<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1998
Commission File Number 0-26670
----------------------
NORTH AMERICAN SCIENTIFIC, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 51-0366422
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7435 Greenbush Avenue, North Hollywood, CA 91605
(Address of principal executive offices)
(818) 503-9201
(Registrant's telephone number, including area code)
----------------------
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.
[X] Yes [ ] No
The number of shares of Registrant's Common Stock, $.01 par value,
outstanding as of August 24, 1998 was 6,663,975 shares.
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<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of July 31, 1998 and October 31, 1997................................. 3
Consolidated Statements of Income for the three months and
nine months ended July 31, 1998 and 1997 .......................................................... 4
Consolidated Statements of Cash Flows for the nine months
ended July 31, 1998 and 1997 ...................................................................... 5
Condensed Notes to Consolidated Financial Statements ................................................ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ...................................................................... 8
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........................................ 11
ITEM 5. OTHER MATTERS............................................................................... 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits ............................................................................................ 11
Reports on Form 8-K ................................................................................. 11
</TABLE>
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<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ..................................................... $ 1,950,000 $ 1,596,000
Marketable securities ......................................................... 10,099,000 27,000
Accounts receivable, net ...................................................... 908,000 430,000
Inventories ................................................................... 596,000 378,000
Income taxes receivable........................................................ - 106,000
Prepaid expenses and other current assets...................................... 242,000 34,000
------------ ------------
Total current assets ........................................................ 13,795,000 2,571,000
Notes receivable.................................................................. 700,000 500,000
Equipment and leasehold improvements, net ........................................ 1,403,000 346,000
Investment in and advances to Affiliates ......................................... 1,861,000 -
Deposits and other assets ........................................................ 439,000 256,000
------------ ------------
Total assets .............................................................. $ 18,198,000 $ 3,673,000
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable .............................................................. $ 415,000 $ 364,000
Accrued expenses .............................................................. 86,000 81,000
Income taxes payable .......................................................... 314,000 -
------------ -----------
Total current liabilities ................................................... 815,000 445,000
------------ ------------
Stockholders' equity
Preferred stock, $.01 par value, 2,000,000 shares authorized;
no shares issued............................................................. - -
Common stock, $.01 par value, 40,000,000 shares authorized; 6,663,975 and
5,176,052 shares issued and outstanding as of July 31, 1998
and October 31, 1997, respectively........................................... 67,000 34,000
Additional paid-in capital .................................................... 16,923,000 3,515,000
Unrealized losses on investments .............................................. (6,000) -
Retained earnings (deficit) ................................................... 399,000 (321,000)
------------ ------------
Total stockholders' equity .................................................. 17,383,000 3,228,000
------------ ------------
Total liabilities and stockholders' equity .................................. $ 18,198,000 $ 3,673,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
-3-
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
------------------------ ---------------------
1998 1997 1998 1997
----------- ----------- ----------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales................................................... $ 1,809,000 $ 820,000 $ 3,981,000 $ 2,589,000
Cost of goods sold.......................................... 776,000 449,000 1,879,000 1,367,000
----------- ----------- ----------- -----------
Gross profit .......................................... 1,033,000 371,000 2,102,000 1,222,000
----------- ----------- ----------- -----------
Selling, general and administrative expenses ............... 486,000 296,000 1,297,000 851,000
Research and development.................................... 56,000 13,000 122,000 28,000
----------- ----------- ----------- -----------
Income from operations ..................................... 491,000 62,000 683,000 343,000
Interest and other income................................... 175,000 16,000 483,000 32,000
----------- ----------- ----------- -----------
Income before provision for income taxes ................... 666,000 78,000 1,166,000 375,000
Provision for income taxes ................................. 246,000 37,000 425,000 155,000
----------- ----------- ----------- -----------
Net income ................................................. $ 420,000 $ 41,000 $ 741,000 $ 220,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per share
Basic ................................................... $ .07 $ .01 $ .12 $ .05
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted.................................................. $ .06 $ .01 $ .10 $ .04
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of common and
common equivalent shares outstanding
Basic .................................................. 6,464,572 4,609,802 6,349,713 4,557,302
