FIRST SCIENTIFIC INC, 10QSB, 1999-11-15

FIRST SCIENTIFIC INC
10QSB, 1999-11-15
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-QSB

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarter ended September 30, 1999
Commission File Number: 0-24378

FIRST SCIENTIFIC, INC.
----------------------
(Exact name of small business issuer as specified in its charter)

DELAWARE 33-0611745
----------------------------- --------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)

1877 West 2800 South, Suite 200, Ogden, Utah 84401
---------------------------------------------------
(Address of principal executive offices)

Registrant's telephone number, including Area Code: (801) 393-5781

Check whether the issuer (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Exchange Act during the past 12 months (or for
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.

YES X NO

These were 20,219,770 shares of common stock, $.001 par value, outstanding
as of November 8, 1999.

<PAGE>

FIRST SCIENTIFIC, INC.
FORM 10-QSB

QUARTER ENDED SEPTEMBER 30, 1999

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Page

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (Unaudited)
- September 30, 1999 and December 31, 1998 . . . . . . . . . . . .3

Condensed Consolidated Statements of Operations
(Unaudited) for the Three Months and Nine Months
Ended September 30, 1999 and 1998 and for the Cumulative
Period from April 30, 1990 (Date of Inception) through
September 30, 1999 . . . . . . . . . . . . . . . . . . . . . . . .4

Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Nine Months Ended September 30, 1999 and 1998 and
for the Cumulative Period from April 30, 1990 (Date of
Inception) through September 30, 1999. . . . . . . . . . . . . . .5

Notes to the Condensed Consolidated Financial Statements
(Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Item 2. Management's Discussion and Analysis and Plan of Operation . .9

PART II - OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 13

Item 2. Changes in Securities and Use of Proceeds . . . . . . . . . . 14

Item 4. Submission of Matters to a Vote of Security Holders . . . . . 14

Item 6. Exhibits and Reports of Form 8-K. . . . . . . . . . . . . . . 15

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FIRST SCIENTIFIC, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

September 30, December 31,
1999 1998
------------ ------------
ASSETS

Current Assets
Cash $ 402,666 $ 1,286,299
Investment in securities available-for-sale 111,714 194,784
Trade receivables 261,789 614
Inventory 49,986 26,619
Prepaid expenses 73,359 29,356
------------ ------------
Total Current Assets 899,514 1,537,672
------------ ------------
Property and Equipment 152,821 95,378
Less: accumulated depreciation (19,818) (2,982)
------------ ------------
Net Property and Equipment 133,003 92,396

Purchased Technology, Net 41,250 108,750

Investment in Equity Securities, at Cost - 50,000
------------ -----------
Total Assets $ 1,073,767 $ 1,788,818
============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts Payable $ 82,178 $ 54,334
Customer deposits 15,206 33,750
Accrued liabilities 43,439 75,979
Capital lease obligation - current portion 4,774 2,070
Related party notes payable 12,370 22,693
------------ -----------
Total Current Liabilities 157,967 188,826
------------ -----------
Long-Term Capital Lease Obligation 7,196 4,784

Stockholders' Equity
Preferred stock 1,000,000 shares
authorized, no shares outstanding - -
Common stock $.001 par value, 50,000,000
shares authorized; issued and outstanding:
20,219,770 shares at September 30, 1999
and 20,169,770 shares at December 31, 1998 20,220 20,170
Additional paid-in-capital 6,791,564 6,429,114
Unearned compensation (208,086) (84,056)
Accumulated other comprehensive loss - (7,275)
Deficit accumulated during the
development stage (5,695,094) (4,762,745)
------------ -----------
Total Stockholders' Equity 908,604 1,595,208
------------ -----------

Total Liabilities and Stockholders' Equity $ 1,073,767 $ 1,788,818
============ ===========

The accompanying notes are an integral part of these financial statements.
3
<PAGE>

FIRST SCIENTIFIC, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative From
April 30, 1990
(Date of Inception)
For the Three Months For the Nine Months Through
Ended September 30, Ended September 30, September 30,
----------------------- ----------------------- -----------
1999 1998 1999 1998 1999
---------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Sales $ 303,784 $ 60,889 $ 426,083 $ 68,501 $ 662,079
Cost of Sales 49,650 38,412 73,947 43,291 228,599
---------- ----------- ---------- ----------- -----------
Gross Profit 254,134 22,477 352,136 25,210 433,480
---------- ----------- ---------- ----------- -----------
Operating Expenses
General and administrative
expense 600,638 162,083 1,126,647 210,169 1,963,980
Research and development
expense 25,983 3,783,376 42,091 3,795,959 4,031,641
---------- ----------- ---------- ----------- -----------
Total Operating Expenses 626,621 3,945,459 1,168,738 4,006,128 5,995,621
---------- ----------- ---------- ----------- -----------
Loss from Operations (372,487) (3,922,982) (816,602) (3,980,918) (5,562,141)

Other Income and (Expense)
Interest income 6,993 - 28,163 - 42,845
Realized loss from investment
in securities (140,346) - (140,346) - (140,346)
Interest expense (1,212) (5,706) (3,564) (21,751) (97,333)
---------- ----------- ---------- ----------- -----------
Loss Before Income Taxes (507,052) (3,928,688) (932,349) (4,002,669) (5,756,975)

Benefit from Income Taxes - - - - 61,881
---------- ----------- ---------- ----------- -----------

Net Loss $ (507,052) $(3,928,688) $ (932,349) $(4,002,669) $(5,695,094)
========== =========== ========== =========== ===========

Basic and Diluted Loss
Per Common Share $ (0.03) $ (0.37) $ (0.05) $ (0.39) $ (0.51)
========== =========== ========== =========== ===========
Weighted Average Number of
Shares Used in Per-Share
Calculation 20,205,748 10,570,842 20,181,895 10,317,667 11,094,594
========== ========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
4
</FN>
</TABLE>
<PAGE>

FIRST SCIENTIFIC, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Cumulative From
April 30, 1990
(Date of Inception)
For the Nine Months Through
Ended September 30, September 30,
---------- ------------ -----------
1999 1998 1999
---------- ----------- -----------
Cash Flows From Operating Activities
Net loss $ (932,349) $(4,002,669) $(5,695,094)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 84,336 3,917 113,568
Common stock issued for services 80,000 - 154,355
Common stock issued for purchased
research and development - 3,766,440 3,766,440
Compensation from stock options
granted 158,470 20,737 248,608
Loss on investment in securities 140,346 - 140,346
Deferred tax benefit - - (61,881)
Changes in operating assets and
liabilities:
Accounts receivable (261,175) (15,737) (261,789)
Inventory (23,367) 7,883 (49,986)
Prepaid expenses (44,003) (11,066) (73,359)
Accounts payable 27,843 13,186 82,178
Customer deposits (18,544) 33,750 15,206
Accrued liabilities (32,540) (5,642) 175,870
Deferred compensation - 28,000 -
---------- ----------- -----------
Net Cash Used in Operating
Activities (820,983) (161,201) (1,445,538)
---------- ----------- -----------
Cash Flows From Investing Activities
Cash paid for equipment (53,716) (7,550) (141,377)
Cash received from sale of securities
available-for-sale - 302,847 302,847
---------- ----------- -----------
Net Cash Provided by (Used in)
Investing Activities (53,716) 295,297 161,470
---------- ----------- -----------
Cash Flows From Financing Activities
Proceeds from borrowing 4,336 61,050 260,311
Principal payments on notes payable - (117,338) (155,975)
Proceeds from loans from stockholders - 19,930 158,934
Principal payments on loans from
stockholder (10,323) (28,403) (74,130)
Principal payment under capital
lease obligation (2,947) - (3,809)
Proceeds from issuance of common
stock - 667,440 1,501,403
---------- ----------- -----------
Net Cash Provided by (Used in)
Financing Activities (8,934) 602,679 1,686,734
---------- ----------- -----------
Net Increase (Decrease) in Cash (883,633) 736,775 402,666

Cash and Cash Equivalents at
Beginning of Period 1,286,299 7,938 -
---------- ----------- -----------
Cash and Cash Equivalents at
End of Period $ 402,666 $ 744,713 $ 402,666
=========== =========== ===========

The accompanying notes are an integral part of these financial statements.
5
<PAGE>

FIRST SCIENTIFIC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM CONDENSED FINANCIAL STATEMENTS -The accompanying condensed
consolidated financial statements are unaudited. In the opinion of
management, all necessary adjustments (which include only normal recurring
adjustments) have been made to present fairly the financial position,
results of operations and cash flows for the periods presented. Certain
information and disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the Company's
financial statements and notes thereto included in the Form 10-KSB dated
December 31, 1998. The results of operations for the nine month period
ended September 30, 1999 are not necessarily indicative of the operating
results to be expected for the full year.

NOTE 2-INVESTMENT IN SECURITIES AVAILABLE-FOR-SALE

The Company has investments in marketable securities which are classified
as available-for-sale securities. During the nine months ended September
30, 1999, equity securities which were restricted from resale with a cost
of $50,000 were reclassified to securities available-for-sale at their fair
value at the time of reclassification of $50,000. The market value of the
available-for-sale securities has declined during 1999 and, at September
30, 1999, management has determined that the decline is
other-than-temporary. Accordingly, a write-down to market value has been
recognized in the results of operations during September 1999 in the amount
of $140,346. After the write-down, cost and fair value of the securities
were $111,714.

NOTE 3-COMPREHENSIVE LOSS

Other comprehensive loss consists of an unrealized loss on investment in
securities available-for-sale. Comprehensive loss is computed as follows:

<TABLE>
<CAPTION> Cumulative From
April 30, 1990
(Date of Inception)
For the Three Months For the Nine Months Through
Ended September 30, Ended September 30, September 30,
------------------------ ------------------------ -----------
1999 1998 1999 1998 1999
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Loss $ (507,052) $(3,928,688) $ (932,349) $(4,002,669) $(5,695,094)

Other Comprehensive Loss

Change in unrealized loss
on investment in securities
available-for-sale (4,857) - (133,070) - (140,346)

Less: Reclassification
adjustment for losses
included in net loss 140,346 - 140,346 - 140,346
----------- ----------- ----------- ----------- -----------
Comprehensive Loss $ (371,563) $(3,928,688) $ (925,073) $(4,002,669) $(5,695,094)
=========== =========== =========== =========== ===========
</TABLE>
6
<PAGE>

FIRST SCIENTIFIC, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 4-SUPPLEMENTAL CASH FLOW INFORMATION

Interest paid during the nine months ended September 30, 1999 and 1998, was
$3,564 and $21,751, respectively, and $97,333 for the period from April 30,
1990 (date of inception) through September 30, 1999.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENT - Effective May 1, 1999, First Scientific established
a one-year employment agreement with its new sales and marketing vice
president for an annual minimum of $85,000 plus options to purchase 250,000
common shares at $0.75 per share.

CONSULTANT AGREEMENT - Effective October 1, 1999, First Scientific entered
into a five-year consulting agreement with a shareholder and director to
provide certain scientific, product development and regulatory consulting
to the Company. The agreement automatically renews yearly unless either
party elects not to extend the agreement. Payments under the agreement are
$8,000 monthly, which monthly amount will increase by $1,000 each
anniversary date. In addition, the Company may pay annual bonuses in stock
or cash as the Company determines based upon the services and value
provided to the Company by the shareholder and director.

CAPITAL LEASE - During the first nine months of 1999, First Scientific
entered into two capital lease agreements for computer equipment. The
first lease agreement is for a 3-year term requiring monthly payments of
$177 and a present value of $4,336 at inception of the lease. The second
agreement is for a 3-year term requiring monthly payments of $150 and a
present value of $3,727.

UNASSERTED CLAIM - On January 5, 1999 First Scientific was advised of a
claim against it allegedly arising out of an Agreement in Principle made in
1991 (the "1991 Agreement") by Linco Industries, Inc. ("Linco" now known as
First Scientific Corporation, a wholly owned subsidiary or First
Scientific, Inc.). The 1991 Agreement purported to promise shares of Linco
common stock to an individual (the Claimant) if certain conditions were
met by the Claimant in representing Linco to potential customers. As of
September 30,1999 no legal proceeding has been filed with respect to this
claim by the Claimant, nor has First Scientific made any settlement offer
in an attempt to resolve the matter. First Scientific's management
maintains that the 1991 Agreement is no longer valid because the conditions
in the 1991 Agreement were not met in a reasonable time and because of the
failure of other material terms.

Additionally, an indemnification agreement in favor of First Scientific by
the former founding Linco shareholders requires the latter to satisfy any
obligations Linco may have incurred prior to the reorganization.
Consequently, First Scientific would require that any eventual settlement
or award resulting from the 1991 Agreement be satisfied entirely by the
founding shareholders of Linco. The Linco founders have assured First
Scientific that they will defend this matter in the event any legal
proceedings should be filed against First Scientific. Subsequent to the
end of the reporting quarter, September 30, 1999, in response to the
Claimant's demands, the Linco founders filed with the District Court of
Weber County, State of Utah (Civil Case No. 99090484) an action, including
First Scientific, Inc., First Scientific Corporation, and Linco Industries,
Inc. as co-Plaintiffs, for declaratory judgement that the Claimant (the
Defendant in said action) has no entitlement against any of the Plaintiffs,
including First Scientific. The Claimant was served regarding this action
and responded by filing with the court for a change of venue from Weber
County, Utah to Utah County, Utah which the court granted.

7
<PAGE>

NOTE 6 - STOCKHOLDERS' EQUITY

On April 30, 1999 the Company agreed to issue 10,000 shares of common stock
to an individual for marketing services during 1997 and 1998. The Company
awarded the individual an exclusive distributorship in the Western United
States for the Company's Fresh Cleanse Brand to the professional health
care market. The marketing services were valued at $10,000 based upon the
fair value of the common stock issued. The fair value of the common stock
was established by management based upon an evaluation of the perceived
performance of the Company to date.

On August 7, 1999, the Company agreed to issue 40,000 shares of common
stock to an outside service provider for their creative services in
developing and presenting promotional and other materials regarding First
Scientific and its products. The services were valued at $70,000, or $1.75
per share, based upon an evaluation by management of the perceived fair
value of the Company's common stock on the date of the agreement.

NOTE 7 - STOCK OPTIONS

During the quarter ending September 30, 1999, the Company granted 470,000
options under the 1998 Stock Option Plan to various employees. Options for
88,000 common shares were exercisable on August 30, 1999 and the remaining
382,000 options become exercisable beginning May 12, 2000 through May 12,
2002. All options granted during this period expire 10 years from the date
of grant. Compensation relating to the options of $282,500, or $0.61 per
share, is being recognized over the period the options vest of which
$112,018 was recognized in the quarter ending September 30, 1999.

<PAGE>

Item 2. Managements's Discussion and Analysis and Plan of Operation.

The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of First
Scientific's consolidated results of operations and financial condition.
The discussion should be read in conjunction with the unaudited condensed
consolidated financial statement, as of September 30, 1999, together with
the annual financial statements as of December 31,1998. Whenever in this
discussion the term "First Scientific" is used, it should be understood to
refer to First Scientific, Inc. and its wholly owned subsidiary on a
consolidated basis, except where the context clearly indicates otherwise.

Plan of Operation
-----------------
First Scientific is a development stage company which, since inception,
has incurred losses from operations. As of September 30, 1999, the
cumulative net losses of First Scientific since inception total $5,695,094
of which $3,766,440 is attributable to a non-recurring charge for acquired
research and development, as described in First Scientific's annual report
on Form 10-KSB dated December 31, 1998. First Scientific is engaged
primarily in the development and marketing of chemical formulations that
management feels will have worldwide sales opportunities. As of September
30, 1999, First Scientific has had minimal sales from its products, but
intends to expand the marketing of its products through private label
relationships with companies that are major distributors in the medical,
healthcare, over-the-counter, and multi-level arenas. Marketing materials
have been produced to assist with a formal product launch that took place
during the current quarter. Development of First Scientific's own brands
will be handled mostly through regional distributors, especially in medical
markets, and will be pursued on a case-by-case basis as profitable
opportunities are identified and evaluated.

First Scientific has developed two unique formulations. The first is a
moisturizing, antimicrobial sanitizing formulation that removes 99.99% of
bacteria from the skin without the harsh effects of alcohol, CHG, PCMX,
triclosan, or iodine (this product can be delivered in wipe, spray, lotion
or soap forms). The second is a topical rash prevention and treatment
formulation that cleanses and moisturizes the skin. It is used for the
prevention and treatment against skin rashes caused by incontinence, as
well as other skin rashes (in wipe form).

The potential worldwide market for products similar to First Scientific's
has grown significantly in recent years and is projected to continue
growing at a substantial rate. Regarding growth of the market for products
similar to First Scientific's antimicrobial formulation, the growth in
demand is due to the increase in bacteria related disease, sickness and
death from methicillin-resistant and other bacteria, the demands of
government and healthcare agencies/providers to create healthier treatment
environments and the insistence of the public in general for healthier
living and working conditions. The potential market growth for products
similar to First Scientific's rash formulation is primarily a function of
the growth rates in the incontinent geriatric population, as baby boomers
grow older. The product appears to also have application in the infant
care market. Management believes the markets for products similar to First
Scientific's products will continue to expand and that the potential of
First Scientific to become a significant participant in such markets is a
reasonable expectation.

