<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 2 TO FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES ACT OF 1934
For The fiscal year ended December 31, 1997
Commission File Number 0-28392
HARVARD SCIENTIFIC CORP.
------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Nevada 88-0226455
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
755 Rinehart Road, Suite 100, Lake Mary, FL 32746
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (407) 324-1606
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, Par Value $0.01 Per Share
(Title of Class)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
- ----- -----
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ____
State issuer's revenues for its most recent fiscal year. None
----
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of such common equity, as
of a specified date within 60 days prior to the date of filing.
Based on the average of the high and low bid and ask prices for the Registrant's
shares of common stock of $7.75 on March 18, 1998, such market value is
calculated net of 3,042,028 affiliate shares which equals $17,019,147.
Indicate the number of shares outstanding of each of the registrant's classes of
Common Stock, as of the latest practicable date. As of April 24, 1998 there were
5,238,047 shares of Common Stock outstanding.
The information required by PART III (other than Item 13. "Exhibits and Reports
on Form 8-K") of this annual report 10K-SB, was previously excluded on the basis
of reference to the proxy or information statement for the election of directors
and other matters to be filed with the Securities Exchange Commission on or
before April 30, 1998 or on an amendment to such annual report including such
information. This Amendment includes the previously excluded PART III (other
than Item 13. "Exhibits and Reports on Form 8-K").
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<PAGE>
PART III
A 1 for 10 reverse stock split was effective February 2, 1998. All
figures in this Amendment to the Annual Report give effect to such reverse stock
split, and previously stated numbers of shares are appropriately restated,
unless otherwise indicated. All statements in this annual report should be read
in conjunction with and are qualified by the other information and financial
statements (including the notes thereto) appearing elsewhere in this Amendment
to the Annual Report and the previously filed Annual Report and Amendments, or
incorporated herein by reference.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
As of April 24, 1998, the directors and executive officers of the Company, their
ages, positions and offices in the Company, the dates of their initial election
or appointment as director or executive officer, and the expiration of the terms
as directors are as follows:
<TABLE>
<CAPTION>
- ------------------------------ --------- ----------------------------- --------------------------
Period Served as Director
NAME Age Position (1) or Executive Officer
- ------------------------------ --------- ----------------------------- --------------------------
<S> <C> <C> <C>
Col. Robert T. Hayden 72 Director (2) (3) Since 2/10/98
- ------------------------------ --------- ----------------------------- --------------------------
Martin J. Holloran 67 Director (3) Since 2/10/98
- ------------------------------ --------- ----------------------------- --------------------------
Barbara L. Krilich 38 Secretary and Chief Since 12/12/97
Operating Officer
- ------------------------------ --------- ----------------------------- --------------------------
Curtis A. Orgill 48 Director, Treasurer, Officer since
and Chief Financial 12/12/97;
Officer (2) (3) Director since
2/10/98
- ------------------------------ --------- ----------------------------- --------------------------
Jackie R. See, M.D. (4) 56 Director (5) Since 1/6/94
- ------------------------------ --------- ----------------------------- --------------------------
Thomas E. Waite 35 Chief Executive Since 11/14/97
Officer, President
and Director (5)
- ------------------------------ --------- ----------------------------- --------------------------
</TABLE>
(1) The Company's directors are elected at the annual meeting of stockholders
and hold office until their successors are elected and qualified or until
the director resigns. The Company's officers are appointed annually and as
needed by the Board of Directors and serve at the pleasure of the Board.
(2) These Directors are members of the Compensation Committee. Mr. Orgill is
Chairman of this committee.
(3) These Directors are members on the Audit Committee. Mr. Orgill is Chairman
of this committee.
(4) In his role as consultant, Dr. See acts as the Company's Director of
Scientific Research and Development. Dr. See may also be considered a
promoter of the Company.
(5) These Directors are members of the Company's Executive Committee, of which
Mr. Waite is Chairman.
BUSINESS EXPERIENCE:
JACKIE R. SEE, M.D., F.A.C.C., is a Director of the Company. Dr. See is a
cardiologist and the principal inventor and author of the patent of microsphere
technology "PGE1-EDT". He received his M.D. from the University of California,
College of Medicine (Irvine) in 1968. Dr. See completed his Residency in
Internal Medicine at the Huntington Memorial Hospital, Pasadena, California in
1973. After serving as a Medical Officer on active duty in the U.S. Navy Medical
Corps. He went on to do research fellowship work in cardiology at Peter Bent
Brigham Hospital, Harvard Medical School (Boston). He was an Associate Director
2 of 12
<PAGE>
of the Foundation for Cardiovascular Research (1968-1984) and has been a Fellow
of the American College of Cardiology since 1980. Dr. See is licensed to
practice medicine in the States of California and Nevada and is Board Certified
by the American Board of Internal Medicine. He is the author or co-author of
more than 60 research articles for various medical publications.