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted ................................................. 7,179,244 5,325,928 7,092,175 5,132,118
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
-4-
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JULY 31,
1998 1997
------------- ----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income .............................................................. $ 741,000 $ 220,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization .......................................... 160,000 39,000
Other .............................................................. (4,000) -
Changes in assets and liabilities
Accounts receivable .................................................. (488,000) 216,000
Inventories .......................................................... (218,000) (236,000)
Income taxes receivable............................................... 106,000 -
Prepaid expenses and other assets .................................... (444,000) (65,000)
Accounts payable ..................................................... 51,000 47,000
Accrued expenses ..................................................... 5,000 (3,000)
Income taxes payable ................................................. 314,000 (155,000)
------------- ------------
Net cash provided by operating activities .................... 223,000 63,000
------------- ------------
Cash flows from investing activities:
Investment in and advances to affiliates ................................... (1,861,000) -
Net purchases of marketable securities ..................................... (10,078,000) -
Notes receivable............................................................ (200,000) -
Capital expenditures ....................................................... (1,171,000) (151,000)
-------------- ------------
Net cash used in investing activities ........................ (13,310,000) (151,000)
------------- ------------
Cash flows from financing activities:
Net proceeds from issuance of common stock.................................. 13,441,000 1,114,000
------------- ------------
Net cash provided by financing activities .................... 13,441,000 1,114,000
------------- ------------
Effect of foreign currency translation on cash ................................. - (5,000)
------------- ------------
Net increase in cash and cash equivalents ...................................... 354,000 1,021,000
Cash and cash equivalents at beginning of period ............................... 1,596,000 866,000
------------- ------------
Cash and cash equivalents at end of period ..................................... $ 1,950,000 $ 1,887,000
------------- ------------
------------- ------------
Supplemental disclosure of cash flow information:
Interest paid .............................................................. $ - $ 1,000
------------- ------------
------------- ------------
Income taxes paid........................................................... $ 37,000 $ 344,000
------------- ------------
------------- ------------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
-5-
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial information as of July 31, 1998 and for the three
months and nine months then ended is unaudited. In the opinion of the
Company, the unaudited financial information is presented on a basis
consistent with the audited financial statements and contains all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results for such interim periods. The results of
operations for interim periods are not necessarily indicative of results of
operations for the full year. The interim financial statements should be read
in conjunction with the audited financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the fiscal year
ended October 31, 1997.
Certain reclassifications of previously reported amounts have been made to
conform to the current period's presentation.
NOTE 2 - STOCK SPLIT
Effective April 20, 1998, the Company effected a 3-for-2 stock split in the
form of a share dividend. The par value of the Company's common stock was
unchanged. All common stock information set forth in the consolidated
financial statements and notes thereto has been restated to reflect the stock
split.
NOTE 3 - MARKETABLE SECURITIES
The Company considers its marketable securities available-for-sale as defined
in Statement of Financial Accounting Standards ("SFAS") No. 115. There were
no material realized or unrealized gains or losses nor any material
differences between estimated fair values, based upon quoted market prices,
and the costs of securities as of July 31, 1998.
NOTE 4 - INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in-first-out method.
NOTE 5 - NET INCOME PER SHARE
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share", in the first quarter of fiscal 1998. SFAS 128 requires
the Company to present basic and diluted earnings per share on the face of
the statement of operations. Basic earnings per share is computed by dividing
the net income by the weighted average number of shares outstanding for the
period.
Diluted earnings per share is computed by dividing the net income by the sum
of the weighted average number of common shares outstanding for the period
plus the assumed exercise of all dilutive securities by applying the treasury
stock method.
-6-
<PAGE>
NOTE 6 - PRIVATE PLACEMENT
In November 1997, the Company completed a private placement of 800,000 shares
of its common stock to certain institutional investors. The net proceeds to
the Company from the sale were approximately $13.3 million.
NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS
REPORTING COMPREHENSIVE INCOME
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income
("SFAS 130"). SFAS 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income is defined as the change in equity
of a business enterprise during a period from transactions and other events
and circumstances from non-owner sources. The Company is required to adopt
SFAS 130 for its fiscal year beginning November 1, 1998; reclassification of
financial statements for earlier periods provided for comparative purposes is
required. The Company does not expect this pronouncement to materially impact
the presentation of its financial statements.
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information Reporting ("SFAS 131"). SFAS 131
establishes standards for disclosure about operating in segments in annual
financial statements and selected information in interim financial reports.
