As filed with the Securities and Exchange Commission on June 14, 2000
Commission File No. 333
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRST SCIENTIFIC, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0611745
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1877 West 2800 South, Suite 200
Ogden, Utah 84401
(801) 393-5781
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Randall L. Hales, President
and Chief Executive Officer
1877 West 2800 South, Suite 200
Ogden, Utah 84401
(801) 393-5781
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
______________________
Copies to:
Randall A. Mackey, Esq.
Dwight B. Williams, Esq.
Mackey Price & Williams
170 South Main Street, Suite 900
Salt Lake City, Utah 84101-1655
Telephone: (801) 575-5000
Approximate date of proposed sale to the public:
As soon as practicable after the Registration Statement becomes effective.
_______________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are being
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 (the "Securities Act"), other than securities offered
only in connection with dividend or interest reimbursement plans check the
following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
___________________________
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each Proposed Proposed
class of Amount maximum maximum Amount of
securities to be to be offering price aggregate Registration
registered registered per share offering price fee
-------------------------------------------------- ---------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
Resale of Common Stock issuable upon exercise
of Series 2000-A Warrants . . . . . . . . . . . . 2,000,000 $3.00 $ 6,000,000 $ 1,584.00
Resale of Common Stock issuable upon conversion of
Series 2000-A Preferred Stock. . . . . . . . . . . 2,000,000 $3.00 $ 6,000,000 $ 1,584.00
Resale of Common Stock owned by Certain Holders
of Common Stock . . . . . . . . . . . . . . . . . 3,210,780 $3.00 $ 9,632,340 $ 2,542.94
----------
Total Registration Fee. . . . . . . . . . . . $ 5,710.94
</TABLE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act or until the Registration Statement
shall become effective on such date as the Commission acting pursuant to
said Section 8(a), may determine.
<PAGE>
FIRST SCIENTIFIC, INC.
Cross Reference Sheet
Form S-3 Item No. and Caption Prospectus Caption
----------------------------------- ------------------------
Item 1. Front of Registration Statement and Outside Front Cover Page
Outside Front Cover Page of Prospectus
Item 2. Inside Front and Outside Back Cover Inside Front and Outside
Pages of Prospectus Back Cover Pages
Item 3. Summary Information, Risk Factors and Prospectus Summary; Risk
Ratio of Earnings to Fixed Charges Factors
Item 4. Use of Proceeds Use of Proceeds
Item 5. Determination of Offering Price Not Applicable
Item 6. Dilution Not Applicable
Item 7. Selling Security Holders Selling Warrantholders,
Preferred Shareholders
and Shareholders
Item 8. Plan of Distribution Outside Front Cover Page;
Plan of Distribution
Item 9. Description of Securities Outside Front Cover Page
Item 10. Interests of Named Experts and Counsel Legal Matters; Experts
Beneficial Owners and Management
Item 11. Material Changes Not Applicable
Item 12. Incorporation of Certain Information Documents Incorporated by
by Reference Reference
Item 13. Disclosure of Commission Position Description of Securities
on Indemnification for Securities Undertakings
Act Liabilities
Item 14. Other Expenses of Issuance and Other Expenses of Issuance
Distribution and Distribution
Item 15. Indemnification of Directors Indemnification of Directors
and Officers and Officers
Item 16. Exhibits Exhibits
Item 17. Undertakings Undertakings
<PAGE>
PROSPECTUS
FIRST SCIENTIFIC, INC.
7,210,780 SHARES OF COMMON STOCK
First Scientific, Inc., is a development stage company
engaged in the research, development and commercialization of unique
formulations for sale in the professional health care, food
handling, hospitality, government, education, e-commerce, retail and
other niche markets. We resulted from a merger in September 1998 with
Linco Industries, Inc. ("Linco"). We are primarily engaged in
commercializing two patent-pending formulations originally developed by
Linco. The first is a moisturizing, antimicrobial (kills microorganisms
including bacteria, yeast, viruses and fungi or suppresses their growth or
reproduction) formula that combines skin-softening emollients and
botanicals proven to soothe and condition, while eliminating up to 99.999%
of bacteria. This formulation can be packaged as an antimicrobial
handwash, antimicrobial lotion, antibacterial (destroys bacteria or
suppresses their growth or reproduction) spray and antibacterial
towelettes. The second product is a skin protection formula that
brings together dimethicone with skin-conditioning emollients and
botanical oils to create a solution for the treatment and prevention
of rashes. This product, in towelette form, is used for the
treatment and prevention of skin rashes caused by infant and adult
incontinence. We currently supply the skin protection formula to a
third-party manufacturer, which produces a waterless, patient-bathing
product for the marketing and sale by ConvaTec, a division of Bristol-Myers
Squibb Company.
The primary purpose of this offering is to register for resale
shares of the Company's Common Stock which are issuable upon the conversion of
shares of Series 2000-A Preferred Stock and the exercise of Series A Warrants,
as well as to register for resale shares of the Company's Common Stock issued
prior to September 15, 1998. Of these shares, we will receive funds only
upon the exercise of the Series 2000-A Warrants. Such funds will be used for
the expansion of marketing and sales, research and development costs and
other expenses. We are registering for resale a total of 7,210,780 shares
of Common Stock.
This Prospectus supercedes all prior registrations. Prior to this
offering, there has been no public market for our shares.
Investing in the Common Stock involves a high degree of risk.
You should purchase shares only if you can afford a complete loss
of your investment. See "Risk Factors" beginning on page 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES,
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is dated June ___, 2000.
<PAGE>
AVAILABLE INFORMATION
We are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and, in accordance therewith, file reports, proxy and information
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and information
statements and other information filed by us can be inspected
and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at its regional offices at Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661-2511, and at 7 World Trade
Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549 at prescribed
rates. In addition, the Commission maintains a web site at
http://www.sec.gov containing reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission, including our company.
We have filed with the Commission a Registration Statement
(together with all amendments and exhibits) on Form S-3 under the
Securities Act of 1933, as amended with respect to the shares of
Common Stock offered pursuant to this Prospectus. This Prospectus
does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements made in
this Prospectus as to the contents of any agreement or other
document referred to herein are not necessarily complete and
reference is made to the copy of such agreement or to the Registration
Statement and to the exhibits and schedules filed therewith. Copies
of the material containing this information may be obtained from
the Commission upon payment of the prescribed fee.
PROSPECTUS SUMMARY
This summary highlights some information from this
prospectus. It may not contain all of the information that is
important to you. To understand this offering fully, you should
read the entire prospectus carefully, including the risk factors.
THE COMPANY
We develop and market proprietary chemical formulations that
we believe will have worldwide sales opportunities. We are currently
marketing our products to private label companies that are major
distributors in the over-the-counter, medical, health care, retail,
food handling and multi-level arenas, with nominal sales being made by
a small distributor of our branded products. Future development of our
own brands, especially in medical markets, will be pursued on a
case-by-case basis as profitable opportunities arise. We have developed
three unique proprietary formulations: two are moisturizing antimicrobial
sanitizing formulations that remove up to 99.999% of bacteria
from the skin without the harsh effects of alcohol or iodine (these
products can be delivered in wipes, spray, lotion and lotion-soap
forms) and the third, a topical rash prevention and treatment
formulation that cleanses and moisturizes the skin for treatment
against skin rashes caused by incontinence and other irritations (in
wipe form).
The potential worldwide market for our products has grown
significantly in recent years according to industry analysts, who
project its continued growth at an aggressive rate. The growth in
demand for our antimicrobial formulation is primarily due to the
increase in bacteria related disease, sickness and death from
methicillin-resistant staph and other bacteria, the demands of
government and health care agencies/providers to create a healthier
treatment environment and the insistence of the public in general
for healthier living and working conditions. Increasing market
growth for our diaper and other rash formulation is primarily a
function of the significant growth rate of the incontinent geriatric
population, as baby boomers grow older, and the product's
application for the infant market. Through PureSoft Solutions, LLC,
which we recently acquired, we also market a fourth complimentary
product, an antimicrobial hard-surface cleaner that is E.P.A.
registered for use.
Our management believes the markets for our products will
continue to expand and that the potential for becoming a significant
participant in such markets is a reasonable expectation; however, we
have not generated significant sales during our history. The
$2,000,000 funding First Scientific received in the third quarter of
1998 provided a strong base for expanded and focused marketing and
sales efforts. These efforts are backed up by additional
management and staff, new executive offices, the upgrading of
existing research and development, mixing and storage facilities
and expanded testing accommodations. During the fourth quarter of
1999, we initiated a second Private Placement through which we
raised $1,777,001 from accredited investors through June 1, 2000.
During the second quarter of 2000 we raised $1 million, less
offering costs of $100,000, through the sale of Series 2000-A
Convertible Preferred Stock to our institutional investor, who has
committed to purchase an additional $3 million aggregate worth of
series 2000-A Convertible Preferred Stock in blocks at 30 day
intervals through mid-September-2000. Funds raised through this
private placement are planned to be used to expand our sales and
marketing efforts, to build out a state-of-the-art research and
development laboratory, to provide adequate manufacturing capacity,
to acquire complimentary products, to expand distribution and to
provide sufficient capital to bring us to a positive working capital
position. We maintain our own web page, which can be found at
'www.firstscientific.com.'