THOMAS E. WAITE, is a Director and Chairman of the Board, President and the
Chief Executive Officer of the Company. Much of Mr. Waite's experience has been
specialized in investment banking, corporate finance, mergers and acquisitions,
and public relations for publicly traded biotechnology and medical device
companies. Just prior to joining the Company, Mr. Waite was President of his
consulting firm, Thomas E. Waite & Associates, Inc., which began in late 1992,
where he and his associates began researching the most effective, risk adverse
way for establishing enterprises in the rapidly expanding and highly lucrative
riverboat gaming industry. As a result of this research, in 1993, Mr. Waite
organized a successful riverboat gaming company called Wild Card Enterprises,
Inc., of which he was also President. From 1988 to 1994, Mr. Waite was a
Series-7 licensed registered representative. His consulting experience began in
1990 at First Montauk Securities. In 1991 he became Director of Investment
Banking and Corporate Finance at Collner Higgins and Andersen, a securities firm
that specializes in trading. In 1993, Mr. Waite resigned his position with
Collner Higgins and Andersen.
MARTIN J. HOLLORAN is a Director of the Company. Mr. Holloran is currently
retired. Prior to retirement, Mr. Holloran had over forty years of experience in
sales and marketing, which includes over twenty-five years with Prudential
Insurance Company. He earned many awards over his career for both sales and
management abilities. Mr. Holloran was a winner of 24 National Leadership awards
for Prudential, a two time winner of its Academy of Honor and a two time winner
of the Citation award given to the top 10% producers in Prudential Insurance
Company. Mr. Holloran also received the Distinguished Professional Service Award
for New England and continues to be very active as a Teacher of Christian
Doctrine and a coach of children's athletics.
COLONEL ROBERT T. HAYDEN is a Director of the Company. Colonel Hayden retired
from active service in the United States Army in 1981 following 31 years of
active service. He was promoted to Colonel in 1971, and upon graduation from The
War College, served 3 years on the Joint Staff in the Pentagon in the office of
J-5, NATO Plans and Policy Directorate. Over his military career, Colonel Hayden
served in both Korea and Vietnam and has received many military decorations
which include the Silver Star, the Legion of Merit, two Bronze Starts, a Purple
Heart, an Army Commendation Medal with two oak leaf clusters, an Air Medal with
five oak leaf clusters, a Vietnam Medal of Honor and the Vietnam Gallantry Cross
with Silver and Gold Palm. He has been awarded the Combat Infantry Badge and the
Army Staff and Joint Chiefs of Staff Medallions, is a member of the Field
Artillery Hall of Fame, MOWW, The American Legion and the Military Order of the
Purple Heart and has served as President of the Florida Council of Florida
Chapter of the Retired Officers Association.
CURTIS A. ORGILL, CPA, is the Company's Treasurer, Director and Chief Financial
Officer. Dr. See is a cardiologist and the principal inventor and author of the
patent of microsphere technology "PGE1-EDT". He received his M.D. from the
University of California, College of Medicine (Irvine) in 1968. Dr. See
completed his Residency in Internal Medicine at the Huntington Memorial
Hospital, Pasadena, California in 1973. After serving as a Medical Officer on
active duty in the U.S. Navy Medical Corps. He went on to do research fellowship
work in cardiology at Peter Bent Brigham Hospital, Harvard Medical School
(Boston). He was an Associate Director of the Foundation for Cardiovascular
Research (1968-1984) and has been a Fellow of the American College of Cardiology
since 1980. Dr. See is licensed to practice medicine in the States of California
and Nevada and is Board Certified by the American Board of Internal Medicine. He
is the author or co-author of more than 60 research articles for various medical
publications.
BARBARA L. KRILICH, CPA, the Company's Secretary and Chief Operating Officer,
has been a Certified Public Accountant in Arizona since 1984. She recently
served as Director and Chief Financial Officer of Health Care Centers of
America, Inc. from November 1996 to August 1997. Immediately prior to that she
was employed by Evans Withycombe Residential, Inc. (currently Equity Residential
Inc.), a Real Estate Investment Trust (REIT), in Phoenix, Arizona, which she
joined in 1994. Initially Ms. Krilich worked in developing multi-family units in
Phoenix, Arizona, later transferring into the acquisition division responsible
for acquiring multi-family properties in Southern California. From 1992 to 1994,
she was a Regional Manager in Phoenix Arizona for SCG Residential, a subsidiary
of Security Capital Group, a REIT listed on the New York Stock Exchange. Prior
to joining SCG, Ms. Krilich spent over 10 years in accounting and finance with
various firms, including Peat Marwick & Mitchell (currently KPMG Peat Marwick).