It also establishes standards for related disclosures about products and
services, geographic areas and major customers. This statement supersedes
SFAS No. 14, Financial Reporting for Segments of a Business Enterprise. The
Company is required to adopt SFAS 131 for its fiscal year ending October 31,
1999, and requires that comparative information from earlier years be
restated to conform to the requirements of this standard. The Company does
not expect this pronouncement to materially change the Company's current
reporting and disclosures.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). This statement establishes a
new model for accounting for derivatives and hedging activities. Under SFAS
133, all derivatives must be recognized as assets and liabilities and
measured at fair value. The Company is required to adopt SFAS 133 for its
fiscal year ending October 31, 2000. The Company does not expect this
pronouncement to materially impact its consolidated financial position or
results of operation
-7-
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements contained herein and the notes thereto.
Certain matters discussed in this quarterly report on Form 10-QSB are forward
looking as that term is defined by: (i) the Private Securities Litigation
Reform Act of 1955 (the "1995 Act") and (ii) releases issued by the SEC.
These statements are being made pursuant to the provisions of the 1995 Act
and with the intention of obtaining the benefits of the "Safe Harbor"
provisions of the 1995 Act. The Company cautions investors that any forward
looking statements made by the Company are not guarantees of future
performance and that actual results may differ materially from those in such
forward looking statements as a result of various factors, including, but not
limited to the risks detailed herein or detailed from time to time in the
Company's filings with the SEC, including those factors identified under
"Business-Risk Factors" in the Company's Annual Report on Form 10-KSB for the
fiscal year ended October 31, 1997.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 1998 COMPARED TO THREE MONTHS ENDED JULY 31, 1997
NET SALES. Net sales increased $989,000, or 121%, to $1,809,000 for the three
months ended July 31, 1998 from $820,000 for the three months ended July 31,
1997. The increase in net sales was primarily due to the inclusion of
revenues from a new product line, brachytherapy sources, which was introduced
in the first quarter of fiscal 1998.
GROSS PROFIT. Gross profit increased $662,000 or 178% to $1,033,000 for the
three months ended July 31, 1998 from $371,000 for the three months ended
July 31, 1997. Gross profit as a percent of sales increased from 45% to 57%
during this period. The increase in gross profit as a percentage of sales was
primarily attributable to the inclusion of revenues from the brachytherapy
product line in the third quarter of fiscal 1998 which yield greater gross
margins than the Company's reference source product line.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses increased $190,000, or 64%, to $486,000 for
the three months ended July 31, 1998 from $296,000 for the three months ended
July 31, 1997. SG&A expenses increased primarily due to the following: (i)
the Company added staff to focus on reference source business product sales,
to improve gross margins and to develop capabilities for new product lines
and (ii) other general and administrative expenses were increased to support
the growth of the Company.
RESEARCH AND DEVELOPMENT. Research and development efforts continued into the
third quarter of 1998 with such expenditures totaling $56,000 during this
period compared to $13,000 in the corresponding 1997 period. The increase was
due primarily to development efforts associated with new product lines. Such
expenditures are expected to increase in future periods.
INCOME FROM OPERATIONS. Income from operations increased $429,000 to $491,000
for the three months ended July 31, 1998, from $62,000 for the three months
ended July 31, 1997. This increase is a result of a combination of the
factors described above.
-8-
<PAGE>
INTEREST INCOME. Interest income increased $159,000 to $175,000 for the three
months ended July 31, 1998 from $16,000 for the three months ended July 31,
1997. This increase resulted from the investment of funds received from the
Company's 1997 private placement.
NET INCOME. Net income increased $379,000 to $420,000 for the three months
ended July 31, 1998 from $41,000 for the three months ended July 31, 1997.
The increase is a result of the factors described above.
NINE MONTHS ENDED JULY 31, 1998 COMPARED TO NINE MONTHS ENDED JULY 31, 1997
NET SALES. Net sales increased $1,392,000, or 54%, to $3,981,000 for the nine
months ended July 31, 1998 from $2,589,000 for the nine months ended July 31,
1997. The increase in net sales is primarily due to: (i) the introduction of
the brachytherapy source product line in the first quarter of fiscal 1998
which increase was partially offset by (ii) a slight decline in sales of the
reference source product line due to increased competition.
