<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2000
Commission File Number 0-26670
----------------------
NORTH AMERICAN SCIENTIFIC, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0366422
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20200 Sunburst Street, Chatsworth, CA 91311
(Address of principal executive offices)
(818) 734-8600
(Registrant's telephone number, including area code)
----------------------
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 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 29, 2000 was 6,924,227 shares.
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-1-
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<S> <C> <C> <C>
Consolidated Balance Sheets as of July 31, 2000 and October 31, 1999................................. 3
Consolidated Statements of Income for the three months and nine months
ended July 31, 2000 and 1999 ..................................................................... 4
Consolidated Statements of Cash Flows for the nine months
ended July 31, 2000 and 1999 ...................................................................... 5
Condensed Notes to Consolidated Financial Statements ................................................ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ...................................................................... 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ................................. 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS........................................................................... 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits ............................................................................................ 11
Reports on Form 8-K ................................................................................. 11
</TABLE>
-2-
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
2000 1999
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents ..................................................... $ 3,353,000 $ 1,443,000
Marketable securities ......................................................... 8,142,000 8,219,000
Accounts receivable, net ...................................................... 1,212,000 1,983,000
Inventories ................................................................... 827,000 552,000
Prepaid expenses and other current assets...................................... 959,000 365,000
------------ ------------
Total current assets ........................................................ 14,493,000 12,562,000
Notes receivable.................................................................. 6,189,000 4,162,000
Equipment and leasehold improvements, net ........................................ 3,600,000 3,743,000
Construction in progress ......................................................... 3,687,000 2,826,000
Deposits and other assets ........................................................ 568,000 545,000
------------ ------------
Total assets ................................................................ $ 28,537,000 $ 23,838,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable .............................................................. $ 899,000 $ 568,000
Accrued expenses .............................................................. 562,000 627,000
Income taxes payable .......................................................... - 163,000
------------ ------------
Total current liabilities ................................................... 1,461,000 1,358,000
------------ ------------
Deferred income taxes............................................................. 114,000 114,000
------------ ------------
Total liabilities ........................................................... 1,575,000 1,472,000
------------ ------------
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; 6,920,477
and 6,828,887 shares issued and outstanding as of July 31, 2000 and
October 31, 1999, respectively............................................... 69,000 68,000
Additional paid-in capital .................................................... 18,655,000 18,172,000
Retained earnings ............................................................. 8,238,000 4,126,000
------------ ------------
Total stockholders' equity .................................................. 26,962,000 22,366,000
------------ ------------
Total liabilities and stockholders' equity .................................. $ 28,537,000 $ 23,838,000
============ ============
</TABLE>
See notes to 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,
------------------------ ------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales................................................... $ 4,450,000 $ 3,444,000 $ 12,891,000 $ 8,878,000
Cost of goods sold.......................................... 1,478,000 1,257,000 4,296,000 3,261,000
------------ ------------ ------------ -------------
Gross profit .......................................... 2,972,000 2,187,000 8,595,000 5,617,000
------------ ------------ ------------ -------------
Selling, general and administrative expenses ............... 885,000 773,000 2,583,000 2,236,000
Research and development.................................... 126,000 36,000 264,000 240,000
------------ ------------ ------------ -------------
Income from operations ..................................... 1,961,000 1,378,000 5,748,000 3,141,000
Interest and other income................................... 403,000 178,000 833,000 429,000
------------ ------------ ------------ -------------
Income before provision for income taxes ................... 2,364,000 1,556,000 6,581,000 3,570,000