<PAGE>
THE OFFERING
Securities Offered The resale of 7,210,780 shares of Common
Stock, consisting of the resale of 2,000,000
shares of Common Stock issuable upon the
conversion of the Series 2000-A Convertible
Preferred Stock (the "Series 2000-A Preferred
Stock"), the resale of 2,000,000 shares of
Common Stock issuable upon the exercise of
the Series 2000-A Warrants, and the resale of
3,210,780 shares of Common Stock issued on or
before September 15, 1998. See "Security-
holders Registering Shares" and "Description
of Securities."
Common Stock outstanding 20,812,103 shares.
prior to the offering
Common Stock outstanding
after the offering (1) 24,812,103 shares.
Preferred shares outstanding 1,000 shares.
Use of Proceeds All funds received by us upon the exercise of
the Warrants will be used for the expenses
of our marketing and sales, research and
development costs, and other expenses. We
will not receive any proceeds from the
conversion of the Series 2000-A Preferred
Stock or the shares of Common Stock issued
on or before September 15, 1998. See
"Use of Proceeds."
Risk Factors/Dilution The offering involves a high degree of risk.
See "Risk Factors."
_____________________
(1) Assumes the conversion of all the shares of Series 2000-A Preferred
Stock into 2,000,000 shares of Common Stock and the exercise of all
of the Series 2000-A Warrants into 2,000,000 shares of Common Stock.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by us with the Commission are
incorporated herein by reference:
(1) Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999;
(2) Quarterly Report on Form 10-QSB for the quarter
ended March 31, 2000;
(3) Report on Form 8-K, as filed on March 30, 2000;
(4) Report on Form 8-K, as filed on May 31, 2000;
(5) Report on Form 8-K, as filed on June 8, 2000;
(6) Report on Form 8-K/A, as filed on June 14, 2000;
(7) Definitive Proxy Statement for the Company's 1999
Annual Meeting of Shareholders, as filed on September
23, 1999.
All documents subsequently filed by us with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended and prior to the
termination of this offering, shall be deemed to be incorporated by
reference in this Prospectus. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein, or in
any other subsequently filed document that also is or is deemed to
be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
We will provide, without charge, to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered,
upon the written or oral request of such person, a copy of any or
all of the documents that have been incorporated herein by
reference, other than Exhibits to such documents (unless such
Exhibits are specifically incorporated by reference therein).
Requests for such copies should be directed to: Randall L. Hales,
President and Chief Executive Officer, 1877 West 2800 South, Suite
200, Ogden, Utah 84401.
RISK FACTORS
Before you invest in our Common Stock you should be aware that
there are various risks, including those described below. You
should consider carefully these risk factors together with all of
the other information included in this registration statement before
you decide to purchase Shares of our Stock. No investment should be
made by any person who is not in a position to lose the entire
amount of his investment.
Some of the information in this Registration Statement may
contain forward-looking statements. Such statements can be
identified by the use of forward-looking terminology such as "May,"
"will," "expect," "anticipate," "estimate," "continue" or other
similar words or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involve
risks and uncertainties. These statements discuss future
expectations, contain projections of results of operations or of
financial condition or state other "forward-looking" information.
When considering such forward-looking statements, you should keep in
mind the risk factors and other cautionary statements in this
Registration Statement. The risk factors noted in this section and
other factors noted throughout this Registration Statement,
including certain risks and uncertainties, could cause our actual
results to differ materially from those contained in any
forward-looking statement.
LIMITED WORKING CAPITAL; LIMITED OPERATING HISTORY; ACCUMULATED
DEFICIT; ANTICIPATED LOSSES.
As of March 31, 2000, we had limited working capital of
$909,139. We also have a limited operating history. Most of our
current sales are related to product testing, raw materials sales
and a licensing fee from a major customer, as well as from minimal
product sales. We are still a development stage company. As of
March 31, 2000, our cumulative deficit since inception was $6,930,127,
of which $3,766,440 was attributable to a non-recurring charge for
acquiring research and for development. These losses have resulted
primarily from costs incurred in connection with research and
development, including FDA compliance of our proprietary products.
Prior to 1999, our revenues have been sporadic. Only during the
fiscal quarter ended September 30, 1999, did we finally execute a
significant sales order. Revenues from that sales order have not
yet been significant. Our ability to become profitable largely
depends on successfully marketing our products and developing new
formulations and products. The problems and expenses frequently
encountered in developing new products and the competitive industry
in which we operate will impact whether we are successful. We may
never achieve profitability. Furthermore, we may encounter
substantial delays and unexpected expenses related to research,
development, production, marketing, regulatory matters or other
unforeseen difficulties.
FUTURE CAPITAL NEEDS.
We may require substantial funds for various reasons, including
continuing research and development, expanded testing, primarily the
FDA shelf-life testing process for our products, and manufacturing and
marketing our existing products. In the short term, based on past financial
needs and on currently planned programs, we anticipate that the funds on
hand and funds committed from the sale of preferred stock, together with
funds generated from future product sales, should be adequate, even if
at the minimum level, to satisfy our capital requirements for approximately
12 months. This estimate is based on certain assumptions and there
can be no assurance that available funds will be sufficient to
satisfy our capital requirements for that period. Adequate funds
may not be available when needed or on terms acceptable to us.
Insufficient funds may require us to delay, scale back or eliminate
certain or all of our research and development programs or to
license third parties to commercialize products or technologies that
we would otherwise seek to develop ourselves, which may materially
adversely affect our continued operations.
NEED OF ADDITIONAL FINANCING.
While we have just completed financings through the sale of common
and preferred stock, we may not be able to fully expand or operate
our business as planned without obtaining additional financing
within the next 12 months. If such financing is not available
or obtainable, investors may lose a substantial portion or all of
their investment and our business may be inadequately funded to
satisfy our capital requirements, expand our clinical trials, fund
our research and development, and sustain the contract manufacturing,
marketing and sales of our existing products. We currently have
no immediate means for obtaining this additional financing.
Consequently, we cannot assure investors that additional financing,
when necessary, will be available on acceptable terms, or at all.
TECHNOLOGICAL UNCERTAINTY AND EARLY STAGE OF PRODUCT DEVELOPMENT.
The science and technology of products for the health care and
personal hygiene markets, including antimicrobial preparation, is
rapidly evolving. Our products may require significant further
research, development, testing and regulatory compliance efforts.
They are also subject to the risks of failure inherent in the
development of products based on innovative technologies. These
risks include the possibility that any or all of the future products
will prove to be ineffective or unsafe, that the proposed products
are uneconomical, that others hold proprietary rights which preclude
us from marketing such products, or that others market better
products. Accordingly, we are unable to predict whether its
research and development activities will result in any new
commercially profitable products. Further, due to the extended
testing process required, we may be unable to sell certain new
products in the future. There is also no guarantee that we will be
able to sell our proprietary formulation in sustained, profitable
volumes.
LACK OF PRODUCTION FACILITIES.
Small batches of concentrate for our products are now
being mixed at facilities off our premises and shipped to a
manufacturer designated by our major customer, where the products
are mixed and packaged. Management believes that a portion of the
profit related to the sale of each product unit is foregone because
we lack our own production facility. There is no assurance that
such an eventual acquisition would be affordable or be as successful
as projected, or that we could develop the capacity to manufacture
and package our products in house, since we have no experience in
large scale manufacturing. In addition, we may be unsuccessful in
developing the necessary facilities or recruiting trained personnel
to achieve profitable manufacturing and packaging capacities.
SMALL VOLUME EXPERIENCE
We may encounter scale-up difficulties as anticipated sales
require us to produce larger commercial volume batches of our products.
In the event we were to receive sales orders larger than we or our contract
manufacturers and suppliers can fill within a reasonable time, we would
face the alternative of either turning down such orders, being late in
fulfilling them or being constrained to subcontract the production out
on terms less favorable to us. In either of the first two events, we
could lose credibility with existing of potential customers, which could
result in the loss of future business. In all three of these eventualities,
our anticipated revenues and earnings would probably be materially
adversely effected.
GOVERNMENT REGULATION; AND COMPLIANCE WITH FDA MONOGRAPHS.
We are subject to certain United States and international laws
and regulations regarding the development, production,
transportation and sale of our products. As a result, we may be
required to comply with certain restrictive regulations, or
potential future regulations, rules, or directives. Such potential
regulatory conditions or compliance with such regulations may
increase our cost of operations or decrease our ability to generate
income.
We are subject to certain regulation by the Food and Drug
Administration (FDA) and other federal and state regulatory
agencies. FDA monographs require us to use only approved
ingredients, and to conduct efficacy, shelf-life and stability
testing. Any changes in existing FDA requirements may materially
and adversely affect us.
LACK OF OPERATING EXPERIENCE.
Management believes that business skills and experience are
transferrable from one industry to another and one company to
another. However, none of our executives has direct experience in
managing a company which utilizes research and medical care
technology to such a high degree.
POTENTIAL OBSOLESCENCE FROM RAPID TECHNOLOGICAL CHANGE.
Our market is subject to rapid technological change.
Development by others of new or improved products, formulation,
processes or technologies may make our products obsolete or less
competitive. Accordingly, we must continue investing in research
and development on our existing products and to develop new
products. Despite such investment, our current or proposed products
may be unsuccessful.
RISKS OF INDUSTRY COMPETITION AND REDUCTION OF REVENUE AND LOSS OF
MARKET SHARE.
Our products compete with other antimicrobial and skin
protection products currently on the market. The professional
health care and personal hygiene industry is dominated by a small
number of large competitors that are well established in the
marketplace, have experienced management, are well financed, and
have well recognized trade names related to their respective product
lines. We may be unable to penetrate the existing market and
acquire a sufficient market share to be profitable. Significant
competitive factors which will affect future sales include
performance, pricing, timely product shipment, safety, customer
support, convenience of use and general market acceptance.
