NASI North American Scientific (MM)

North American Scientific, Inc. (Nasdaq:NASI) today announced financial results for its fiscal fourth quarter and fiscal year ended October 31, 2007. For the fourth quarter of fiscal 2007, the Company reported revenues from continuing operations of approximately $4.2 million, a 25% increase over the fourth quarter of the prior year, and a net loss of $3.9 million, or $0.13 per share, including $0.8 million related to the discontinued operations of the NOMOS� Radiation Oncology business. The fourth quarter loss represented a 36% decrease as compared to the net loss for the fourth quarter of the prior fiscal year, primarily due to a reduced loss relating to the discontinued NOMOS operations. �During the fiscal fourth quarter we achieved our ninth consecutive quarter of year-over-year growth in our Radiation Sources business,� said John B. Rush, President and Chief Executive Officer of North American Scientific. �Our Radiation Sources business grew 22% during fiscal 2007. This growth was generated by our renewed focus on our brachytherapy business which has resulted in new customer contracts and the addition of value-added products and services. We believe we are well positioned to capitalize on the positive, emerging market dynamics and our strong relationships with our customers, which together should support growth in fiscal 2008 and beyond. �Regarding our new breast brachytherapy product, ClearPath, we continue to execute our strategic plan that includes working closely with key medical opinion leaders as we prepare for full commercialization,� continued Mr. Rush. �The first step in this process has begun with our initial clinical experiences in a few targeted medical centers. During fiscal 2008, we intend to continue to spearhead a number of development and marketing activities that will support our commercial launch and generate additional mindshare among healthcare professionals. Our full commercialization plan also includes the introduction and launch of a second generation device for our ClearPath-HDR, featuring increased functionality and ease-of-use for radiation oncologists. We also are finalizing the design for our low-dose rate treatment device, ClearPath-CR� and we would expect to have a product ready for commercialization in fiscal 2008. �As previously announced we have completed a $15.5 million equity financing to fund operations and our ClearPath product line for breast brachytherapy,� continued Mr. Rush. �We are excited about the progress we have made, and look forward to continued execution as a more focused entity.� Fourth Quarter Financial Results For the fourth quarter of fiscal 2007, the Company reported revenues from continuing operations of approximately $4.2 million compared with revenues from continuing operations of $3.3 million for the fourth quarter of fiscal 2006. The 25% increase from the prior year was due to a 30% increase in sales of the Company�s brachytherapy seeds and accessories, and a 9% increase in non-therapeutic product sales. The net loss from continuing operations for the fourth quarter of fiscal 2007 was $3.2 million, or $0.11 per share, compared with the net loss from continuing operations for the fourth quarter of fiscal 2006 of $2.8 million, or $0.10 per share. The $0.3 million increase in the net loss from continuing operations was primarily due to $0.5 million increased interest expense on debt, partially offset by $0.2 million higher gross profit on increased revenues. The net loss for the fourth quarter of fiscal 2007 was $3.9 million, or $0.13 per share, compared with the net loss for the fourth quarter of fiscal 2006 of $6.1 million, or $0.21 per share. The $2.2 million decrease in the net loss was primarily due to a $2.5 million reduction in the net loss from the discontinued NOMOS� Radiation Oncology business, partially offset by the $0.3 million increase in the net loss from continuing operations related to interest expense. At the end of the fourth quarter of fiscal 2007, the Company had $0.6 million in cash and cash equivalents, compared with $9.3 million at the end of fiscal year 2006. During the fourth quarter of fiscal 2007, the Company used $3.0 million cash in operating activities for continuing operations, compared with $2.9 million in the fourth quarter of the prior year. As of October 31, 2007 the Company had borrowed $2.2 million on its bank credit line and $1.0 million on a bridge loan. Our existing credit line expires and all amounts outstanding thereunder become due on February 1, 2008. We are currently discussing a new credit line with our bank, but no assurances can be given that this credit line will be obtained. On January 22, 2008 the Company announced the closing on January 18, 2008 of a private placement of shares of its common stock and warrants for the purchase of common stock. The Company has received gross proceeds of $15.5 million from the financing which will be used for continued development of ClearPath�, the Company�s breast brachytherapy device, as well as working capital. The private placement increased the Company�s stockholders� equity