Ms. Krilich is a member of the American Institute of Certified Public
Accountants and the Arizona Society of Certified Public Accountants.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
For the period beginning June 30, 1996 through the fiscal year ending December
31, 1997, the following persons, who were directors, officers or beneficial
owners of more than 10% of Common Stock of the Company, that failed to file, or
failed to file on a timely basis, reports required by Section 16(a) of the
Securities Exchange Act of 1934:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
DATE TO DATE
NAME POSITION STATUS FORMS BE FILED FILED
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Don Steffens Director & Officer Filed late 3 and 4 A 4/17/98
Jackie R. See Director Filed late 3 and 4 A 4/6/98
Curtis A. Orgill Director & Officer Filed late 3 2/9/98 3/2/98
Barbara L. Krilich Officer Filed late 3 2/9/98 3/2/98
Biosphere Technology Inc. More than 10% of Stock Filed late 3 and 4 A 4/6/98
- ---------------------------------------------------------------------------------------------
</TABLE>
A= Filer inadvertently failed to file required forms timely. The Forms 4
filed includes all transactions which were previously unreported
throughout the year. A Form 5 was required to be filed and was not.
However, all transactions required to be filed on the Form 5 have now
been included on Form's 3 and 4, respectively.
The Company is unable to confirm or verify compliance with Section 16(a)
of the Exchange Act for a former Director and Officer of the Company, Alexander
H. Walker, Jr. The Company is currently in litigation with Mr. Walker (See "ITEM
3. LEGAL PROCEEDINGS, ITEM NO.8"). The Company has attempted to obtain a
reconciliation of share differences and as of April 24, 1998 there has been no
response from Mr. Walker.
4 of 12
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth information about compensation paid or
accrued by the Company during the years ended December 31, 1997, 1996
and 1995 to the Company's officers and directors:
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------
Name and Other
Principal Year Salary/Consulting Fees Bonus Compensation
Position
- ------------------------------------------------------------------------------
(a) (b) STOCK (a)+(b)
CASH GRANTS (1) TOTAL
- ------------------------------------------------------------------------------
JACKIE R. SEE (2) 1997 $199,662 $10,088,450 $10,288,112 None None
Director of 1996 $104,000 None $104,000 None None
Research 1995 $16,000 $65,000 $81,000 None None
- ------------------------------------------------------------------------------
IAN HICKS (3) 1997 $46,000 $1,671,750 $1,717,750 None None
Was CEO, 1996 None None None None $16,440
President & 1995 None None None None None
Director
- ------------------------------------------------------------------------------
DON STEFFENS (4) 1997 $155,135 $3,608,750 $3,763,885 $100,000 None
Was CEO, 1996 None None None None None
President & 1995 None None None None None
Director
- ------------------------------------------------------------------------------
ALEXANDER H. 1997 $150,000 $2,892,724 $3,042,724 $75,000 None
WALKER(5) 1996 None $1,170,000 $1,170,000 None None
Was Secretary & 1995 None None None None None
Director
- ------------------------------------------------------------------------------
LORENZ HOFMANN 1997 $140,150 $59,600 $199,750 None None
(6) 1996 None None None None None
Was COO 1995 None None None None None
- ------------------------------------------------------------------------------
THOMAS E. WAITE 1997 $28,462 $4,000,000 $4,028,462 None None
(7) President & 1996 None None None None None
CEO 1995 None None None None None
- ------------------------------------------------------------------------------
(1) The transfer of shares issued to directors and officers is restricted
pursuant to applicable securities laws, although some recipients have
registration rights in respect of their shares, as noted herein. The
aggregate number and dollar value of stock holdings of officers and
directors as of April 20, 1998 were 2,405,278 shares and $25,502,291,
respectively. Such dollar value and the dollar value of all share grants
reflected in this Summary Compensation Table as of the date involved are
calculated in accordance with item 402(b)(2)(iv)(A) of Regulation S-B, which
requires the dollar value of any award of restricted stock to be calculated
by multiplying the closing market price of the registrant's unrestricted
stock on the date of grant by the number of shares awarded, even if that
amount could not than be realized.
(2) Dr. See is not an employee, and all compensation paid to him was as a
consultant. His consultant agreement, which was entered into as of April 1,
1996 and will terminate on March 30, 1999, calls for the Company to pay him
a consulting fee of $12,500 per month. In addition, he is reimbursed for all
reasonable and necessary business expenses incurred in the discharge of his
consulting duties. Dr. See is to receive a royalty fee equal to two percent
(2%) of the net revenues from the sale of LLPGE1 and any other products the
Company may produce under Patent Application No. 08/573408. Dr. See will
receive these royalty fees for the life of patent No. 5,718,917 issued
February 17, 1998. SEE ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, DR. JACKIE R. SEE & BIOSPHERE, for additional relationships
between Dr. See and the Company.