First Scientific currently outsources manufacturing of its products. First
Scientific has developed relationships with manufacturers, and is in the
process of qualifying other manufacturers, who have U.S. Food and Drug
Administration ("F.D.A.") compliant facilities and experience manufacturing
in accordance with F.D.A. standards. These companies are generally in the
business of manufacturing for various customers who require F.D.A.
compliant facilities for their products. First Scientific is able to
produce a concentrate of its antimicrobial formulation at its own facility,
or at contract facilities, under F.D.A. protocols. The concentrate can then
be shipped to contract manufacturers for production runs according to
customer specifications. This procedure helps protect the trade secret

9
<PAGE>

status of this proprietary formulation. First Scientific filed for patent
protection with the U. S. Patent Office for this product during the current
quarter. First Scientific does not use this same concentrate mixing
procedure in the production of its dimethicone-based rash prevention and
treatment formulation, because currently First Scientific cannot
economically mix concentrate itself for this product. Strict
confidentiality agreements are in place with the manufacturer to protect
the trade secret status of this product formulation. First Scientific has
also filed a patent for this product with the U. S. Patent Office.

The cash requirements of First Scientific through the end of first quarter
2000 will vary based upon a number of factors including, but not limited
to, continuing research and development levels, increased market
development, facilities enhancement and/or acquisitions, additional
personnel, travel and other expenses related to projected growth. With the
new business First Scientific is now actively pursuing, management believes
existing cash, cash equivalents and cash generated from anticipated sales
will be sufficient to meet obligations over the next four to six months.
However, in light of management's cash consumption projections for this
period, if anticipated sales do not materialize in a timely manner at
projected volumes, First Scientific would likely need a bank line of credit
and/or additional equity funding to meet its working capital needs during
the first quarter of 2000. There is no assurance that any funding will be
available or that, if available, the terms of such funding will be
favorable to First Scientific.

The new source of revenue reported in the previous quarter's filing by
First Scientific continues to produce revenue. ConvaTec, a division of
Bristol-Myers Squibb Company, has engaged First Scientific, on a fee for
service basis, to perform testing procedures that fulfill FDA compliance
requirements relating to product sales to this customer. ConvaTec has
reported favorable results regarding First Scientific's testing procedures
and operating protocols. The prospects for ongoing testing work with this
customer appear likely. This relationship has allowed First Scientific to
gain experience and to develop standard operating procedures that satisfy,
not only this customer's needs, but that should withstand the most critical
evaluations and requirements of future customers, and therefore, may
provide new revenue opportunities. ConvaTec has also considered First
Scientific as the vendor of choice for the post testing work required by
the F.D.A for this product, which may generate additional revenues.

Product research and development is an ongoing process at First
Scientific. Existing products are continuously being refined to meet the
needs of markets being pursued. Potential customers present product
specification requests from time to time which different from those of
First Scientific's existing product specifications. These circumstances
caused additional research and development to be performed in order to meet
the required specifications. Similar requests from potential customers are
also anticipated in the future. First Scientific likewise researches new
products that fall within the scope of its currently defined market place
and new market places that appear to have future economic potential.

In light of First Scientific's current mode of operations of outsourcing
its manufacturing, existing plant and equipment are projected to be
sufficient to meet most of its growth needs. However, should First
Scientific be required to perform expanded testing and/or manufacturing for
its clients and/or should the Company deem it to be in its best interest to
undertake in-house manufacturing, additional capital would be required to
fund the establishment of such activities. Management is actively
investigating alternatives for the manufacture of its products, both
additional outsourced and in-house.

First Scientific employs 11 individuals in management, administrative, and
technical positions. As First Scientific continues to grow, additional
personnel will need to be added to enable the Company to meet its projected
growth. During the current quarter, one employee left First Scientific and
two new employees were hired; a marketing manager and a lab technician
Management anticipates hiring additional sales /marketing and finance
personnel, a lab testing/quality control manager and another lab technician
over the next three to six months.

First Scientific has entered into agreements with Kinara Graphics for
advertizing, web creation and creative marketing, with Scribe Public
Relations for general public relations, press and media relations and with
Kovach and Associates for industry consulting and introductions. Management
feels these professionals are enhancing First Scientific's professionalism,
market presence and potential customer contacts. Under the leadership of
in-house sales and marketing management, collateral and sales presentation
materials have been produced to launch First Scientific's antimicrobial
products to potential customers and to introduce the company to the media.
Management considers the initial results of these efforts to have been
positive.

<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations

Financial Position
------------------
First Scientific had $402,666 in cash as of September 30, 1999. This
represents a decrease of $883,633 from December 31, 1998. Working capital,
as of September 30,1999, decreased to $741,547 compared to working capital
of $1,348,846 at December 31, 1998.

Results of Operations
---------------------
During the three months and nine months ended September 30, 1999, First
Scientific had total operating revenues of $303,784 and $426,083
respectively, compared with total operating revenues of $60,889 and $68,501
for the comparable periods from the prior year. Revenue for 1999
year-to-date has primarily resulted from product testing, raw materials
sales and a licensing fee from a major customer, and product sales.

Prior to December 1998 Company revenues were generated from sporadic sales
of a Linseed oil based soap product and a rash prevention product created
for a distributor who sells this product under private labels to an
over-the-counter customer. First Scientific has decided to discontinue the
sale of these products, however, minimal revenue may be realized as
existing inventory is liquidated. In June 1998, First Scientific entered
into a private label supply agreement with a multinational distributor of
medical and healthcare products. This agreement was for individual
antimicrobial wipes that the customer had planned to export. However,
based on communications from the customer, First Scientific has determined
that no additional revenue will materialize from this agreement. The
customer determined not to complete the purchase, accordingly, First
Scientific has recognized the related costs and revenues relating to the
amount previously received from the customer.

On August 12, 1999 First Scientific signed a supply agreement with
ConvaTec, a division of Bristol-Myers Squibb Company, which immediately
began to produce revenue. Under this agreement, First Scientific provides
raw materials to a third party manufacturer designated by ConvaTec, who
manufactures a dimethicone based cleansing and diaper rash treatment and
prevention product for this customer. Product testing revenue for this
product from ConvaTec, regarding F.D.A. compliance, which began during the
quarter ended June 30, 1999, continued during the quarter ending September
30, 1999. A licensing fee, raw materials sales and testing revenue
accounted for the majority of the revenue during the quarter. Initial
negotiations, including the exchange of non-disclosure agreements, have
begun with nine of the market share leaders in the healthcare personnel
handwash market where First Scientific is currently focusing it marketing
efforts. Invitations to meet with several of these companies have been
received by First Scientific and appointments have been set during the
fourth quarter of 1999 to make sales presentations. First Scientific's
regional distribution agreement with Welmed Specialties produced minimal
revenues during the quarter ended September 30, 1999. Initial warehousing
inventory is planned to be shipped to Welmed during the fourth quarter of
1999. This agreement covers six western states; California, Nevada,
Oregon, Washington, Utah and Hawaii. Welmed will have non-exclusive
distribution rights to First Scientific's products in these states and
exclusive distribution rights to First Scientific's Fresh Cleanse(R) brand
products to hospitals, nursing homes, medical clinics and doctors offices
in this territory.

11
<PAGE>

Should anticipated sales from customers with whom First Scientific has
agreements in place or is negotiating or other potential sales
opportunities which First Scientific anticipates materializing, not come to
fruition, the ability of First Scientific to sustain operations beyond the
first quarter of 2000, without additional debt or equity financing, would
be questionable.

Private label agreements, such as those discussed above, create certain
risks for First Scientific. These risks include (i) reliance for sales of
products on other parties, and therefore reliance on the other parties'
marketing ability, marketing plans and credit-worthiness; (ii) if First
Scientific's products are marketed under other parties' labels, goodwill
associated with use of the products generally inures to the benefit of the
other parties rather than First Scientific; (iii) First Scientific may have
only limited protection from changes in manufacturing costs and raw
material costs; and (iv) if First Scientific continues to rely on other
parties for all or substantially all of its sales, First Scientific may be
limited in its ability to negotiate with such other parties upon eventual
renewals of their agreements. It is the belief of management that these
risks are mitigated by initial market demands, the apparent uniqueness of
the Company's formulations, large existing and expanding markets for its
products and the caliber of customers with whom First Scientific is
currently negotiating. However, First Scientific recognizes that, in the
short run, it will be dependent on a few large customers where the bulk of
its sales are envisioned to be generated. Until a broader base of
customers has been established, the loss one such customer could have a
serious material adverse impact on the operating viability of First
Scientific.

First Scientific uses as many as twenty specific chemical and botanical
ingredients to formulate each of its products. In most cases, supplies of
ingredients for First Scientific's formulations continues to remain readily
available from multiple sources. First Scientific continues to maintain
very good relationships with its suppliers and does not anticipate problems
that would cause significant interruption, delay or availability of such
ingredients.

General and administrative expenses were $600,638 and $1,126,647 for the
three months and nine months ended September 30, 1999, respectively,
compared with $162,083 and $210,169 for the comparable periods from the
prior year. The increase in expenditures between the 1999 and 1998 periods
was due to the continued transition of First Scientific from a one-man
product development entity, with minimal sales during the third quarter of
1998, to an adequately staffed operation in the third quarter of 1999,
capable of administrating anticipated growth. Executive office space
into which First Scientific moved during 1998 will need to be expanded as
the finance, testing, research and development and sales/marketing
functions increase to match anticipated growth. Currently unoccupied space
adjacent to the existing executive offices of First Scientific is being
considered for such expansion.

Research and development expenses were $25,983 and $42,091 for the three
and nine months ended September 30, 1999, respectively, compared with
$3,783,376 and $3,795,959 for the comparable periods from the prior year.
When purchased technology of $3,766,440 is netted out of the 1998 three
and nine numbers, research and development expenditures for the three and
nine month periods in 1998 were $16,936 and $29,519 respectively. The
increase in expenditures between the 1999 and net amounts for the 1998
periods resulted from the continued refinement of First Scientific's
formulations and the development of new product variations to meet customer
requests. Management anticipates an increase in research and development
expenses for future periods, as First Scientific expands its product
offerings.

Liquidity and Capital Resources
-------------------------------
Historically, First Scientific has financed its operations principally
through loans, private placements of equity securities and sporadic
product sales. During the nine month period, ending September 30, 1999,
sales and a licensing fee constituted the source of the majority of funds
from the operations of First Scientific. First Scientific used net cash of
$820,983 in operating activities during the nine months ended September 30,
1999. As of September 30, 1999, First Scientific's liabilities totaled
$165,163. The Company had working capital of $741,547 as of September
30,1999.

12
<PAGE>

Year 2000
---------
First Scientific uses computers principally for scientific modeling and
calculation, product/market research and administrative functions, such as
communications, word processing, accounting and management and financial
reporting. First Scientific's computer system was purchased September,
1998. The software utilized by First Scientific is generally standard "off
the shelf" software, typically available from a number of vendors. While
First Scientific believes it has taken all appropriate steps to assure year
2000 compliance, the Company is substantially dependent on vendor
compliance. Even if vendor assurances that First Scientific's systems are
2000 compliant be incorrect, management believes systems failures would not
have a material adverse impact on its operations.

In addition to its own computer systems, in connection with its business
activities, First Scientific interacts with suppliers, customers, creditors
and financial service organizations domestically and globally who use
computer systems. It is impossible for First Scientific to monitor all such
systems, and there can be no assurance that the failure of such systems
would not have a material adverse impact on First Scientific's business and
operations. The Company continues to evaluate what contingency plans it
may adopt in order to make in the event First Scientific or parties with
whom it does business experience year 2000 problems.

Forward-Looking Statements
--------------------------
When used in this Form 10-QSB and in other filings by First Scientific
with the SEC, in First Scientific's press releases or other public or
stockholder communications, or in oral statements made with the approval of
an authorized executive officer of First Scientific, the words or phrases
"would be," "will allow," "intends to," "will likely result," "are expected
to," "will continue," "is anticipated," "estimate," "project," or similar
expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.

First Scientific cautions readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made, are based
on certain assumptions and expectations which may or may not be valid or
actually occur, and which involve various risks and uncertainties,
including but not limited to risk of product demand, market acceptance,
economic conditions, competitive products and pricing, difficulties in
product development, commercialization, and technology, and other risks. In
addition, sales and other revenues may not commence and/or continue as
anticipated due to delays or otherwise. As a result, First Scientific's
actual results for future periods could differ materially from those
anticipated or projected.

Unless otherwise required by applicable law, First Scientific does not
undertake, and specifically disclaims any obligation, to update any
forward-looking statements to reflect occurrences, developments,
unanticipated events or circumstances after the date of such statements.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

First Scientific is not involved in, nor has it been involved as a
defendant in, any legal proceedings as of the end of the reporting quarter,
September 30, 1999. However, on January 5, 1999 First Scientific was
advised of a claim against it allegedly arising out of an Agreement in
Principle made in 1991 (the "1991 Agreement") by Linco Industries, Inc.
("Linco" now known as First Scientific Corporation, a wholly owned
subsidiary or First Scientific, Inc.). The 1991 Agreement purported to
promise shares of Linco common stock to an individual (the Claimant) if
certain conditions were met by the Claimant in representing Linco to
potential customers. As of September 30,1999 no legal proceeding has been
filed with respect to this claim by the Claimant, nor has First Scientific
made any settlement offer in an attempt to resolve the matter. First
Scientific's management maintains that the 1991 Agreement is no longer
valid because the conditions in the 1991 Agreement were not met in a
reasonable time and because of the failure of other material terms.

<PAGE>

Item 2. Changes in Securities and Use of Proceeds

On April 30, 1999 the Company agreed to issue 10,000 shares of common
stock to Weldon Phillips for marketing services during 1997 and 1998. The
services were valued at $10,000 based upon the fair value of the common
stock in April 1999. The fair value of the common stock was established by
management based upon an evaluation of the perceived performance of the
Company to date. The shares were issued in reliance upon Section 4(2) of
the Securities Act of 1933, as amended (the "Act") and Rule 506 of
Regulation D promulgated thereunder. The Company believes that Mr.
Phillips is an accredited investor.

On August 7, 1999, the Company agreed to issue 40,000 shares of common
stock to Kinara Graphics, Inc. for their creative services in developing
and presenting promotional and other materials regarding First Scientific
and its products. The services were valued at $70,000, or $1.75 per share,
based upon an evaluation by management of the perceived fair value of the
Company's common stock on the date of the agreement. The shares were issued
in reliance upon Section 4(2) of the Act and Rule 506 of Regulation D
promulgated thereunder. Based on information obtained by the Company in
connection with its business relationship with Kinara Graphics, Inc.,
management believes, that Kinara Graphics, Inc., through its
representatives, has such knowledge on business and financial matters as to
be able to evaluate the merits and risks of an investment in First
Scientific.

Item 4. Submission of Matters to a Vote of Security Holders

At the Annual Meeting of the Company's shareholders held on Friday,
September 24, 1999, the following matters were submitted to and acted upon
by the Company's shareholders: (i) five directors were elected to serve
until the next Annual Meeting of the shareholders to serve until their
respective successors are elected and qualified; (ii) the Company's 1998
Stock Incentive Plan was ratified and the reservation of 2,500,000 shares
of Common Stock for issuance thereunder was approved; and (iii) the
appointment of Hansen, Barnett & Maxwell as the Company's independent
accountants for the fiscal year ended December 31, 1999 was ratified. No
other business came before the meeting for submission to shareholders.

14
<PAGE>

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

The following exhibits are filed herewith pursuant to Rule 601 of
Regulation S-B or are incorporated by reference to previous filings.

Exhibit # Description
--------- -----------
2.1 Agreement and Plan of Reorganization, dated August 10, 1998,
between the Registrant, Linco, Linco Acquisition Corp. and
Edward Walker*
3.1 Articles of Incorporation**
3.2 Bylaws**
3.3 Amendment to Articles of Incorporation changing name to First
Scientific, Inc. and effecting a forward stock split.*
3.4 Restated Bylaws*****
10.1 Non-qualified Stock Option Agreement with Jerral R. Pulley***
10.2 Non-qualified Stock Option Agreement with Peter Sundwall,
M.D.***
10.3 1998 Stock Incentive Plan ****
10.4 Agreement with Weldon Phillips*****
10.5 Employment Agreement with Randy Hales*****
10.6 Consulting Agreement with Jerral R. Pulley*****
10.7 Consulting Agreement with Edward Walker*****
27 Financial data schedule*****
_____________________
* Incorporated by reference to the same-numbered exhibit to the
Form 8-K filed October 2, 1998 by First Scientific with the
Securities and Exchange Commission.
** Incorporated by reference to the same-numbered exhibit to
the Company's Registration Statement on Form 10-SB, file
No. 0-24378.
*** Incorporated by reference from Annual Report on Form 10-KSB, as
filed on March 26, 1999.
**** Incorporated by reference from Quarter Report on Form 10-QSB, as
filed on June 15, 1999.