from a $2.9 million deficit, as reported for the fiscal year ended October 31, 2007, to proforma stockholders� equity of $11.2 million assuming estimated closing costs of $1.4 million, and excluding financial results subsequent to October 31, 2007. The proforma stockholders� equity exceeds the $2.5 million minimum stockholders� equity requirement for continued listing on the Nasdaq Capital Market. Jim Klingler, Chief Financial Officer, added, �We are pleased that we were able to complete our $15.5 million private placement of common stock in January, 2008 to support our continuing operations and ClearPath. Although our goal is to use our existing financial resources, including cash and expected available credit lines, to reach profitability, obtaining adequate financing is an important part of our business strategy. We believe that our focus on serving the large and growing addressable market opportunities that are emerging in radiation therapy will provide the Company with exciting growth opportunities.� Fiscal Year Financial Results For fiscal 2007, the Company reported revenues from continuing operations of approximately $15.3 million compared with revenues from continuing operations of $12.6 million for fiscal 2006. The 22% increase from the prior year was due to a 24% increase in sales of our brachytherapy seeds and accessories, and a 16% increase in sales of our non-therapeutic products. The net loss from continuing operations for fiscal 2007 was $10.5 million, or $0.36 per share, compared with the net loss from continuing operations for fiscal 2006 of $9.4 million, or $0.43 per share. The $1.1 million increase in the net loss from continuing operations was primarily due to $1.0 million in increased selling and marketing expense and $0.6 million increased research and development expense, both primarily related to the ClearPath device, and $0.4 million increased interest expense on debt, which was partially offset by increased gross profit of $1.0 million resulting from increased sales. The net loss for fiscal 2007 was $21.0 million, or $0.72 per share, compared with the net loss for fiscal 2006 of $17.1 million, or $0.78 per share. The $3.9 million increase in the net loss was primarily due to a $2.8 million increase in the net loss from discontinued operations, and a $1.1 million increase in the net loss from continuing operations described above. ClearPath� Breast Brachytherapy Update The ClearPath systems are intended to combine the ease-of-use benefits of balloon brachytherapy products with the customized dose planning benefits of the multi-catheter brachytherapy procedure into one device. This innovative combination is expected to allow more patients to access the shorter radiation treatment cycles offered through accelerated partial breast irradiation (APBI) when treated with the ClearPath Device. The ClearPath systems are placed in the patient through a single incision and are designed to adapt to the resection cavity, allowing for more conformal therapeutic radiation dose distribution following lumpectomy compared to other methods of APBI. ClearPath is designed to accommodate either high-dose, ClearPath-HDR�, or low-dose rate, ClearPath-CR�, treatment methods. The Company has received 510k approval from the United States FDA for both ClearPath-HDR and ClearPath-CR. Throughout the fourth quarter of fiscal 2007, the Company began clinical experience and collected data from human patient implants performed by key opinion leaders with the first generation ClearPath-HDR device. The Company plans several key developments and marketing activities designed to support the successful commercialization of the ClearPath� products in fiscal 2008: Key ClearPath Development Activities planned in Fiscal 2008 Complete development and introduce second generation ClearPath-HDR products that increase functionality and ease-of-use Introduce the first generation ClearPath-CR (continuous release) products Strategically expand the Company�s distribution and sales organization to focus on ClearPath� products Conference Call Today The Company will host an investor conference call to review its fourth quarter and fiscal year 2007 financial results and latest corporate developments, beginning at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time on Tuesday, January 29, 2008. The dial-in number for the conference call is 800-240-2430 for domestic participants and 303-262-2006 for international participants. A live webcast of North American Scientific's conference call will be available over the Internet through its website at www.nasmedical.com in the Investor Center. For those who cannot listen to the live webcast, a taped replay of the call will be available beginning approximately one hour after the call�s conclusion and will remain available for seven days. It can be accessed at the same site shortly after the call, or by dialing 800-405-2236 for domestic callers and 303-590-3000 for international callers, using the passcode 11107832#. About North American Scientific North American Scientific is a leader in radiation therapy in the fight against