5 of 12
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On March 18, 1997, Dr. See received 35,000 shares of Common Stock of the
Company for services performed for the Company. The dollar value of such
shares was $2,340,450. On June 10, 1997, Dr. See received 400,000 shares of
Common Stock of the Company for services performed for the Company. The
dollar value of such shares was $7,748,000. Of these shares, 100,000 shares
were transferred into the Anita Wassgren See Trust (Anita Wassgren See is
Dr. See's wife). See ITEM 1."DESCRIPTION OF BUSINESS- OTHER FINANCING
ARRANGEMENTS" concerning the Financing Agreement between Dr. Jackie R. See
and Thomas E. Waite and the Company dated January 13, 1998 and amended
February 3, 1998, pursuant which Dr. See and Mr. Waite have the right to
invest up to $10,000,000 in the Company and pursuant to which they invested
$5,000,000 on February 3, 1998 in promissory notes and cash and received
1,580,028 shares of Common Stock therefor. Such stock is valued at the
closing bid price of $9.50 on February 3, 1998 for a total value of
$7,506,321.
(3) During 1995, Mr. Hicks was not an employee of the Company. Mr. Hicks became
President in June 1996. He ceased being an employee or otherwise affiliated
with the Company as of May 14, 1997. On March 18, 1997, Mr. Hicks received
25,000 shares of Common Stock of the Company for services performed. The
dollar value of such stock was $1,671,750.
(4) Mr. Steffens was not an employee of the Company during 1995, and he moved
from the positions of CFO, Secretary and Treasurer of the Company, to which
he was appointed in 1996, to the positions of President and CEO as of May
15,1997. Mr. Steffens resigned from these positions on November 14, 1997 and
is no longer affiliated with the Company. On June 10, 1997, Mr. Steffens
received 100,000 shares of the Company's Common Stock for services performed
for the Company. The dollar value of such stock was $1,937,000. On March 18,
1997, Mr. Steffens received 25,000 shares of Common Stock of the Company for
services performed. The dollar value of such stock was $1,671,750.
(5) The Company entered into two agreements on March 19, 1997, and on May 15,
1997, with Alexander H. Walker, Jr. ("Walker"), former Director, Secretary,
and General Counsel of the Company. The agreements provided that Walker was
retained as General Counsel for all legal matters of the Company and was to
prepare or supervise the preparation of Securities and Exchange Commission
filings, contracts and agreements. The agreements provided that Walker would
receive $15,000 per month over 36 months plus up to 100,000 shares of Common
Stock. In 1997, Walker received $231,678 and was issued 105,200 shares of
Common Stock. In December 1997, the Company terminated all agreements with
Walker. SEE ITEM 2."LEGAL PROCEEDINGS-ITEM 8". During 1996, Walker did not
receive any cash payment for legal fees and received $600 as reimbursement
of expenses for his services as counsel.
On April 12, 1996, Walker received 18,000 shares of the Company's Common
Stock for services performed. The dollar value of such stock was $1,170,000.
On March 18, 1997, Walker received 18,000 shares of stock for services
performed. The dollar value of such stock was $1,203,660. On June 10, 1997,
Walker received 87,200 shares of stock for current and future services to be
performed. The dollar value of such stock was $1,689,064.
(6) Dr. Lorenz Hofmann Ph.D. was not an employee of the Company during 1995 and
1996. In August 1997, the Company entered into a consulting agreement with
Dr. Hofmann whereby Dr. Hofmann was to receive $15,000 per month for his
services, plus 10,000 shares of the Company's Common Stock for services
performed in 1997. These shares were issued on January 26, 1998 with respect
to services performed in 1997 for a dollar value of $59,600.
(7) Thomas E. Waite became President, Director and Chief Executive Officer on
November 14, 1997 and was issued 400,000 shares of the Company's Common
Stock to induce him to work for the issuer and provide an incentive for his
successful performance. Mr. Waite has a 1-year employment contract with the
Company effective January 5, 1998 for a monthly salary of $20,000. Prior to
that time, Mr. Waite was not an employee of the Company. In 1995, Thomas E.
Waite & Associates, a company owned by Mr. Waite, was a consultant to the
Company.
On November 14, 1997, Mr. Waite was issued 400,000 shares of the Company's
Common Stock to enable him to devote his entire business time to the affairs
of the Company. The dollar value of such shares was $4,000,000. See ITEM
1."DESCRIPTION OF BUSINESS- OTHER FINANCING ARRANGEMENTS" concerning the
Financing Agreement between Dr. Jackie R. See and Thomas E. Waite and the
Company dated January 13, 1998 and amended February 3, 1998, pursuant which
Dr. See and Mr. Waite have the right to invest up to $10,000,000 in the
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Company and pursuant to which they invested $5,000,000 on February 3, 10998
in promissory notes and cash and received 1,580,028 shares of Common Stock
therefor. Such stock is valued at the closing bid price of $9.50 on February
3, 1998 for a total value of $7,506,321. For stock issuance's to Thomas E.