Provision for income taxes ................................. 884,000 575,000 2,469,000 1,362,000
------------ ------------ ------------ -------------
Net income ................................................. $ 1,480,000 $ 981,000 $ 4,112,000 $ 2,208,000
============ ============ ============ =============
Earnings per share:
Basic ................................................... $ .21 $ .14 $ .60 $ .32
============ ============ ============ =============
Diluted.................................................. $ .20 $ .14 $ .55 $ .31
============ ============ ============ =============
Shares used in per share calculations:
Basic .................................................. 6,884,806 6,804,137 6,872,402 6,795,660
============ ============ ============ =============
Diluted ................................................. 7,527,990 7,247,996 7,467,303 7,183,188
============ ============ ============ =============
</TABLE>
See notes to the consolidated financial statements
-4-
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JULY 31,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................................ $ 4,112,000 $ 2,208,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization .......................................... 543,000 262,000
Gain on sale of other assets ........................................... (119,000) -
Changes in assets and liabilities
Accounts receivable .................................................. 771,000 (605,000)
Inventories .......................................................... (275,000) 89,000
Prepaid expenses and other assets .................................... (681,000) (260,000)
Accounts payable ..................................................... 331,000 443,000
Accrued expenses ..................................................... (65,000) 114,000
Income taxes payable ................................................. (163,000) 542,000
-------------- ------------
Net cash provided by operating activities .................... 4,454,000 2,793,000
------------- ------------
Cash flows from investing activities:
Net sales of marketable securities ......................................... 77,000 1,701,000
Proceeds from sale of other assets ......................................... 169,000 -
Notes receivable, net....................................................... (2,027,000) (2,135,000)
Construction in progress.................................................... (861,000) (465,000)
Capital expenditures ....................................................... (386,000) (2,437,000)
-------------- ------------
Net cash used in investing activities ........................ (3,028,000) (3,336,000)
------------- ------------
Cash flows from financing activities:
Net proceeds from issuance of common stock.................................. 484,000 15,000
------------- ------------
Net cash provided by financing activities .................... 484,000 15,000
------------- ------------
Net increase (decrease) in cash and cash equivalents ........................... 1,910,000 (528,000)
Cash and cash equivalents at beginning of period ............................... 1,443,000 2,119,000
------------- ------------
Cash and cash equivalents at end of period ..................................... $ 3,353,000 $ 1,591,000
============= ============
Supplemental disclosure of cash flow information:
Income taxes paid........................................................... $ 2,600,000 $ 821,000
============= ============
</TABLE>
See notes to 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, 2000, and for the three
months and nine months then ended is unaudited and has been prepared by the
Company in accordance with the instructions to Form 10-Q. Therefore, 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. In the opinion of management, 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-K for the fiscal year ended October 31, 1999.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the reporting period. Actual
results could differ from those estimates.
NOTE 2 - 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, 2000.
NOTE 3 - INVENTORIES
Inventories are valued at the lower of cost or market as determined under the
first-in, first-out method. Costs include materials, labor and manufacturing
overhead. Inventories are shown net of applicable reserves and allowances.
Inventories consist of the following:
<TABLE>
<CAPTION>
July 31, October 31,
2000 1999
------------ ------------
<S> <C> <C>
Raw materials $ 604,000 $ 285,000
Work in process 65,000 166,000
Finished goods 158,000 101,000
------------ ------------
$ 827,000 $ 552,000
============ ============
</TABLE>
-6-
<PAGE>
NOTE 4 - CONVERTIBLE NOTES RECEIVABLE
As of October 31, 1999, the Company had a $500,000 secured subordinated
convertible note (the "Note") from RadioMed Corporation ("RadioMed"). The Note
bore interest at 10% per annum and had an original maturity date of October 7,
2007. The Note was convertible at the Company's election at any time prior to
the maturity date into Series A Preferred Stock of RadioMed at a price of $500
per share, subject to adjustment.
On December 4, 1999, the Company and RadioMed signed a settlement letter which
provided for, among other matters, the repayment of the principal amount of the
Note on or prior to March 31, 2000, and payment of the accrued interest on the
Note in the form of 20,000 shares of RadioMed Series A Convertible Preferred
Stock, $0.01 par value. Each of these provisions was satisfied in accordance
with the settlement letter in the second quarter of fiscal year 2000.