***** Filed herewith.

(b) Reports on Form 8-K
There were no reports on Form 8-K during the reporting quarter.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

REGISTRANT

FIRST SCIENTIFIC, INC.
Registrant

DATED: November 15, 1999. By: /s/ Douglas R. Warren
-----------------------
Douglas R. Warren, President

DATED: November 15, 1999. By: /s/ Gordon M. Davis
------------------------
Gordon M. Davis, Vice President
Administration/CFO (Principal
Financial and Accounting Officer)

<PAGE>

EXHIBIT NO. 3.4

RESTATED
BYLAWS

FIRST SCIENTIFIC, INC.
(formerly SPPS Financial Corporation)

1999

RESTATED BYLAWS OF

FIRST SCIENTIFIC, INC.

Table Of Contents
Page
ARTICLE 1 CORPORATE OFFICES. . . . . . . . . . . . . . . . . . . 1
1.1 Business Office. . . . . . . . . . . . . . . . . . . . 1
1.2 Registered Office. . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . 1
2.1 Annual Meeting . . . . . . . . . . . . . . . . . . . . 1
2.2 Special Meetings . . . . . . . . . . . . . . . . . . . 1
2.3 Place of Meetings. . . . . . . . . . . . . . . . . . . . 2
2.4 Notice of Meetings . . . . . . . . . . . . . . . . . . 2
2.5 Fixing of Record Date. . . . . . . . . . . . . . . . . 2
2.6 Voting List. . . . . . . . . . . . . . . . . . . . . . 2
2.7 Meetings by Telecommunication. . . . . . . . . . . . . 2
2.8 Shareholder Quorum and Voting Requirements . . . . . . 2
2.9 Proxies. . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Voting Shares. . . . . . . . . . . . . . . . . . . . . 3
2.11 Shareholder Action Without a Meeting . . . . . . . . . . 3
2.12 Waiver . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 3 BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . 4
3.1 General Powers . . . . . . . . . . . . . . . . . . . . 4
3.2 Number of Directors and Qualification. . . . . . . . . 4
3.3 Election and Term of Office. . . . . . . . . . . . . . 4
3.4 Chairman of the Board of Directors . . . . . . . . . . . 4
3.5 Regular Meetings . . . . . . . . . . . . . . . . . . . . 4
3.6 Special Meetings . . . . . . . . . . . . . . . . . . . . 4
3.7 Notice . . . . . . . . . . . . . . . . . . . . . . . . 5
3.8 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.9 Manner of Acting . . . . . . . . . . . . . . . . . . . . 5
3.10 Vacancies and Newly-Created Directorships. . . . . . . . 5
3.11 Fees and Compensation. . . . . . . . . . . . . . . . . . 5
3.12 Presumption of Assent. . . . . . . . . . . . . . . . . 6
3.13 Resignations . . . . . . . . . . . . . . . . . . . . . 6
3.14 Action by Written Consent. . . . . . . . . . . . . . . . 6
3.15 Meetings by Telephone Conference Call. . . . . . . . . . 6
3.16 Removal of Directors . . . . . . . . . . . . . . . . . . 6

i
<PAGE>

ARTICLE 4 COMMITTEES . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Committees . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Procedures, Meetings and Quorum. . . . . . . . . . . . . 7

ARTICLE 5 OFFICERS . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Officers . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Appointment, Term of Office and Qualification . . . . . 7
5.3 Resignations . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Vacancies and Newly-Created Offices. . . . . . . . . . . 8
5.6 President. . . . . . . . . . . . . . . . . . . . . . . . 8
5.7 Vice Presidents. . . . . . . . . . . . . . . . . . . . . 8
5.8 Secretary. . . . . . . . . . . . . . . . . . . . . . . . 8
5.9 Treasurer. . . . . . . . . . . . . . . . . . . . . . . . 9
5.10 Assistant Secretaries and Treasurers . . . . . . . . . . 9
5.11 Salaries . . . . . . . . . . . . . . . . . . . . . . . . 9
5.12 Surety Bonds . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE 6 EXECUTION OF INSTRUMENTS, BORROWING OF MONEY AND DEPOSIT
OF CORPORATE FUNDS . . . . . . . . . . . . . . . . . . 10
6.1 Instruments. . . . . . . . . . . . . . . . . . . . . . 10
6.2 Loans. . . . . . . . . . . . . . . . . . . . . . . . . 10
6.3 Deposits . . . . . . . . . . . . . . . . . . . . . . . 10
6.4 Checks, Drafts, etc. . . . . . . . . . . . . . . . . . 10
6.5 Bonds and Debentures . . . . . . . . . . . . . . . . . 10
6.6 Sale, Transfer, etc., of Securities. . . . . . . . . . 11
6.7 Proxies. . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 7 CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . 11
7.1 Stock Certificates . . . . . . . . . . . . . . . . . . 11
7.2 Shares Without Certificates. . . . . . . . . . . . . . 12
7.3 Transfer of Stock. . . . . . . . . . . . . . . . . . . 12
7.4 Restrictions on Transfer or Registration o2
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.5 Regulations. . . . . . . . . . . . . . . . . . . . . . 12
7.6 Transfer Agents and Registrars . . . . . . . . . . . . 12
7.7 Lost or Destroyed Certificates . . . . . . . . . . . . 13
7.8 Consideration for Shares . . . . . . . . . . . . . . . 13

ARTICLE 8 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 13
8.1 Indemnification. . . . . . . . . . . . . . . . . . . . 13
8.2 Certain Restrictions on Indemnification. . . . . . . . 13
8.3 Mandatory Indemnification. . . . . . . . . . . . . . . 14
8.4 Determination. . . . . . . . . . . . . . . . . . . . . 14
8.5 General Indemnification. . . . . . . . . . . . . . . . 14
8.6 Advances . . . . . . . . . . . . . . . . . . . . . . . 14
8.7 Scope of Indemnification . . . . . . . . . . . . . . . 14
8.8 Insurance. . . . . . . . . . . . . . . . . . . . . . . 15

<PAGE>

ARTICLE 9 FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 10 DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 11 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . 15

iii

<PAGE>

BYLAWS

FIRST SCIENTIFIC, INC.
(Restated through September 24, 1999)

ARTICLE 1

CORPORATE OFFICES

1.1 Business Office. The principal office of the
corporation shall be located at such place either within or outside
the State of Delaware, as may be determined by the Board of
Directors. The corporation may have such other offices, either
within or without the State of Delaware as the Board of Directors
may designate or as the business of the corporation may require from
time to time.

1.2 Registered Office. The registered office of the
corporation shall be located within the State of Delaware and may
be, but need not be, identical with the principal office (if located
within the State of Delaware). The address of the registered office
may be changed from time to time by the Board of Directors.

ARTICLE 2

SHAREHOLDERS

2.1 Annual Meeting. The annual meeting of shareholders
shall be held each year on a date and at a time designated by the
Board of Directors. At the meeting, directors shall be elected and
any other proper business may be transacted. If the election of
directors shall not be held on the day designated for the annual
meeting of the shareholders, or at any adjournment thereof, the
Board of Directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as may be convenient.

2.2 Special Meetings. Special meetings of the
shareholders may be called at any time by the Chairman of the Board,
by the President, or by the Board of Directors. Special meetings of
the shareholders may also be called by the holders of not less than
one-tenth (1/10) of all the shares entitled to vote on any issue
proposed to be considered at the proposed special meeting by
delivery of one or more signed and dated written demands for the
meeting stating the purpose for which it is to be held to the
corporation's Secretary or other designated officer.

<PAGE>

2.3 Place of Meetings. Meetings of shareholders may be
held at any place within or outside the State of Delaware as
designated by the Board of Directors. In the absence of any such
designation, meetings shall be held at the principal office of the
corporation.

2.4 Notice of Meetings. Written or printed notice stating
the place, date, and hour of the meeting, and in case of a special
meeting, the purpose or purposes for which the meeting is called,
shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, either personally, by facsimile,
mail, or express courier by or at the direction of the Chairman of
the Board of Directors, the President, the Secretary, or the officer
or person(s) calling the meeting, to each shareholder of record
entitled to vote at such meeting or to any other shareholder
entitled by the Delaware General Corporation Law (the "Act") or the
corporation's Articles of Incorporation to receive notice of the
meeting.

2.5 Fixing of Record Date. For the purpose of determining
shareholders of any voting group entitled to notice of or to vote at
any meeting of shareholders, or shareholders entitled to take action
without a meeting, or shareholders entitled to receive payment of
any distribution or dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors
may fix in advance a date as the record date. Such record date
shall not be more than seventy (70) days prior to the date on which
the particular action requiring such determination of the
shareholders is to be taken. If no record date is so fixed by the
Board of Directors, the record date for determination of such
shareholders shall be determined in accordance with the Act.

2.6 Voting List. Unless otherwise directed by the Board
of Directors, the Secretary of the corporation shall prepare a list
of the names of all of the shareholders who are entitled to be given
notice of the meeting. The list shall be arranged by voting group,
and within each voting group by class or series of shares. The list
shall be alphabetical within each class or series and must show the
address of, and the number of shares held by, each shareholder. The
shareholder list must be made available for inspection by any
shareholder in accordance with the Act.

2.7 Meetings by Telecommunication. Any or all of the
shareholders may participate in an annual or special meeting of the
shareholders by, or the meeting may be conducted through the use of,
any means of communication by which all persons participating in the
meeting can hear each other during the meeting.

2.8 Shareholder Quorum and Voting Requirements. If the
corporation's Articles of Incorporation or the Act provides for
voting by a single voting group on a matter, action on that matter
is taken when voted upon by that voting group.

<PAGE>

If the Articles of Incorporation or the Act provide for
voting by two or more voting groups on a matter, action on that
matter is taken only when voted upon by each of those voting groups
counted separately. Action may be taken by one voting group on a
matter even though no action is taken by another voting group
entitled to vote on the matter.

Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares
exists with respect to that matter. Unless the Articles of
Incorporation, these Bylaws or the Act provide otherwise, one-third
of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.

Once a share is represented for any purpose at a meeting, it
is deemed present for quorum purposes for the remainder of the
meeting and for any adjournment of that meeting unless a new record
date is or must be set for the adjourned meeting.

If a quorum exists, action on a matter (other than the
election of directors) by a voting group is approved if the votes
cast within the voting group favoring the action exceed the votes
cast opposing the action, unless the Articles of Incorporation,
these Bylaws, or the Act require a greater number of affirmative
votes.

2.9 Proxies. At all meetings of shareholders, a
shareholder may vote in person, or vote by a proxy that is executed
by the shareholder or that is executed by the shareholder's duly
authorized attorney-in-fact, or by a written statement of the
appointment transmitted by telegram, teletype, telecopy, or other
electronic transmission along with written evidence from which it
can be determined that the shareholder transmitted or authorized the
transmission of the appointment. Such proxy shall be filed with the
Secretary of the corporation or any other person authorized to
tabulate votes before or at the time of the meeting. No proxy shall
be valid after eleven (11) months from the date of its execution
unless otherwise provided in the proxy.

2.10 Voting Shares. Each outstanding share, regardless of
class, and except as otherwise required by the Act, shall be
entitled to one (1) vote, and each fractional share is entitled to a
corresponding fractional vote, on each matter submitted to a vote at
a meeting of the shareholders, except to the extent that the voting
rights of the shares of any class or classes are limited or denied
by the Articles of Incorporation of this corporation as permitted by
the Act.

Redeemable shares are not entitled to vote after notice of
redemption is mailed to the holders and a sum sufficient to redeem
the shares has been deposited with a bank, trust company, or other
financial institution under an irrevocable obligation to pay the
holders the redemption price upon surrender of the shares.

Unless the Articles of Incorporation of this corporation
provide otherwise, at each election for directors, every shareholder
entitled to vote at such election shall have the right to vote, in
person or by proxy, all of the votes to which the shareholder's
shares are entitled for as many persons as there are directors to be
elected and for whose election such shareholder has a right to vote.

2.11 Shareholder Action Without a Meeting. Any action
required to be taken at a meeting of the shareholders, or any other
action that may be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth the
action so taken, is signed by all of the shareholders entitled to
vote with respect to the subject matter thereof.

2.12 Waiver. A shareholder may waive any required notice
in accordance with the Act.

<PAGE>

ARTICLE 3

BOARD OF DIRECTORS

3.1 General Powers. All corporate powers shall be
exercised by or under the authority of, and the business and affairs
of the corporation shall be managed under the direction of, the
Board of Directors, subject to any limitation set forth in the
Articles of Incorporation or in a shareholder's agreement authorized
under the Act.

3.2 Number of Directors and Qualification. The initial
authorized number of directors shall be three (3) unless otherwise
specified from time to time by resolution of the Board of Directors,
but shall not be less than three (3) unless the number of
shareholders of the corporation is less than three (3), in which
event the corporation may have a number of directors equal to or
greater than the number of shareholders. Directors need not be
residents of the State of Delaware or shareholders of the
corporation.

3.3 Election and Term of Office. Directors shall be
elected at each annual meeting of the shareholders to hold office
until the next succeeding annual meeting. Each director, including
a director elected to fill a vacancy, shall hold office until the
expiration of the term for which elected and until a successor has
been elected and qualified. No decrease in the authorized number of
directors shall have the effect of shortening the term of any
incumbent director.

3.4 Chairman of the Board of Directors. The Board of
Directors may elect a Chairman of the Board of Directors, which
person shall at all times be a director. The Chairman of the Board
of Directors, if such a person is elected, shall, if present,
preside at meetings of the Board of Directors and exercise and
perform such other powers and duties as may from time to time be
assigned to him or her by the Board of Directors or as may be
prescribed by these Bylaws. Unless otherwise restricted by law, the
Chairman of the Board of Directors may also be given the duties of
an officer of the corporation, as well as serve as an officer, as
determined by the Board of Directors. The period(s) of service by
the Chairman of the Board of Directors shall be determined by the
Board of Directors. In the absence of the Chairman of the Board of
Directors, if elected, the Board of Directors may appoint another
member of the Board of Directors to conduct the meeting(s) of the
Board of Directors.

3.5 Regular Meetings. The Board of Directors may provide
by resolution the time and place, either within or without the State
of Delaware, for the holding of regular meetings without notice
other than such resolution.

3.6 Special Meetings. Special meetings of the Board of
Directors for any purpose or purposes may be called at any time by
or at the request of the Chairman of the Board of Directors, the
President, or any two (2) directors. The person or persons
authorized to call special meetings of the Board of Directors may
fix any place, either within or without the State of Delaware, as
the place for holding any special meeting of the Board of Directors.

<PAGE>

3.7 Notice. Notice of the date, time, and place of any
special meeting of the Board of Directors shall be delivered
personally or by telephone to each director or sent by mail, express
courier, or facsimile, charges prepaid, addressed to each director
at that director's address as it is shown on the records of the
corporation. If the notice is mailed, it shall be deposited in the
United States mail at least five (5) days before the time of the
holding of the meeting. If the notice is delivered personally, by
express courier, or by telephone, facsimile, or telegraph, it shall
be delivered at least forty-eight (48) hours before the meeting
begins. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of
the director who the person giving notice has reason to believe will
promptly communicate it to the director. Any director may waive
notice of any meeting by delivering a written waiver to the
corporation to file in its corporate records, and attendance of a
director at a meeting shall constitute a waiver of notice of such
meeting, except where the director attends a meeting for the express
purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened and does not thereafter
vote for or consent to action taken at the meeting. Neither the
business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors needs to be specified in
the notice or waiver of notice of such meeting.

3.8 Quorum. A majority of the authorized number of
directors as fixed in accordance with these Bylaws shall constitute
a quorum for the transaction of business at any meeting of the Board
of Directors, but if less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time
to time without further notice until a quorum shall be present.

3.9 Manner of Acting. The act of a majority of the
directors present at a meeting at which a quorum is present shall,
unless the act of a greater number of directors is required by the
Articles of Incorporation of the corporation or these Bylaws, be the
act of the Board of Directors.

3.10 Vacancies and Newly-Created Directorships. Any
vacancy occurring in the Board of Directors may be filled by the
affirmative vote of a majority of the remaining directors, though
less than a quorum, or by the affirmative vote of the majority of
shares entitled to vote for directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his or her
predecessor in office. The term "vacancy" includes any directorship
authorized under Section 3.2 but not filled by shareholders at the
annual meeting, whether or not such directorship had previously been
filled.

3.11 Fees and Compensation. Directors may receive such
compensation, if any, for their services and such reimbursement of
expenses as may be fixed or determined by resolution of the Board of
Directors. This section shall not be construed to preclude any
director from serving the corporation in any other capacity as an
officer, agent, employee, or otherwise and receiving compensation
for those services.

3.12 Presumption of Assent. A director who is present at a
meeting of the Board of Directors when corporate action is taken is
considered to have consented to the action taken at the meeting
unless the director objects at the beginning of the meeting, or
promptly upon arrival, to holding the meeting or transacting
business at the meeting and does not thereafter vote for or consent
to any action taken at the meeting, or the director
contemporaneously requests his or her dissent or abstention as to
any specific action to be entered into the minutes of the meeting,
or the director causes written notice of a dissent or abstention as
to a specific action to be received by the presiding officer of the
meeting before adjournment of the meeting or by the corporation
promptly after adjournment of the meeting.

