COMPANY OF THE MONTH

                               CHAD THERAPEUTICS

                                AMEX Symbol: CTU

                                BOWSER RATING: 8

                      Price Last 24 Months--$1.06 to $4.17

We've all seen people with a thin plastic tube under their nose that is giving
them life-prolonging oxygen.

      That thin plastic tube is called a cannula. And, one of the leading
manufacturers of cannulas and the accompanying tanks of oxygen is CHAD
Therapeutics Inc.

      The American Lung Assn. reported in 1996--and the number has increased
since then--that there were 16.4 million Americans suffering from chronic
obstructive pulmonary diseases (COPD). It is the fourth leading cause of death
in the U.S. and claims more than 100,000 lives a year.

      Although precise data is not available, it is estimated there are more
than one million home-care patients receiving supplementary administration of
oxygen. Total dealer revenues for home oxygen therapy are estimated at over $2
billion.

      Medicare accounts for about 60% of home oxygen dealers' revenues. Growth
in the number of home oxygen patients is projected at the rate of 8% per year.

      Chronic obstructive pulmonary diseases are also prevalent in other
countries, particularly in some European nations and the Far East, where the
incidence is higher than in the U.S. The potential international market for
home oxygen is expected to grow to 150% of the U.S. market over the next five
to ten years.

      The primary oxygen supply for home patients is provided from cylinders
containing compressed gaseous oxygen (less than 1% of users), reservoirs
containing liquid oxygen (10-15%) or by means of concentrators that get oxygen
from the ambient air (85-90%).

      In Jun '83, CTU began marketing its first product--the OXYMIZER
disposable, oxygen-conversing device. This was a unique, patented, disposable
device. It contains a collapsable reservoir, which captures incoming oxygen
delivered during exhalation and prevents its waste. The oxygen captured in this
reservoir is then breathed in by the patient during the next inhalation.

      This both conserves oxygen and provides the patient with an extra rich
supply of oxygen at the beginning of the inhalation period when it can be more
effectively utilized.

      Through the years, many improvements have been made on this basic device.
One improved model senses the optimal moment in the breathing cycle for
delivery of oxygen and, at that moment, releases a very brief pulse of oxygen.

      The electronics have been improved and the battery life has been
prolonged.

      The OXYMATIC-2400 can be used 24 hours a day with both primary and
portable oxygen sources. It also has an alarm system. Models are available that
allow patients to be away from their homes for extended periods, for greater
freedom of movement.

      The TOTAL 02 Delivery System was introduced in 1998. It reduces the
monthly cost of servicing patients. Home care dealers are no longer required to
make monthly service calls to deliver cylinders.

      Las month, the FDA approved the CYPRESS OXY-Pneumatic conserver. With
this, CHAD Therapeutics will be able to compete in the pneumatic conserver
market for the first time. This sector accounts for 35% of the total market.

      The CYPRESS conserver allows the use of a single lumen cannula and
provides a savings ratio of greater than 3:1. Most other pneumatic conservers
use a dual lumen cannula, which is more expensive.

      As our statistical chart indicates, 2000 and 2001 were not good years.
The Company had to overcome the reduction in Medicare funding. Also the firm
lost its leadership position when it failed to introduce new models. But, this
is past history.

      All of this is shown by the 54% increase in sales during fiscal 2002 and
the return to profitability.


<Table>
<Caption>
                          2000(A)           2001(A)          2002(A)(B)
                                                   
SALES                   $12,774,000       $12,158,000       $18,730,000
NET INCOME(LOSS)        $(2,511,000)      $(3,011,000)      $ 1,157,000
WORKING CAPITAL         $ 9,763,624       $ 5,847,000       $ 7,497,000
BOOK VALUE                  $1.22            $0.92             $1.03
TOTAL SHARES             10,035,000        10,052,000        10,059,000
FLOAT                        N/A              N/A             9,300,000
</Table>
(A) FISCAL YEAR ENDS 3/31. (B) 2002 NET INCOME INCLUDED OVER $90,000 FROM AN
    INCOME TAX REFUND.

      The just-approved CYPRESS will give a further boost to sales. And, the
TOTAL 02 is a sleeper, because of its great cost-savings aspects.

      CHAD Therapeutics is a financially-conservative firm. There is no
long-term debt and, for every $7 in current assets, there is only $1 in current
liabilities.

      As of Dec. 31, CTU has $3,856,000 and $2,928,000 in Federal and
California net operating loss carry-forwards respectively. Over $900,000 of
this was used March 31 in bolstering fiscal 2002 earnings.

      Thomas E. Jones, 58, CEO and president, owns 250,460 shares of the
common. He has also been with the company since 1997 and became CEO in 1998. He
has a rich background in the industry. At one time, he was chairman of the
Compressed Gas Association.

      Office: 21622 Plummer St., Chatsworth, CA 91311, 800/423-8870, Fax:
818/882-1809, www.chadtherapeutics.com.


                    The Bowser Report - August 2002 - Page 3