On October 21, 1999 the Company signed a definitive agreement to acquire Theseus
Imaging Corporation, a developmental stage company, in a stock for stock
exchange. Under the terms of the Agreement, Theseus stockholders will receive up
to 200,000 shares of newly issued NASI common stock and certain royalty rights
in exchange for 100% of Theseus' common stock. The acquisition of Theseus is
contingent upon final due diligence, receipt of a financial fairness opinion
from a qualified independent third party and initial clinical results. The
Company has also agreed to provide financing to Theseus up until the acquisition
date. This financing is in the form of convertible notes bearing interest at the
prime rate plus 1%. These notes are convertible into common stock of Theseus at
the Company's option. These notes are due and payable or must be converted no
later than November 30, 2000. The notes are secured by a first priority interest
in Theseus' right, title and interest in the collateral as defined in the
Security Agreement, which consists primarily of certain licensing agreements. As
of July 31, 2000 the Company had convertible notes from Theseus totaling
$5,989,000. In August 2000, the Company advanced Theseus an additional $875,000.
In the event NASI does not pursue the acquisition, it is not obligated to
convert the notes.
The Company has a $200,000 secured convertible note from a manufacturing
company. The convertible note matured on June 19, 2000. The note may be
converted at any time at the Company's election into equity securities of the
manufacturing company. The Company is currently evaluating its conversion
option. The note is secured by certain licenses and intellectual property
rights.
NOTE 5 - NET INCOME PER SHARE
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. The following table
sets forth the computation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
------------------------ ------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net income $ 1,480,000 $ 981,000 $ 4,112,000 $ 2,208,000
=========== =========== =========== ===========
Weighted average shares outstanding (basic) 6,884,806 6,804,137 6,872,402 6,795,660
Dilutive effect of stock options and warrants 643,184 443,859 594,901 387,528
----------- ----------- ----------- -----------
Diluted shares outstanding 7,527,990 7,247,996 7,467,303 7,183,188
=========== =========== =========== ===========
Basic earnings per share $ .21 $ .14 $ .60 $ .32
=========== =========== =========== ===========
Diluted earnings per share $ .20 $ .14 $ .55 $ .31
=========== =========== =========== ===========
</TABLE>
Stock options to purchase 135,000 common shares for the three months ended July
31, 2000 and 169,096 shares for the nine months ended July 31, 2000 were
outstanding, but were not included in the computation of diluted earnings per
share because the exercise price of the options was greater than the average
market price of the common shares and, therefore, the effect would have been
antidilutive.
-7-
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
ITEM 2. 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 and the
audited consolidated financial statements and notes thereto contained in the
Company's 1999 Annual Report on Form 10-K. Certain matters discussed in this
quarterly report on Form 10-Q are forward looking as that term is defined by:
(i) the Private Securities Litigation Reform Act of 1995 (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, any 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-K for the
fiscal year ended October 31, 1999. The Company undertakes no obligation to
update publicly any forward-looking statements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 2000 COMPARED TO THREE MONTHS ENDED JULY 31, 1999
NET SALES. Net sales increased $1,006,000, or 29%, to $4,450,000 for the three
months ended July 31, 2000 from $3,444,000 for the three months ended July 31,
1999. The increase in net sales was due to the increase in revenues generated
from the Company's brachytherapy product lines. Sales of the non-therapeutic
lines remained consistent between periods.
GROSS PROFIT. Gross profit increased $785,000 or 36% to $2,972,000 for the three
months ended July 31, 2000 from $2,187,000 for the three months ended July 31,
1999. Gross profit as a percent of sales increased from 64% to 67% during this
period. The increase in gross profit as a percentage of sales was primarily
attributable to the significant proportionate increase in revenues from the
brachytherapy product lines in the third quarter of fiscal 2000, which yield
greater gross margins than the Company's non-therapeutic product lines.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses increased $112,000, or 14%, to $885,000 for the
three months ended July 31, 2000 from $773,000 for the three months ended July
31, 1999. SG&A as a percent of net sales decreased to 20% for the three months
ended July 31, 2000 from 22% for the same period in 1999. SG&A expenses
increased primarily due to the following: (i) the Company added a significant
number of administrative personnel throughout fiscal 1999 and has continued to
do so into fiscal 2000 to support the growth of the Company, and (ii) other
general and administrative expenses were increased to give effect to
management's plans for the expansion of the Company. The Company expects that
general and administrative expenses will continue to increase in absolute
dollars.