Competition among hand care products is strong and presents a
significant barrier to entry by new products such as the ones we
produce. Consumers tend to purchase and use products produced or
distributed by manufacturers with recognizable names. We have not
yet developed such a recognizable name in the marketplace. In
addition, we have identified a number of competitors who offer
products that appear substantially similar to ours, a number of
which are significantly larger and more experienced in the
healthcare marketplace than we are. Furthermore, we face
competition from companies that currently market, or are developing
products similar to those we offer. Many of these companies have
significantly greater marketing, financial and managerial resources
than we do. In the face of such competition, our products may
become obsolete and our business may fail.
BUSINESS DEVELOPMENT RISKS.
New ventures, particularly those involved in a highly
technical industry such as the healthcare and personal hygiene
industry, have substantial inherent risks. These risks are in the
general, technical and human areas. Notwithstanding any
pre-production planning, new products can incur unexpected problems
in full-scale production, which cannot always be foreseen or
accurately predicted. Formulas can become unworkable, for
unpredicted reasons. Quality control and component sourcing failures
can also be expected from time to time. Any business, including
ours, is substantially dependent upon the capabilities and
performance of both management and sales personnel. Mistakes in
judgment or performance can be costly and, in certain instances,
disabling. Therefore, management skill, experience, character and
reliability are of significant importance.
DEPENDENCE ON KEY PERSONNEL.
Due to the highly technical nature of our business, we are
dependent on certain key personnel. Our success will be largely
dependent on the decisions made by members of management. The loss
of services of one or more of these employees could have a material
adverse effect on our Company, including the development and sale of
proprietary formulations. We are especially dependent upon the
efforts and abilities of certain of our senior management and
consultants, particularly Dr. Edward B. Walker, Director of Research
and Development. We have a five-year consulting agreement with
Dr. Walker. The loss of any of our key executives could have a
material adverse effect on us and our operations and prospects,
although the loss of Dr. Walker could have a more significant
adverse effect. We have $2,000,000 of key man insurance coverage on
Dr. Walker.
Furthermore, we believe that our future success will depend,
in part, upon our ability to attract, retain and motivate qualified
personnel with competitive compensation packages, equity
participation and other benefits which may reduce the working
capital available for our operations. Management may also seek to
obtain outside independent professionals to assist in assessing the
merits and risks of any business proposals as well as assisting in
the development and operation of any projects. There is no
assurance, however, that we will be successful in attracting and
retaining such personnel.
LIMITED INDEPENDENT MARKET TESTING.
We believe that there is substantial commercial demand for our
proprietary antimicrobial and skin protection products at a
profitable price. However, this belief is solely based on our
management's experience, judgment and its inhouse marketing and
research, with the exception of the professional medical market
where we have access to detailed industry studies. An independent
marketing study has been conducted by an independent professional
marketing firm with respect to potential demand for our products.
However, there is no assurance that sufficient testing has been
completed across all markets to confirm reliably the extent of this
demand, the price ranges within which it exists, and the amount of
promotion necessary to exploit this demand.
NO ASSURANCE OF MARKET ACCEPTANCE.
Our products may not be accepted in the marketplace. Such
acceptance will depend on a number of factors, including
demonstrating the efficacy and advantages of our products over those
of our current and future competitors. Further, we may be unable to
successfully market our products even though they perform
successfully in independent laboratory and clinical testing.
DEPENDENCE ON PATENTS AND THE PROTECTION OF PROPRIETARY TECHNOLOGY.
We depend on our ability to license and obtain patents and on
the adherence to confidentiality agreements executed by employees,
consultants and third-parties to maintain the proprietary nature of
our technology and to operate without infringing on the proprietary
rights of others. We have applied for a United States patent for
protection on our antimicrobial, and rash treatment and prevention
formulations. The pending patents may not be perfected. Also, our
present or future products may be found to infringe upon the patents
of others. If our products are found to infringe on the patents, or
otherwise to utilize the intellectual property of others without
authority, our development, manufacture and sale of such products
could be severely restricted or prohibited. In such case we might
be required to obtain licenses to utilize such patents or
proprietary rights of others, for which acceptable terms may be
unavailable. If we were not able to obtain such licenses, the
development, manufacture or sale of products requiring such licenses
would be materially adversely affected. In addition, we could incur
substantial costs in defending ourselves against challenges to our
patents or infringement claims made by third parties or in enforcing
any patents we may obtain.
LIMITED NATURE OF PATENT PROTECTION.
Others may sell products similar to ours before we can market
our products adequately. We rely on the protections that we hope to
realize under the United States and foreign patent laws. However,
patents provide limited protection. We have applied for a United
States patent on the antimicrobial and rash treatment and
prevention formulations, and applications for various other domestic
and foreign patents are either pending or planned. Similar
formulations and products, however, could be designed that do not
infringe on our patent rights, but which may be similar enough in
formulation or effect to compete against our patented products.
Moreover, it is possible that unpatented but prior existing
formulations and products that have never been made public and
therefore are not known to us or the industry in general, may
surface. Such a product could be introduced into the market without
infringing on our future patents. If any such competing,
non-infringing products were produced and distributed, our profit
potential would be materially limited, which would seriously impair
our viability.
In addition, we cannot assure investors that any intellectual
property rights eventually issued or exerted by us will not be
challenged, invalidated or circumvented, or that our competitors
will not independently develop or patent technologies that are
substantially equivalent or superior to ours. Furthermore, if an
action is brought, a court may find that we have infringed on
patents owned by others. We may have to go to court to defend our
rights or products, to prosecute infringements, or to defend
ourselves from infringement claims by others. We are, however, not
aware of any such litigation at this time.
Patent litigation is expensive and time-consuming, and
well-funded adversaries can use such actions as part of a strategy
for depleting the resources of a small company such as ours. We
cannot assure investors that we will have sufficient resources to
successfully prosecute our interests in any such litigation that may
be brought.
POSSIBLE LIMITATIONS ON MEDICAL REIMBURSEMENT.
A major market for our products could also be adversely
affected by recent federal legislation that reduces reimbursements
under the capital cost pass-through system utilized in connection
with the Medicare program. Failure by hospitals and other users of
our products to obtain reimbursement from third-party payors or
changes in government and private third-party payors' policies
toward reimbursement for procedures employing our products would
have a material adverse effect on us.
PROPOSED HEALTH CARE REFORM.
The Clinton Administration has attempted, and continues to
make proposals to change aspects of the delivery and financing of
health care services. Other legislation to accomplish the same
purpose has been or will also be introduced by members of Congress.
Legislation derived from one or more of these proposals may be
enacted in the future. Such legislation to control or reduce public
(Medicare and Medicaid) and private spending on health care, to
reform the methods of payment for health care goods and services by
both the public and private sectors, and to provide universal access
to health care may be passed. We cannot predict what form this
legislation may take or the effect of such legislation on our
business. It is possible that the legislation ultimately enacted by
Congress will contain provisions resulting in price limits and
utilization controls which may reduce the rate of increase in the
growth of our market or otherwise adversely affect our business. It
is also possible that future legislation could result in
modifications to the nation's public and private health care
insurance systems which may affect reimbursement policies in a
manner adverse to us. We also cannot predict what other legislation
relating to our business or the health care industry may be enacted,
including legislation relating to third-party reimbursement, or what
effect legislation may have on the results of our operations.
DEPENDENCE ON OUTSIDE SUPPLIERS.
We currently purchase all of our chemical components, supplies
and contract manufacturing from third-party suppliers. Substantially
all of our current products are mixed and packaged by companies unrelated
to us under supply agreements. However, if we were required to locate
other suppliers or manufacturers, we could experience increased costs
and significant delays in both locating and switching to new vendors.
Although we have access to adequate supplies of raw materials for our
current and foreseeable needs, a significant disruption in this supply
could have a short-term material adverse impact on our revenue production
and financial results. We have sought to mitigate this risk by entering
into contracts with our suppliers to assure a continuing supply of
raw materials for our product. However, long-term hedging opportunities
against price increases for these items are generally not available.
MINIMAL MARKETING EXPERIENCE.
We have commenced a sales program to market our current and
proposed products. However, we have limited sales experience in the
health care and personal hygiene industries and may need to recruit
additional qualified personnel and/or consultants for this purpose.
Our sales program may be unsuccessful or we may be unable to attract
and retain qualified customers and distributors on favorable terms.
PRODUCT LIABILITY RESULTING IN LOSSES AND CAUSING BUSINESS TO FAIL.
We have a limited operating history upon which to evaluate the
performance and effects of our products in actual use on consumers.
We can provide no absolute assurance that our product line will
operate as designed or that no injury to persons will result from
the use of our products. For example, there is potential that
someone may have an allergic reaction or sustain injury in some
other way after using our antimicrobial hand cleansing, or rash
prevention products. Such individuals may subsequently seek to hold
us responsible for any losses incurred. In such a case, we may
experience losses or other material adverse consequences, which may,
in severe cases, cause us to cease operations.
PRODUCT LIABILITY AND POSSIBLE INSUFFICIENCY OF INSURANCE.
The nature of our business, the manufacture, development and
marketing of antimicrobial hand cleansing products, exposes us to
the potential risk from product liability claims and there can be
no assurance that we can avoid significant product liability
exposure. We maintain product liability insurance providing
coverage up to $2,000,000 per claim with an aggregate policy limit
of $2,000,000. There is substantial doubt that this amount of
insurance would be adequate to cover potential liabilities in the
event that we were to face significant claims. A successful products
liability claim brought against us could have a material adverse
effect on our business, operating results and financial condition.
