<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
October 13, 2000
Date of Report
(Date of earliest event reported)
-----------------------
NORTH AMERICAN SCIENTIFIC, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0366422
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
20200 SUNBURST STREET, CHATSWORTH, CA 91311
(Address, including zip code, of principal executive offices)
(818) 734-8600
(Registrant's telephone number, including area code)
-----------------------
NOT APPLICABLE
(Former address and telephone number of principal executive offices,
if changed since last report)
-----------------------
1
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 13, 2000, we acquired Theseus Imaging Corporation ("Theseus") by
means of a merger. The Company is now a wholly owned subsidiary of North
American Scientific, Inc. ("NASI"). Theseus develops proprietary
radiopharmaceuticals to enhance the medical management of various conditions,
including heart attack, organ transplantation and cancer. NASI intends to
continue to use the acquired assets to develop products similar to those
previously developed by Theseus.
Theseus' stockholders and option holders received a total of 345,665
shares of, or options to purchase, NASI's common stock in exchange for 100%
of Theseus' outstanding common stock and options. The acquisition will be
accounted for as a purchase. In connection with the acquisition, NASI has
retained all of Theseus' obligations, including approximately $8 million owed
to NASI with respect to loans made to Theseus. In connection with the Theseus
acquisition, NASI expects to record in its fiscal quarter ending October 31,
2000, a one-time charge for in-process research and development of between
$11 million and $12 million. NASI also expects to incur ongoing clinical
trial and development costs related to Theseus' principal product candidate,
Apomate(TM), totaling an estimated $20 million over the next two to three
years. NASI's consolidated financial statements will include Theseus'
financial position and its results of operations for periods subsequent to
the acquisition date.
Dr. Allan M. Green, a director of NASI, was the chairman of the board of
directors, president and a significant stockholder of Theseus. Irwin J.
Gruverman, chairman of the board of the directors of NASI, was a director and
significant stockholder of Theseus. Pursuant to the merger, Dr. Green and Mr.
Gruverman will receive approximately 132,583 and 49,721 shares of NASI's common
stock, respectively. Dr. Green and Mr. Gruverman took no part in the
deliberations of the NASI's board of directors with respect to the proposed
Theseus transaction, which actions were approved by a unanimous vote of the
disinterested members of NASI's board.
The Amended and Restated Agreement and Plan of Merger, dated as of
September 22, 2000, between NASI and Theseus is attached as Exhibit 2.1 to this
Report on Form 8-K.
Statements included in this current report that are not historical facts
may be considered forward-looking statements that are subject to a variety of
risks and uncertainties. There are a number of important factors that could
cause actual results to differ materially from those expressed in any
forward-looking statements made by us including, but not limited to, expected
benefits from the Theseus acquisition, uncertainties relating to drug discovery
and clinical development processes, the impact of competitive products and
technological changes, changes in relationships with strategic partners and
dependence upon strategic partners for the performance of critical activities
under collaborative agreements, uncertainties relating to patent protection and
regulatory approval, the stable supply of appropriate isotopes, whether produced
by us or purchased from third-party vendors, the impact of competitive products
and pricing, earnings impact from the Theseus acquisition, research and
development estimates, market opportunities, risks associated with strategic
opportunities or acquisitions we may pursue and the risk factors included in our
filings with the Securities and Exchange Commission.
DOCUMENTS REFERRED TO IN THIS REPORT
NASI has filed documents with the Securities and Exchange Commission that
are referred to in this report. The documents referred to and the information
they contain are described below.
- NASI's Form 10-K for the fiscal year ended October 31, 1999. The Form 10-K
includes NASI's audited 1999 and 1998 financial statements.
- NASI's Form 10-Q for the three and nine months ended July 31, 2000. The
Form 10-Q includes NASI's unaudited financial statements for the nine
months ended July 31, 2000.
You may read and copy any reports, statements or other information we file
at the SEC's reference room in Washington D.C. Please call the SEC at (202)
942-8090 for further information on the operation of the reference rooms. You
can also request copies of these documents, upon payment of a duplicating fee,
by writing to the SEC, or review our SEC filings on the SEC's EDGAR web site,
which can be found at http:\\www.sec.gov. You may also write or call us at our
corporate office located at 20200 Sunburst Street, Chatsworth, California 91311.
Our telephone number is (818) 734-8600.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
Financial statements of Theseus Imaging Corporation are attached hereto as
follows:
<TABLE>
<CAPTION>
Page
----
<S> <C>
AUDITED FINANCIAL STATEMENTS
Report of Independent Accountants ......................................................................... F-1
Balance Sheets as of December 31, 1999 and 1998 ........................................................... F-2
Statements of Operations for the period from September 10, 1997 (Inception) to December 31, 1999 and
for the years ended December 31, 1999 and 1998........................................................... F-3
Statements of Stockholders' Deficit for the period from September 10, 1997 (Inception) to
December 31, 1999........................................................................................ F-4
Statements of Cash Flows for the period from September 10, 1997 (Inception) to December 31, 1999 and
for the years ended December 31, 1999 and 1998........................................................... F-5
Notes to the Financial Statements ......................................................................... F-6
UNAUDITED INTERIM FINANCIAL STATEMENTS
Unaudited Balance Sheets as of September 30, 2000 and December 31, 1999 ................................... F-11
Unaudited Statements of Operations for the nine months ended September 30, 2000 and 1999 .................. F-12
Unaudited Statements of Stockholders' Deficit for the nine months ended
September 30, 2000 ...................................................................................... F-13
Unaudited Statements of Cash Flows for the nine months ended September 30, 2000 and 1999 .................. F-14
Condensed Notes to the Unaudited Financial Statements ..................................................... F-15
(b) Pro forma financial information.