Waite & Associates prior to Mr. Waite becoming an employee, see ITEM 3.
"LEGAL PROCEEDINGS - ITEM 1."
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
All shares included in the following table and in this section are current and
have been restated to reflect the 1 for 10 reverse stock split effective
February 2, 1998. The following table sets forth information as of April 21,
1998 concerning ownership of the Company's Common Stock by (i) each Director and
Executive Officer of the Company, (ii) all Directors and Officers as a group and
(iii) each person known to the Company to be the beneficial owner of more than
5% of the Company's Common Stock:
<TABLE>
<CAPTION>
- --------------------- --------------------------------- ------------------- -------------------
PERCENTAGE OF
AMOUNT AND OUTSTANDING SHARES
NAME AND ADDRESS NATURE OF OF COMMON STOCK
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL AS OF APRIL 21,
OWNERSHIP (1) 1998 (2)
- --------------------- --------------------------------- ------------------- -------------------
<S> <C> <C> <C>
Common Stock Dr. Jackie R. See (3) 2,554,493 (2) 43.8%
100 N. Arlington
Suite 23-P
Reno, NV 89501
- --------------------- --------------------------------- ------------------- -------------------
Common Stock Don Steffens (4) 111,500 2.1%
100 N. Arlington
Suite 23-P
Reno, NV 89501
- --------------------- --------------------------------- ------------------- -------------------
Common Stock Ian Hicks (5) 25,000 .5%
5967 Jacaranda Lane
Yorba Linda, CA 92887
- --------------------- --------------------------------- ------------------- -------------------
Common Stock Alexander H. Walker, Jr. (6) 122,200 2.3%
American Plaza II
57 West 200 South, Ste. 400
Salt Lake City, UT 84101
- --------------------- --------------------------------- ------------------- -------------------
Common Stock Thomas E. Waite (7) 1,782,743 (2) 30.6%
755 Rinehart Road
Suite 100
Lake Mary, FL 32746
- --------------------- --------------------------------- ------------------- -------------------
Common Stock Curtis Orgill (8) 50,000 1.0%
1325 Airmotive Way
Suite 125
Reno, NV 89502
- --------------------- --------------------------------- ------------------- -------------------
Common Stock Colonel Robert T. Hayden (9) 5,000 -
3715 Constancia Drive
Green Cove Springs, FL 32043
- --------------------- --------------------------------- ------------------- -------------------
Common Stock Martin J. Holloran (10) 5,000 -
356 Crystal Ridge Way
Lake Mary, FL 32746
- --------------------- --------------------------------- ------------------- -------------------
Common Stock See & Waite Group (11) 3,744,632 64.2%
- --------------------- --------------------------------- ------------------- -------------------
Common Stock All Directors and 3,854,632 66.1%
Officers as a Group
- --------------------- --------------------------------- ------------------- -------------------
Common Stock BioSphere Technology, Inc. 746,750 14.3%
Suite 23P
100 N. Arlington Avenue
Reno, NV 89501
- --------------------- --------------------------------- ------------------- -------------------
</TABLE>
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(1) The ownership of the shares deemed to be held by Springrange Investment
Group, Ltd., due to its ownership of $2,550,000 principal amount of the
Company's 6% Convertible Debentures, is not reflected due to Springrange's
contractual obligation to the Company pursuant to which it is not entitled
to convert any Debenture to the extent that after such conversion the
number of shares of Common Stock beneficially owned by Springrange and its
affiliates (excluding any shares deemed beneficially owned through any
continuing ownership of Debentures) exceeds 4.9% of the outstanding Common
Stock.
The Company cannot, however, be assured that the shares owned by
Springrange have or have not exceeded 4.9% of the shares outstanding from
time to time. In this regard, the following conversions by Springrange of
6% Convertible Debentures are noted: 1) 86,452 shares of Common Stock
issued upon conversion of $700,000 principal amount of Debentures on July
14, 1997, 2) 35,504 shares of Common Stock issued upon conversion of
$300,000 principal amount of Debenture on August 13, 1997, 3) 22,677 shares
of Common Stock issued upon conversion of $250,000 principal amount of
Debenture on August 22, 1997, 4) 40,430 shares of Common Stock issued upon
conversion of $500,000 principal amount of Debenture on October 24, 1997,
5) 33,400 shares of Common Stock issued upon conversion of $250,000
principal amount of Debenture on December 3, 1997, 6) 63,762 shares of
Common Stock issued upon conversion of $200,000 principal amount of
Debenture on December 24, 1997, 7) 103,606 shares of Common Stock issued
upon conversion of $250,000 principal amount of Debenture on January 16,
1998. The total number of shares of Common Stock issued to Springrange
through April 24, 1998 is 385,831.