Further, product liability insurance is becoming increasingly
expensive, and there can be no assurance that we will successfully
maintain adequate product liability insurance at acceptable rates,
or at all. Should we be unable to maintain adequate product
liability insurance, our ability to market our products would be
significantly impaired. Any losses that we may suffer from future
liability claims or a voluntary or involuntary recall of our
products and the damage that any product liability litigation or
voluntary or involuntary recall may do to the reputation and
marketability of our products would have a material adverse effect
on our business, operating results and financial condition.
RISKS ASSOCIATED WITH POTENTIAL INTERACTIONS, ACQUISITIONS OR
INVESTMENTS.
We may engage in corporate partnering or other interactions
with, or acquire or make substantial investments in complementary
businesses, products, services or technologies in the future. From
time to time, we may have discussions with other companies regarding
such interactions, acquisitions or investments in, their businesses,
products, services or technologies. However, we have no present
understanding or agreement relating to any such transaction. We cannot
assure the investor that we will be able to identify suitable candidates.
Even if we identify suitable candidates, there can be no assurance that
we will be able to close such interactions, acquisitions or investments
on commercially acceptable terms.
In the event that we acquire another company, we could
encounter difficulty in assimilating the acquired company's
operations, personnel or products. In addition, the key personnel
of the acquired company may decide not to work for us. If we make
other types of acquisitions, we could have difficulty in
assimilating the acquired products, services or technologies into
our operations. Such difficulties could potentially disrupt our
ongoing business, distract our management and employees, increase
our expenses and adversely affect our results of operations and
otherwise dilute the desired financial and strategic benefits from
the acquisition or investment. Future acquisitions and investments
by us also could result in substantial cash expenditures.
Furthermore, we may incur debt or issue equity securities to pay for
any future acquisitions. The issuance of equity securities could
potentially dilute the ownership of our existing stockholders. The
incurrence of additional debt and contingent liabilities, and
amortization expenses related to goodwill and other intangible
assets, could have a material adverse effect upon our financial
results.
DEPENDENCE ON DOMESTIC MARKETS AND PROJECTED EXPANSION INTO
INTERNATIONAL MARKETS.
While a number of our competitors have diversified their
revenues to include a strong international component, we are
currently dependent primarily on sales generated in the U.S.
markets. In order for our unit sales to sustain growth in the
domestic markets we will depend on increased usage of our products
by health care professionals, the food handling industry,
hospitality, government, education, e-commerce, retail and other
niche markets. In addition, we will need to promote innovation and
expansion of our product line as well as capture market share from
our competitors. There can be no assurance that we will succeed in
implementing our strategies to achieve such domestic growth.
In order to reduce our dependence on domestic revenues, we
have adopted a strategy to begin penetrating international markets.
In implementing this strategy, we face barriers to entry and the
risk of competition from local and other companies that already have
established global businesses. The risks generally associated with
conducting business internationally include: exposure to currency
fluctuations, limitations on foreign investment, import/export
controls, nationalization, unstable governments and legal systems
and the additional expense and risks inherent in operating in
geographically and culturally diverse locations. Because we plan to
develop our international business through joint ventures, co-packaging
arrangements, agent and/or other alliances, we may also be subject
to risks associated with such joint venture arrangements and
alliances, including those relating to the marriage of different
corporate cultures and shared decision-making. In addition, since
the current international distribution capabilities are extremely
limited, we will also need to acquire a distribution network or
enter into alliances with existing distributors before we can
effectively conduct operations in new markets. There can be no
assurance that we will succeed in increasing our international
business in a profitable manner, and a failure to expand this
business may have a material adverse effect on our business and
results of operation.
At the present time we do not have any registered foreign
trademarks or any pending foreign trademark applications. There can
be no assurance that we will successfully register any foreign
trademarks. Furthermore, in the event that we are successful in
registering foreign trademarks on our products and formulations
there can be no assurance that such trademarks will be protected in
the foreign markets in which they are used.
RISKS ASSOCIATED WITH PROJECTED EXPANSION INTO INTERNATIONAL MARKETS.
We intend to establish and expand our operations to encompass
international sales and marketing efforts. In order to maximize our
expansion abroad with minimum capital outlay, we may recruit
business partners in various foreign markets to conduct operations,
establish local networks and coordinate sales and marketing efforts.
Our success in such markets is directly dependent on the success of
locating good business partners and their dedication of sufficient
resources to our business relationships.
International expansion will subject us to additional exchange
risks and will require management attention and resources. We expect
to pursue expansion through a number of international alliances and
to rely extensively on these business partners initially to conduct
operations, register web sites, and coordinate sales and marketing
efforts. Our success in these markets will depend on the success of
our business partners and their willingness to dedicate sufficient
resources to our business relationships. We cannot provide assurances
to investors that we will be successful in our efforts overseas.
International operations are subject to other inherent risks,
including: the impact of recessions in economies outside the United
States; changes in domestic regulatory requirements, as well as
differences between domestic and foreign regulatory requirements;
export restrictions, including export controls relating to product
formulas, reduced protection for intellectual property rights in
some countries; potentially adverse tax consequences; difficulties
and costs of staffing and managing foreign operations; political and
economic instability; tariffs and other trade barriers; and seasonal
reductions in business activity during the summer months in Europe
and certain other parts of the world.
Our failure to address these risks adequately could materially
and adversely affect our business, results of operations and
financial condition.
WORLD ECONOMIC, POLITICAL AND EXCHANGE FLUCTUATIONS.
We anticipate that a significant portion of our future product
sales will be in foreign countries. Because we plan to quote prices
for our products and to accept payment on sales principally in U.S.
dollars, any significant increase in the value of the U.S. dollar
against local currencies may make our products less competitive with
foreign products. The economic and political instability of some
foreign countries also may affect the ability of distributors and
customers to purchase and pay for our products, or the ability of
potential customers to pay for them.
POTENTIAL ADVERSE EFFECTS OF FUTURE SALES OF STOCK; DILUTION.
As of June 1, 2000, approximately 84.4% or about 17,572,373 of
the total 20,812,103 shares of Common Stock outstanding were
"restricted securities" within the meaning of Rule 144 under the
1933 Act. Ordinarily, under Rule 144, a person holding restricted
securities for a period of one year may, every three months, sell in
ordinary transactions, or in transactions directly with a market
maker an amount equal to the greater of one percent of our then
outstanding Common Stock or the average weekly trading volume during
the four calendar weeks prior to such sale. Purchasers of
Securities in this offering will experience immediate and
substantial dilution in net tangible book value of their investment.
POSSIBLE VOLATILITY OF STOCK PRICE.
There is currently no public market for our shares. However,
should our shares be traded in the future, factors such as announcements
by us of new products, quarterly variations in our financial results,
the gain or loss of material contracts, changes in management, regulatory
changes, trends in the industry or stock market and announcements by
competitors, among other things, could cause an eventual market
price of such securities to fluctuate significantly.
POTENTIAL ADVERSE AFFECTS OF BOARD OF DIRECTOR'S RIGHT TO ISSUE
PREFERRED STOCK.
Our Certificate of Incorporation authorizes the issuance of
shares of "blank check" preferred stock, which will have such
designations, rights and preferences as may be determined from time
to time by the Board of Directors. Accordingly, the Board of
Directors is empowered, without stockholder approval (but subject to
applicable government regulatory restrictions), to issue preferred
stock with dividend, liquidation, redemption, conversion, voting or
other rights which could adversely affect the voting power or other
rights of the holders of our Common Stock. Those terms and conditions
may include preferences on an equal or prior rank to existing series of
Preferred Stock. Those shares may be issued on such terms and for
such consideration as the Board then deems reasonable and such stock
shall then rank equally in all aspects of the series and on the
preferences and conditions so provided, regardless of when issued.
In the event of such issuance, the preferred stock could be
utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in our control.
NO CASH DIVIDENDS.
The holders of Common Stock are entitled to receive dividends
when, and if declared by the Board of Directors out of funds legally
available therefor. To date, we have not paid any cash dividends.
We do not intend to declare any cash dividends in the foreseeable future,
but instead intend to retain all earnings, if any, for use in our
business operations. Since we may be required to obtain additional
financing, it is likely that there will be restrictions on our ability
to declare any dividends.
BROAD DISCRETION AS TO USE OF PROCEEDS.
All of the net proceeds of the Offering, if any, have been
allocated for the expansion of marketing and sales, research and
development, and to gain control of manufacturing capacity, and for
other operating needs (and not otherwise allocated for a specific
purpose) and will be used for such purposes as management may
determine in its sole discretion without the need for stockholder
approval with respect to any such allocations.
LIMITED LIABILITY FOR OFFICERS AND DIRECTORS AND INDEMNIFICATION
MATTERS.
Our Certificate of Incorporation and Bylaws eliminate, in
certain circumstances, the liability of directors and officers for
monetary damages for breach of their fiduciary duties. Delaware law
permits a corporation to enter into indemnification agreements whereby
it could provide indemnification of officers and directors against
expenses, including reasonable attorneys' fees, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any civil or criminal action or administrative
proceeding arising out of his performance of his duties as a director
or officer, other than an action instituted by the director or officer.