Unaudited pro forma condensed financial information reflecting NASI's
acquisition of Theseus, including related explanatory notes, are attached
hereto as follows:
PAGE
Basis of Presentation ..................................................................................... X-1
Unaudited Pro Forma Condensed Balance Sheet as of July 31, 2000 ........................................... X-2
Unaudited Pro Forma Condensed Statement of Operations for the year ended October 31, 1999.................. X-3
Unaudited Pro Forma Condensed Statement of Operations for the nine months ended July 31, 2000.............. X-4
Notes to Unaudited Pro Forma Condensed Financial Data ..................................................... X-5
</TABLE>
3
<PAGE>
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Description
<S> <C>
2.1 Restated Agreement and Plan of Merger, dated as of September
22, 2000, among NASI, NASI Acquisition Corp., a wholly-owned
subsidiary of NASI, Theseus Imaging Corporation, Dr. Allan
M.Green, Robert Bender, Sally Hansen and Irwin Gruverman.
99.1 Press Release dated October 16, 2000.
</TABLE>
-------------------
4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Theseus Imaging Corporation (A Development Stage Enterprise)
In our opinion, the accompanying balance sheets and the related statements of
operations, of stockholders' deficit and of cash flows present fairly, in all
material respects, the financial position of Theseus Imaging Corporation (A
Development Stage Enterprise) at December 31, 1999 and 1998 and the results of
its operations and its cash flows for the period from September 10, 1997
(Inception) to December 31, 1999 and for the years ended December 31, 1999 and
1998, in conformity with accounting principles generally accepted in the United
States. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Orange County, CA
October 17, 2000
F-1
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash ................................................................................... $ 165,000 $ 98,000
----------- -----------
Total current assets .............................................................. 165,000 98,000
----------- -----------
Licenses, net .......................................................................... 3,132,000 3,058,000
Other assets ........................................................................... 4,000 --
----------- -----------
Total assets ...................................................................... $ 3,301,000 $ 3,156,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Convertible notes payable ........................................................... $ 4,007,000 $ 1,078,000
Accounts payable .................................................................... 292,000 119,000
Accrued expenses .................................................................... 75,000 58,000
Accrued interest .................................................................... 339,000 127,000
----------- -----------
Total current liabilities ......................................................... 4,713,000 1,382,000
Note payable ........................................................................... 2,500,000 2,500,000
Commitments and contingencies (Note 7)
Stockholders' deficit
Common stock, $.01 par value, 1,000,000 shares authorized; 900,000 and 770,000 shares
issued and outstanding as of December 31, 1999 and 1998 respectively .............. 9,000 8,000
Common stock subscription receivable ................................................ (8,000) (8,000)
Deferred compensation ............................................................... (711,000) (930,000)
Additional paid-in capital .......................................................... 2,751,000 1,159,000
Deficit accumulated during development stage ........................................ (5,953,000) (955,000)
----------- -----------
Total stockholders' deficit ....................................................... (3,912,000) (726,000)
----------- -----------
Total liabilities and stockholders' deficit ....................................... $ 3,301,000 $ 3,156,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM
SEPTEMBER 10, FOR THE FOR THE
1997 (INCEPTION) YEAR ENDED YEAR ENDED
TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1999 1998
---------------- --------------- ---------------
<S> <C> <C> <C>
Operating expenses
Research and development.................................. $ 3,559,000 $ 3,084,000 $ 475,000
General and administrative expenses ...................... 1,043,000 715,000 328,000
-------------- ------------- --------------
Loss from operations ................................... 4,602,000 3,799,000 803,000
Other expenses
Interest expense.......................................... 1,351,000 1,199,000 152,000
-------------- ------------- --------------
Net loss .................................................. $ 5,953,000 $ 4,998,000 $ 955,000
============== ============= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE
PERIOD FROM SEPTEMBER 10, 1997 (INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEFICIT
COMMON ACCUMULATED
COMMON STOCK STOCK ADDITIONAL DURING THE
------------ SUBSCRIPTION DEFERRED PAID-IN DEVELOPMENT
SHARES AMOUNT RECEIVABLE COMPENSATION CAPITAL STAGE TOTAL
------ ------- ----------- ------------ ------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock issued
September 1997................. 770,000 $ 8,000 ($ 8,000) $ - $ - $ - $ -
-------- ------- ----------- -------------- ----------- ------------- -----------
Balance at December 31, 1997..... 770,000 8,000 (8,000) - - - -
Beneficial conversion feature
recognized on convertible notes
payable (Note 4) .............. - - - - 25,000 - 25,000
Non-cash stock compensation
charge for options issued
