, respectively 488,300 387,100
Inventories 148,100 196,800
Prepaid expenses and other current assets 13,400 21,900
----------- -----------
Total current assets 1,165,800 1,278,800
Equipment and leasehold improvements, net 86,100 123,700
Deposits and other assets 39,300 40,900
----------- -----------
$ 1,291,200 $ 1,443,400
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 42,200 $ 98,300
Accrued expenses 78,100 49,700
Income taxes payable 54,400 40,400
----------- -----------
Total current liabilities 174,700 188,400
Stockholder's equity:
Preferred stock, par value $.01 per share;
authorized 2,000,000 shares, no shares issued - -
Common stock, par value $.01 per share; authorized
10,000,000 shares; 1995 - 2,983,201 shares issued
and outstanding, 1994 - 2,962,701 shares issued
and outstanding 29,800 29,800
Additional paid-in capital 2,105,100 2,105,100
Accumulated deficit (1,010,200) (864,500)
Cumulative translation adjustment (8,200) (15,400)
----------- -----------
Total stockholder's equity 1,116,500 1,255,000
----------- -----------
$ 1,291,200 $ 1,443,400
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
1
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NORTH AMERICAN SCIENTIFIC, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
April 30, April 30,
------------------------- ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $1,194,300 $ 783,700 $ 580,800 $ 408,000
Cost of goods sold 606,800 372,600 263,200 195,300
---------- ---------- ---------- ----------
Gross profit 587,500 411,100 317,600 212,700
Research and development expenses 8,900 - 1,000 -
General and administrative expenses 355,400 313,300 207,400 154,400
---------- ---------- ---------- ----------
Income from operations 223,200 97,800 109,200 58,300
Interest and other income 10,600 5,200 5,800 2,300
---------- ---------- ---------- ----------
Income from continuing operations
before income taxes 233,800 103,000 115,000 60,600
Income taxes 88,100 38,400 51,800 28,100
---------- ---------- ---------- ----------
Net income for period $ 145,700 $ 64,600 $ 63,200 $ 32,500
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per share:
Net earnings per share $ .05 $ .02 $ .02 $ .01
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of shares outstanding 2,983,201 2,962,701 2,983,201 2,962,701
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
2
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NORTH AMERICAN SCIENTIFIC, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months
Ended April 30,
-----------------------
1996 1995
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $145,700 $ 64,600
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 25,200 17,800
Changes in assets and liabilities:
Accounts receivable 101,200 44,700
Inventories (48,700) (81,900)
Prepaid expenses and other current assets (8,500) (7,800)
Deposits and other assets (1,600) (12,200)
Accounts payable 56,100 (35,000)
Accrued expenses (28,400) (30,700)
Income taxes payable (14,000) (40,100)
-------- ---------
Total adjustments 81,300 (145,200)
-------- ---------
Net cash provided (used) by operating activities 227,000 (80,600)
Cash flows from investing activities:
Purchase of fixed assets (61,600) (34,700)
-------- ---------
Net cash used for investing activities (61,600) (34,700)
Effect of foreign exchange on cash (9,000) (700)
-------- ---------
Net increase (decrease) in cash and cash equivalents 156,400 (116,000)
Cash and cash equivalents, beginning of period 491,000 601,800
-------- ---------
Cash and cash equivalents, end of period $647,400 $ 485,800
-------- ---------
-------- ---------
Supplemental disclosure of cash flow information:
Interest paid $ 250 $ -
-------- ---------
-------- ---------
Income taxes paid $102,160 $ 78,500
-------- ---------
-------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
3
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NORTH AMERICAN SCIENTIFIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:
North American Scientific, Inc. manufactures and distributes a line of low-level
radiation sources and standards. References to the "Company" include both the
parent company and its subsidiary. There are no significant operations in
Canada.
BASIS OF PRESENTATION
The consolidated financial statements have been prepared by North American
Scientific, Inc. (the "Company"), without audit, 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 have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information not misleading. These
financial statements should be read in conjunction with the financial statements
and related notes contained in the Company's 1995 Annual Report. Other than as
indicated herein, there have been no significant changes from the data presented
in said Report.
In the opinion of management, the financial statements contain all adjustments
necessary to present fairly the financial position of the Company as of April
30, 1996 and April 30, 1995, and the results of operations and cash flows for
the same periods.
INVENTORIES
Inventories are valued at the lower-of-cost or market. Cost is determined using
the first-in-first-out method.
4
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
The following discussion should be read in conjunction with the
consolidated financial statements contained herein and the notes thereto.
Dollar amounts specified herein refer to U.S. dollars.
SECOND QUARTER ENDING APRIL 30, 1996 COMPARED WITH SECOND QUARTER ENDING
APRIL 30, 1995
Net sales in the second quarter increased from $408,000 for the 1995 period
to $580,800 for the 1996 period under review, an increase of approximately 42%,
as a result of the Company's continued sales efforts in both domestic and
foreign markets. Net income increased from $32,500, or $0.01 per share, in the
1995 period, to a net income of $63,200, or $0.02 per share, in the 1996 fiscal
period, an increase of 94%. Net sales for the first six months increased from
$783,800 for the 1995 period to $1,194,300 for the 1996 period, an increase of
approximately 52%. Net income for the first six months increased from $64,600,
or $0.02 per share, in the 1995 period, to a net income of $145,700, or $0.05
per share, in the 1996 fiscal period, and increase of 126%.