The indemnification agreements could also require that we indemnify the
director or other party thereto in all cases to the fullest extent
permitted by applicable law. Such agreements could permit the director
or officer that were party thereto to bring suit to seek recovery of
amounts due under the agreement and to recover the expenses of such
a suit if he or she were successful. We may enter into such agreements
in the future.
DILUTION POSSIBILITIES.
The Board of Directors has the inherent right under applicable
Delaware law, for whatever value the board deems adequate, to issue
additional shares of Common Stock up to the limit of shares
authorized by the Certificate of Incorporation, and, upon such
issuance, all holders of shares of Common Stock, regardless of when
it is issued, thereafter generally rank equally in all aspects of
that class of stock, regardless of when issued. The Board of
Directors likewise has the inherent right, limited only by
applicable Delaware law and provisions of the Certificate of
Incorporation to increase the number of shares of Preferred Stock in
a series, to create a new series of Preferred Stock and to establish
preferences and all other terms and conditions in regard to such
newly created series. Any of those actions will dilute the holders
of Common Stock and also affect the relative position of the holders
of any series of any class. Current stockholders have no rights to
prohibit such issuances nor inherent "preemptive" rights to purchase
any such stock when offered.
RISKS OF FORWARD-LOOKING STATEMENTS ON INVESTMENT DECISIONS.
Because forward-looking statements are inherently unreliable,
investors should not rely on such assessments in making their
investment decisions. The information contained in this section and
elsewhere may at times represent our best estimates of our future
financial and technological performance, based upon assumptions
believed to be reasonable. We make no representation or warranty,
however, as to the accuracy or completeness of any of these
assumptions, and nothing contained in this document should be relied
upon as a promise or representation as to any future performance or
events.
Our ability to accomplish our objectives, and whether or not
we will be financially successful is dependent upon numerous
factors, each of which could have a material effect on the results
obtained. Some of these factors are within the discretion and
control of management and others are beyond management's control.
Our management considers the assumptions and hypothesis used in
preparing any forward-looking assessments of profitability contained
in this document to be reasonable; however, we cannot assure
investors that any projections or assessments contained in this
document, or otherwise made by management, will be realized or
achieved at any level. Prospective investors should have this
prospectus reviewed by their personal investment advisors, legal
counsel or accountants to properly evaluate the risks and
contingencies of purchasing our common stock.
SUBSTANTIAL PENALTIES FOR FAILURE TO MAINTAIN THE EFFECTIVENESS OF
THIS REGISTRATION STATEMENT.
We are subject to a registration rights agreement that
requires us to register certain of our Common Stock with the
Securities and Exchange Commission. Under this agreement, we
must also maintain this registration until all of the covered
securities are sold or can be sold publicly without benefit of
the registration. If we are unable to obtain or maintain this
registration, we will be subject to substantial monetary penalties.
USE OF PROCEEDS
Holders of Series 2000-A Warrants of First Scientific, Inc.
(the "Company"), are not obligated to exercise any of their Warrants.
However, assuming the issuance and exercise of all of the Warrants and
the issuance of the maximum 2,000,000 additional shares of Common Stock,
issuable upon such exercise, which are being registered for resale
hereunder, the net proceeds from this Offering to be received by us
from the issuance of said maximum shares of Common Stock upon the exercise
of all of the potentially issuable Warrants are estimated to be $6,000,000.
There has been no public market for our shares. There is no assurance
that any of the Warrants will be exercised and, consequently, the Company
may not receive any proceeds from this Offering. The Company will not
receive any proceeds from the issuance of shares of Common Stock upon
conversion of the Series 2000-A Preferred Stock or from the resale by
holders of shares of Common Stock issued prior to September 15, 1998.
The Company currently anticipates that it will use the net
proceeds of this Offering, if any, will be used for the expansion of
marketing and sales, research and development costs, and other expenses.
In the event sufficient proceeds are not received, the Company's short
term plan is to meet cash needs through external financing sources such
as bank financing and private offerings of debt and/or equity. The
Company also expects the cash flow from operations will provide
additional funds to the Company as operating revenues increase.
The cost, timing and the amount of funds required for such
uses by the Company cannot be precisely determined at this time and
will be based upon, among other things, competitive developments,
the rate of the Company's progress in product development, and the
availability of alternative methods of financing. In addition, the
Company's Board of Directors has broad discretion in determining how
the proceeds of this Offering received by the Company will be applied.
SECURITYHOLDERS REGISTERING SHARES
Of the shares of Common Stock, up to a total of 4,000,000
shares will be offered and sold by Aspen Capital Resources, LLC, the
holder of the Series 2000-A Preferred Stock and of the Series 2000-A
Warrants. The remaining 3,210,780 shares of Common Stock are to be
offered and sold by holders of shares issued on or before September
15, 1998. The tables on the page that follows set forth, as of the
date of this Prospectus: (i) the name of each Selling Shareholder;
(ii) certain beneficial ownership information with respect to the
Selling Shareholders; (iii) the number of Shares that may be sold
from time to time by each Selling Shareholder pursuant to this
Prospectus, and (iv) the amount (and, if one percent or more, the
percentage) of Common Stock to be owned by each Selling Shareholder
if all Shares are sold. Beneficial ownership is determined in
accordance with securities rules and regulations and generally
includes voting or investment power with respect to securities.
Shares of Common Stock that are issuable upon the exercise of
outstanding options, warrants or other purchase rights, to the
extent exercisable within 60 days of the date of this Prospectus,
are treated as outstanding for purposes of computing each Selling
Shareholder's percentage ownership of outstanding Common Stock.
The following table sets forth information regarding the
beneficial ownership of the Company's Common Stock as of June 9,
2000, by each of the holders of Series 2000-A Convertible Preferred
Stock (the "Selling Series 2000-A Preferred Stockholder"), assuming
the Series 2000-A Preferred Stockholder elects to exercise its
conversion rights to convert the Series 2000-A Convertible Preferred
shares into shares of Common Stock, at the minimum conversion price
equal to $2.00 per share of Common Stock, the number of shares of
Common Stock to be sold by each Selling Series 2000-A Preferred
Shareholder, and the percentage of each Selling Series 2000-A
Preferred Stockholder after the sale of Common Stock included in
this Prospectus.
<TABLE>
<CAPTION>
Shares Beneficially
Shares Beneficially Number of Owned After
Owned Prior to Offering Shares Being Offering (1)
------------------------ Offered ---------------------
Stockholder Number Percent(2) ------------- Number Percent
--------------- ------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Aspen Capital Resources, LLC 2,000,000(3) 8.1% 2,000,000(3) -0- *
</TABLE>
________________________
* Less than 1%
(1) Assuming the sale by the Selling Series 2000-A Preferred
Stockholder of all of its shares of Common Stock offered
hereunder by such Selling Series 2000-A Preferred Stockholder.
There can be no assurance that any of the Shares of Common Stock
offered hereby will be sold.
(2) The percentages set forth above have been computed assuming the
number of shares outstanding equals the sum of (a) 20,812,103, which
is the number of shares of Common Stock actually outstanding on June
9, 2000, and (b) shares of Common Stock subject to conversion rights
and warrants held by the person(s) with respect to which such
percentage is calculated.
(3) Includes up to 2,000,000 shares of Common Stock representing
the shares issuable by the Company upon the conversion of Series
2000-A Preferred Stock pursuant to a Securities Purchase
Agreement between the Company and Aspen Capital Resources, LLC,
whereby the Selling Series 2000-A Preferred Stockholder has
purchased 1,000 shares of Series 2000-A Preferred Stock and up to
a maximum of 500,000 Series 2000-A Warrants for $1,000,000 less
offering expenses of $100,000 and may, but is not required to,
purchase up to an an additional 3,000 shares of Series 2000-A
Preferred Stock and up to a maximum of 1,500,000 additional
Warrants for $3,000,000. Upon conversion of all 4,000 such
preferred shares, a maximum of 2,000,000 shares of Common Stock
could be issuable to the Selling Series 2000-A Preferred Stockholder.
The actual number of shares of Common Stock that will be issued to
the Selling Series 2000-A Preferred Stockholder in the event of
conversion pursuant to the Securities Purchase Agreement will vary,
and may vary materially from the aggregate of 2,000,000 shares
registered under the Registration Statement.
There can be no assurance that any of the shares of Common Stock
will be issued to the Selling Series 2000-A Preferred Stockholder
pursuant to the Securities Purchase Agreement and therefore that any
of the Shares of Common Stock offered hereby by the Selling Series
2000-A Preferred Stockholder will be sold.
__________________________________________
The following table sets forth information regarding the
beneficial ownership of the Company's Common Stock as of June 9,
2000, the holder of Series 2000-A Warrants (the "Selling
Warrantholder"), assuming the Selling Warrantholder elects to
exercise the Warrants held by it to purchase shares of Common Stock
at an exercise price of $3.00 per share, the number of shares to be
sold by said Selling Warrantholder, and the percentage of said
Selling Warrantholder after the sale of the shares included in this
Prospectus.
<TABLE>
<CAPTION>
Shares Beneficially
Shares Beneficially Number of Owned After
Owned Prior to Offering Shares Being Offering (1)
------------------------ Offered ---------------------
Warrantholder Number Percent(2) ------------- Number Percent
------------- ------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Aspen Capital Resources, LLC 2,000,000(3) 8.1% 2,000,000(3) -0- *
</TABLE>
________________________
* Less than 1%
(1) Assuming the sale by the Selling Warrantholder of all of its shares
of Common Stock issuable upon exercise of the Warrants and offered
hereunder for resale by such Selling Warrantholder. There can be no
assurance that any of the Shares of Common Stock offered hereby will
be sold.