On January 28, 1998, Springrange gave notice of conversion of $250,000
principle amount of Debenture. This Conversion called for a transfer of
52,573 shares of Common Stock. The Company has not honored this request. On
January 29, 1998, Springrange gave notice of conversion of $250,000
principle amount of Debenture. The conversion called for a transfer of
48,686 shares of Common Stock. The Company has not honored this request.
(SEE ITEM 2."LEGAL PROCEEDINGS").
(2) The percentage calculation for each person or group, reflects the addition
to the number of shares beneficially owned by such person or group and to
the aggregate outstanding shares, the number of shares that the person or
group involved has the right to acquire within 60 days.
(3) This total includes 1,105,139 shares held by Dr. Jackie R. See, 746,750
shares held by Bio-Sphere Technology, Inc., of which Dr. Jackie R. See is
the controlling person, 110,000 shares held by Anita Wassgren See Trust
(Anita Wassgren See is Dr. Jackie See's spouse), of which Trust Dr. Jackie
R. See disclaims any beneficial interest or control, 296,302 additional
shares issuable to Dr. Jackie R. See under the See and Waite Agreement, and
296,302 shares issuable to Thomas E. Waite under the See & Waite Agreement
because Dr. Jackie R. See and Thomas E. Waite may be deemed to be a group
in connection therewith, (sEE ITEM 1."DESCRIPTION OF BUSINESS - OTHER
FINANCING ARRANGEMENTS").
(4) As of May 15, 1997, Mr. Steffens moved from the positions of Chief
Financial Officer, Secretary and Treasurer of the Company to the positions
of President and Chief Executive Officer of the Company. Mr. Steffens
resigned from all positions with the Company as of November 14, 1997.
(5) Mr. Hicks resigned as President, Chief Executive Officer and Director of
the Company as of May 14, 1997.
(6) Mr. Walker was appointed Secretary and Director of the Company as of May
15,1997, and was appointed General Council as of February 21, 1997. Mr.
Walker was terminated as Secretary and General Council on December 13, 1997
and resigned as Director on December 23, 1997.
(7) Mr. Waite was appointed President, CEO, and Chairman of the Board of
Directors on November 14, 1997. Mr. Waite's total includes 1,190,139 shares
held by him plus 296,302 additional shares issuable to Mr. Waite under the
See and Waite Agreement, and 296,302 shares issuable to Dr. Jackie R. See
under the See & Waite agreement, because Thomas E. Waite and Dr. Jackie R.
See may be deemed to be a group in connection therewith, (SEE ITEM
1."DESCRIPTION OF BUSINESS - OTHER FINANCING ARRANGEMENTS" AND ITEM
1."DESCRIPTION OF BUSINESS - OTHER FINANCING ARRANGEMENTS").
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(8) Mr. Orgill was appointed Treasurer and Chief Financial Officer on December
12, 1997. On February 10, 1998, Mr. Orgill was appointed as a Director to
the Company.
(9) Col. Hayden was appointed a Director of the Company on February 10, 1998.
(10) Mr. Holloran was appointed a Director of the Company on February 10, 1998.
(11) Dr. Jackie R. See & Thomas E. Waite may be considered to be a group. See
(2) and (7) above.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During 1996, 1997 and to April 24, 1998, the Company issued the
following shares of Common Stock to current or prior Officers and Directors of
the Company, relatives of those Officers and Directors and other related
parties, as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
RELATIONSHIP CURRENT NO. OF
TO STATUS/ DATE SHARES DOLLAR
NAME THE COMPANY RELATIONSHIP REFERENCE ISSUED ISSUED VALUE **
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Colonel Robert T. Director Current (1) 2/18/98 5,000 $ 25,650
Hayden
- ----------------------------------------------------------------------------------------------------
Ian Hicks Officer & Prior (1) 3/18/97 25,000 $ 1,671,750
Director
- ----------------------------------------------------------------------------------------------------
Martin J. Holloran Director Current (1) 2/18/98 5,000 $ 25,650
- ----------------------------------------------------------------------------------------------------
Barbara L. Krilich Officer Current (1) 1/26/98 50,000 $ 298,000
- ----------------------------------------------------------------------------------------------------
Curtis A. Orgill Officer & Current (1) 1/26/98 50,000 $ 298,000
Director
- ----------------------------------------------------------------------------------------------------
Dr. Jackie R. See, M.D. Director Current (1) 3/18/97 35,000 $ 2,340,450
Dr. Jackie R. See, M.D. Director Current (1) 6/10/97 400,000 $ 7,748,000