GROSS PROFIT. Gross profit increased $880,000 or 72% to $2,102,000 for the
nine months ended July 31, 1998 from $1,222,000 for the nine months ended
July 31, 1997. Gross profit as a percent of sales increased from 47% to 53%
during this period. The increase in gross profit as a percentage of sales was
primarily attributable to the inclusion of revenues from the brachytherapy
product line in fiscal 1998 which yield greater gross margins than the
Company's reference source product line.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased
$446,000, or 52%, to $1,297,000 for the nine months ended July 31, 1998 from
$851,000 for the nine months ended July 31, 1997. SG&A expenses increased
primarily due to the following: (i) the Company added staff to focus on
increasing reference source business product sales and gross margins, and to
develop capabilities for new product lines (ii) an increase in other general
and administrative expenses to support the growth of the Company and (iii)
the inclusion of $85,000 in waste disposal costs associated with the
Company's first waste shipment since it began operations in 1990.
RESEARCH AND DEVELOPMENT. Research and development efforts continued into
1998 and such expenditures totaled $122,000 for the period under review,
compared to $28,000 in the same 1997 period. The increase was due primarily
to development efforts associated with the brachytherapy source line. Such
expenditures are expected to increase in future periods.
INCOME FROM OPERATIONS. Income from operations increased $340,000 to $683,000
for the nine months ended July 31, 1998, from $343,000 for the nine months
ended July 31, 1997. This increase is a result of the factors described above.
INTEREST INCOME. Interest income increased $451,000 to $483,000 for the nine
months ended July 31, 1998 from $32,000 for the nine months ended July 31,
1997. This increase resulted from the investment of funds received from the
Company's 1997 private placement and cash generated from operations.
NET INCOME. Net income increased $521,000 to $741,000 for the nine months
ended July 31, 1998 from $220,000 for the nine months ended July 31, 1997.
The increase is a result of the factors described above.
-9-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1998, the Company had cash and investments aggregating
approximately $12.0 million. The increase in the Company's cash position
during the nine months ended July 31, 1998, was primarily the result of the
private placement of 800,000 shares of its common stock in November 1997
which resulted in net proceeds to the Company of approximately $13.3 million.
For the nine months ended July 31, 1998, net cash provided by operating
activities was approximately $.3 million. Cash used in investing activities
for capital expenditures, investments in marketable securities and advances
to Affiliates totaling approximately $13.3 million were made during the nine
months ended July 31, 1998. The capital expenditures primarily related to
projects designed to increase manufacturing capacity for the new
brachytherapy source line.
To date, the Company's short term liquidity needs have generally consisted of
operating capital to finance growth in inventories, trade accounts receivable
and new product development as well as to take advantage of strategic
investments in related businesses. 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 its existing cash resources will be
sufficient to fund its planned expansion over the next 24 months, although
additional funding may be required to fund the acquisition of complementary
businesses, technologies or products.
YEAR 2000 COMPLIANCE. The Year 2000 issue arises from the fact that most
computer software programs have been written using two digits rather than
four to represent a specific year. Any computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculation causing disruption of operations, including, among other
things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities. Based on a recent assessment,
the Company believes that it will not be required to modify or replace
significant portions of its software in order to address its Year 2000 issue.
The Company is initiating formal communications with its significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their Year 2000
issue. The Company has so far received no indication that its, or any
material third party's, systems will not be Year 2000 compliant.
Consequently, the Company does not expect the Year 2000 issue to be material.
However, there can be no assurance that the systems of other companies will
be converted timely, or that a failure to convert by another company, or a
conversion that is incompatible with the Company's systems would not have a
material adverse effect on the Company.
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<PAGE>
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 except as follows:
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Following a solicitation of consents by the Company, effective June 11, 1998
the stockholders of the Company approved an amendment to the Certificate of
Incorporation of the Company to increase the number of authorized shares from
10 million to 40 million shares. An aggregate of 2,909,172 (68%) of the
outstanding shares entitled to vote were cast in favor of the amendment, with
175,237 (4%) shares being cast against and 552 shares (0.01%) abstaining. No
broker non-votes were received in connection with the proposal. The
Certificate of Amendment was filed with the Secretary of State for the State
of Delaware on June 19, 1998.
ITEM 5 OTHER MATTERS
The Securities and Exchange Commission has recently amended Rules 14a-4 and
14a-5 promulgated under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), in respect of the Company's exercise of discretionary voting
authority in connection with annual shareholder meetings, and in particular
with respect to matters not submitted under the Shareholder Proposal rule set
forth in Rule 14a-8 under the 1934 Act.