<PAGE>

3.13 Resignations. A director may resign at any time by
giving a written notice of resignation to either the Chairman of the
Board of Directors, the President, a Vice-President, or the
Secretary or Assistant Secretary, if any. Unless otherwise provided
in the resignation, the resignation shall become effective when the
notice is received by an officer or director of the corporation. If
the resignation is effective at a future time, the Board of
Directors may elect a successor to take office when the resignation
becomes effective.

3.14 Action by Written Consent. Any action required to be
taken at a meeting of the Board of Directors of the corporation or
any other action that may be taken at a meeting of the Board of
Directors or of a committee, may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by
all of the directors, or all of the members of the committee, as the
case may be. Such consent shall have the same legal effect as a
unanimous vote of all the directors or members of the committee and
may be described as such in any document or instrument. Action
taken pursuant to this Section is effective when the last director
signs a writing describing the action taken, unless the Board of
Directors establishes a different effective date.

3.15 Meetings by Telephone Conference Call. Members of the
Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors or
committee, as the case may be, by means of conference telephone call
or similar communications equipment by which all persons
participating in the meeting can hear each other throughout the
meeting. Participation in such a meeting shall constitute presence
in person at such meeting.

3.16 Removal of Directors. The shareholders may remove one
(1) or more directors at a meeting called for that purpose if notice
has been given that a purpose of the meeting is such removal. The
removal may be with or without cause unless the Articles of
Incorporation provide that directors may only be removed with cause.
If a director is elected by a voting group of shareholders, only
the shareholders of that voting group may participate in the vote to
remove such director. A director may be removed only if the number
of votes cast to remove such director exceeds the number of votes
cast not to remove such director.

<PAGE>

ARTICLE 4

COMMITTEES

4.1 Committees. The Board of Directors may from time to
time by resolution adopted by a majority of the Board of Directors
designate from among its members one (1) or more committees,
including, but not limited to, a Compensation Committee and an
audit Committee, each of which shall have such authority of the
Board of Directors as may be specified in the resolution of the
Board of Directors designating such committee; provided, however,
that any such committee so designated shall not have any powers not
allowed under the Act. The chairman of any such committee shall be
designated by the Board of Directors. Each committee must have at
least two (2) directors as members. The Board of Directors shall
have power at any time to change the members of any such committee,
designate alternate members of any such committee, and fill all
vacancies therein. Any such committee shall serve at the pleasure
of the Board of Directors.

4.2 Procedures, Meetings and Quorum. Meetings of any
committee designated by the Board of Directors may be held at such
times and places as the chairman of such committee shall from time
to time determine. Notice of such meetings shall be given within
the same times and by the same means as set forth in these Bylaws
for meetings of the Board of Directors. At every meeting of any
such committee, the presence of a majority of all of the members of
such committee shall be necessary for the transaction of business,
and the action of any such committee must be authorized by the
affirmative vote of a majority of the members present at such
meeting at which a quorum is present. Any such committee shall keep
minutes of its proceedings, and all action by such committee shall
be reported to the Board of Directors at its meeting next succeeding
such action. Any action by a committee shall be subject to review
by the Board of Directors, provided, no rights of third parties
shall be affected by such review.

ARTICLE 5

OFFICERS

5.1 Officers. Except as provided otherwise by a
resolution of the Board of Directors, the officers of the
corporation shall be a President, one or more Vice-Presidents as may
be determined by resolution of the Board of Directors, a Secretary,
and a Treasurer. Any two (2) or more offices may be held by the
same person. The corporation may also have, at the discretion of
the Board of Directors, one or more Assistant Secretaries, one or
more Assistant Treasurers, and such other officers as may be
appointed by the Board of Directors. Officers need not be
shareholders of the corporation.

5.2 Appointment, Term of Office and Qualification. The
officers of the corporation shall be appointed by, and serve at the
pleasure of, the Board of Directors, subject to any rights of an
officer under any contract of employment. Appointment of officers
shall take place annually or at such other intervals as the Board of
Directors may determine, and may be made at regular or special
meetings of the Board of Directors or by the written consent of the
directors. Each officer shall hold office until his or her
successor shall have been duly appointed and qualified or until such
officer's death, resignation, or removal in the manner provided in
these Bylaws. No officer provided for in this Article 5 need be a
director of the corporation nor shall any such officer be a director
unless elected a director in accordance with these Bylaws.

5.3 Resignations. Any officer may resign at any time by
delivering a written resignation to the Board of Directors, the
President, or the Secretary. Unless otherwise specified therein,
such resignation shall take effect upon such delivery of the
resignation; and, unless otherwise specified in the resignation, the
acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if
any, of the corporation under any contract to which the officer is a
party.

<PAGE>

5.4 Removal. Any officer may be removed by the Board of
Directors or by a committee, if any, if so authorized by the Board
of Directors, whenever in its judgment the best interests of the
corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so
removed.

5.5 Vacancies and Newly-Created Offices. A vacancy in any
office may be filled by the Board of Directors at any regular or
special meeting or by the unanimous written consent of the directors.

5.6 President. Unless the Board of Directors shall
otherwise determine, the President shall be the chief executive
officer of the corporation, and, if so designated by resolution of
the Board of Directors, shall also have the title Chief Executive
Officer, and shall, subject to the control of the Board of
Directors, have general supervision, direction, and control of the
business, officers, employees, and agents of the corporation. The
President shall, when present, preside at meetings of the
shareholders. The President shall have the general powers and
duties of management usually vested in the office of President of a
corporation, and shall have such other powers and duties as may be
prescribed by the Board of Directors or these Bylaws. The President
shall prepare the agenda for the board of Directors' meetings.

5.7 Vice Presidents. In the absence or disability of the
President, the Vice Presidents, in order of their rank as fixed by
the Board of Directors or, if not ranked, a Vice President
designated by the Board of Directors, shall perform all the duties
of the President and, when so acting, shall have all the powers of,
and be subject to all the restrictions upon, the President. The
Vice Presidents shall have such other powers and perform such other
duties as may from time to time be prescribed for them by the Board
of Directors, these Bylaws, the President, or the Chairman of the
Board of Directors and, unless otherwise so prescribed, the powers
and duties customarily vested in the office of Vice President of a
corporation.

5.8 Secretary. The Secretary shall keep or cause to be
kept, at the principal executive office of the corporation or such
other place as the Board of Directors may direct, a book of minutes
of the proceedings of all meetings of, and a record of all actions
taken by, the Board of Directors or any committees of the Board of
Directors. The Secretary shall cause all notices of meetings to be
duly given in accordance with the provisions of these Bylaws and as
required by the Act.

The Secretary shall be the custodian of the corporate
records and of the seal, if any, of the corporation. Unless
otherwise required by law or by the Board of Directors, the adoption
or use of a corporate seal is not required. The Secretary shall see
that the books, reports, statements, certificates, and other
documents and records required by the Act are properly kept and filed.

<PAGE>
The Secretary shall have charge of the stock books of the
corporation and cause the stock and transfer books to be kept in
such manner as to show at any time the amount of the stock of the
corporation of each class issued and outstanding, the manner in
which and the time when such stock was paid for, the alphabetically
arranged names and addresses of the holders of record thereof, the
number of shares held by each holder, and the time when each became
a holder of record. The Secretary shall exhibit at all reasonable
times to any director, upon application, the original or duplicate
stock register. The Secretary shall cause the stock ledger to be
kept and exhibited at the principal office of the corporation in the
manner and for the purposes provided by these Bylaws and the Act.

The Secretary shall perform all duties incident to the
office of Secretary and such other duties as are given to him or her
by law or these Bylaws or as from time to time may be assigned by
the Board of Directors.

5.9 Treasurer. The Treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transactions of
the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, retained earnings,
and shares. The books of account shall at all reasonable times be
open to inspection by any director.

The Treasurer shall deposit all monies and other valuables
in the name and to the credit of the corporation with such
depositories as may be designated by the Board of Directors. The
Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, shall render to the President and
the Board of Directors, whenever they request it, an account of all
of transactions taken as Treasurer and of the financial condition of
the corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or these
Bylaws.

5.10 Assistant Secretaries and Treasurers. Any Assistant
Secretaries or Assistant Treasurers elected by the Board of
Directors shall perform such of the duties of the Secretary or the
Treasurer, respectively, as may be assigned to them by the officers
they are elected to assist, or as may otherwise be prescribed for
them by the Board of Directors.

5.11 Salaries. The salaries or other compensation of the
officers of the corporation shall be fixed from time to time by the
Board of Directors, except that the Board of Directors may delegate
to any person or group of persons the power to fix the salaries or
other compensation of any officers. No officer shall be prevented
from receiving any such salary or compensation by reason of the fact
that he or she is also a director of the corporation.

5.12 Surety Bonds. In the event the Board of Directors
shall so require, any officer or agent of the corporation shall
provide the corporation with a bond, in such sum and with such
surety or sureties as the Board of Directors may direct, conditioned
upon the faithful performance of his or her duties to the
corporation, including responsibility for negligence and for the
accounting of all property, monies, or securities of the corporation
that may come under his or her responsibility.

ARTICLE 6

EXECUTION OF INSTRUMENTS, BORROWING OF MONEY
AND DEPOSIT OF CORPORATE FUNDS

<PAGE>
6.1 Instruments. The Board of Directors may authorize any
officer, agent, or agents, to enter into any contract or execute and
deliver any instrument in the name of, and on behalf of, the
corporation, and such authority may be general or confined to
specific instances.

6.2 Loans. No loan to the corporation shall be
contracted, no negotiable paper or other evidence of its obligation
under any loan to the corporation shall be issued in its name, and
no property of the corporation shall be mortgaged, pledged,
hypothecated, transferred, or conveyed as security for the payment
of any loan, advance, indebtedness, or liability of the corporation,
unless and except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.

6.3 Deposits. All monies of the corporation not
otherwise employed shall be deposited from time to time to its
credit in such banks or trust companies or with such bankers or
other depositories as the Board of Directors may select, or as from
time to time may be selected by any officer or agent authorized so
to do by the Board of Directors.

6.4 Checks, Drafts, etc. All checks, drafts, acceptances,
notes, endorsements, and, subject to the provisions of these Bylaws,
evidences of indebtedness of the corporation shall be signed by such
officer or officers or such agent or agents of the corporation and
in such manner as the Board of Directors from time to time may
determine. Endorsements for deposit to the credit of the
corporation in any of its duly authorized depositories shall be in
such manner as the Board of Directors from time to time may determine.

6.5 Bonds and Debentures. Every bond or debenture issued
by the corporation shall be evidenced by an appropriate instrument
signed by the President or a Vice-President and by the Secretary.
Where such bond or debenture is authenticated with the manual
signature of an authorized officer of the corporation or other
trustee designated by the indenture of trust or other agreement
under which such security is issued, the signature of any of the
corporation's officers named thereon may be a facsimile. In case
any officer who signed, or whose facsimile signature has been used
on any such bond or debenture, shall cease to be an officer of the
corporation for any reason before the same has been delivered by the
corporation, such bond or debenture may nevertheless be adopted by
the corporation and issued and delivered as though the person who
signed it or whose facsimile signature has been used thereon had not
ceased to be such officer.

6.6 Sale, Transfer, etc., of Securities. Sales,
transfers, endorsements, and assignments of shares of stock, bonds,
and other securities owned by or standing in the name of the
corporation and the execution and delivery on behalf of the
corporation of any and all instruments in writing incident to any
such sale, transfer, endorsement, or assignment, shall be effected
by the President, or by any Vice-President, together with the
Secretary, or by any officer or agent thereunto authorized by the
Board of Directors.

6.7 Proxies. Proxies to vote with respect to shares of
stock of other corporations owned by or standing in the name of the
corporation shall be executed and delivered on behalf of the
corporation by the President or any Vice-President and the Secretary
of the corporation or by any officer or agent thereunto authorized
by the Board of Directors.

<PAGE>

ARTICLE 7

CAPITAL STOCK

7.1 Stock Certificates. The shares of the corporation
may, but need not be, represented by certificates. If the shares
are represented by certificates, the certificates shall be signed by
two (2) officers as designated by the Board of Directors, or in the
absence of such designation, any two (2) of the following officers:
the President, any Vice-President, the Secretary, or any Assistant
Secretary of the corporation. The signatures of the designated
officers upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar,
other than the corporation itself or an employee of the corporation.
In case any officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he or she were such officer
at the date of its issue.

If the corporation is authorized to issue different classes
of shares or a different series within a class, the designations,
preferences, limitations, and relative rights applicable to each
class, the variations in preferences, limitations, and relative
rights determined for each series, and the authority of the Board of
Directors to determine variations for any existing or future class
or series, must be summarized on the front or back of each share
certificate. Alternatively, each certificate may state
conspicuously on its front or back that the corporation will furnish
the shareholder this information on request in writing, without
charge.

Each certificate representing shares shall also state upon
the face thereof:

(a) The name of the issuing corporation and that it
is organized under the laws of the State of Delaware.

(b) The name of the person to whom the certificate
is issued.

There shall be entered upon the stock transfer books of the
corporation at the time of issuance of each share, the number of the
certificate issued, the name and address of the person owning the
shares represented thereby, the number and kind, class, or series of
such shares, and the date of issuance thereof. Every certificate
exchanged or returned to the corporation shall be marked "Cancelled"
with the date of cancellation. Unless otherwise required by the
Act, or by the Board of Directors in accordance with applicable law,
the foregoing with respect to shares does not affect shares already
represented by certificates.

7.2 Shares Without Certificates. The Board of Directors
may authorize the issuance of some or all of the shares of any or
all of the classes or series of the corporation's stock without
certificates. The authorization does not affect shares already
represented by certificates until they are surrendered to the
corporation. Within a reasonable time after the issuance or
transfer of shares without certificates, the corporation shall send
the shareholder a written statement of the information required on
certificates as stated in Section 7.1 of these Bylaws.

<PAGE>

7.3 Transfer of Stock. Transfers of stock shall be made
only upon the stock transfer books of the corporation kept at the
principal office of the corporation or by the transfer agent(s)
designated to transfer shares of the stock of the corporation.
Except where a certificate is issued in replacement of a lost or
destroyed certificate as provided in these Bylaws, an outstanding
certificate for the number of shares involved shall be surrendered
for cancellation before a new certificate is issued therefor.
Except as otherwise provided by law, the corporation and the
transfer agent(s) and registrar(s), if any, shall be entitled to
treat the holder of record of any share or shares of stock as the
absolute owner thereof for all purposes and, accordingly, shall not
be bound to recognize any legal, equitable, or other claim to or
interest in such share or shares on the part of any other person
whether or not it or they shall have express or other notice thereof.

7.4 Restrictions on Transfer or Registration of Shares.
The Board of Directors may, as they may deem expedient, impose
restrictions on the transfer or registration of transfer of shares
of the corporation. The restriction does not affect shares issued
before the restriction was adopted unless the holders of the shares
are parties to the restriction agreement or voted in favor of the
restriction or otherwise consented to the restriction.

The restriction on the transfer or registration of transfer
of shares is valid and enforceable against the holder or a
transferee of the holder, if the restriction is authorized by the
Act and its existence is noted conspicuously on the front or back of
the certificate, or if the restriction is contained in the
information statement that is sent to shareholders whose shares are
not represented by certificates pursuant to Section 7.2 of these
Bylaws.

7.5 Regulations. Subject to the provisions of these
Bylaws and of the Articles of Incorporation, the Board of Directors
may make such rules and regulations as it may deem expedient
concerning the issuance, transfer, redemption, and registration of
certificates for shares of the stock of the corporation.

7.6 Transfer Agent(s) and Registrar(s). The Board of
Directors may appoint one (1) or more transfer agent(s) and one (1)
or more registrar(s) with respect to the certificates representing
shares of stock of the corporation, and may require all such
certificates to bear the signature of either or both. The Board of
Directors may from time to time define the respective duties of such
transfer agent(s) and registrar(s).

7.7 Lost or Destroyed Certificates. In the event of the
loss or destruction of any certificate of stock, another may be
issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft, or
destruction and concerning the giving of a satisfactory bond or
bonds of indemnity.

7.8 Consideration for Shares. The Board of Directors may
authorize the issuance of shares for consideration consisting of any
tangible or intangible property or benefits to the corporation,
including cash, promissory notes, services performed, contracts or
arrangements for services to be performed, or other securities of
the corporation. The terms and conditions of any tangible or
intangible property or benefit to be provided in the future to the
corporation, including contracts or arrangements for services to be
performed, shall be set forth in writing. The corporation may place
in escrow shares issued in consideration for contracts, arrangements
for future services or benefits, or in consideration of a promissory
note, or make other arrangements to restrict transfer of the shares
issued for any such consideration, and may credit distributions in
respect of the shares against the purchase price until the services
are performed, the note is paid, or the payments are received. If
the specified future services are not performed, the note is not
paid, or the benefits are not received, the shares escrowed or
restricted or the distributions credited may be cancelled in whole
or in part.