For the second quarter cost of goods sold increased from $195,300 in 1995
to $263,200 in the 1996 fiscal period, an increase of approximately 35%. This
increase was generally consistent with the increase in net sales. For the six
month period comparison, cost of goods sold increased from $372,600 in 1995 to
$606,800 in the 1996 fiscal period, an increase of approximately 63%. This
increase was generally consistent with the increase in net sales.
For the second quarter, general and administrative expenses increased from
$154,400 in 1995 to $263,200 in the 1996 fiscal period, an increase of
approximately 34%. For the six month comparison, general and administrative
expenses increased from $313,300 in 1995 to $355,400 in the 1996 fiscal period,
an increase of approximately 13%. The increase in general and administrative
expenses for the second quarter and six month fiscal 1996 periods was primarily
a result of one time legal expenses associated with the Company's U.S. stock
registration and increased rent expense due to facility expansion.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1995, the Company had cash and short-term deposits aggregating
approximately $647,400, compared to $485,800 at April 30, 1995. To date, the
Company's short-term liquidity needs have generally consisted of operating
capital to finance growth in trade accounts receivable and inventories. The
Company has satisfied these needs primarily through a combination of private and
public equity financings and from cash generated by operations. The Company has
no long-term debt and has not had, or had the need for, a line of credit or
similar arrangement with a bank. Management anticipates that the Company's
continued growth will be funded from operations and believes that it will
continue to have sufficient cash resources from operations to fund its cash
needs.
For the six month period ended April 30, 1996, cash flow from operations
generated approximately $227,000 compared to using $80,600 for the comparable
1995 period. Cash flow in investing activities used approximately $61,600 in
the 1996 fiscal period compared to $34,700 in the comparable 1995 period. The
increased use of cash for investing activities in the current period resulted
from equipment purchases.
SEASONALITY
The Company's business is not significantly impacted by seasonal
fluctuations. However, the first quarter of each fiscal year has traditionally
seen relatively slower demand associated with the holiday season.
IMPACT OF INFLATION
The impact of inflation on the Company's operations is not significant.
5
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PART II OTHER INFORMATION
The Company was not required to report the information pursuant to Items 1
through 6 of Part II of Form 10-QSB for any of the three months ended April 30,
1996, except as follows:
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 14, 1996, the company held its 1996 Annual Meeting of Stockholders. The
following persons were elected as directors to hold office until the 1997 Annual
Meeting of Stockholders: Irwin J. Gruverman, L. Michael Cutrer,
Dr. Allan M. Green, Larry Berkin and Michael C. Lee. The number of shares cast
for, withheld and abstained with respect to each of the nominees were as
follows:
Nominee For Withheld Abstained
------- --- -------- ---------
Gruverman 2,106,825 0 21,000
Cutrer 2,106,825 0 21,000
Green 2,100,625 6,200 21,000
Berkin 2,106,825 0 21,000
Lee 2,106,825 0 21,000
The stockholders also voted to adopt the 1996 Stock Option Plan of the Company.
1,493,095 shares were cast for the adoption of the proposal, 20,000 shares were
cast against this proposal, and 12,000 shares abstained.
The stockholders also voted to approve the ratification of the selection of
Price Waterhouse LLP as independent auditors for the Company for the fiscal year
ending October 31, 1996. 2,068,865 shares were cast for such selection, no
shares were cast against such selection, and 5,450 shares abstained.
575,770 Broker nonvotes were received in connection with the vote upon the 1996
Stock Option Plan.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits - The following Exhibits are filed herewith:
Exhibit (27) - financial Data Schedule (EDGAR only)
b) Reports on Form 8-K - No such reports were filed during the quarter for
which this report is filed.
6
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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.
NORTH AMERICAN SCIENTIFIC, INC.
--------------------------------------
(Registrant)
Date By: /s/ L. Michael Cutrer
--------------------------- --------------------------------------
L. Michael Cutrer
President and Chief Executive Officer
(Principal Executive, Accounting and
Financial Officer)
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<CASH> 647,400
<SECURITIES> 0
<RECEIVABLES> 388,800
<ALLOWANCES> (1,700)
<INVENTORY> 196,800
<CURRENT-ASSETS> 1,278,800
<PP&E> 341,400
<DEPRECIATION> (217,700)
<TOTAL-ASSETS> 1,443,400
<CURRENT-LIABILITIES> (188,400)
<BONDS> 0
0
0
<COMMON> 29,800
<OTHER-SE> 2,105,100
<TOTAL-LIABILITY-AND-EQUITY> 1,443,400
<SALES> 1,194,300
<TOTAL-REVENUES> 0
<CGS> 606,800
<TOTAL-COSTS> 364,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 233,800
<INCOME-TAX> 88,100
<INCOME-CONTINUING> 145,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,700
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