RESEARCH AND DEVELOPMENT. Research and development efforts continued into the
third quarter of 2000 with such expenditures totaling $126,000 during this
period compared to $36,000 in the corresponding 1999 period.
INTEREST AND OTHER INCOME. Interest and other income increased $225,000 to
$403,000 for the three months ended July 31, 2000 from $178,000 for the three
months ended July 31, 1999 due to the following: (i) the Company realized a
pre-tax gain of $119,000 related to the disposition of 7,680 shares of series A
preferred stock in RadioMed, a privately held company, and (ii) a change in the
composition of the Company's investment portfolio.
NET INCOME. Net income increased $499,000 to $1,480,000 for the three months
ended July 31, 2000 from $981,000 for the three months ended July 31, 1999. The
increase is a result of the factors described above.
-8-
<PAGE>
NINE MONTHS ENDED JULY 31, 2000 COMPARED TO NINE MONTHS ENDED JULY 31, 1999
NET SALES. Net sales increased $4,013,000, or 45%, to $12,891,000 for the nine
months ended July 31, 2000 from $8,878,000 for the nine months ended July 31,
1999. The increase in net sales was due to the increase in revenues generated
from the Company's brachytherapy product lines. Sales of the non-therapeutic
lines remained consistent between periods.
GROSS PROFIT. Gross profit increased $2,978,000 or 53% to $8,595,000 for the
nine months ended July 31, 2000 from $5,617,000 for the nine months ended July
31, 1999. Gross profit as a percent of sales increased from 63% to 67% during
this period. The increase in gross profit as a percentage of sales was primarily
attributable to the significant proportionate increase in revenues from the
Company's brachytherapy product lines in the first nine months of fiscal 2000,
which yield greater gross margins than the Company's non-therapeutic product
lines.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses increased $347,000, or 16%, to $2,583,000 for
the nine months ended July 31, 2000 from $2,236,000 for the nine months ended
July 31, 1999. SG&A as a percent of net sales decreased to 20% for the nine
months ended July 31, 2000 from 25% for the same period in 1999. SG&A expenses
increased primarily due to the following: (i) the Company added a significant
number of administrative personnel throughout fiscal 1999 and has continued to
do so into fiscal 2000 to support the growth of the Company and (ii) other
general and administrative expenses were increased to give effect to
management's plans for the expansion of the Company. The Company expects that
general and administrative expenses will continue to increase in absolute
dollars.
RESEARCH AND DEVELOPMENT. Research and development efforts continued through the
first nine months of 2000 with such expenditures totaling $264,000 during this
period compared to $240,000 in the corresponding 1999 period.
INTEREST AND OTHER INCOME. Interest and other income increased $404,000 to
$833,000 for the nine months ended July 31, 2000 from $429,000 for the nine
months ended July 31, 1999 due to the following: (i) the Company realized a
pre-tax gain of $119,000 related to the disposition of 7,680 shares of series A
preferred stock in RadioMed, a privately held company, and (ii) a change in the
composition of the Company's investment portfolio.
NET INCOME. Net income increased $1,904,000 to $4,112,000 for the nine months
ended July 31, 2000 from $2,208,000 for the nine months ended July 31, 1999. The
increase is a result of the factors described above.
-9-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 2000, the Company had cash and investments in marketable securities
aggregating approximately $11.5 million and working capital of $13.0 million.
For the nine months ended July 31, 2000, net cash provided by operating
activities was approximately $4.5 million. Net cash used in investing activities
for capital expenditures, convertible notes and construction in progress totaled
approximately $3.3 million during the nine months ended July 31, 2000. On
October 21, 1999, the Company entered into a definitive agreement to acquire
Theseus Imaging Corporation ("Theseus"). The increase in notes receivable
resulted from an additional $2.5 million in secured loans to Theseus which was
partially offset by the repayment of the $500,000 principal balance of the
convertible note receivable from RadioMed Corporation. Although the acquisition
of Theseus has not been completed, the Company anticipates ongoing clinical
trial costs associated with Theseus to be material to the Company's financial
position. Construction in progress includes payments related to the two linear
accelerators purchased pursuant to a purchase agreement dated February 6, 1998.