to non-employees (Note 5)...... - - - (930,000) 1,134,000 - 204,000
Net loss......................... - - - - - (955,000) (955,000)
-------- ------- ----------- -------------- ----------- ------------- -----------
Balance at December 31, 1998..... 770,000 8,000 (8,000) (930,000) 1,159,000 (955,000) (726,000)
Common stock issued for
licenses, August 1999.......... 60,000 - - - 498,000 - 498,000
Common stock issued for
consulting, August 1999........ 70,000 1,000 - - 427,000 - 428,000
Beneficial conversion feature
recognized on convertible notes
payable (Note 4) .............. - - - - 667,000 - 667,000
Non-cash stock compensation
charge for options issued
to non-employees (Note 5)...... - - - 219,000 - - 219,000
Net loss......................... - - - - - (4,998,000) (4,998,000)
-------- ------- ----------- -------------- ----------- ------------- -----------
Balance at December 31, 1999..... 900,000 $ 9,000 ($ 8,000) ($ 711,000) $ 2,751,000 ($ 5,953,000) ($3,912,000)
======== ======= =========== ============== =========== ============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM
SEPTEMBER 10, FOR THE FOR THE
1997 (INCEPTION) TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1999 1998
---- ---- ----
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: <C> <C>
Net loss .................................................... ($ 5,953,000) ($4,998,000) ($ 955,000)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization ........................... 254,000 177,000 77,000
Common stock issued for consulting and licenses.......... 926,000 926,000 -
Non-cash stock compensation charge....................... 423,000 219,000 204,000
Interest expense from beneficial conversion feature
on convertible notes................................... 692,000 667,000 25,000
Changes in assets and liabilities
Accounts payable ...................................... 292,000 173,000 119,000
Accrued expenses ...................................... 75,000 17,000 58,000
Accrued interest ...................................... 339,000 212,000 127,000
-------------- ------------- --------------
Net cash used for operating activities ............ (2,952,000) (2,607,000) (345,000)
-------------- ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of licenses...................................... (885,000) (250,000) (635,000)
Capital expenditures ........................................ (5,000) (5,000) -
-------------- ------------- --------------
Net cash used for investing activities ............ (890,000) (255,000) (635,000)
-------------- ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of convertible notes payable ........ 4,007,000 2,929,000 1,078,000
-------------- ------------- --------------
Net cash provided by financing activities ......... 4,007,000 2,929,000 1,078,000
-------------- ------------- --------------
Net increase in cash ............................................ 165,000 67,000 98,000
Cash at beginning of period ..................................... - 98,000 -
-------------- ------------- --------------
Cash at end of period ........................................... $ 165,000 $ 165,000 $ 98,000
============== ============= ==============
Supplemental disclosure of cash flow information:
Interest paid .................................................. $ 270,000 $ 270,000 $ -
============== ============= ==============
Income taxes paid ............................................... $ 7,000 $ 7,000 $ -
============== ============= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS
Theseus Imaging Corporation (the "Company") was incorporated on September
10, 1997 (Inception) at which time it was capitalized. The Company is a
development stage enterprise that develops radiopharmaceuticals to enhance the
medical management of heart attack, organ transplantation and cancer.
The majority of the Company's efforts to date have been in the organization
of the Company, establishing its management team, raising capital and initiating
product development. Substantially all of the Company's products are in various
stages of development.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, including cash, accounts payable and
notes payable are carried at historical cost, which approximates their fair
values because of the short-term maturity of these instruments and the
relatively stable interest rate environment.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives. The estimated service lives used in determining
depreciation on equipment is 5 years.
LICENSE AGREEMENTS
License agreements are amortized on a straight-line basis over periods
ranging up to fifteen years. The amortization periods are based on the lives of
the license agreements or the approximate remaining lives of the related
patents, whichever is shorter. Accumulated amortization related to license
agreements at December 31, 1999 and 1998 totaled $253,000 and $77,000,
respectively.
LONG-LIVED ASSETS
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate the carrying amount of such assets may not be
recoverable. Recoverability of these assets is determined by comparing the
forecasted undiscounted cash flows attributable to such assets to their carrying
value. If the carrying value of the assets exceeds the forecasted undiscounted
cash flows, then the assets are written down to their fair value. Fair value is
determined based on discounted cash flows or appraised values, depending upon
the nature of the assets. To date, no such impairments have been recorded.
F-6
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INCOME TAXES
The Company recognizes current and deferred income tax assets and
liabilities based upon all events that have been recognized in the consolidated
financial statements as measured by the provisions of the enacted tax laws.