(2) The percentages set forth above have been computed assuming the
number of shares outstanding equals the sum of (a) 20,812,103, which
is the number of shares of Common Stock actually outstanding on June
9, 2000, and (b) shares of Common Stock subject to conversion rights
and warrants held by the person(s) with respect to which such
percentage is calculated.
(3) Includes up to 2,000,000 shares of Common Stock representing
the shares issuable by the Company upon the exercise of Series
2000-A Warrants pursuant to a Securities Purchase Agreement between
the Company and Aspen Capital Resources, LLC, whereby the Selling
Warrantholder has purchased 1,000 shares of Series 2000-A Preferred
Stock and up to a maximum of 500,000 Series 2000-A Warrants for
$1,000,000 less offering expenses of $100,000 and may, but is not
required to, purchase up to an additional 3,000 Series 2000-A shares
of Preferred Stock and up to a maximum of 1,5000,000 additional
Warrants for $3,000,000 less offering expenses of $300,000. Upon
exercise of all Series 2000-A Warrants, a maximum of 2,000,000 shares
of Common Stock could be issuable to the Selling Warrantholder. The
actual number of shares of Common Stock that will be issued to the
Selling Warrantholder in the event of exercise pursuant to the
Securities Purchase Agreement will vary, and may vary materially from
the aggregate of 2,000,000 shares registered under the Registration
Statement.
There can be no assurance that any of the shares of Common Stock
will be issued to the Selling Warrantholder pursuant to the
Securities Purchase Agreement and therefore that any of the Shares
of Common Stock offered hereby by the Selling Warrantholder will be
sold.
__________________________________________________
The following table sets forth information regarding the
beneficial ownership of the Company's Common Stock as of June 9,
2000, by each of the holders of shares of Common Stock issued on or
before September 15, 1998 (the "Selling Shareholders"), assuming
each of the Selling Shareholders elects to sell his or her shares of
Common Stock, at an exercise price of $3.00 per share, the number
of shares to be sold by each Selling Shareholder and the percentage
of each Selling Shareholder after the sale of the shares included in
this Prospectus.
<TABLE>
<CAPTION>
Shares Beneficially
Shares Beneficially Number of Owned After
Owned Prior to Offering Shares Being Offering (1)
-------------------- Offered (2) ---------------------
Stockholders Number Percent ---------- Number Percent
------------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Alfred C. Adams & Kathie B. Adams,
JTWROS(3) 13,333 * 8,333 0 *
Kathie B. Adams Custodian for Kristina
L. Adams 2,500 * 2,500 0 *
Kathie B. Adams Custodian for Zackary
C. Adams 2,500 * 2,500 0 *
Chris Allison 163,869 * 3,167 160,702 *
American Pension Services, FUB Custodian
for Nikki R. Blackham (5) 38,000 * 38,000 0 *
American Pension Services, FUB Custodian
for Heath T. Birchall Roth/IRA(6) 7,500 * 7,500 0 *
American Pension Services, FUB Custodian
for Keri F. Burrows Roth/IRA 7,500 * 7,500 0 *
American Pension Services FUB, Custodian
for Merlin V. Fish Keogh(5) 100,000 * 100,000 0 *
American Pension Services FUB, Custodian
for Marci C. Fish Roth, IRA 7,500 * 7,500 0 *
American Pension Services FUB, Custodian
for Candace L. Fish Roth, IRA(3) 7,500 * 7,500 0 *
American Pension Services, FUB, Custodian
for Kevin B. Fish Roth, IRA(3) 7,500 * 7,500 0 *
American Pension Services, FUB Custodian
for Candace L. Fish Roth, IRA(3) 7,500 * 7,500 0 *
American Pension Services, FUB Custodian
for Kevin B. Fish Roth,IRA(3) 7,500 * 7,500 0 *
American Pension Services, FUB Custodian
for Jane Mendenhall Roth,IRA 1,690 * 1,690 0 *
American Pension Services, FUB Custodian
for Ryan Taylor Roth,IRA 10,000 * 10,000 0 *
American Pension Services, FUB Custodian
for Jennie Curtis Roth,IRA 1,000 * 1,000 0 *
American Pension Services, FUB Custodian
for Kent Curtis Roth, IRA 1,000 * 1,000 0 *
American Pension Services, FUB Custodian
for Steven C. Pinegar, IRA 7,000 * 7,000 0 *
American Pension Services, FUB Custodian
for Ryan A. Fish Roth, IRA 7,500 * 7,500 0 *
American Pension Services, FUB Custodian
for Marshall S. Blackham Roth,IRA 10,000 * 10,000 0 *
American Pension Services, FUB Custodian
Todd K. Hewlett Roth, IRA 25,000 * 25,000 0 *
American Pension Services, FUB Custodian
for Stefanie F. Hewlett Roth, IRA 25,000 * 25,000 0 *
American Pension Services, FUB Custodian
for Julia F. Thompson Roth,IRA 7,500 * 7,500 0 *
American Pension Services, FUB Custodian
for Melvin G. Fish Roth, IRA 8,000 * 8,000 0 *
Clyde Argyle 1,000 * 1,000 0 *
Reza John Azimi 45,000 * 5,000 40,000 *
James N. Bahan and Mary Bahan Trust (4) 121,646 * 63,000 58,646 *
Paul Bank and Cornelia Bank, JTWROS 4,000 * 4,000 0 *
Bruce Banks 1,000 * 1,000 0 *
The Barebones Charitable Remainder
Unitrust(5) 100,000 * 100,000 0 *
Evan R. Barton 2,000 * 2,000 0 *
Michael D. Bearden 500 * 500 0 *
Paul L. Beckett 2,000 * 2,000 0 *
William Beifuss III 3,333 * 3,333 0 *
Marci L. Fish (6) 98,225 * 23,500 74,725 *
Lori F. Birchall Custodian for Candace
L. Fish, UGMA UT(5)(7) 92,443 * 49,050 43,393 *
Lori F. Birchall Custodian for Kevin B.
Fish, UGMA UT(5)(7) 92,293 * 48,900 43,393 *
Lori F. Birchall and Heath T. Birchall,
JTWROS(7) 344,262 1.4% 16,800 327,462 1.6%
Rachael Bird(8) 1,500 * 500 1,000 *
Randall C. Bird(8) 1,500 * 1,000 500 *
Lowell I. Black 129,458 * 27,858 101,600 *
Angus U. Blackham and Lula Belle
Blackham, JT TEN 20,000 * 20,000 0 *
Marshall S. Blackham(9) 250,892 1.0% 134,333 116,559 *
Blue Cavern Investments LLC(10) 70,999 * 24,333 46,666 *
Beth Borup 500 * 500 0 *
J. Russ Bradshaw 9,667 * 3,000 6,667 *
J. Larry Bradshaw 2,000 * 2,000 0 *
Willard T. Brannen 1,500 * 1,500 0 *
Claud Tracy Bronson 500 * 500 0 *
Jane Burrows 1,000 * 1,000 0 *
Megan Burrows 1,000 * 1,000 0 *
Brian Burrows 1,000 * 1,000 0 *
Steve Burrows 1,500 * 1,500 0 *
Matthew Burrows and Keri Burrows Family Trust 97,759 * 8,700 89,059 *
Grant S. Burrows Sr. 1,000 * 1,000 0 *
B W LLC (4) 33,646 * 33,646 0 *
Jennifer Call 5,000 * 5,000 0 *
Randy Carlson 5,000 * 5,000 0 *
Larry Carson and Sandee Carson, JTWROS 32,667 * 26,000 6,667 *
R. Wade Carson 3,000 * 3,000 0 *
Jason Carter 500 * 500 0 *
Adam G. Chapman (11) 1,000 * 1,000 0 *
Cadi Chapman (11) 2,000 * 2,000 0 *
Gloria Chapman 10,500 * 10,500 0 *
Richard G. Chapman 1,000 * 1,000 0 *
Thomas G. Chapman (11) 159,219 * 25,666 133,553 *
Jack R. Christianson 500 * 500 0 *
Jane H. Clark 18,300 * 18,300 0 *
Jeffrey Paul Clark and Jane Ann Clark,
JTWROS 2,500 * 2,500 0 *
Douglas R. Clark 2,500 * 2,500 0 *
Brian P. Clark 2,500 * 2,500 0 *
Stuart T. Clark 500 * 500 0 *
Scott C. Clark 500 * 500 0 *
Byron N. Clark 250 * 250 0 *
N. Palmer Clark 250 * 250 0 *
Michelle T. Clegg and Trent K. Clegg 1,000 * 1,000 0 *
Jerry Craven 1,000 * 1,000 0 *
Robert Shannon Cummings and Lorri Kay,
Cummings JTWROS 26,000 * 26,000 0 *
Kent Curtis and Jennie Curtis, JTWROS 15,000 * 13,000 0 *
Garrett C. Davis 400 * 400 0 *
Curtis De Young 1,000 * 1,000 0 *
Devon Denler 833 * 833 0 *
Doug Denning 400 * 400 0 *
Jamie Dillman (12) 5,000 * 2,500 0 *
Robert Dillman (12) 5,000 * 2,500 0 *
David H. Dimond 1,000 * 1,000 0 *
Heather Disbrow (13) 5,000 * 2,500 2,500 *
Jared Disbrow (13) 5,000 * 2,500 2,500 *
Sharon O. Drakos 5,000 * 5,000 0 *
Richard Dunbar 2,500 * 2,500 0 *
Cindy L. Dunkin and Jeffrey L. Dunkin,
JTWROS 20,000 * 20,000 0 *
Robert H. Eager 572 * 572 0 *
Frank Eubank and Candy Eubank 700 * 700 0 *
Steve Faerber and Vera Faerber, JT TEN 500 * 500 0 *
David M. Fairbourn and Margie N.