Dr. Jackie R. See, M.D. Director Current (2) 2/3/98 790,139 $ 7,506,321
Dr. Darryl See, M.D. Consultant Dr. Jackie (1) 11/14/97 50,000 $ 500,000
See's Son
Dr. Darryl See, M.D. Consultant Dr. Jackie (1) 1/26/98 200,000 $ 1,192,000
See's Son
Total 1,475,139 $ 19,286,771
- ----------------------------------------------------------------------------------------------------
Don Steffens Officer & Prior (1) 3/18/97 25,000 $ 1,671,750
Director
Don Steffens Officer & Prior (1) 6/10/97 100,000 $ 1,937,000
Director
Total 125,000 $ 3,608,750
- ----------------------------------------------------------------------------------------------------
Thomas E. Waite Officer & Current (3) 12/18/96 56,875 $ 1,279,688
Director
Thomas E. Waite Officer & Current (4) 11/14/97 400,000 $ 4,000,000
Director
Thomas E. Waite Officer & Current (2) 2/3/98 790,139 $ 7,506,321
Director
Total 1,247,014 $ 12,786,008
- ----------------------------------------------------------------------------------------------------
Alexander H. Walker, Jr. Officer & Prior (5) 4/12/96 18,000 $ 1,170,000
Director
Alexander H. Walker, Jr. Officer & Prior (5) 3/18/97 18,000 $ 1,203,660
Director
Alexander H. Walker, Jr. Officer & Prior (5) 6/10/97 87,200 $ 1,689,064
Director
Alexander H. Walker, III N/A Walker Jr's Son (6) 7/5/96 2,000 $ 65,000
Alexander H. Walker, III N/A Walker Jr's Son (6) 3/18/97 2,000 $ 133,740
J.T. Cardinalli N/A Walker Jr's (6) 7/5/96 2,000 $ 65,000
Son-in-law
J.T. Cardinalli N/A Walker Jr's (6) 3/18/97 2,000 $ 133,740
Son-in-law
Total 131,200 $ 4,460,204
- ----------------------------------------------------------------------------------------------------
</TABLE>
*- 100,000 shares were issued in the name of Anita Wassgren See Trust. Anita
Wassgren See is Dr. Jackie See's wife.
** The dollar value of all share grants are calculated in accordance with item
402(b)(2)(iv)(A) of Regulation S-B, which requires the dollar value of any award
of restricted stock to be calculated by multiplying the closing market price of
the registrant's unrestricted stock on the date of grant by the number of shares
awarded even if the amount could not than be realized. The Company has recorded
all the above stock transaction at par value of $.01.
9 of 12
<PAGE>
(1) The shares were issued for compensation for services performed as an
Officer or Director of the Company, or services performed as an
independent consultant to the Company. See ITEM 11"SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" for specific title of their
position with the Company and dates of service with the Company. Also
see ITEM 10 "EXECUTIVE COMPENSATION" for a more specific description of
share transactions to Officers and Directors of the Company.
(2) The Company has secured a Financing Agreement (SEE "DESCRIPTION OF
BUSINESS - OTHER FINANCING ARRANGEMENTS") with Dr. Jackie See and Thomas
E. Waite, President and Chief Executive Officer (the "Investors"),
whereby the investors (a) purchased an initial tranche of 1,580,278
shares of the Company's Common Stock for an aggregate purchase price of
$5,000,000, and (b) may purchase up to an aggregate of 592,605
additional shares of the Company's Common Stock, upon certain terms and
conditions, at an aggregate maximum additional purchase price of
$5,000,000. The initial funding of $5,000,000 was effected on February
3, 1998 by the delivery to the company by each investor of a check for
$7,901.39 and Promissory Notes due March 31, 1999 in the principal
amount of $2,492,098.61, bearing interest at the rate of 1% above prime
and secured by the shares purchased.
(3) In December 1996, the Company issued 56,875 shares of its Common Stock
as part of a settlement agreement in the litigation between the Company
and Thomas Waite & Associates described herein. SEE " LEGAL PROCEEDINGS-
ITEM 2".
(4) In November 1997, the Company hired Thomas E Waite as the President and
Chairman of the Board and issued to him 400,000 shares of the Company's
Common Stock to induce him to work for the Company and provide an
incentive for his successful performance as President and Chief
Executive Officer. The grant of 400,000 shares of the Company's Common
Stock is irrevocable and the amount of the grant was determined, in view
of the cessation of the active business of Thomas E. Waite & Assoc., at
the time of Mr. Waite's employment to enable him to devote his entire
business time to the affairs of the Company. The 400,000 shares issued
to Thomas E. Waite have demand registration rights under the Securities
Act of 1933, which rights have been exercised. For stock issuance's to
Thomas E. Waite & Associates prior to Mr. Waite becoming an employee,
see ITEM 3. "LEGAL PROCEEDINGS - ITEM 1."