STOCK-BASED COMPENSATION
The Company accounts for stock-based employee compensation arrangements in
accordance with the provisions of Accounting Principles Board ("APB") No. 25,
"Accounting for Stock Issued to Employees," and complies with the disclosure
requirements of SFAS No. 123, "Accounting for Stock-Based Compensation." The
Company accounts for stock issued to non-employees in accordance with the
provisions of SFAS No. 123 and Emerging Issues Task Force ("EITF") 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services."
STATEMENT OF CASH FLOWS
During 1999 and 1998, the Company acquired certain licensing rights which
are payable in future periods. Accordingly, as of December 31, 1999 and 1998,
the Company has recorded $2,575,000 and $2,500,000, respectively, in accrued
liabilities and/or note payable. As a result, these non-cash transactions are
not reflected in the statement of cash flows.
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 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.
NOTE 3 - LICENSE AGREEMENTS
License agreements include the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1999 1998
----------- -----------
<S> <C> <C>
NeoRx Corporation ............................... $ 3,000,000 $3,000,000
Other ........................................... 385,000 135,000
----------- ----------
Total cost ................................... 3,385,000 3,135,000
Accumulated amortization ........................ (253,000) (77,000)
----------- ----------
Licenses, net ................................ $ 3,132,000 $3,058,000
=========== ==========
</TABLE>
F-7
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NEORX CORPORATION
On August 7, 1998, the Company acquired a license to a family of patents
and patent applications and certain other information and know-how from NeoRx
Corporation for worldwide rights to technology relating to "linkers" (a chemical
binding process linking Annexin-V protein to radioactive isotope). Under the
terms of the license agreement, the Company has agreed to pay NeoRx $3 million,
$500,000 of which was paid in 1998, with the remaining $2.5 million due on
August 7, 2001. Interest on the unpaid balance accrues at the rate of ten
percent annually with interest payments due semiannually. Accrued interest
totaled $99,000 and $112,000 at December 31, 1999 and 1998, respectively. The
Company is also required to pay earned royalty payments based on the net sales
of products using technology covered in the agreement. The license expires upon
the date of the expiration of the last patent covered in the agreement.
OTHER
The Company has also acquired licenses, patents and technology from certain
other entities. These agreements included certain up-front license payments as
well as royalties on net sales of products covered by the agreements.
NOTE 4 - CONVERTIBLE NOTES PAYABLE
On October 7, 1998, the Company signed a letter of intent to merge with
North American Scientific, Inc. ("NASI"). NASI agreed to provide financing to
the Company to cover clinical trial costs and other operating and research
purposes. This financing was in the form of convertible notes bearing interest
at the prime rate plus 1%. These notes are convertible into common stock of the
Company at NASI's option. The original notes were due by September 30, 1999. On
October 21, 1999, the Company signed a definitive merger agreement to be
acquired by NASI in a stock-for-stock exchange. Concurrently, the secured notes
were amended extending the due date to November 30, 2000. The notes are secured
by a first priority interest in the Company's right, title and interest in the
collateral as defined in the Security Agreement, which consists primarily of
certain licensing agreements.
As of December 31, 1999 and 1998, the convertible notes payable balances
were $4,007,000 and $1,078,000, respectively. As of December 31, 1999 and 1998,
the accrued interest on the notes amounted to $240,000 and $15,000,
respectively. From January 1, 2000 to October 13, 2000, NASI further advanced
the Company an additional $3,292,000.
Because the value of the Company's common shares as determined by
independent appraisals exceeded the related note and accrued interest balances
which NASI was entitled to convert, the convertible notes have been determined
to contain a beneficial conversion feature. Accordingly, at each date when
funding was received from NASI under the notes, an interest expense component
was reflected with an offsetting credit to additional paid-in-capital.
F-8
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - STOCK OPTIONS
The Company issues options pursuant to its 1998 Employee, Director and
Consultant Stock Plan (the "Plan"). The Plan provides for the granting of
options to purchase up to 120,000 shares of common stock to employees, directors
and consultants of the Company. Options vest over periods ranging from three to
four years. The options expire ten years from the date of grant. The following
table summarizes stock option activity during the period from September 10, 1997
(Inception) to December 31, 1999:
<TABLE>
<CAPTION>
Options Weighted Average
Outstanding Exercise Price
----------- --------------
<S> <C> <C>
Granted -
Forfeited or cancelled -
Exercised -
-----------
Balance at December 31, 1997 -
-----------
Granted 100,000 $ 0.01
Forfeited or cancelled -
Exercised -
-----------
Balance at December 31, 1998 100,000 0.01
-----------
Granted -
Forfeited or cancelled -
Exercised -
-----------
Balance at December 31, 1999 100,000 $ 0.01
-----------
</TABLE>
The exercise price for all stock options outstanding at December 31, 1999
was $.01 per share. There were 50,000 and 25,000 options exercisable with
weighted average exercise prices of $0.01 at December 31, 1999 and 1998,
respectively. The weighted average remaining contractual life as of December 31,
1999 and 1998 was 8.5 and 9.5 years, respectively.