<PAGE>

ARTICLE 8

INDEMNIFICATION

8.1 Indemnification. Except as provided in Section 8.2 of
these Bylaws, the corporation may, to the maximum extent and in the
manner permitted by the Act, indemnify an individual made a party to
a proceeding because he or she is or was a director, against
liability incurred in the proceeding if his or her conduct was in
good faith, he or she reasonably believed that his or her conduct
was in, or not opposed to, the corporation's best interests, and in
the case of any criminal proceeding, he or she had no reasonable
cause to believe his or her conduct was unlawful. Termination of
the proceeding by judgment, order, settlement, conviction, upon a
plea of nolo contendere or its equivalent, is not, of itself,
determinative that the director did not meet the standard of conduct
described in this section.

8.2 Certain Restrictions on Indemnification. The
corporation may not indemnify a director under Section 8.1 of these
Bylaws, in connection with a proceeding by or in the right of a
corporation in which the director was adjudged liable to the
corporation, or in connection with any other proceeding charging
that the director derived an improper personal benefit, whether or
not involving action in his or her official capacity, in which
proceeding he or she was adjudged liable on the basis that he or she
derived an improper personal benefit.

8.3 Mandatory Indemnification. The corporation shall
indemnify a director who was successful, on the merits or otherwise,
in the defense of any proceeding, or in the defense of any claim,
issue, or matter in the proceeding, to which he or she was a party
because he or she is or was a director of the corporation, against
reasonable expenses incurred by him or her in connection with the
proceeding or claim with respect to which he or she has been
successful.

8.4 Determination. The corporation may not indemnify a
director under Section 8.1 of these Bylaws unless authorized and a
determination has been made in a specific case that indemnification
of the director is permissible in the circumstances because the
director has met the applicable standard of conduct set forth in
Section 8.1 of these Bylaws. Such determination shall be made
either (a) by the Board of Directors by majority vote of those
present at a meeting at which a quorum is present, and only those
directors not parties to the proceedings shall be counted in
satisfying the quorum requirement, (b) if a quorum cannot be
obtained, by majority vote of a committee of the Board of Directors
designated by the Board of Directors, which committee shall consist
of two (2) or more directors not parties to the proceeding, except
that the directors who are not parties to the proceeding may
participate in the designation of directors for the committee, (c)
by special legal counsel selected by the Board of Directors or a
committee of the Board of Directors in the manner prescribed by the
Act, or (d) by the shareholders, by a majority of the votes entitled
to be cast by holders of qualified shares present in person or by
proxy at a meeting. The majority of the votes entitled to be cast
by the holders of all qualified shares constitutes a quorum for
purposes of action that complies with this Section. Shareholders'
action that otherwise complies with this Section is not affected by
the presence of holders, or the voting, of shares that are not
qualified shares as determined under the Act.

<PAGE>

8.5 General Indemnification. The indemnification and
advancement of expenses provided by this Article 8 shall not be
construed to be exclusive of any other rights to which a person
seeking indemnification or advancement of expenses may be entitled
under the Articles of Incorporation, these Bylaws, any agreement,
any vote of shareholders or disinterested directors, or otherwise,
both as to action in his or her official capacity and as to action
in another capacity while holding such office.

8.6 Advances. The corporation in accordance with the Act
may pay for or reimburse the reasonable expenses incurred by any
director who is a party to a proceeding in advance of final
disposition of the proceeding if (a) the director furnishes the
corporation a written affirmation of his or her good faith belief
that he or she has met the applicable standard of conduct described
in Section 8.1 of these Bylaws, (b) the director furnishes to the
corporation a written undertaking in the form required by the Act,
executed personally or on his or her behalf, to repay the advance if
it is ultimately determined that he did not meet the standard of
conduct, and (c) a determination is made that the facts then known
to those making a determination would not preclude indemnification
under this Article 8.

8.7 Scope of Indemnification. The indemnification and
advancement of expenses authorized by this Article 8 is intended to
permit the corporation to indemnify to the fullest extent permitted
by the laws of the State of Delaware, any and all persons whom it
shall have power to indemnify under such laws from and against any
and all of the expenses, liabilities, or other matters referred to
in or covered by such laws. Any indemnification or advancement of
expenses hereunder shall, unless otherwise provided when the
indemnification or advancement of expenses is authorized or
ratified, continue as to a person who has ceased to be a director,
officer, employee, or agent of the corporation and shall inure to
the benefit of such person's heirs, executors and administrators.
This Article 8 is a summary of the indemnification provisions of the
Act. In the event of a conflict between the provisions of this
Article 8 and the Act, the Act shall control.

8.8 Insurance. The corporation may purchase and maintain
liability insurance on behalf of a person who is or was a director,
officer, employee, fiduciary, or agent of the corporation, or who,
while serving as a director, officer, employee, fiduciary, or agent
of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee,
fiduciary, or agent of another foreign or domestic corporation, or
other person, or of an employee benefit plan, against liability
asserted against or incurred by him or her in any such capacity or
arising out of his or her status in any such capacity, whether or
not the corporation would have the power to indemnify him or her
against the liability under the provisions of this Article 8 or the
laws of the State of Delaware, as the same may hereafter be amended
or modified.
14

<PAGE>

ARTICLE 9

FISCAL YEAR

The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.

ARTICLE 10

DIVIDENDS

The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law.

ARTICLE 11

AMENDMENTS

These Bylaws may be amended by the Board of Directors or by
the shareholders.

<PAGE>

CERTIFICATE OF ADOPTION OF RESTATED BYLAWS

FIRST SCIENTIFIC, INC.

The undersigned hereby certifies that he is the duly elected,
qualified, and acting Secretary of First Scientific, Inc., a
Delaware corporation, and that the foregoing Bylaws were submitted
to and approved and adopted by the Board of Directors of the
corporation by Action by Unanimous Written Consent of the Board of
Directors dated September 24, 1999.

DATED this 24th day of September, 1999.

/s/ Reed J. Tanner

Secretary

<PAGE>

Exhibit 10.4
AGREEMENT

THIS AGREEMENT is made and entered into effective as of this
30th day of April, 1999, by and between FIRST SCIENTIFIC, INC.,
("FSI"), a Delaware corporation, and WELDON PHILLIPS, a resident of
the state of California ("Phillips").

W I T N E S S E T H:

WHEREAS, FSI is a successor in interest to the business of
Linco Industries, Inc., which is a party to that certain agreement
dated the 20th day of January, 1998 with Phillips, the subject
matter of which is the efforts by Phillips to locate customers and
business opportunities for Linco Industries, Inc. (the "Prior
Agreement"); and

WHEREAS, Linco Industries, Inc. was a private corporation,
whereas FSI is a public corporation: and it is therefore desirable
to terminate said Prior Agreement in order to enhance the market
value of FSI shares; and

WHEREAS, FSI and Phillips mutually desire to terminate the
Prior Agreement and to redefine their relationship as hereinafter
set forth;

NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, receipt and sufficiency whereof are
hereby mutually acknowledged by the parties, FSI and Phillips hereby
agree as follows:

1. TERMINATION OF PRIOR AGREEMENT. The Prior Agreement is
hereby terminated.

2. ISSUANCE OF SHARES. FSI shall issue to Phillips a stock
certificate representing 10,000 shares of FSI common stock. Said
certificate shall bear the same restrictive legend as all recently
issued shares of FSI; i.e., that the resale of such shares shall not
be permitted unless said shares are either registered or sold in
compliance with Rule 144 promulgated by the Securities and Exchange
Commission or pursuant to some other exemption.

3. NON-EXCLUSIVE DISTRIBUTORSHIP. FSI hereby appoints
Phillips as a non-exclusive distributor with respect to the
distribution and sales of FSI products in the states of California,
Nevada, Utah, Washington, Oregon and Hawaii (at standard distributor
prices). This relationship shall be based on standard practices in
the industry. For three years from the date of this Agreement, FSI
shall grant to Phillips a discount equal to one-half of one percent
(.005) of the net sales proceeds received by FSI during a three (3)
year period beginning with the date the initial purchase order is
received from each respective customer.

4. FEE FOR NEW REFERRALS. With respect to sales from
specific products or projects referred after January 1, 1999 by
Phillips to FSI, and accepted by FSI, FSI shall pay to Phillips an
amount equal to one-half of one percent (.005%) of net sales
proceeds received by FSI during a one (1) year period beginning with
the respective date of acceptance by FSI of the initial purchase
order for each such product.

5. SOLICITATION OF NEW CUSTOMERS. The parties agree that
Phillips shall be free to solicit whatever potential new customer he
desires in order to attempt to develop business for FSI, provided
that Phillips is not at the time aware that FSI is actively working
with or otherwise pursuing such company in an active dialogue. From
time to time, FSI will provide Phillips with a list of its current
customers or prospects with whom it is engaged in active dialogue.
In the event of any dispute as to who first engaged the customer in
an active dialogue, correspondence will be examined to establish the
priority.

6. WRITTEN ACCPETANCE REQUIRED. Before a referral shall be
deemed accepted, FSI must provide Phillips with a written acceptance
of a proposed product or project.

7. NON-DISCLOSURE.

A. Phillips agrees to protect the proprietary rights of FSI
to any proprietary information obtained during the course of this
Agreement and afterward in perpetuity, and he agrees to take every
reasonable precaution to safeguard and treat such information as
confidential and to take appropriate action by instruction,
agreement or notice to his affiliates, agents and employees of the
confidential and proprietary nature of such information.

B. All information, whether written, verbal, transmitted by
any physical medium or delivered by electronic means from FSI to
Phillips, pursuant to this Agreement, shall be and remain the
property of FSI, and all such written, verbal, physical medium
transmission and/or physical recording of information delivered
electronically, and/or any copies thereof, shall be promptly
returned to FSI or destroyed, at FSI's option, upon its demand.

C. Notwithstanding the foregoing, Phillips shall not be
liable for use or disclosure of any information obtained from FSI if
that information is:

1. In the public domain, other than as a wrongful
disclosure of information; or

2. Known to Phillips at the time of disclosure to him
by FSI:

3. Independently developed by Phillips, other than as
a result of a disclosure of information; or

4. Becomes known to Phillips without similar
restrictions from a source other than FSI, other than as a
result of wrongful disclosure of information.

E. Except as specifically provided above, nothing contained
in this Agreement shall be construed as granting or conferring any
rights to Phillips by license or otherwise, expressly, by
implication, or otherwise for any invention, discovery or
improvement made, strategy, study made, conceived or acquired by FSI
prior to or after the date of this Agreement.

F. Phillips agrees that unauthorized disclosure of
proprietary information by him may cause irreparable harm and
significant commercial damage to FSI, which may be difficult to
ascertain. Therefore, Phillips agrees that FSI shall have the right
to an immediate preliminary injunction enjoining any breach of this
Paragraph 7, and further agrees to indemnify FSI against any losses
sustained by it, including any costs and reasonable attorney's fees,
by reason of the breach of any portion of this Paragraph 7.

8. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Utah. In the event of any action arising under
this Agreement, each party hereto agrees to jurisdiction and venue
in the state and federal courts of the State of Utah.

9. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled
by arbitration in Salt Lake City, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The
parties agree to meet within fifteen (15) days following a request
for arbitration from either party for the purpose of agreeing upon
arbitrator actions to compel arbitration or to enforce judgment.
Judgment upon any award rendered by the arbitrator(s) may be filed
in any court having jurisdiction thereof. In the event of any
dispute or litigation arising out of this Agreement, the prevailing
party shall be entitled to reasonable costs and attorney fees from
the prevailing party.

10. SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or
enforceability of any other provision.

11. ENTIRE AGREEMENT. This Agreement, is the entire, final
and integrated Agreement with respect to this agreement, and
supersedes any prior negotiations and agreements. This Agreement
may not be changed in any respect except by a written agreement
signed by both Phillips and FSI.

12. FACSIMILE (FAX) DOCUMENTS. Facsimile transmission of any
signed original document and retransmission of any signed facsimile
transmission shall be the same as delivery of an original.

13. EXECUTION. This Agreement shall be deemed to be binding
and effective upon execution by the undersigned parties. The
parties agree to perform all acts and execute all documents
necessary or desirable to carry out this Agreement.

14. NOTIFICATION. Any notification required under this
Agreement shall be by prepaid certified U.S. mail, express courier,
or facsimile sent to the respect address or fax number as set forth
on Page 1. Notice shall be deemed complete within three (3)
business days following mailing, two (2) business days following
delivery to an express courier, and one (1) business day following
completed facsimile transmission, respectively.

15. CONTINUING EFFECT. This Agreement shall be binding upon
the respective parties and his/her/its successors, administrators,
trustees and/or assigns.

16. TIME OF ESSENCE. It is expressly agreed that time is of
the essence in this Agreement.

17. HEADINGS. The headings of the Sections of this Agreement
are inserted for convenience only, and shall not be deemed to be
part of this Agreement as to affect the construction thereof.

18. MISCELLANEOUS. No waiver by either party at any time of
any breach by the other party, or in compliance with any condition
or provision of the Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or any prior or subsequent time. Whenever
the context of any provision shall require it, the singular number
shall be held to include the plural number, and vice versa, and the
use of any gender shall include any and all genders. Should any
provision of this Agreement require judicial interpretation, the
court interpreting or construing the same shall not apply a
presumption that the terms hereof shall be more strictly construed
against one party, by reason of the rule of construction that a
document is to be construed more strictly against the person who
herself, or through his agent, prepares the same, it being
acknowledged that the agents of both parties have participated in
the preparation hereof.

IN WITNESS WHEREOF, the parties have signed the foregoing
instrument as of the day and year first above written.

FIRST SCIENTIFIC, INC.

By: /s/ Douglas R. Warren
---------------------------------
Douglas R. Warren, President

/s/ Weldon Phillips
--------------------------------
Weldon Phillips

Exhibit 10.5
EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
May 1, 1999 by and between FIRST SCIENTIFIC, INC., a Delaware
corporation having its principal place of business at 1877 West 2800
South, Suite 200, Ogden, Utah 84401 ("First Scientific"), and RANDY
HALES, a resident of Rockwell, Texas (the "Employee").

WITNESSETH:

WHEREAS, First Scientific is engaged in the business of the
formulation and sale of proprietary antibacterial and other products
for the healthcare and beauty care industries; and

WHEREAS, the Employee possesses knowledge and senior sales
experience of substantial value to First Scientific's continued
operations and expansion; and

WHEREAS, First Scientific desires to establish its right to the
services of the Employee in the capacity described below, on the
terms and conditions and subject to the rights of termination
hereinafter set forth, and the Employee is willing to accept such
employment on such terms and conditions.

NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
mutually acknowledged, the Employee and First Scientific have agreed
and do hereby agree as follows:

1. EMPLOYMENT AS VICE PRESIDENT, SALES AND MARKETING.
First Scientific does hereby employ, engage and hire the Employee as
Vice President, Sales and Marketing of First Scientific, and the
Employee does hereby accept and agree to such hiring, engagement and
employment. The Employee's duties during the Employment Period (as
that term is defined in Section 2 below) shall include such duties
as are reasonably related to the Employee's skills and experience,
as First Scientific's management and Board of Directors shall from
time to time prescribe or as provided in First Scientific's
policies. First Scientific's management and Board of Directors, in
their sole and absolute discretion, shall determine the Employee's
duties and responsibilities and may assign or reassign the Employee
to such duties, responsibilities or positions as they deem in First
Scientific's best interest; provided, however, that any such duties,
responsibilities or positions shall be reasonably related to the
Employee's skills and experience. The Employee shall devote a
reasonable portion of his time, skills and efforts to the
performance of his duties hereunder. The Employee shall also
exercise due diligence and care in the performance of his duties
under this Agreement.

2. EMPLOYMENT PERIOD.

2.1 INITIAL TERM. The Employee shall be employed by the
Company for the duties as set forth in Section 1 above for a twelve
(12) month period commencing on the date hereof and ending twelve
(12) months from the date hereof (the "Initial Term"), unless
earlier terminated in accordance with the provisions of this Agreement.

<PAGE>

2.2 RENEWAL; EMPLOYMENT PERIOD DEFINED. No later than sixty
(60) days prior to the expiration of the Initial Term, the parties
hereto agree to meet and discuss in good faith the possibility of
extending the term of this Agreement, on terms and conditions
mutually acceptable to the parties, which shall include as material
terms Employee's meeting the performane criteria set forth on
Exhibit "A" attached hereto and hereby incorporated herein. If the
parties agree to extend this Agreement at the expiration of the
Initial Term, each such extension term is referred to herein as a
"Renewal Term" and, collectively, as the "Renewal Terms." Neither
First Scientific nor the Employee shall be under any obligation to
agree to any such extension or extensions and may refuse to extend
or renew this Agreement for any or no reason whatsoever. The period
of time commencing as of the date hereof and ending on the effective
date of the termination of employment of the Employee under this or
any successor Agreement is referred to herein as the "Employment
Period."

3. COMPENSATION.

3.1 COMPENSATION PACKAGE. First Scientific shall pay the
Employee, and the Employee agrees to accept from First Scientific in
full payment for his services and promises to First Scientific
(specifically including the Employee's Covenant Not to Compete as
set forth in Section 9 below),an annual compensation package as set
forth below, payable in equal semi-monthly installments or at such
other time or times as the Employee and First Scientific shall
agree. The Employee's annual compensation package need not be
renegotiated in the event this Agreement is extended or renewed
pursuant to Section 2 above.