cancer. Its innovative products provide physicians with tools for the treatment of various types of cancers. They include Prospera� brachytherapy seeds and SurTRAK� needles and strands used primarily in the treatment of prostate cancer. In addition, the Company has been gaining clinical experience with its first generation ClearPath� multi-channel catheter breast brachytherapy devices in 2007, and intends to launch the second generation devices in 2008. They are the only such devices approved for both high dose and continuous release, or low dose, radiation treatments. The devices are designed to provide flexible, precise dose conformance and an innovative delivery system that is intended to offer the more advanced form of brachytherapy for the treatment of breast cancer. Please visit www.nasmedical.com for more information. Statements included in this release 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 the Company including, but not limited to, the impact of competitive products and pricing, technological changes, changes in relationships with strategic partners and dependence upon strategic partners for the performance of critical activities under collaborative agreements, the ability of the Company to successfully directly market and sell its products, uncertainties relating to patent protection and regulatory approval, the stable supply of appropriate isotopes, research and development estimates, market opportunities, risks associated with strategic opportunities or acquisitions the Company may pursue and the risk factors included in the Company�s filings with the Securities and Exchange Commission. Any forward-looking statements contained in this news release speak only as of the date of this release, and the Company undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future results or otherwise. NORTH AMERICAN SCIENTIFIC, INC. Consolidated Statements of Operations � Three months endedOctober 31, (Unaudited) � For the years endedOctober 31, � 2007 � 2006 2007 � 2006 � Revenue Product $ 4,177,000 $ 3,349,000 $ 15,317,000 $ 12,594,000 Cost of revenue Product � 2,898,000 � 2,298,000 � 10,690,000 � 8,998,000 � Gross profit 1,279,000 1,051,000 4,627,000 3,596,000 � Operating expenses Selling expenses 974,000 800,000 3,819,000 2,772,000 General and administrative expenses 2,515,000 2,682,000 9,010,000 8,964,000 Research and development 498,000 445,000 1,780,000 1,160,000 Amortization of intangible assets 7,000 7,000 28,000 28,000 � Total operating expenses � 3,994,000 � 3,934,000 � 14,637,000 � 12,923,000 � Loss from operations (2,715,000 ) (2,882,000 ) (10,010,000 ) (9,326,000 ) Interest and other income (expense) (437,000 ) 52,000 (535,000 ) (119,000 ) � Loss before provision for income taxes (3,152,000 ) (2,830,000 ) (10,545,000 ) (9,445,000 ) Provision for income taxes � � � � � Loss from continuing operations (3,152,000 ) (2,830,000 ) (10,545,000 ) (9,445,000 ) Loss from discontinued operations (including a loss on disposal of $7,107,000 in 2007) � � (783,000 � ) � (3,297,000 � ) � � (10,453,000 � ) � (7,685,000 � ) � Net loss $ (3,935,000 ) $ (6,127,000 ) $ (20,998,000 ) $ (17,130,000 ) � Basic and diluted loss per share: Continuing operations $ (0.11 ) $ (0.10 ) $ (0.36 ) $ (0.43 ) Discontinued operations � (0.02 ) � (0.11 ) � (0.36 ) � (0.35 ) � Net loss $ (0.13 ) $ (0.21 ) $ (0.72 ) $ (0.78 ) � Weighted average number of shares outstanding, basic and diluted � 29,395,331 � 29,338,220 � 29,344,269 � 21,956,565 NORTH AMERICAN SCIENTIFIC,�INC. Consolidated Balance Sheets � October 31, 2007 2006 � Assets Current assets Cash and cash equivalents $ 609,000 $ 903,000 Marketable securities, held to maturity --- 8,420,000 Accounts receivable, net of reserves 2,296,000 2,618,000 Inventories, net of reserves 1,546,000 1,284,000 Prepaid expenses and other current assets 724,000 830,000 Assets held for sale --- 11,377,000 � Total current assets 5,175,000 25,432,000 Equipment and leasehold improvements, net 891,000 1,318,000 Intangible assets, net 110,000 138,000 Other assets --- 310,000 � Total assets $ 6,176,000 $ 27,198,000 � Liabilities and Stockholders' (Deficit) Equity Current liabilities Lines of credit, net of discount $ 3,241,000 $ --- Warrant derivative 173,000 --- Accounts payable 2,564,000 2,406,000 Accrued expenses 3,110,000 3,790,000 Liabilities related to assets held for sale --- 3,814,000 � Total liabilities 9,088,000 10,010,000 � Commitments and contingencies � Stockholders' (deficit) equity Preferred stock, $.01 par value, 2,000,000 shares authorized; no shares issued � � Common stock, $.01 par value, 100,000,000 (2007) and 40,000,000 (2006) shares authorized; 29,601,352 (2007) and 29,447,270 (2006) shares issued; and 29,395,331 (2007) and 29,336,144 (2006) shares outstanding 300,000 298,000 Additional paid-in capital 145,533,000 144,543,000 Treasury stock, at cost � 206,021 (2007) and 111,126 (2006) common shares (227,000 ) (133,000 ) Accumulated deficit (148,518,000 ) (127,520,000 ) � Total stockholders' (deficit) equity (2,912,000 ) 17,188,000 � Total liabilities and stockholders' (deficit) equity $ 6,176,000 $ 27,198,000