Fairbourn 1,000 * 1,000 0 *
Jacob C. Fish 14,333 * 5,000 9,333 *
Judith Fish and Stanley L. Fish, JTWROS 4,000 * 4,000 0 *
Melvin G. Fish 41,000 * 33,000 0 *
Tyler Fish(8) 3,500 * 3,500 0 *
Jessica Fish 3,500 * 3,500 0 *
Gregory M. Fish 100,559 * 32,000 68,559 *
Marlene K. Fish 7,000 * 7,000 0 *
Patricia B. Fish(5) 996,859 4.0% 532,690 464,169 2.2%
Ryan A. Fish 89,495 * 13,436 76,059 *
Marlene Fish Custodian for Adam Fish 11,500 * 11,500 0 *
Marlene Fish Custodian for Amberly Fish 11,500 * 11,500 0 *
Marlene Fish Custodian for Michael Fish 11,500 * 11,500 0 *
John Foster 10,000 * 10,000 0 *
Shelly S. French 100 * 100 0 *
Pomera M. Fronce 300 * 300 0 *
R. Quinn Gardner 133,333 * 133,333 0 *
Nolan D. Gerber 500 * 500 0 *
David O. Gifford 2,000 * 2,000 0 *
Ryan W. Gill 1,200 * 1,200 0 *
Kenneth Goggia 5,000 * 5,000 0 *
Natalie C. Gordon 500 * 500 0 *
Brandon Greenwood 6,250 * 6,250 0 *
George Hacking and Sydney Hacking 5,000 * 5,000 0 *
Don Hacking 20,000 * 20,000 0 *
Jehu Hand (14) 150,000 * 150,000 0 *
Matt Hanks 4,000 * 4,000 0 *
Adam K. Heindorff 500 * 500 0 *
Paul Heiner 1,000 * 1,000 0 *
Daniel Hemmert 1,667 * 1,667 0 *
Suzanna Hewlett 4,000 * 4,000 0 *
Mona F. Hewlett 23,000 * 23,000 0 *
Sandra A. Hewlett 5,000 * 5,000 0 *
Stefanie Hewlett (15) 331,804 1.3% 86,245 245,559 1.2%
Todd K. Hewlett(15) 331,804 1.3% 150,000 181,804 *
Matthew S. Hewlett 2,500 * 2,500 0 *
Robert Higginson 15,000 * 15,000 0 *
Rachael W. Hirschi and Brent Morgan
Hirschi, JTWROS 15,750 * 15,750 0 *
Melissa Hobaugh 125 * 125 0 *
David R. Hodson 300 * 300 0 *
Brett Hughes 1,500 * 1,500 0 *
Jared Hutchings 450 * 450 0 *
Aaron S. Inouye 2,000 * 2,000 0 *
Annette Irwin 6,667 * 6,667 0 *
Romm Jackson 800 * 800 0 *
Richard D. Jarvis 1,000 * 1,000 0 *
Michael P. Jensen 20,000 * 20,000 0 *
Paul V. Johnson 500 * 500 0 *
Pattie M. Johnson 500 * 500 0 *
Brian M. Johnson 500 * 500 0 *
Rick K. Johnson 500 * 500 0 *
Christine C. Jones 2,500 * 2,500 0 *
Rod Jorgensen and Gayle Jorgensen 1,000 * 1,000 0 *
Joel G. Judd 500 * 500 0 *
Kelly B. Kading 7,500 * 7,500 0 *
Stan Kauffman 500 * 500 0 *
Ronnie L. Kolgrow 250 * 250 0 *
Richard C. Knudson 3,000 * 3,000 0 *
John Bruce Kochevar (16) 1,250 * 625 0 *
Jeffery Bruce Kochevar (16) 1,250 * 625 0 *
W. Matthew Lallatin 10,000 * 10,000 0 *
Brock Laubhan 1,500 * 1,500 0 *
Ryan Lee 4,445 * 4,445 0 *
Kim LeGrande 20,000 * 20,000 0 *
Allan Loretz 2,500 * 2,500 0 *
Nanette Loveday 500 * 500 0 *
Randall Lunt 1,000 * 1,000 0 *
Cory H. Maxwell 500 * 500 0 *
Cameron D. McClure 1,500 * 1,500 0 *
Ryan S. Napierski 500 * 500 0 *
Dru R. Nielson and Laurel Nielson, JTWROS 70,000 * 70,000 0 *
Jason R. Nokes 3,000 * 3,000 0 *
Brent Olson 36,666 * 10,000 26,666 *
Collete Parker 500 * 500 0 *
Marianne Peck 2,650 * 250
Marianne R. Peck 2,650 * 100 0 *
Mark R. Peck and Marianne R. Peck, JT
TEN(17) 2,650 * 2,000 0 *
Marianne R. Peck Custodian for
Elizabeth Peck 100 * 100 0 *
Marianne R. Peck Custodian for
Mckenzie Peck, UGMA UT 100 * 100 0 *
Marianne R. Peck Custodian for Connor
M. Peck, UGMA UT 100 * 100 0 *
Brian Peterson 6,225 * 6,225 0 *
John R. Peterson 32,000 * 32,000 0 *
Stanley A. Peterson 5,000 * 5,000 0 *
Edward L. Platt 8,000 * 8,000 0 *
John Prevatt 125,000 * 25,000 100,000 *
Kristy Pulley 1,000 * 1,000 0 *
Devin Elwood Rhoton 1,000 * 1,000 0 *
Derick Rhoton 1,350 * 1,350 0 *
Scott Rice 1,000 * 1,000 0 *
John Rice 20,000 * 20,000 0 *
Byron Riches and Colleen Riches, Trustee
for the Riches Family Trust DTD 1/9/87 1,000 * 1,000 0 *
Stewart Ritchie 375 * 375 0 *
Richard K. Robins 1,000 * 1,000 0 *
Gene B. Robison 5,000 * 5,000 0 *
Angela Romeril 1,000 * 1,000 0 *
Mark C. Sanderson 8,572 * 8,572 0 *
Welster M. Santos and Colleen I. Santos,
JT TEN 1,250 * 1,250 0 *
Bethany Schlensker (18) 13,000 * 2,000 0 *
Louise A. Schlensker(18) 13,000 * 9,000 0 *
Scott D. Schlensker 2,000 * 2,000 0 *
Todd Schlensker(18) 13,000 * 2,000 0 *
Laurie A. Schlensker 2,000 * 2,000 0 *
David Schofield 1,000 * 1,000 0 *
Monte F. Shelley 68,500 * 1,500 67,000 *
Cally J. Smith 500 * 500 0 *
Societe Financiere du Seujet, S.A.(19) 200,000 * 200,000 0 *
Calvin R. Stephens(20) 21,000 * 5,000 0 *
RaNae Stephens(20) 21,000 * 500 0 *
Rod W. Stephens and Pamela W. Stephens,
JTWROS (20) 21,000 * 15,000 0 *
Roy J. Stephens(20) 21,000 * 500 0 *
Shane C. Stephens and Michelle Stephens,
JTWROS 20,000 * 20,000 0 *
Ronald E. Strobelt 6,000 * 6,000 0 *
Dale Strum 5,000 * 5,000 0 *
James Swain 1,000 * 1,000 0 *
Juno L. Taylor 4,500 * 4,500 0 *
David D. Thompson and Julia F. Thompson,
JTWROS 149,759 * 73,700 76,059 *
Kenyon Titus 2,500 * 2,500 0 *
Brian Tolman(21) 29,000 * 1,000 0 *
JoAnn H. Tolman(21) 29,000 * 28,000 0 *
Thomas L. Tyler 500 * 500 0 *
James L. Warr and Myrna F. Warr, JTWROS 8,000 * 8,000 0 *
The Watchman Trust (22) 48,000 * 48,000 0 *
Peter S. Watkins 700 * 700 0 *
Gary Webb 1,580 * 1,580 0 *
Robert Webster 445 * 445 0 *
Kenneth Weidrich 12,500 * 12,500 0 *
Shelby West 500 * 500 0 *
Douglas A. Whitaker and Valerie B.
Whitaker, JTWROS (23) 30,000 * 24,000 6,000 *
Melanie A. Whitaker (23) 2,000 * 2,000 0 *
Douglas A. Whitaker Custodian for
Scott U. Whitaker(23) 2,000 * 2,000 0 *
Douglas A. Whitaker Custodian for
Camille B. Whitaker(23) 1,000 * 1,000 0 *
Douglas A. Whitaker Custodian for
Ashlee M. Whitaker(23) 1,000 * 1,000 0 *
John Wilding 4,589 * 4,589 0 *
Kevin Williams 5,000 * 5,000 0 *
Aaron T. Williams (24) 1,000 * 1,000 0 *
Brant Williams 1,000 * 1,000 0 *
Channing R. Williams 1,000 * 1,000 0 *
Lyle T. Williams and Lois Fish Williams,
JTWROS(24) 12,000 * 11,000 1,000 *
Gregory Wilson 500 * 500 0 *
Kevin A. Wilson 572 * 572 0 *
Louis Wong 4,500 * 4,500 0 *
Stuart Wright 15,000 * 15,000 0 *
---------- ------- --------- --------- -------
Totals 5,933,430 23.9% 3,210,780 2,577,800 12.4%
========== ======= ========= ========= =====
______________________________________
* Less than 1%
(1) The Company is advised that American Pension
Services ("APS") acts as administrator of self directed
IRAs and other fiduciary investments and has no control or
discretion over the accounts administered by it.