The Employee's annual compensation package shall consist of the
following:

(a) COMPENSATION. Annual Salary: $100,000 or a base salary
of $85,000, plus a sales bonus based on new customer revenue added
to First Scientific sales (excluding current customers; National
Boston Medical, Weldon Phillips, Johnson and Johnson, Sheffield
Resource Network, Liquid Prosperity Group, Swire Loxley and
Convatec.), as follows:

* 3% on the first $500,000 in new customer revenue; plus
* 2% on new customer revenue $500,000 - 1,000,000; plus
* 1.5% on new customer revenue beyond $1,000,000.

The bonus program will be subject to review and appropriate
refinements and improvements for renewal terms, which likely will
also include team bonus incentives that cover others engaged in
maturing a successful order and contract (a team bonus may be
implemented for the other players during the Initial Term).

(b) STOCK OPTIONS. Subject only to an enabling board
resolution, the Employee will be granted stock options conveying
250,000 shares of First Scientific common stock. The options would
vest as follows from the grant date (which is anticipated to be
close to Employee's employment date).

<PAGE>

Percentage Number of
End of: Vested Shares Vested
---------- -------------
Year I 40% 100,000
Year II 30% 75,000
Year III 30% 75,000

The options will be granted pursuant to the First Scientific
non-qualified stock option plan and subject to all the conditions
and provisions of the plan.

(c) HEALTH INSURANCE PLAN. First Scientific does not
currently have an employee medical health plan. Until such a plan
is adopted, the Employee will be entitled to receive a monthly
employee allowance of $250/month over and above any other
compensation. An eventual plan will probably require some level of
Employee premium participation. Typically, reasonably good family
health plans in the Utah market, with a fair deductable and a 20%
co-insurance provision, run $250 to $420/month. COBRA should negate
any "pre-existing condition" problem.

(d) MOVING ALLOWANCE. First Scientific shall provide a
one-time moving allowance of $10,000 to move the Employee's
household provisions from Dallas to Utah, and will reimburse actual
invoices paid up to that amount.

(e) HOUSE HUNTING. Employee and spouse are eligible for one
house hunting trip. All expenses, such as economy class air travel,
hotel, car rental and meals will be reimbursed against proper
receipts for up to five days, assuming mid-level, non-luxury hotels.

3.2 VACATION. The Employee shall be entitled to ten (10)
days of paid vacation and six (6) days of paid sick leave per year,
with such vacation to be scheduled and taken in accordance with
First Scientific's standard vacation policies.

4. BUSINESS EXPENSES. The Employee will be entitled to
reimbursement for all routine expenses incurred by the Employee in
the normal course of his employment for and on behalf of First
Scientific. Extraordinary expenses for which the Employee desires
to receive reimbursement shall be approved in writing by First
Scientific management.

5. DEATH OR DISABILITY.

5.1 TERMINATION OF EMPLOYMENT. If the Employee becomes
physically or mentally disabled while employed by First Scientific,
and as a result thereof becomes unable to continue the proper
performance of his duties hereunder, or if the Employee dies while
employed by First Scientific, the Employee's employment hereunder
shall automatically cease and terminate. Except for the proceeds
from any life or disability income insurance which may be provided
from time-to-time in the future by the Company for the Employee, in
which case the Employee would be entitled to said benefits actually
paid under such policy, First Scientific's obligation to pay any
component of the Employee's compensation package pursuant to Section
3.1 above shall cease as of the date of the Employee's death, or, in
the case of disability, the Employee's last day of active employment
with First Scientific.

<PAGE>

5.2 DEFINITION OF DISABLED. The Employee shall be considered
to be "disabled" for purposes of this Section 5, if, in the judgment
of two (2) licensed physicians (one of whom shall be selected by the
President of First Scientific and the other selected by the Employee
(or his personal representative)), the Employee is unable to perform
his customary duties under this Agreement because of a physical or
mental impairment or if the Employee is unable to perform his
customary duties and responsibilities under this Agreement for one
hundred twenty (120) days in any twelve (12) month period for any
reason whatsoever; provided, however, that First Scientific shall
only pay the Employee his compensation package as provided by
Section 3.1 above up to thirty (30) days during said disability
period. The determination by such physicians shall be binding and
conclusive for all purposes. Upon the expiration of the one hundred
twenty (120) days, First Scientific may, in its sole discretion,
terminate this Agreement.

6. TERMINATION BY FIRST SCIENTIFIC.

6.1 TERMINATION FOR REASONABLE CAUSE. First Scientific may
terminate this Agreement at any time before the last day of the
Initial Term, or before the last day of any Renewal Term if this
Agreement is renewed on the mutual agreement of the parties, for
"reasonable cause," as determined by the Managing Members of First
Scientific in the exercise of its reasonable business judgment. The
term "reasonable cause" as used herein shall mean:

(a) The failure of the Employee to discharge or perform
his duties and obligations promptly and in good faith under this
Agreement and with due diligence and care or to meet the objectives
agreed to and set forth on Exhibit "A" to this Agreement;

(b) The refusal of the Employee to implement or adhere
to lawful or reasonable policies or directives of First Scientific's
Board of Directors;

(c) Conduct of a criminal nature having an adverse
impact on First Scientific's reputation and standing in the industry
or community;

(d) Conduct in violation of the Employee's common law
duty of loyalty and fiduciary duty owed to First Scientific;

(e) Fraudulent conduct in connection with the business
or affairs of First Scientific, regardless of whether such conduct
is designed to defraud First Scientific or others; or

(f) Conduct in violation of any provision of this
Agreement or any other agreement or contract with First Scientific.

<PAGE>

The existence of reasonable cause shall be conclusively determined
by First Scientific's Board of Directors. If the Employee's
employment is terminated for any of the reasons specified in
subparagraphs (c), (d), or (e) above, the Employee's employment may
be terminated immediately without any advance notice whatsoever.
The Employee's employment may be terminated for any of the reasons
specified in subparagraphs (a), (b) or (f) above, the Employee
shall be entitled to receive ten (10) days advance written notice of
termination. If the Employee's employment is terminated pursuant to
this Section 6.1, First Scientific's obligation to pay the
Employee's compensation package as determined pursuant to Section
3.1 above shall cease as of the Employee's last day of work.

6.2 NORMAL TERMINATION. This Employment Agreement shall
automatically terminate on the expiration of the Initial Term
without any notice from either party hereto, unless the parties
mutually agree in writing in advance to extend or renew this
Agreement for an additional Renewal Term, although performance
criteria in Exhibit "A" may be modified. If the parties agree to
extend or renew this Agreement, this Agreement, as extended or
renewed, shall automatically terminate as of the last day of each
Renewal Term, without any notice from either party hereto, unless
the parties mutually agree in writing in advance to extend this
Agreement for an additional Renewal Term as provided herein.

6.3 DISCOUNTINUANCE OF OPERATIONS. First Scientific may
terminate this Agreement at any time if First Scientific
discontinues its operations and liquidates, becomes insolvent,
voluntarily files for protection under the Bankruptcy Code, files
any petition or action in bankruptcy or insolvency or files for the
appointment of a receiver or trustee or for the assignment of its
assets for the benefit of its creditors. First Scientific
specifically reserves the right to discontinue its operations at any
time and for any reason whatsoever in the exercise of the reasonable
business judgment of its Board of Directors.

6.4 FINAL COMPENSATION PAYMENTS. First Scientific's
obligation to pay the Employee's compensation package pursuant to
Section 3.1 above shall terminate as of the last day of the Initial
Term, or as of the last day of any Renewal Term if this Agreement is
extended or renewed by the mutual written agreement of the parties
hereto, or on the day properly specified in any notice of
termination issued pursuant to any of the preceding paragraphs of
this Section 7.

7. TERMINATION BY THE EMPLOYEE. The Employee may terminate
this Agreement at any time before the last day of the Initial Term,
or before the last day of any Renewal Term if this Agreement is
renewed by the mutual agreement of the parties, if First Scientific
materially breaches this Agreement, and if said breach is not cured
within thirty (30) days of receipt of written notice of the breach
hereof.

8. EFFECT OF TERMINATION; SURVIVAL. Upon the proper
termination of this Agreement by First Scientific or by the Employee
as provided herein, this Agreement shall thereupon be and become
void and of no further force or effect, except that the Covenant
Not to Compete set forth in Section 9 below and the Proprietary
Information provision set forth in Section 10 below shall survive
any said termination and shall continue to bind the Employee for the
period of time stated therein, and, in addition, the dispute
resolution procedures set forth in Section 16 below shall continue
to govern all disputes arising hereunder (except as set forth
therein), the representations and warranties set forth in Section 18
below shall continue in full force and effect. Any payments due
pursuant to the terms of this Agreement for services rendered prior
to the termination of this Agreement shall be made as otherwise
provided herein.

<PAGE>

9. EMPLOYEE'S COVENANT NOT TO COMPETE. The Employee
acknowledges that he will serve as the Vice President, Sales and
Marketing of First Scientific and in such capacity the Employee will
be First Scientific's representative with clients, customers,
suppliers, investors and the potential clients, customers, suppliers
and investors in, of and to First Scientific. The Employee also
acknowledges that he will have access to confidential information
about First Scientific and its actual and potential clients,
customers, suppliers, and investors and that he will have access to
other "Proprietary Information" (as that term is defined in Section
10.3 below) acquired by First Scientific at the expense of First
Scientific for use in its business. The Employee has and will
develop in the course of his employment substantial contacts and
experience in and possesses special, unique and extraordinary skills
and knowledge related to all aspects of First Scientific's business.
The Employee's professional skills and services to First Scientific
and the contact base which he now has and will develop in the
course of his employment are special, unique and extraordinary, and
the continued success of First Scientific is highly dependent upon
the Employee's discharge of his duties and responsibilities as
provided herein. Accordingly, by execution of this Agreement:

9.1 DURATION OF COVENANT. The Employee agrees that during
the Employment Period and for a period of twelve (12) months
following Employee's termination of employment with First Scientific
for any reason whatsoever (whether such termination shall be
voluntary or involuntary), unless such termination is the direct
result of or a response to a material breach of the Agreement by
First Scientific, the Employee shall not violate the provisions of
Section 9.2 below. The Employee agrees that the twelve (12) month
period referred to in the immediately preceding sentence shall be
extended by the number of days included in any period of time during
which the Employee is or was engaged in activities constituting a
breach of Section 9.2 below.

9.2 PROHIBITED COMPETITIVE ACTIVITIES. During the time
period specified in Section 9.1 above, the Employee shall not:

(a) Directly or indirectly own, operate, manage,
consult with, control, participate in the management or control of,
be employed by, design, schedule or conduct marketing programs for,
maintain, or continue any interest whatsoever in any company,
corporation, partnership, entity or person that intends to engage
in or that is engaged, directly or indirectly in the business of the
company;

(b) Directly or indirectly solicit any client,
customer, supplier, investor in, of, to and from First Scientific
for any company, corporation, partnership, entity or person other
than for and on behalf of First Scientific in connection with the
executive and managerial duties delegated to the Employee pursuant
to this Agreement.

9.3 NEED FOR COVENANT AND LEGAL REMEDIES. The Employee
expresses, agrees, and acknowledges that the Covenant Not to Compete
contained in this Section 9 is necessary for First Scientific's
protection because of the nature and scope of First Scientific's
business and the Employee's position with and the scope of the
duties and responsibilities delegated to the Employee by First
Scientific. Further, the Employee acknowledges that, in the event
of his breach of this Covenant Not to Compete, money damages will
not sufficiently compensate First Scientific for its injury caused
thereby, and the Employee accordingly agrees that in addition to
such money damages, the Employee may be restrained and enjoined from
any continuing breach of this Covenant Not to Compete without any
bond or other security being required by any court. The Employee
acknowledges that any breach of this Covenant Not to Compete will
result in irreparable damage, harm and injury to First Scientific.

9.4 ACKNOWLEDGMENTS BY THE EMPLOYEE. The Employee expressly
agrees and acknowledges as follows:

(a) This Covenant Not to Compete is reasonable as to
time and geographical scope and area, and does not place any
unreasonable burden on the Employee.

(b) The general public will not be harmed as a result
of enforcement of this Covenant Not to Compete.

(c) The Employee has requested or has had the
opportunity to request that his personal legal counsel review this
Covenant Not to Compete.

(d) The Employee understands and hereby agrees to each
and every term and condition of this Covenant Not to Compete.

10. PROPRIETARY INFORMATION.

10.1 RETURN OF PROPRIETARY INFORMATION. Upon the termination
of this Agreement for any reason whatsoever, the Employee shall
immediately turn over to First Scientific any and all Proprietary
Information (as that term is defined in Section 10.3 below). The
Employee shall have no right to retain any copies of any material
qualifying as Proprietary Information for any reason whatsoever
after the termination of his employment hereunder without the
express written consent of First Scientific.

10.2 NON-DISCLOSURE. It is understood and agreed that, in the
course of his employment hereunder and through his activities for
and on behalf of First Scientific, the Employee will receive, deal
with, and have access to First Scientific's Proprietary Information
and that the Employee holds said First Scientific's Proprietary
Information in trust and confidence for First Scientific. The
Employee agrees that he will not, during the term of this Agreement
or thereafter, in any fashion, form or manner, directly or
indirectly, retain, make copies of, divulge, disclose or communicate
to any person, company, partnership or entity, in any manner
whatsoever, except when necessary or required in the normal course
of the Employee's employment hereunder and for the benefit of First
Scientific or with the express written consent of First Scientific,
any of First Scientific's Proprietary Information or any information
of any kind, nature, or description whatsoever concerning any
matters affecting or relating to First Scientific's business or
affairs.

<PAGE>

10.3 PROPRIETARY INFORMATION DEFINED. For purposes of this
Agreement, "Proprietary Information" shall not include Employee's
contributions to First Scientific as set forth in Exhibit "A," which
is attached hereto and by this reference made a part hereof, but
shall mean and include the following: (a) the identity of actual or
potential clients, customers, suppliers, or investors in, of, or to
First Scientific; (b) any written, typed or printed lists or other
materials identifying actual or potential clients, customers,
suppliers or investors in, of, or to First Scientific; (c) any
financial or other information supplied to First Scientific by
actual or potential clients, customers, suppliers or investors; (d)
any and all data or information involving the techniques, programs,
methods, customers, suppliers, investor or other contacts employed
by First Scientific in the conduct of its business; (e) any lists,
documents, manuals, records, forms or other materials used by First
Scientific in the conduct of its business; (f) any descriptive
materials describing the methods and procedures employed by First
Scientific in the conduct of its business; and (g) any other secret
or confidential information concerning First Scientific's business
or affairs. The terms "list," "document," or their equivalent, as
used in this Section 10.3, are not limited to a physical writing or
compilation, but also include electronic media and any and all other
information whatsoever regarding the subject matter of the "list" or
"document", whether or not such compilation has been reduced to
writing.

11. TERMINATION OF PRIOR AGREEMENTS. This Agreement
terminates and supersedes any and all prior agreements and
understandings between the parties hereto with respect to employment
or with respect to any form of direct or indirect compensation of
the Employee by First Scientific. Notwithstanding this provision,
the Employee agrees to execute contemporaneously with this
Employment Agreement an "Employee, Director, Consultant Proprietary
Information Agreement" in the form attached hereto as Exhibit "B",
which will survive this paragraph 11 and this Agreement.

12. ASSIGNMENT. This Agreement is personal in nature and
neither of the parties hereto shall, without the prior written
consent of the other, assign or transfer this Agreement or any of
the rights or obligations hereunder; provided, however, that in the
event of the merger, consolidation, or sale of all or substantially
all of the assets of First Scientific with or to any other company,
corporation, partnership, entity or person, this Agreement shall,
subject to the provisions hereof, be binding upon and inure to the
benefit of such successor and such successor shall discharge and
perform all of the promises, covenants, duties, and obligations of
First Scientific hereunder.

13. GOVERNING LAW. Except as provided in Section 16.3 below,
this Agreement shall be governed in all respects, whether as to
validity, construction, capacity, performance or otherwise, by the
laws of the State of Utah, and no action involving this Agreement or
the enforcement of any mediation or arbitration award thereunder may
be brought in any judicial forum except in the Second District Court
of Utah or in the Federal District Court for the District of Utah.

<PAGE>

14. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement of the parties hereto respecting the matters within its
scope and may be modified only in a writing signed by both parties.

15. WAIVER. Failure to insist upon strict compliance with
any of the terms, covenants, or conditions hereof shall not be
deemed a waiver of any such term, covenant or condition, nor shall
any waiver or relinquishment of, or failure to insist upon strict
compliance with, any right or power hereunder at any one or more
times be deemed to constitute a waiver or relinquishment of such
right or power at any other time or times.

16. DISPUTE RESOLUTION PROCEDURES.

16.1 CONSULTATION. Any dispute to be resolved pursuant to the
employment relationship created by this Agreement shall be resolved
as follows:

(a) The complaining party shall write a description of
the facts giving rise to the dispute and shall send it to the other
party as provided in this Agreement for the delivery of notices.
This description shall explain the nature of the problem and refer
to the relevant Sections of this Agreement on which the complaint is
based. The complaining party shall also set forth a proposed
solution to the problem, including a specific time frame within
which the parties must act.