Under the amended Rules, a company is permitted discretionary voting
authority in those instances in which the company did not have notice of the
matter by a date more than 45 days before the month and day in the current
year corresponding to the date on which the company first mailed its proxy
materials for the prior year's annual meeting of shareholders, or by a date
established by an overriding advance notice provision in a company's articles
of incorporation or bylaws. The Company has not implemented such an advance
notice provision. Accordingly, in connection with the 1999 Annual Meeting of
Stockholders of the Company, the date after which notice of a stockholder
proposal submitted outside the processes of Rule 14a-8 under the 1934 Act is
considered untimely is January 20, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits - The following Exhibits are filed herewith:
Exhibit 3.1 - Certification of Amendment to Certificate of Incorporation
Exhibit 11 - Computation of Earnings per Share
Exhibit 27 - Financial Data Schedules (EDGAR only)
b. Reports on Form 8-K - No reports on Form 8-K have been filed during the
quarter for which this report is filed.
-11-
<PAGE>
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.
August 26, 1998 By: /s/ L. Michael Cutrer
---------------------
Name: L. Michael Cutrer
Title: President and
Chief Executive Officer
(Principal Executive Officer)
August 26, 1998 By: /s/ Alan I. Edrick
------------------
Name: Alan I. Edrick
Title: Chief Financial Officer
(Principal Financial and
Accounting Officer)
-12-
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NORTH AMERICAN SCIENTIFIC, INC.
* * * * * * * *
NORTH AMERICAN SCIENTIFIC, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at an April 9,
1998 telephonic meeting of its members, adopted a resolution proposing and
declaring advisable the following amendment to the Certificate of
Incorporation of said corporation:
RESOLVED, that subject to the approval of the stockholders of the
Corporation, Paragraph A of Article Fourth of the Certificate of
Incorporation of the Corporation is hereby amended to be and read as
follows:
"Fourth: A. The total number of shares of stock which the Corporation
is authorized to issue is Forty-Two million (42,000,000) shares,
(40,000,000) of which shall be classified as Common Stock, par value $0.01
per share (the "Common Stock"), and Two Million (2,000,000) of which shall
be classified as Preferred Stock, par value $0.01 per share (the "Preferred
Stock)."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to the proposal to amend the
Certificate of Incorporation to increase the authorized shares of Common
Stock from ten million (10,000,000) to forty million (40,000,000) in
accordance with the provisions of Section 228 of the General Corporation Law
of the State of Delaware and written notice of the adoption of the proposal
and enactment of the amendment has been given as provided in Section 228 of
the General Corporation Law of the State of Delaware to every stockholder
entitled to such notice.
<PAGE>
THIRD: That said proposal and amendment was duly adopted in accordance
with the applicable provision of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said NORTH AMERICAN SCIENTIFIC, INC. has caused this
certificate to be signed by L. Michael Cutrer, its President and attested by
Alisa Christensen, its Assistant Secretary, this 18th day of June, 1998.
By: /s/ L. Michael Cutrer
----------------------------
L. Michael Cutrer, President
ATTEST:
/s/ Alisa Christensen
- --------------------------------------
Alisa Christensen, Assistant Secretary
<PAGE>
EXHIBIT 11.1
NORTH AMERICAN SCIENTIFIC, INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
----------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net income ................................................. $ 420,000 $ 41,000 $ 741,000 $ 220,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Shares
Weighted average number of common
shares outstanding (basic)............................. 6,464,572 4,609,802 6,349,713 4,557,302
Add dilutive effect of
Common stock options .................................. 775,998 792,000 763,581 837,000
Warrants............................................... 171,000 225,000 171,000 200,000
Less treasury shares repurchased......................... 232,326 300,874 192,119 462,184
Weighted average number of common
shares outstanding (diluted)........................... 7,179,244 5,325,928 7,092,175 5,132,118
Earnings per Common Share
Basic ................................................. $ .07 $ .01 $ .12 $ .05
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted................................................ $ .06 $ .01 $ .10 $ .04
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 1,950
<SECURITIES> 10,099
<RECEIVABLES> 927
<ALLOWANCES> (19)
<INVENTORY> 596
<CURRENT-ASSETS> 13,795
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