(5) On April 12, 1996, the Company issued 18,000 shares of Common Stock to
Alexander H. Walker, Jr. in connection with legal services rendered and
to be rendered to the Company, pursuant to a consulting agreement signed
in March 1996. During 1997, Alexander H. Walker Jr's consulting
agreement was renewed whereby Mr. Walker was to receive $15,000 per
month plus the issuance of Common Stock shares, in exchange for his
services as general counsel to the Company, among other things. During
1997, Mr. Walker issued to himself 105,200 shares of Common Stock. The
Company has terminated all agreements with Mr. Walker. SEE ITEM 2."LEGAL
PROCEEDINGS- ITEM 8 AND ITEM 10, AND "EXECUTIVE COMPENSATION NO. 5".
(6) On July 5, 1996 and again on March 18, 1997, the Company issued 2,000
shares of Common Stock to Alexander H. Walker III (Mr. Alexander H.
Walker, Jr's son) and 2,000 shares of Common Stock to J.T. Cardinalli
(Alexander H. Walker Jr's son-in-law) for legal services rendered and to
be rendered to the Company.
As of April 21, 1998, BioSphere Technology Inc. ("BTI") owned 746,750
shares of Common Stock representing 14.3% of the Company's outstanding shares.
Dr. Jackie R. See controls BTI and is a Director, a controlling person, and may
be considered a promoter, of the Company.
The Company has paid BTI for the LLPGE1 patent application and other
intellectual properties, as well as licensing and distribution agreements and
utilization of its scientific and technical personnel, with Company stock. The
Company initially issued 71,400 shares (originally issued 2,856,000 shares prior
to the 1 for 4 reverse stock split effective November 3, 1994 and the 1 for 10
reverse stock split effective February 2, 1998) to BTI in January 1994 for the
intellectual rights to the product with the stipulation that the company pay for
and effect a patent application. The Company was not able to fund the patent
process. To fund the patent application and for management assistance and
distribution agreements associates with the LLPGE 1 product, BTI received
613,850 shares of the Company's Common Stock in November 1995.
10 of 12
<PAGE>
On November 20, 1997, the Company agreed to exchange 200,000 shares of
Common Stock (which have been issued) to BTI for the Intellectual Property
Rights to Prostaglandin E1 Lyophilized Liposomes for the use of treatment of
Psoriasis. BTI is to receive a 3% override on royalties of the Psoriasis
product.
During 1997, the Company entered into three significant transactions
with BTI for the acquisition of intellectual rights, and for the provision of
technological, management, fundraising and marketing assistance. In addition, in
1996, the Company incurred costs payable to BTI for consultation and rent of
$133,157 and for research and development $50,378 of the LLPGE1 product. During
1997, the Company incurred an additional cost payable to BTI of $150,000 for the
Intellectual Property Rights to Prostaglandin E1 Lyophilized Liposomes for the
use of treatment of Psoriasis. During the year, BTI chose to convert the
accounts payable balance of $333,535 as a contribution to
additional-paid-in-capital.
During 1996, BTI advanced 20,000 of its shares as security for a
subordinated loan agreement with Stein Securities. The shares were loaned and
are expected to be returned to BTI in 1998. During 1997, the Company advanced to
BTI $500,000 in connection with this settlement and expects to collect this
money when the 20,000 shares are returned to BTI in 1998.
In April 1996, the Company entered into a royalty agreement with Dr. See
to pay Dr. See 2% of net revenues from the sale of LLPGE1 and any other products
the Company may produce under Patent Application No. 08/573408 pursuant to which
patent No. 5,718,917 was issued on February 17, 1998. Dr. See will receive these
royalty fees for the life of the patent.
In 1997, BTI in lieu thereof, sold shares of the Company's Common Stock
under circumstances in which the Company is entitled to recapture of profit
pursuant to Section 16(b) of the Securities Exchange Act of 1934. The total
amount of profits of $392,819 has been booked as a receivable from related
parties and is expected to be repaid to the company.
The Company may continue the practice of issuing shares of Common Stock in
lieu of cash payment in the future if it determines that such issuance is in the
best interests of the Company and is consistent with the Company's agreement.
The foregoing arrangements and relationships may give rise to conflicts of
interest with respect to future interpretation of the agreements between the
Company and its affiliates or with respect to future transaction between the
Company and its affiliates. There can be no assurance those future transactions
between the Company and any affiliates will be advantageous to the Company.
11 of 12
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
HARVARD SCIENTIFIC CORP.
By /S/ Thomas E. Waite
--------------------------------------
Thomas E. Waite, President & CEO
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Name Title Date
Chairman of the Board
of Directors,President,
/S/ Thomas E. Waite and Chief Executive Officer April 24, 1998
- ----------------------------
Thomas E. Waite
/S/ Jackie R. See, M.D.
- ---------------------------- Director April 24, 1998
Jackie R. See, M.D.
Director, Treasurer, and
/S/ Curtis A. Orgill Chief Financial Officer April 24, 1998
- ----------------------------
Curtis A. Orgill
Secretary and Chief Operating
/S/ Barbara L. Krilich Officer April 24, 1998
- -----------------------------
Barbara L. Krilich
12 of 12