(b) The party receiving the description must respond in
writing within fifteen (15) days after receipt of the description
with an explanation, including references to the relevant Sections
of this Agreement and a response to the proposed solution.

(c) Not more than ten (10) days after receipt of the
response referenced in Section 16.1(b) above, the parties must meet
and discuss options for resolving the dispute. The complaining
party must initiate the scheduling of this meeting.

16.2 MEDIATION. If the meeting does not resolve the dispute,
then a settlement conference shall be held in Weber County, Utah,
not more than thirty (30) days after the unsuccessful meeting. The
complaining party must initiate the scheduling of the conference.
The parties shall try to agree on a retired judge of the Second
District Court, in and for Weber County, State of Utah, to mediate
the conference. If the parties are unable to agree on a retired
judge, they shall ask Judicial Arbitration & Mediation Services,
Inc. ("JAMS") to provide a list of three such retired judges who are
available and each party shall strike one (1) of such retired
judges. The remaining retired judge shall serve as the mediator at
the settlement conference.

16.3 ARBITRATION. Any dispute not resolved pursuant to
Section 16.1 or 16.2 above shall, if demanded by either party, be
finally resolved and determined by binding arbitration in the County
of Weber, State of Utah, under the administration of JAMS in
accordance with the law of the State of Utah and the JAMS Rules of
Practice and Procedure for the Arbitration of Commercial Disputes
(collectively, the "Rules").

<PAGE>
(a) Proceedings. Subject to appropriate protective
orders, the parties to the arbitration shall facilitate the
arbitration by: (1) making available to one another and to the
arbitrator for inspection, copying and extraction all documents,
books, records under the control of such party that are relevant to
the subject matter of the arbitration proceeding; (2) conducting
arbitration hearings to the greatest extent possible on successive
days; (3) observing strictly the periods established by the Rules or
by the arbitrator for the submission of evidence or briefs; and (4)
making reasonably available to one another in arbitration discovery
and to the arbitrator all personnel who are under the control of
such party or who control such party and who have information
relevant to the arbitration proceeding.

(b) In the arbitration proceeding, depositions may be
taken and discovery obtained in accordance with the Rules. The
arbitrator, in his discretion, may impose sanctions to enforce
discovery and may limit discovery.

(c) Until the arbitration award is rendered, neither
party to the arbitration proceeding shall have any right to apply to
or appeal to any court in connection with any question of law
arising in the course of the arbitration proceeding except to
enforce arbitration, provided that either such party may apply to
any court for (1) an injunction or other provisional or interim
relief in support of arbitration or pursuant to Section 16.3(b)
above, and any such application shall not be deemed incompatible
with or a waiver of the agreement to arbitrate, or (2) a temporary
restraining order, preliminary injunction or other interim relief to
enforce this Agreement, provided that the decision to award
permanent injunctive relief shall be determined by arbitration.

(d) Any award rendered by the arbitrator shall be final
and binding upon each party to the arbitration proceeding and
judgment on the award may be entered in any court of competent
jurisdiction in Weber County, State of Utah. The arbitration award,
where appropriate, may be enforced by such court through injunctive
or other equitable relief, as well as being enforced at law,
including the awarding of damages. The arbitrator also may issue
decisions for interim, interlocutory, provisional or partial relief,
including temporary restraining orders, preliminary injunctions,
orders to compel discovery, orders of attachment and protective
orders, any of which may be enforced as an arbitration award by any
court of competent jurisdiction. Any arbitration award for money
shall be made and shall be payable in U.S. dollars. The arbitrator
may award interest from the date of any breach of this Agreement and
shall fix the rate of interest on any amount awarded from the date
of the award to the date the award is paid in full.

17. INTERPRETATION; SEVERABILITY. The headings and captions
used in this Agreement are for convenience only and shall not be
considered in interpreting this Agreement. Notwithstanding any rule
or maxim of construction to the contrary, any ambiguity or
uncertainty in this Agreement shall not be construed against either
of the parties hereto based upon authorship of any of the provisions
hereof. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any
statute, law, rule or public policy, then only the portions of this
Agreement that violate such statute, law, rule or public policy
shall be stricken. All portions of this Agreement that do not
violate any statute, law, rule or public policy shall continue in
full force and effect. Further, any court order striking any
portion of this Agreement shall modify the stricken terms as
narrowly as possible to give as much effect as possible to the
intentions of the parties under this Agreement.

<PAGE>

18. REPRESENTATIONS AND WARRANTIES.

18.1 As of the date hereof, the Employee represents and
warrants to First Scientific as follows:

(a) The Employee has received all required approvals
and consents necessary to enter into and perform the services
required under this Agreement.

(b) There is no pending or threatened litigation or
proceedings against the Employee, except as previously disclosed to
the Company in writing.

18.2 As of the date hereof, First Scientific represents and
warrants to the Employee as follows:

(a) First Scientific has received all required
approvals and consents necessary to enter into and perform under
this Agreement. To the best of First Scientific's knowledge, there
is no pending or threatened litigation or proceedings against First
Scientific.

(b) First Scientific is a corporation duly organized,
validly existing, and in good standing under the laws of the State
of Delaware with all requisite corporate power and authority to own
its assets and carry on its business as now owned and as now
conducted, respectfully.

(c) There is no pending or threatened litigation or
proceedings against the Intellectual Property Rights (as that term
is defined below). For purposes of this Section 19.2, "Intellectual
Property Rights" shall include any information, materials, technical
data or know-how, including, but not limited to, that which relates
to research, development, market demographics, products, formulas,
services, inventions, processes, formulations, extracts, techniques,
strategies, hardware, equipment, methods, designs, software,
drawings, marketing sources, information, investor, contacts,
opportunities, and/or contracts or trade secrets.

19. ATTORNEY'S FEES. If either party incurs any attorney's
fees in order to enforce the terms and conditions of this Agreement,
whether or not a legal action or an arbitration proceeding is
instituted, the party not in breach shall be entitled to
reimbursement for all attorney's fees and costs, in addition to any
other remedies such party may have at law or in equity.

<PAGE>

20. NOTICES. All notices, requests, consents, and other
communications hereunder will be in writing and will be deemed to
have been delivered on the date personally delivered, upon receipt
of a telecopy or telex, or three (3) days following the date mailed
first class, registered or certified mail, postage prepaid, if
addressed to the other party at the address first set forth above or
at such new address as may have previously been communicated to the
other party pursuant to this Section 20.

IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement effective as of the date first-above written.

FIRST SCIENTIFIC: FIRST SCIENTIFIC, INC.

By: /s/ Douglas R. Warren
---------------------------
Its: President

THE EMPLOYEE:
/s/ Randy Hales
---------------------------
Randy Hales

Exhibit 10.6
CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT, made effective as of the 1st day of
August, 1999, by and between FIRST SCIENTIFIC, INC., a Delaware
corporation with its principal office located at 1877 West 2800
South, Suite 200, Ogden, Utah 84401, and any existing or future
subsidiary (collectively, the "Company") and JERRAL R. PULLEY, a
resident of Salt Lake City, Utah (the "Consultant").

The Company agrees to engage the Consultant to perform certain
marketing and management consulting and other services as detailed
hereinafter for the Company and the Consultant agrees to perform
such services on the terms and conditions hereinafter set forth.

1. TERM. The services of Consultant hereunder shall commence
on the 1st day of August, 1999 and continue for twelve months (the
"Consulting Period") from the date hereof, and shall be renewable
from year to year thereafter, unless a majority of the directors of
the Company or shareholders holding a majority of the outstanding
voting shares of Company common stock should vote not to extend the
Consulting Period and Consultant is notified of such vote at least
sixty (60) days prior to the end of the Consulting Period or any
extension thereof. This Agreement may be extended for additional
periods by written agreement between the Company and the Consultant.

2. DUTIES AND SERVICES. The Consultant shall assist the
Company in the role of a marketing consultant, and shall further
offer suggestions with respect to general management matters. The
Consultant agrees to perform all of his duties hereunder pursuant to
the direction of the Board of Directors of the Company and in
accordance with performance accountability standards which shall be
set by the Board of Directors from time to time. Consultant shall
also assist the Company in such specific other tasks as the
Consultant may be directed from time to time by the President or the
Board of Directors of the Company. The Consultant shall also serve
as Chairman of the Board of Directors of the Company unless replaced
by the Shareholders at a duly called and convened meeting; provided,
however, that any such replacement, or a resignation by the
Consultant as Board Chairman shall not diminish Consultant's
responsibilities to serve as a Marketing Consultant hereunder, nor
shall either such action diminish or cancel the obligations of the
Company under any Stock Option Plan or hereunder with respect to
payment of the full consulting fee and benefits during the remainder
of the Consulting Period or any extension thereof.

3. COMPENSATION. As compensation for his agreed services
hereunder, the Company shall pay the Consultant a consulting fee of
Seven Thousand Five Hundred Dollars ($7,500) per month during the
Consulting Period. The Consultant agrees to his duties and
obligations as described herein and agrees to devote at least forty
percent (40%) of his time and his best efforts to the performance of
his duties to the best of his ability, as may be required under this
Agreement. The Company agrees and acknowledges that the Consultant
shall not be exclusively retained by the Company and that the
Consultant shall have the right to act as a consultant on behalf of
persons other than the Company and to be an officer and director in
other companies during the term of this Agreement.

<PAGE>

4. OWNERSHIP OF INTELLECTUAL PROPERTY. Consultant hereby
agrees that all intellectual property, whether or not protectable
under patent, trademark, copyright or other laws (whether or not the
Company chooses to file for such protection), which is conceived,
developed, enhanced or extended wholly or partially by Consultant
during the Consulting Period under this Agreement, including any
extensions or renewals, shall constitute "work for hire" and shall
be and remain the property of the Company.

5. NON-COMPETITION. The Consultant agrees that (a) he will
not during the Consulting Period engage in, or otherwise directly or
indirectly be employed by, or act as a consultant to, or be a
director, officer, employee, owner, or partner of, any other
business or organization which shall be in competition with the
Company, unless the Consultant ceases to be a consultant or employee
for the Company, and (b) unless the consulting relationship is
ceased as a result of the malfeasance or nonfeasance on the part of
the Company, for a period of two (2) years after termination
(including for "just cause") of his consulting or employment
relationship with the Company under this Agreement, Consultant shall
not directly or indirectly compete with, be engaged in the same
business as the Company, or be employed by, or act as consultant to,
or be a director, officer, employee, owner, or partner of, any
business or organization which, at the time of such cessation,
competes with and is engaged in the same business as the Company in
the same geographical area as the Company, except that this
restriction shall not prohibit the Consultant from owning up to five
percent (5%) of the capital stock of public companies that engage in
a business similar to or in competition with the Company.

6. TERMINATION OF CONSULTING RELATIONSHIP. Notwithstanding
anything to the contrary stated in the Agreement, the consulting
arrangement of the Consultant with the Company and his right to any
and all compensation to which he would otherwise be entitled shall
terminate upon the earliest to occur of the following events: (i)
his death; (ii) permanent disability (as hereafter defined), (iii)
one year from the effective date of this Agreement, or from the
beginning of an applicable one year extension of the "Consulting
Period"; or (iv) upon written notice to the Consultant for "just
cause" as defined in paragraph 6 below.

A. "Permanent Disability" for purposes of this Agreement. The
Consultant shall be considered to have a "permanent disability" if,
in the judgment of two (2) licensed physicians (one of whom shall be
selected by the Board of Directors of the Company and the other
selected by the Consultant (or his personal representative)), the
Consultant is unable to perform his customary duties under this
Agreement because of a physical or mental impairment or if the
Consultant is unable to perform his customary duties and
responsibilities under this Agreement for one hundred twenty (120)
days in any twelve (12) month period for any reason whatsoever;
provided, however, that the Company shall only pay the Consultant
his compensation package as provided by paragraph 2 above for up to
thirty (30) days during said disability period. The determination
by such physicians shall be binding and conclusive for all purposes.
Upon the expiration of said one hundred twenty (120) day period,
the Company may, in its sole discretion, terminate this Agreement.

<PAGE>

7. TERMINATION FOR "JUST CAUSE."

A. "Just cause" for purposes of this Agreement shall mean: (i)
the commission by the Consultant of acts constituting theft,
embezzlement, obtaining funds or property under false pretenses or
gross misconduct with respect to the property of the Company; (ii)
the continuation, after written warning by the Board of Directors of
the Company, of a habitual pattern of personal conduct by the
Consultant involving alcohol, drugs or the like that adversely
impacts his ability to perform his duties hereunder for the benefit
of the Company; or (iii) the commission by the Consultant of a
material act in breach of the confidentiality provisions of this
Agreement or similar breach of trust against the Company.

B. In the event that the Consultant is terminated without
"just cause" as that term has been defined above, and the Company
fails to make timely payments of any compensation due him under this
Agreement, the Consultant will be entitled to be paid all reasonable
legal fees and costs incurred as the result of any legal action
taken by him to challenge such termination and to collect such
unpaid compensation and for other damages. It is further agreed
that the Company will have no right to challenge the
"reasonableness" of legal fees and costs by the Consultant in any
successful challenge to a determination by "just cause" if the total
amount does not exceed fifteen percent (15%) of the unpaid
compensation and other damages awarded him by the Court.

C. In the event the Company elects to terminate the Consultant
under this Agreement for "just cause" as defined above, the Company
shall send written notice to the Consultant describing in reasonable
detail what actions of the Consultant are deemed to constitute "just
cause."

D. The Consultant shall be given a reasonable opportunity to
demonstrate to the Board of Directors of the Company, at a meeting
which he may call for the purpose, that no "just cause" exists for
his termination. No waiver by the Company of any default by the
Consultant or the breach by him of his obligations to perform under
this Agreement shall be deemed a waiver of any future breach or
default, whether or not such breach or default is of the same nature.

8. COVENANT OF CONFIDENTIALITY. The Consultant agrees that
the knowledge, information and relationship with existing or
prospective products, customers, suppliers, dealers, agents, brokers
and representatives, and the knowledge of the business, methods,
systems, plans and policies of the Company which he hereafter shall
establish, receive or obtain as a consultant to or employee of the
Company or in connection with services performed pursuant to this
Agreement, are valuable and unique assets. During the Consulting
Period under this Agreement, including extensions and renewals, and
for two (2) years following termination thereof for any reason,
Consultant shall not (otherwise than pursuant to his duties
hereunder), directly or indirectly, use, divulge, furnish or make
accessible to anyone, without the prior written consent of the Board
of Directors of the Company, any such knowledge or information
pertaining to the Company, or the business, shareholders, personnel,
products, methods, systems, plans or policies thereof, to any
person, firm, corporation or other entity, for any reason or purpose
whatsoever.

<PAGE>

9. ENTITLEMENT OF THE COMPANY TO INJUNCTIVE RELIEF. The
Consultant acknowledges that the services to be rendered by him are
of a special, unique and extraordinary character and, in connection
with such services, he will have access to confidential information
vital to the business of the Company. The Consultant consents and
agrees that, if he violates any provision of this Agreement with
respect to non-competition and confidentiality or if he otherwise
diverts the Company's customers, clients, employees, agents,
brokers, or representatives, irreparable harm would be sustained.
Therefore, in addition to any other remedies which the Company may
have under this Agreement or otherwise, the Company shall be
entitled to apply to any court of competent jurisdiction for an
injunction restraining the Consultant or any other party acting in
concert with him from committing, continuing or participating in a
violation of this Agreement.

10. INDEMNIFICATION AND PAYMENT OF LITIGATION EXPENSES.

A. The Company agrees to indemnify the Consultant against
reasonable costs, disbursements and counsel fees and amounts paid or
incurred in satisfaction of settlements, judgments, fines and
penalties, in connection with any proceeding involving the
Consultant by reason of any action taken by him in his capacity as a
consultant to or as an officer, director or duly authorized
representative of the Company.

B. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not result in the executive being required to
reimburse the Company for any amounts paid under this
indemnification provision unless the trier of fact specifically
determines that the Consultant intentionally took the action or
actions complained of for his personal benefit as opposed to that of
the Company.

C. As used in this indemnification provision, the term
"proceeding" means any pending, threatened or completed civil,
criminal, administrative or arbitrative action, suit or proceeding,
and any appeal therefrom and any inquiry or investigation which
would lead to such action, suit or proceeding.

D. In any proceeding subject to this indemnification
provision, the Consultant will be entitled to retain an attorney of
his own choice to represent him personally.

E. Consultant shall be entitled to advances or reimbursements
for reasonable costs, disbursements and counsel fees incurred by the
Consultant in his capacity as an officer, director, or duly
authorized representative of the Company in advance of the final
disposition of the proceeding, upon receipt by the Company of a
written undertaking from the Consultant and his counsel that such
amounts will be reimbursed if there is an ultimate determination
that the Consultant intentionally took the action or actions
complained of for his personal benefit.

<PAGE>

11. ASSIGNABILITY. Consultant shall have the right to assign
his payments under this agreement to his consulting firm, Client
Synergy Group; provided, however, that all personal services to be
provided by Consultant hereunder must be rendered by Jerral R. Pulley.