The Company accounts for its Plan under APB 25. However, since all options
were granted by Theseus to non-employees, compensation expense for these options
has been recorded by the Company consistent with SFAS 123. The fair value of
each option is estimated using the Black-Scholes option pricing model with the
following weighted average assumptions: no dividend yield; risk free interest
rate of 5.2% for 1999 and 5.7% for 1998; an expected volatility of 80% and an
expected life of 10 years. The weighted average grant-date fair value of options
granted under the Plan during the year ended December 31, 1998 was $3.62 per
share.
F-9
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - INCOME TAXES
There are no net assets or liabilities for income taxes, nor income tax
expense included in the financial statements as the Company has incurred losses
since inception for both financial reporting and income tax purposes. The
deferred tax assets and related valuation allowance consist of the following at
December 31, 1999 and 1998:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
Deferred tax assets: 1999 1998
----------- ----------
<S> <C> <C>
Net operating loss carryforwards .................. $ 2,078,000 $ 354,000
Valuation allowance ............................... (2,078,000) (354,000)
------------ -----------
$ - $ -
============ ===========
</TABLE>
Realization of the future tax benefits related to the deferred tax assets
is dependent on many factors, including the Company's ability to generate
taxable income within the net operating loss carryforward period. Management has
considered these factors in reaching its conclusion that the Company's deferred
tax assets at December 31, 1999 and 1998 should be fully reserved. The
difference between the effective tax rate and the statutory federal income tax
rate is primarily due to the non-recognition of the benefit of net operating
losses and the related provision for the valuation allowance.
At December 31, 1999, the Company has net operating loss carryforwards for
federal and state income purposes of approximately $4,700,000 and $5,100,000,
respectively. The federal net operating loss carryforwards begin to expire in
2018 and state net operating loss carryforwards begin to expire in 2003. The use
of such net operating loss carryforwards would be limited in the event of a
change in control of the Company.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company has agreements with several institutions that call for payments
upon the achievement of milestones by the Company and royalty payments based
upon a percentage of product sales.
From time to time the Company is subject to legal proceedings and claims
that arise in the normal course of its business. The Company believes such
proceedings will not have a material adverse effect on the financial position or
results of operations of the Company.
NOTE 8 - RELATED PARTIES
The chairman of the board of directors, president and a significant
stockholder of Theseus is a director of NASI. In addition, a director and
significant stockholder of Theseus is the chairman of the board of the directors
of NASI.
NOTE 9 - SUBSEQUENT EVENTS
On September 22, 2000, the Company entered into an Amended and Restated
Agreement and Plan of Merger by and among NASI, NASI Acquisition Corp., a
wholly-owned subsidiary of NASI, the Company and certain stockholders and
officers of the Company (the "Merger Agreement"). On October 13, 2000, the
Company consummated the merger with NASI, so that the Company became a wholly
owned subsidiary of NASI.
Pursuant to the Merger Agreement, Theseus' stockholders and option
holders received a total of 345,665 shares of, or options to purchase, NASI's
common stock in exchange for 100% of Theseus' outstanding common stock and
options.
F-10
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash ........................................................................... $ 70,000 $ 165,000
------------- ------------
Total current assets ......................................................... 70,000 165,000
Licenses, net ................................................................... 2,800,000 3,132,000
Other assets .................................................................... 3,000 4,000
------------- ------------
Total assets ................................................................. $ 2,873,000 $ 3,301,000
============= ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Convertible note payable ..................................................... $ 6,974,000 $ 4,007,000
Accounts payable.............................................................. 6,000 292,000
Accrued expenses.............................................................. 3,000 75,000
Accrued interest ............................................................. 664,000 339,000
------------- ------------
Total current liabilities .................................................. 7,647,000 4,713,000
Note payable .................................................................... 2,500,000 2,500,000
Stockholders' deficit
Common stock, $.01 par value, 1,000,000 shares authorized; 900,000 shares
issued and outstanding as of September 30, 2000 (unaudited)
and December 31, 1999....................................................... 9,000 9,000
Common stock subscription receivable ......................................... (8,000) (8,000)
Deferred compensation......................................................... (376,000) (711,000)
Additional paid-in capital ................................................... 7,082,000 2,751,000
Deficit accumulated during development stage ................................. (13,981,000) (5,953,000)
------------- ------------
Total stockholders' deficit................................................. (7,274,000) (3,912,000)
------------- ------------
Total liabilities and stockholders' deficit ................................ $ 2,873,000 $ 3,301,000
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
2000 1999
------------ -----------
(unaudited)
<S> <C> <C>
Operating expenses
Research and development ................................... $ 2,422,000 $ 2,470,000
General and administrative expenses ........................ 644,000 390,000
------------ -----------
Loss from operations ..................................... 3,066,000 2,860,000
------------ -----------
Other expenses
Interest expense ........................................... 4,962,000 673,000
------------ -----------
Net loss ...................................................... $ 8,028,000 $ 3,533,000
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM DECEMBER 31, 1999 TO SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
DEFICIT
COMMON ACCUMULATED
COMMON STOCK STOCK ADDITIONAL DURING THE
---------------- SUBSCRIPTION DEFERRED PAID-IN DEVELOPMENT
