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NASI
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Subject 11236
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North American Scientific, Inc.
(OTCBB: NASI)
3/28/96
Shares Outstanding:2,983,201Stockholders Equity:$1,116,500Float
(EST.):2,000,000Long-term Debt:NonePrice-(3/28/96):$1 9/16Current
Ratio:6.7:1Market Cap:$4,700,000Book Value:$0.38
Summary & Outlook
The Company operates in an area of applications obscure to individuals without a
background in quantum mechanics, but critical to industrial, environmental and medical
applications. Two examples will illustrate this. The effective life of the piston ring in
your automobile's engine depends upon the quality of the lubricating oil used. The
Company's radioactive isotopes can be used to evaluate the quality of engine oil.
Medical applications include the thallium treadmill test which, in effect, provides a
picture of the heart's performance. The Company's product line is divided among
industrial, environmental and medical applications, suggesting steady growth in the
months and years ahead.
Corporate History
To historically stretch a point, it would not be unrealistic to say that the genesis of the
Company is rooted in physicist Max Planck's development of the quantum theory in
1900 and Albert Einstein's extension of that theory in 1905, to cover not only the
emmission and absorption of radiation, but also all the properties of radiant energy
when it occurs in small quantities. Incorporated under the Company Act of British
Columbia in 1987, the name North American Scientific was adopted in 1990. On
April 20, 1995 it became a U.S. company by qualifying as a Delaware corporation.
Industrial Profile
Radioactive isotopes, i.e. "radioisotopes," are used by nuclear utility companies,
federal government facilities and industrial users to assist in monitoring effluents
(discharge) from their facilities to ensure safety of personnel, and the communities in
which the plants are operating. Hospitals, medical centers and universities depend upon
the use of radioisotopes in imaging examinations and for disease detection. The
Company's products, radiation sources and standards, have wide applications for
calibration, measurement and control. The Company will provide uniform as well as
customized products to commercial laboratories serving the environmental sector,
where calibration is critical for accurate analysis of unknown sa,ples collected in the
field. Industrial applications range from material thickness and fluid level gauging to
electronics stabilization and calibrations, while medical uses are critical to effective
diagnosis and patient management. With the end of the "cold war" between the U.S.
and USSR, focus shifted from weapons manufacture to environmental restoration. The
Company stands to benefit from this development.
Recent Developments
On Friday, September 27, 1996 the Company reported that Sutro & Co. had began
making a market for the Company's shares on the Electronic Bulletin Board under the
symbol NASI.
Last September 19, the Company reported signing a three year agreement to supply
sources and related products to a major medical equipment manufacturer.
Management expects revenues generated by the agreement to amount to more than a
million dollars.
Financial Data
Net sales in fiscal 1995, ended October 31, advanced 3.8% to $1.8 million from $1.4
million in fiscal 1994, with net income reaching a record $132,000, or $0.04 per share,
compared with a net loss of $357,000, or $0.12 per share, which included a non-cash
charge of $624,000 levied against the Company by Canadian authorities for the
transfer of escrowed shares from Canada to U.S. jurisdiction. For the three months
ended January 31, 1996 the Company reported that net ales advanced 63.3% to a
record $614,000 as net income rose 157.5% to $82,500 or $0.03 per share,
compared with sales of $376,000 and net income of $32,100, or $0.01 per share, for
the same first quarter of the prior year.
Investment Considerations
With the Company now functioning as a Delaware corporation domiciled in North
Hollywood, California it seems likely that increased trading activity is apt to result in a
higher offering price. The Company's 11.8% return on equity, 10.2% return on assets
and net margin of 7.1% in sales should make this an attractive investment for long-term
buyers. We believe this is a stock to buy for at least a two-to-three year hold.
Paul Gropman
(213) 931-4540
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