12. MODIFICATION. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter
hereof, supersedes all existing agreements between them concerning
the subject matter and may be modified only by a written instrument
duly authorized and executed by the party to be bound.

13. NOTICES. Any notice or other communication required to be
given hereunder shall be in writing and shall be delivered
personally or mailed by Certified Mail Return Receipt Requested, to
the party to whom it is to be given at the address of such party as
set forth on the signature page to this Agreement or to such other
address as the parties shall have furnished in writing in accordance
with the provisions of this section.

14. WAIVER. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach
of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or
more occasions shall not be considered a waiver or deprive that
party of the right hereafter to insist upon strict adherence to that
term or any other term of this Agreement. Any waiver by the Company
must be in writing and authorized by a resolution of the Board of
Directors.

15. BINDING EFFECT. This Agreement shall inure to the benefit
of and shall be binding upon the heirs, executors, administrators,
successors and legal representatives of the Consultant, and shall
inure to the benefit of and be binding upon the company and its
successors. In the event of any sale or other disposition of all or
substantially all of the business of the Company, whether by sale of
stock, sales of assets, merger or otherwise, then its successors and
assigns shall assume the obligations of the Company under this
Agreement.

16. SEPARABILITY. If any provision of this Agreement is
invalid, illegal or unenforceable, the balance of this Agreement
shall remain in effect, and if any provision is inapplicable to any
person, circumstance or jurisdiction, it shall nevertheless remain
applicable to all other persons, circumstances and jurisdictions.

17. HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.

18. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

<PAGE>

19. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah without
giving effect to the conflict of laws. The parties hereby
irrevocably consent exclusively to jurisdiction of the courts of the
State of Utah and to any federal court located in such jurisdiction
in connection with any action or proceeding arising out of or
relating to this Agreement, any document or instrument delivered
pursuant thereto, in connection with, or simultaneously with this
Agreement or breach of this Agreement or any such document or
instrument. In the event the services of an attorney are retained
to obtain enforcement of this Agreement by the non-defaulting party,
such party shall be entitled to recover all costs and expenses and
reasonable attorney's fees, whether or not legal proceedings are
initiated to obtain performance of this Agreement by the defaulting
party.

IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.

"Company" FIRST SCIENTIFIC, INC.

By: /s/ Douglas R. Warren
--------------------------------
Douglas R. Warren, President

"Consultant"

/s/ Jerral R. Pulley
---------------------------------
Jerral R. Pulley

Exhibit 10.7
CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT, made effective as of the 1st day of
October 1998, by and between FIRST SCIENTIFIC, INC., a Delaware
corporation with its principle office located at 1877 West 2800
South, Suite 200, Ogden, Utah 84401, and any existing or future
subsidiary (collectively, the "Company") PHARMULATIONS, L.C., a
Utah limited liability company, located at 3655 Mt. Ogden Drive,
Ogden, UT 84403 ("Pharmulations").

The Company agrees to engage Pharmulations to perform certain
scientific and regulatory consulting and other services as detailed
hereinafter for the Company and Pharmulations agrees to perform
such services on the terms and conditions hereinafter set forth.

1. TERM. The services of Pharmulations shall commence on the 1st
day of October, 1998 and continue for seventy-two months (the
"Consulting Period") from the date hereof. The contract shall be
automatically renewable from year to year thereafter, unless either
(1) a majority of the directors of the Company or shareholders
holding a majority of the outstanding voting shares of Company
common stock should vote not to extend the Consulting Period and
Pharmulations is notified of such vote at least sixty (60) days
prior to the end of the Consulting Period or any extension thereof
or (2) Pharmulations gives Company at least 30 days prior
notification of termination.

2. DUTIES AND SERVICES. Pharmulations shall assist the Company in
the role of a chief scientific adviser and shall advise the Company
with respect to all of the Company's existing products, proposals
for improvements to such products and regulatory testing and
compliance issues for such products. Pharmulations agrees to
perform all of its duties hereunder pursuant to the directions of
the President of the Company and in accordance with reasonable
commercial standards. Provided, however, Pharmulations will
provide such services based upon one person providing such services
on a part-time basis and at such times and manner as Pharmulations
from time to time shall determine. Provided further, that such
services will be performed or supervised by a senior staff person.
The Company agrees and acknowledges that neither Pharmulations or
any of its employees shall be exclusively retained by the Company
and that at least one of Pharmulations' employees is a professor at
Weber State University and that he and the other employees have and
will continue to serve in other capacities and for other businesses
during the term of this Agreement. The Company has no right to
control any such activity or any claim over any of the work product
or proprietary information developed by Pharmulations or its
employees in such other capacities or businesses.

3. NEW FORMULAS. In addition to providing the above services for
the Company's products, Pharmulations may from time to time use its
best efforts to provide formulas for new products similar in nature
to existing products. The Company's new formulas shall be
developed as follows. The Company shall, with the consent of its
president, fully consider the need for any new formula and shall
only after such consideration, propose the creation of such new
formula in detail in writing to Pharmulations. Pharmulations and
the Company shall then mutually agree as to whether or not the
creation of the proposed new formula can and should be performed by
Pharmulations and negotiate in good faith a written agreement which
may specify the incentive consideration which may be paid to

<PAGE>

Pharmulations for such formula. The amount of such incentive
consideration, whether paid in a lump sum or periodic payments,
shall take into consideration or be based upon either the actual or
the anticipated costs to Pharmulations and an anticipated gross
revenues to the Company from products that use such formula. The
Company shall present to Pharmulations all ideas for new formulas
and shall not develop internally any such formulas or employ others
to develop such formulas unless Pharmulations determines it does
not want to develop such formula on terms acceptable to the Company
within 90 days of the Company's written request of Pharmulations to
develop it. Pharmulations shall keep the Company advised as to the
development process of any new formulation it undertakes. After
Pharmulations develops any such new formula, Pharmulations shall
give the Company written notice of completion and assign all of its
rights patent applications and patents, if any, to such new formula
to the Company. Any incentive consideration paid for new
formula(s)- shall be in addition to the compensation provided for
in Paragraph 4, below. The assignment of the formula and payment
of its incentive consideration shall be structured to the extent
possible so that Pharmulations will be subject to long-term capital
gains.

4. COMPENSATION. As compensation for its agreed services
hereunder, the Company shall pay Pharmulations a consulting fee of
$7,000 per month during the Consulting Period (which monthly amount
shall increase as of each annual anniversary date of this Agreement
by $ 1,000). In addition, the Company may pay such annual bonuses
(stock and/or cash) as the Company determines warranted based upon
Pharmulations' services and value to the Company.

5. OWNERSHIP OF INTELLECUTAL PROPERTY. As a result of the
acquisition of certain formulas from Dr. Edward Walker, as
identified in the Agreement and Plan of Reorganization created in
1998, between SPPS Financial Corporation, Linco Acquisition
Corporation, and Dr. Edward Walker, the Company owns the rights to
such identified formulas created by Dr. Edward Walker (the "Walker
Formulas"). Pharmulations hereby agrees that all reformulation,
minor modifications, and minor improvements to the Walker Formulas,
whether or not protectable under patents, trademark, copyright or
other laws (whether or not the Company chooses to file for such
protection) conceived, developed, enhanced, or extended wholly or
partially by Pharmulations during the Consulting Period, shall
constitute "work for hire" and shall be and remain the property of
the Company. Except for such reformulation, minor modifications,
and minor improvements to the Walker Formulas all other formulas,
technology and products developed by Pharmulations and/or Dr.
Edward Walker is the property of Pharmulations unless there exists
a written agreement executed by Pharmulations as provided for in
Paragraph 3, above, that clearly provides the Company will own such
formula, technology and/or product. The above ownership is true
whether or not such formulas are conceived developed enhanced or
extended before, during, or after the Consulting Period and/or
whether or not conceived or developed while Pharmulations is
providing services hereunder. Anything herein to the contrary
notwithstanding, except to the extent specifically herein above
provided to the contrary, the Company has no rights to or rights to
acquire any other formulas, products or intellectual property
developed, invented or produced by Pharmulations, Dr. Edward
Walker, or any other employee of Pharmulations.

6. TERMINATION OF CONCULTING RELATIONSHIP.

A. Notwithstanding anything to the contrary stated in the
Agreement, the consulting arrangement of Pharmulations with the

<PAGE>

Company and its right to any and all compensation to which it would
otherwise be entitled shall terminate upon the earliest to occur of
the following events: (i) permanent disability (as hereafter
defined) of Dr. Edward Walker, (ii) upon written notice of
termination to Pharmulations for "just cause" as defined in
Paragraph 6 below, or (111) upon written notice to the Company of a
material breach hereof that goes substantially uncorrected for a
period of 30 days from written notice detailing the material
breach. Provided, however, in the event of such an early
termination as the result of Dr. Edward Walker's permanent
disability or the Company's breach, the Company shall, never the
less continue to pay to Pharmulations for a period of twelve months
after such termination the monthly payment provided for in
Paragraph 4, above. In addition, the Company may terminate this
Agreement at any time, with or without cause, but in such event the
Company shall pay to Pharmulations, in a single lump sum, an amount
equal to the monthly compensation provided for in Paragraph 4,
above, multiplied by the greater of. 1) the number of months that
remain in the initial seventy-two month term provided for in
Paragraph 1, above or 2) six months.

B. "Permanent disability" for purposes of this Agreement.
Dr. Edward Walker shall be considered to have a "permanent
disability" if, in the judgment of two (2) licensed physicians (one
of whom shall be selected by the Board of Directors of the Company
and the other selected by Pharmulations) Dr. Edward Walker is
unable to perform his customary duties for Pharmulations under this
Agreement because of a physical or mental impairment or if Dr.
Edward Walker is unable to perform such customary duties and
responsibilities for one hundred twenty (120) days in any twelve
(1/2) month period for any reason whatsoever; provided, however,
that the Company shall only pay Pharmulations its compensation
package has provided by Paragraph 4 above for at least six months
during said disability period. The determination by such
physicians shall be binding and conclusive for all purposes upon
the expiration of said one hundred twenty 120-day period, the
Company may, in its sole discretion, terminate this Agreement.

7. Termination for "just cause."

A. "Just cause" for purposes of this Agreement shall mean the
commission by Pharmulations of acts constituting theft,
embezzlement, obtaining funds or property under false pretenses or
gross misconduct with respect to the property of the Company that
goes uncorrected during a 90 days period after written notice to
Pharmulations detailing such alleged gross misconduct.

B. In the event that Pharmulations is terminated without
"just cause" as that term has been defined above, and the Company
fails to make timely payments of any compensation due it under this
Agreement, Pharmulations will be entitled to be paid all reasonable
legal fees and costs incurred as the result of any legal action
taken by it to challenge such termination and to collect such
unpaid compensation and for other damages.

C. In the event the Company elects to terminate Pharmulations
under this Agreement for "just cause" as defined above, the Company
shall send written notice to Pharmulations describing in reasonable
detail what actions of Pharmulations are deemed to constitute "just
cause."

<PAGE>

D. Pharmulations shall be given a reasonable opportunity to
demonstrate to the Board of Directors of the Company, at a meeting
that it may call for the purpose, that no "just cause" exists for
its termination. No waiver by the Company of any default by
Pharmulations or the breach by Pharmulations of its obligations to
perform under this Agreement shall be deemed a waiver of any future
breach or default, whether or not such breach or default is of the
same nature.

8. COVENANT OF CONFIDENTIALITY. During the Consulting Period
under this Agreement, including extensions and renewals, and for
two (2) years following termination thereof for any reason,
Pharmulations shall not (other than pursuant to its duties
hereunder) directly or indirectly, use, divulge, furnish or make
accessible to anyone, without the prior written consent of the
Board of Directors of the Company, any intellectual property or
secret information belonging to the Company.

9. ENTITLEMENT OF THE COMPANY TO INJUNCTIVE RELEIF. Pharmulations
acknowledges that the services to be rendered by it are of a
special, unique and extraordinary character and, in connection with
such services, it will have access to confidential information
vital to the business of the Company. Pharmulations consents and
agrees that, if it violates any provision of this Agreement with
respect to confidentiality, that in addition to any other remedies
which the Company may have under this Agreement or otherwise, the
Company shall be entitled to apply to any court of competent
jurisdiction for an injunction restraining Pharmulations or any
other party acting in concert with it from committing, continuing
or participating in a violation of this Agreement.

10. INDEMNIFICATION AND PAYMENT OF LITIGATION EXPENSES.

A. The Company agrees to hold harmless against and indemnify
Pharmulations, its members, manager, employees and agents
(collectively "Indemnitee") from and against reasonable costs,
disbursements and counsel fees and amounts paid or incurred in
satisfaction of settlements, 'judgments, fines and penalties, in
connection with any proceeding involving Indemnitee by reason of
any action or inaction taken by Indemnitee for the benefit of the
Company or as a result of its relationship with of the Company.

B. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contenders or its
equivalent shall not result in Indemnitee being required to
reimburse the Company for any amounts paid under this
indemnification provision unless the trier of fact specifically
determines that Indemnitee intentionally took the action or actions
complained of solely for its personal benefit as opposed to that of
the Company.

C. As used in this indemnification provision, the term
"proceeding" means any pending, threatened or completed civil,
criminal, administrative or arbitrative action, suit or proceeding,
and any appeal therefrom in any inquiry or investigation which
would lead to such action, suit or proceeding.

<PAGE>

D. In any proceeding subject to this indemnification provision, the
Indemnitee will be entitled to retain an attorney of its own choice to
represent it personally.

E. Indemnitee shall be entitled to advances or
reimbursements for reasonable costs, disbursements and counsel
fees incurred by Pharmulations in its capacity a consultant
officer, director, or duly authorized representative of the
Company in advance of the final disposition of the proceeding,
upon receipt by the Company of a written undertaking from
Indemnitee and its counsel that such amounts will be reimbursed if
there is an ultimate determination that Indemnitee intentionally
took the action or actions complained of solely for its personal
benefit.

11. MODIFICATION. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter
hereof, supersedes all existing Agreements between them concerning
the subject matter and may be modified only by a written
instrument duly authorized and executed by the party to be bound.

12. NOTICES. Any notice or other communication required to be
given hereunder shall be in writing and shall be delivered
personally or mailed by certified mail return receipt requested,
to the party to whom it to be given at the addresses such party as
set forth on the signature page to this Agreement or to such other
address as the parties shall have furnished in writing in
accordance with the provisions of this section.

13. WAIVER. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed
to be a waiver of any other breach of such provision or of any
breach of any other provision of this Agreement. The failure of
party to insist upon strict adherence to any term of this
Agreement on one or more occasions shall not be considered a
waiver or deprive that party of the right hereafter to insist upon
strict adherence to that term or any other term of this Agreement.
Any waiver by the Company must be in writing and authorized by a
resolution of the Board of Directors.

14. BINDING EFFECT. This Agreement shall inure to the benefit
of and shall be binding upon the heirs, executors, administrators,
successors, and legal representatives of Pharmulations and shall
inure to the benefit of and be binding upon the Company and its
successors. In the event of any sale or other disposition of all
or substantially all of the business of the Company, whether by
sale of stock, sales of assets, merger or otherwise, then its
successors and assigns shall assume the obligations of the Company
under this Agreement.

15. SEPARABILITY. If any provision of this Agreement is
invalid, illegal or unenforceable, the balance of this Agreement
shall remain in effect, and if any provision is inapplicable to
any person, circumstance or jurisdiction, it shall nevertheless
remain applicable to all other persons, circumstances and
jurisdictions.

16. HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.

17. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, of which shall be deemed an original, but all of
which together shall constitute one in the same instrument.

18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the state of Utah without
giving effect to the conflict of laws. The parties hereby
irrevocably consent exclusively to jurisdiction of the courts of
the state of Utah and to any federal court located in such
jurisdiction in connection with any action or proceeding arising
out of or relating to this Agreement, any document or instrument

<PAGE>

delivered pursuant thereto, in connection with, or simultaneously
with this Agreement or breach of this Agreement or any such
document or instrument. In the event the services of an attorney
are retained to obtain enforcement of this Agreement by the
non-defaulting party, such party shall be entitled to recover all
costs and expenses and reasonable attorney's fees, whether or not
legal proceedings are initiated to obtain performance of this
Agreement by the defaulting party.

In witness whereof, the parties have duly executed this Agreement
as of the date first above written.

FIRST SCIENTIFIC, INC.

By: /s/ Douglas R. Warren
----------------------------------
Douglas R. Warren, President

PHARMULATIONS, LC.

By: /s/ Edward B. Walker
-----------------------------------
Edward B. Walker, Manager

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF SEPTEMBER 30, 1999, AND STATEMENTS OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
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<RECEIVABLES> 261,789
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<CURRENT-ASSETS> 899,514
<PP&E> 133,003
<DEPRECIATION> (19,818)
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0
0
<COMMON> 20,220
<OTHER-SE> 888,384
<TOTAL-LIABILITY-AND-EQUITY> 1,073,767
<SALES> 426,083
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<CGS> 73,947
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<OTHER-EXPENSES> 1,165,174
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