The manufacture of the accelerators has not been completed. The Company is
currently investigating what the costs will be to complete the accelerators and
anticipates that such costs will be material.
The Company receives cash from the exercise of stock options. During the nine
months ended July 31, 2000, cash received from the exercise of stock options
totaled approximately $484,000. Proceeds from the exercise of stock options and
their related tax benefits will vary from period to period based upon, among
other factors, fluctuations in the market value of the Company's stock relative
to the exercise price of such options.
The Company is authorized to purchase up to $1.5 million of the Company's common
stock on the open market. No such shares have been repurchased as of July 31,
2000.
The primary objectives for the Company's investment portfolio are liquidity and
safety of principal. Investments are made to achieve the highest rate of return
to the Company, consistent with these two objectives. The Company invests its
excess cash in securities with varying maturities to meet projected cash needs.
To date, the Company's short term liquidity needs have generally consisted of
operating capital to finance growth in inventories, trade accounts receivable,
new product development, capital expenditures and strategic investments in
related businesses. The Company has satisfied these needs primarily through a
combination of private equity financings and from cash generated by operations.
The Company does not currently have long-term debt or a line of credit or
similar arrangements with a bank. Management anticipates that its existing cash
resources will be sufficient to fund its planned activities over the next twelve
months, although additional funding may be required to fund the acquisition
and/or development of complementary businesses, technologies or products
including the acquisition of Theseus and completion of the clinical trials of
its Apomate(TM) product. In the event additional needs for cash arise, the
Company may raise additional funds from a combination of sources including
potential debt and equity issuances.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." The Company will be required to adopt SAB 101 in fiscal 2001. The
Company does not expect this change in accounting pronouncement to have a
material effect on the Company's financial position or results of operations.
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 ("FAS 133"), "Accounting for Derivative Instruments and Hedging Activities."
In May 1999, the FASB voted to delay the effective date of FAS 133 by one year.
The Company will be required to adopt FAS 133 for fiscal year 2001. This
statement establishes a new model for accounting for derivatives and hedging
activities. Under FAS 133, all derivatives must be recognized as assets and
liabilities and measured at fair value. The Company does not expect this change
in accounting pronouncement to have a material effect on the Company's financial
position or results of operations.
-10-
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information about market risks for the three months ended July 31, 2000 does not
differ materially from that discussed under Item 7A of the registrant's Annual
Report on Form 10-K for 1999.
PART II - OTHER INFORMATION
The Company was not required to report any information pursuant to Items 1
through 6 of Part II of Form 10-Q except as follows:
ITEM 1. LEGAL PROCEEDINGS
On February 6, 1998, the Company contracted with PracSys Corporation ("PracSys")
to build two linear particle accelerators intended to produce Pd-103 isotopes to
be incorporated in the Company's Pd-103 brachytherapy seed products. PracSys did
not complete the manufacturing of the accelerators, and the Company demanded
that PracSys turn over the uncompleted accelerators. On August 11, 1999 PracSys
initiated an arbitration proceeding against the Company claiming breach of
contract, breach of fiduciary duty and unfair and deceptive trade practices. The
Company denied PracSys' claims, and asserted counterclaims against PracSys for
breach of contract and fraud and misrepresentation in connection with PracSys'
failure to complete the accelerators. On June 2, 2000, the arbitrator denied all
damage claims by either party in their entirety. Additionally, the arbitrator
denied PracSys' claims attempting to cancel the Company's ownership interest in
PracSys and certain other exclusivity and option rights granted to the Company.
Although no liability was found against the Company, the arbitrator did direct
the Company to pay certain of PracSys' legal and administrative expenses related
to the arbitration.
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 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 31, 2000 By: /s/ L. Michael Cutrer
----------------------------------------------
Name: L. Michael Cutrer
Title: President and
Chief Executive Officer
(Principal Executive Officer)
August 31, 2000 By: /s/ Alan I. Edrick
----------------------------------------------
Name: Alan I. Edrick
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)
-12-