SHARES AMOUNT RECEIVABLE COMPENSATION CAPITAL STAGE TOTAL
------ ------ ---------- ------------ -------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999..... 900,000 $ 9,000 ($ 8,000) ($ 711,000) $ 2,751,000 ($ 5,953,000) ($ 3,912,000)
Beneficial conversion feature
recognized on convertible notes
payable ....................... - - - - 4,331,000 - 4,331,000
Non-cash stock compensation
charge for options issued
to non-employees............... - - - 335,000 - - 335,000
Net loss......................... - - - - - (8,028,000) (8,028,000)
-------- ------- --------- ----------- ----------- -------------- ------------
Balance at September 30, 2000.... 900,000 $ 9,000 ($ 8,000) ($ 376,000) $ 7,082,000 ($ 13,981,000) ($7,274,000)
======== ======= ========= =========== =========== ============== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2000 1999
------------ ------------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................................................... ($ 8,028,000) ($ 3,533,000)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization ........................................................... 178,000 109,000
Common stock issued for consulting and licenses ......................................... - 926,000
Non-cash stock compensation charge ...................................................... 335,000 164,000
Interest expense from beneficial conversion feature on convertible note.................. 4,331,000 205,000
Write-off of license..................................................................... 155,000 -
Changes in assets and liabilities
Accounts payable ...................................................................... (286,000) (119,000)
Accrued liabilities ................................................................... (72,000) 51,000
Accrued interest ...................................................................... 325,000 149,000
------------ ------------
Net cash used for operating activities .............................................. (3,062,000) (2,048,000)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of licenses ..................................................................... 0 (52,000)
Capital expenditures ........................................................................ - (5,000)
------------ ------------
Net cash used for investing activities .............................................. 0 (57,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of convertible note payable ......................................... 2,967,000 2,079,000
------------ ------------
Net cash provided by financing activities ........................................... 2,967,000 2,079,000
------------ ------------
Net decrease in cash ........................................................................... (95,000) (26,000)
Cash at beginning of period .................................................................... 165,000 98,000
------------ ------------
Cash at end of period .......................................................................... $ 70,000 $ 72,000
============ ===========
Supplemental disclosure of cash flow information:
Interest paid .................................................................................. $ 255,000 $ 270,000
============ ===========
Income taxes paid .............................................................................. $ 5,000 $ 7,000
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - UNAUDITED INTERIM FINANCIAL STATEMENTS
The interim financial statements included in this report are unaudited. The
Company believes the interim financial statements are presented on a basis
consistent with the audited financial statements. The Company also believes that
the interim financial statements contain all adjustments necessary for a fair
presentation of the results for such interim periods. All of these adjustments
are normal recurring adjustments. The results of operations for interim periods
do not necessarily predict the operating results for the full year. The balance
sheet as of September 30, 2000 does not include all disclosures required by
generally accepted accounting principles as permitted by interim reporting
requirements. The information included in this report should be read in
conjunction with the audited financial statements and related notes included
elsewhere herein.
NOTE 2 - 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 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.
NOTE 3 - SUBSEQUENT EVENTS
On September 22, 2000, the Company entered into an Amended and Restated
Agreement and Plan of Merger by and among NASI, NASI Acquisition Corp., a
wholly-owned subsidiary of NASI, the Company and certain stockholders and
officers of the Company (the "Merger Agreement"). On October 13, 2000, the
Company consummated the merger with NASI, so that the Company became a wholly
owned subsidiary of NASI.
Pursuant to the Merger Agreement, Theseus' stockholders and option
holders received a total of 345,665 shares of, or options to purchase, NASI's
common stock in exchange for 100% of Theseus' outstanding common stock and
options.
F-15
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
BASIS OF PRESENTATION
On October 13, 2000, North American Scientific, Inc. ("NASI") acquired
Theseus Imaging Corporation (the "Theseus") by means of a statutory merger.
Theseus' stockholders and option holders received a total of 345,665 shares
of, or options to purchase, NASI's common stock in exchange for 100% of
Theseus' outstanding common stock and options. The acquisition will be
accounted under the purchase method of accounting. Accordingly, the results
of operations will be included with NASI's beginning at the acquisition date.
The purchase price resulted in an excess of the cost of the acquisition over
the fair value of the net assets acquired. Such excess is being amortized on
a straight-line basis over 10 years. The preliminary purchase price
allocation is based on an independent appraisal and management's estimates.
The purchase price allocation is subject to further refinement and change
over the next year.
The unaudited Pro Forma Condensed Balance Sheet for NASI at July 31, 2000
combines the historical balance sheets of NASI and Theseus as if the acquisition
had occurred on July 31, 2000, after giving effect to certain adjustments
described in the accompanying Notes to the Unaudited Pro Forma Condensed
Financial Information.
The unaudited Pro Forma Condensed Income Statements for the year ended
October 31, 1999 and for the nine-months ended July 31, 2000 present the
combined results of operations of NASI and Theseus as if the acquisition had
occurred on November 1, 1998, after giving effect to certain adjustments
described in the accompanying Notes to Unaudited Pro Forma Condensed Financial
Information.
The following Unaudited Pro Forma Condensed Financial Information is
presented for illustrative purposes only. It is not necessarily indicative of
the consolidated financial position or results of operations for future periods
or the results that actually would have been realized had NASI and Theseus been
a consolidated company during the specified periods. The Unaudited Pro Forma
Condensed Financial Information, including the notes thereto, is qualified in
its entirety by reference to, and should be read in conjunction with the
historical consolidated financial statements and the notes thereto, which were
previously reported in NASI's Annual Report on Form 10-K for the year ended
October 31, 1999 and the Quarterly Report on Form 10-Q for the quarter ended
July 31, 2000.
The required Unaudited Pro Forma Financial Information is as follows:
Unaudited Pro Forma Condensed Balance Sheet at July 31, 2000.
Unaudited Pro Forma Condensed Income Statement for the fiscal year ended
October 31, 1999 and of Theseus for the fiscal year ended December 31,
1999.
Unaudited Pro Forma Condensed Income Statement for the nine-months ended
July 31, 2000 and of Theseus for the nine-months ended September 30,
2000.
X-1
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JULY 31, 2000
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
NASI THESEUS (NOTE 1) PRO FORMA
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ............................... $ 3,353,000 $ 73,000 $ - $ 3,426,000
Marketable securities ................................... 8,142,000 - - 8,142,000
Accounts receivable, net ................................ 1,212,000 - - 1,212,000
Inventories ............................................. 827,000 - - 827,000
Prepaid expenses and other current assets ............... 959,000 - (544,000) (a) 415,000
-------------- ------------- ------------ --------------
Total current assets .................................. 14,493,000 73,000 (544,000) 14,022,000
-------------- ------------- ------------ --------------
Equipment and leasehold improvements, net .................. 3,600,000 3,000 - 3,603,000
-------------- ------------- ------------ --------------
Other assets
Goodwill ................................................ - - 4,134,000 (b) 4,134,000
Licenses, net ........................................... - 2,988,000 - 2,988,000
Notes receivable ........................................ 6,189,000 - (5,989,000) (c) 200,000
Construction in progress ................................ 3,687,000 - - 3,687,000
Other assets ............................................ 568,000 - (307,000) (d) 261,000
-------------- ------------- ------------ --------------
Total other assets..................................... 10,444,000 2,988,000 (2,162,000) 11,270,000
-------------- ------------- ------------ --------------
Total assets .......................................... $ 28,537,000 $ 3,064,000 ($2,706,000) $ 28,895,000
============== ============= ============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Convertible note payable ................................ $ - $ 5,989,000 ($5,989,000) (e) $ -
Accounts payable ........................................ 899,000 717,000 - 1,616,000
Accrued expenses ........................................ 562,000 - - 562,000
Accrued interest ........................................ 669,000 (544,000) (f) 125,000
-------------- ------------- ------------ --------------
Total current liabilities ............................. 1,461,000 7,375,000 (6,533,000) 2,303,000
Note payable ............................................... - 2,500,000 - 2,500,000
Deferred income taxes ...................................... 114,000 - - 114,000
-------------- ------------- ------------ --------------
Total liabilities ..................................... 1,575,000 9,875,000 (6,533,000) 4,917,000
-------------- ------------- ------------ --------------
Stockholders' equity (deficit) ............................. 26,962,000 (6,811,000) 3,827,000 (g) 23,978,000
-------------- -------------- ------------ --------------
Total liabilities and stockholders' equity (deficit)... $ 28,537,000 $ 3,064,000 ($2,706,000) $ 28,895,000
============== ============= ============ ==============
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Information.
X-2
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
NASI THESEUS
FISCAL YEAR FISCAL YEAR PRO FORMA
ENDED ENDED ADJUSTMENTS
10/31/99 12/31/99 (NOTE 1) PRO FORMA
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales .................................................... $ 12,767,000 $ - $ - $ 12,767,000
Cost of goods sold ........................................... 4,594,000 - - 4,594,000
------------- ------------ ------------ ------------
Gross profit .............................................. 8,173,000 - - 8,173,000
Research and development...................................... 287,000 3,084,000 - 3,371,000
Selling, general and administrative expenses ................. 3,060,000 715,000 - 3,775,000
Amortization of goodwill...................................... - - 356,000 (h) 356,000
------------- ------------ ------------ ------------
Income (loss) from operations ............................. 4,826,000 (3,799,000) (356,000) 671,000
Interest and other income (expense), net...................... 611,000 (1,199,000) 667,000 (i) 79,000
------------- ------------- ------------ ------------
Income (loss) before provision for income taxes .............. 5,437,000 (4,998,000) 311,000 750,000
Provision for income taxes (benefit) ......................... 2,068,000 - (1,500,000) (j) 568,000
------------- ------------ ------------- ------------
Net income (loss) ............................................ $ 3,369,000 ($ 4,998,000) $ 1,811,000 $ 182,000
============= ============ ============ ============
Earnings per share:
Basic ..................................................... $ .49 $ .02
============= ============
Diluted ................................................... $ .47 $ .02
============= ============
Shares used in per share calculations:
Basic ..................................................... 6,800,129 7,110,794
============= ============
Diluted ................................................... 7,203,264 7,548,929
============= ============
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Information
X-3
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED JULY 31, 2000
<TABLE>
<CAPTION>
NASI THESEUS
NINE MONTHS NINE MONTHS PRO FORMA
ENDED ENDED ADJUSTMENTS
7/31/00 9/30/00 (NOTE 1) PRO FORMA
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales..................................................... $12,891,000 $ - $ - $12,891,000
Cost of goods sold ........................................... 4,296,000 - - 4,296,000
----------- ------------- ------------ -----------
Gross profit ............................................ 8,595,000 - - 8,595,000
Research and development...................................... 264,000 2,422,000 - 2,686,000
Selling, general and administrative expenses ................. 2,583,000 644,000 - 3,227,000
Amortization of goodwill...................................... - - 267,000 (i) 267,000
----------- ------------- ------------ -----------
Income (loss) from operations ........................... 5,748,000 (3,066,000) (267,000) 2,415,000
Interest and other income (expense), net ..................... 833,000 (4,962,000) 4,331,000 (j) 202,000
----------- ------------- ------------ -----------
Income (loss) before provision for income taxes .............. 6,581,000 (8,028,000) 4,064,000 2,617,000
Provision for income taxes (benefit) ......................... 2,469,000 - (1,300,000) (k) 1,169,000
----------- ------------- ------------ -----------
Net income (loss) ............................................ $ 4,112,000 ($ 8,028,000) $ 5,364,000 $ 1,448,000
============ ============= ============ ============
Earnings per share:
Basic ..................................................... $ .60 $ .20
============ ============
Diluted ................................................... $ .55 $ .19
============ ============
Shares used in per share calculations:
Basic ..................................................... 6,872,402 7,183,067
============ ============
Diluted ................................................. 7,467,303 7,812,968
============ ============
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Information
X-4
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
Note 1. Pro Forma Adjustments
The pro forma adjustments are based on a preliminary allocation of the
purchase price to the assets acquired and liabilities assumed. The allocation of
the purchase price is based on an independent appraisal of certain assets as
well as management estimates of fair value.
Pro forma adjustments relating to the acquisition in the unaudited pro
forma financial information are summarized as follows:
<TABLE>
<CAPTION>
Ref Explanation
--- -----------
<S> <C> <C>
Other current assets (a) To eliminate accrued interest on the Theseus note payable to NASI
Goodwill (b) To record the allocation of the purchase price to goodwill. Purchase price is
determined as follows:
NASI common stock issued $ 7,604,000
NASI convertible note payable and accrued
interest contributed as of actual
closing date (October 13, 2000) 7,981,000
Note payable and accrued interest assumed 2,625,000
Acquisition costs and other liabilities
assumed 416,000
--------------
Total Purchase Price $ 18,626,000
==============
The purchase price has been allocated as follows based in part on an independent
valuation performed in September 2000:
In-process research and development $ 11,431,000
Goodwill 4,134,000
Licenses and other assets 2,988,000
Cash 73,000
--------------
$ 18,626,000
==============
Note receivable (c) To eliminate the Theseus note payable to NASI
Other assets (d) To eliminate acquisition costs associated with the Theseus merger
Convertible note payable (e) To eliminate the Theseus note payable to NASI as of July 31, 2000
Accrued interest (f) To eliminate accrued interest on the Theseus note payable to NASI as of
July 31, 2000
Stockholders' equity (g) The components of the pro forma adjustments to stockholders' equity
are as follows:
NASI common stock issued $ 7,604,000
In-process research and development
write-off (11,431,000)
Elimination of Theseus deficit 6,811,000
Effect of additional loans from
NASI to Theseus and estimated transactions
as of the actual closing date
(October 13, 2000) 843,000
--------------
$ 3,827,000
==============
Amortization of goodwill (h) To record amortization of goodwill related to the acquisition on a
straight-line basis over 10 years
Interest and other income (i) To eliminate non-cash interest expense related to the beneficial
(expense) conversion feature on the convertible note owed by Theseus to NASI
Provision for income taxes (j) To record federal and state tax benefit, where applicable, of the Theseus
losses at tax rates of 34% and 9% for federal and state, respectively,
adjusted for non-deductible expenses such as goodwill amortization.
</TABLE>
X-5
<PAGE>
THESEUS IMAGING CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
Note 2. Pro Forma Earnings Per Share
Basic and diluted pro forma earnings per share were calculated based upon
the equivalent shares of NASI's common stock outstanding for the periods
presented, including the shares of NASI common stock assumed to be issued in
connection with the Theseus merger, as if they had been issued at the beginning
of the periods presented.
X-6
<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.
(Registrant)
October 18, 2000 By: /s/ L. Michael Cutrer
--------------------------------------
Name: L. Michael Cutrer
Title: President and Chief Executive
Officer (Principal Executive
Officer)
X-7