(2) Only includes shares that were originally issued
by the Company prior to September, 15 1998
(3) Includes shares held beneficially in the names of
their children, Kristina L. Adams and Zackary C. Adams
(4) Includes beneficial ownership of 33,646 shares
held by BW LLC.
(5) Merlin V. Fish is trustee of The Barebones
Charitable Remainder Unitrust and is beneficial owner of
shares held in the name American Pension Services FUB
Custodian for Merlin V. Fish Keogh. Merlin V. Fish and
Patricia B. Fish are husband and wife and live in the same
household as Candace L. Fish and Kevin B. Fish.
(6) Includes shares held by American Pension Services
in the account of Marci L. Fish Roth, IRA
(7) Lori F. Birchall and Heath Birchall are husband
and wife and Lori F. Birchall is custodian for Candace L.
Fish and Kevin B. Fish
(8) Randall Bird is the father of and lives in the
same household as Rachael Bird
(9) Marshall S. Blackham and Nikki Blackham are
husband and wife.
(10) Ryan Taylor is the owner of Blue Cavern
Investments LLC. Includes shares held in Roth IRA account
managed by American Pension Services.
(11) Adam Chapman and Cadi Chapman are son and daughter
of Thomas G. Chapman.
(12) Robert Dillman and Jamie Dillman are husband and
wife and live in the same household.
(13) Jared Disbrow and Heather Disbrow are husband and
wife and live in the same household.
(14) Mr. Hand was the former President a director of
the Company and its principal founder.
(15) Todd K. Hewlett and Stephanie F. Hewlett are
husband and wife and live in the same household.
(16) John Bruce Kochevar is the father of Jeffrey Bruce
Kochevar.
(17) Mark R. Peck and Marianne R. Peck are husband and
wife and parents to Elizabeth, Mckenzie, and Connor M.
Peck and all live in the same household.
(18) Louise A. Schlensker is the mother of Todd
Schlensker and Bethany Schlensker, all live in the same
household.
(19) Societe Financiere du Seujet, S.A. is controlled
by Ricardo Mortara.
(20) Calvin R. Stephens is the father of Roy, Rod and
ReNae Stephens and all live in the same houshold.
(21) JoAnn Tolman is the mother of Brian Tolman.
(22) The beneficiary of The Watchman Trust is Raymond Potter.
(23) Douglas A. Whitaker and Valerie B. Whitaker are the
parents of and live in the same household as Melanie,
Scott, Camille and Ashley Whitaker.
(24) Lyle T. Williams and Lois Fish Williams are the
parents and live in the same houshold of Aaron T.
Williams.
There can be no assurance that any of the shares
of Common Stock offered hereby by the Selling Shareholders
will be sold.
DESCRIPTION OF SECURITIES
First Scientific's authorized capital stock consists of
50,000,000 shares of Common Stock, $.001 par value per share, and
1,000,000 shares of Preferred Stock, $.001 par value per share.
The Company has created one class of Preferred Stock, designated as
Series A-2000 Preferred Stock.
COMMON STOCK. The holders of Common Stock are entitled to
one vote for each share held of record on all matters to be voted on
by stockholders. The holders of Common Stock are entitled to
receive such dividends, if any, as may be declared from time to time
by the Board of Directors in its discretion from legally available
funds. Upon liquidation or dissolution of First Scientific, Inc.
the holders of Common Stock are entitled to receive, pro rata,
assets remaining available for distribution to stockholders. The
Common Stock has no cumulative voting, preemptive or subscription
rights and is not subject to any future calls. There are no
conversion or redemption rights applicable to the shares of Common
Stock. All the outstanding shares of Common Stock are fully paid
and non-assessable.
PREFERRED STOCK. The Board of Directors is authorized
without further action by the stockholders, to issue, from time to
time, up to a total of 1,000,000 shares of Preferred Stock in one or
more classes or series, and to fix or alter the designations, power
and preferences and relative participation, option or other rights,
if any, and qualifications, limitations or restrictions thereof,
including, without limitation, dividend rights (and whether
dividends are cumulative), conversion rights, if any, voting rights
(including the number of votes, if any, per share), redemption
rights (including sinking fund provisions, if any), and liquidation
preferences of any unissued shares or wholly unissued series of
preferred stock, and the number of shares constituting any such
class or series and its designation and to increase or decrease the
number of such class or series subsequent to the issuance of shares
of such class or series, but not below the number of shares of such
class or series then outstanding. The issuance of any series of
preferred stock under certain circumstances could have the effect of
delaying, deferring or preventing a change in control and could
adversely affect the rights of the holders of the Common Stock. As
of the date of this Memorandum, First Scientific has created and
issued shares of one class of preferred stock, which is more fully
discussed below.
SERIES 2000-A PREFERRED STOCK. The Board of Directors has
authorized the issuance of a total of 4,500 shares of Series 2000-A
Preferred Stock. The $1,000 stated value of each share of Series
2000-A Preferred Stock, together with accrued and unpaid dividends,
is convertible into shares of Common Stock at a rate equal to 80%
of the fair market value, which is, as provided in the Securities
Purchase Agreement for such shares, $3.00 per share until said
Common Stock is quoted on the Nasdaq Stock Market System or
reported on the NASD's OTC bulletin board during the 15 trading days
preceding the date of conversion, subject to maximum and minimum
conversion prices of $4.00 and $2.00 per share, respectively.
Shares of Company Common Stock are not now quoted or listed, nor are
they otherwise traded. However, the Securities Purchase Agreement
pursuant to which the holder of the Series 2000-A Preferred Stock
and Series 2000-A Warrants acquired said shares and warrants
obligates the Company to register the shares of Common Stock into
which the Series 2000-A Preferred Stock are convertible or which
underlie the Warrants and to trade beginning no later than September
12, 2000. If, as and when the Common Stock is quoted on the Nasdaq
Stock Market System or reported on the NASD's OTC Bulletin Board,
fair market value will then be equal to the average of the three
lowest closing bid prices for the Common Stock during the 15
trading days preceding the date of conversion, subject to minimum
and maximum conversion prices of $2.00 and $4.00 per share,
respectively.
At any time after May 16, 2001, the Company may, at its
sole option, redeem all of the then outstanding shares of Series
2000-A Preferred Stock at a price equal to 125% of stated value per
share, plus accrued and unpaid dividends, if any. The holders of
shares of Series 2000-A Preferred Stock are entitled to cumulative
preferred dividends at the rate of 8% of the stated value per annum
per share, payable in cash or common stock, at the election of the
holder, on or before the end of each calendar quarter, commencing
June 30, 2000. In an event of noncompliance as defined in the
Certificate of Designation, the cumulative preferred dividend rate
becomes 21% per annum.
The Series 2000-A Preferred Stock has priority rights to
dividends over the Common Stock, but will not participate in any
dividends payable to the holders of shares of Common Stock. No
dividends will be paid to holders of shares of Common Stock unless
and until all dividends on shares of Preferred Stock have been paid
in full for the same period. In the event of any liquidation,
dissolution or winding-up of the Company, the holders of shares
of Series 2000-A Preferred Stock are entitled to receive, prior and
in preference to, any distribution of any of the assets or surplus
funds of the Company to the holders of shares of Common Stock
or any other stock of First Scientific ranking on liquidation junior
or subordinate to the Series 2000-A Preferred Stock, an amount equal
to the $1,000 stated value per share, plus accrued and unpaid
dividends, if any.
The holder of shares of Series 2000-A Preferred Stock has
voting rights equal to the number of shares of Company Common Stock
into which said holder's shares of Series 2000-A Preferred Stock are
convertible, except in those instances required by Delaware law.
As of May 16, 2000, there were a total of 1,000 shares of
Series 2000-A Preferred Stock issued and outstanding. It is
anticipated that the Company will sell to the preferred stockholder,
although said preferred stockholder is not required to purchase, an
additional total of 3,000 shares of Series 2000-A Preferred Stock
for $1,000 per share, in phases at 30 day intervals through
September 16, 2000. A total of 2,000,000 shares of Common Stock has
been set aside and reserved in the event that the holder of the now
and subsequently issued shares of Series 2000-A Preferred Stock
elects to convert those shares into shares of Common Stock. As of
June 9, 2000, no shares of Series 2000-A Preferred Stock have been
converted into shares of Common Stock.
Series 2000-A Warrants. Each Series 2000-A Warrant entitles
the holder to purchase one share of Common Stock at an exercise
price of $3.00 per share. The number of Series 2000-A Warrants
ultimately issued will vary depending on the conversion price of the
Series 2000-A Preferred Stock. The Warrantholder will be entitled
to receive one warrant for every share of Common Stock received on
the conversion of the Series 2000-A Preferred Stock. Since this
number is variable, the number of Series 2000-A Warrants to be
issued to the Warrantholder is also variable. However, the number
of such Warrants to be issued to the Warrantholder will be fixed no
later than November 16, 2000, assuming no event of default has occurred.
The Securities Purchase Agreement provides that the ultimate number of
warrants shall be determined by dividing the aggregate stated value of
the shares of Series 2000-A Preferred Stock by the conversion price (as
defined in the Certificate of Designation) of such preferred shares
determined as of the earlier of November 16, 2000, the date on which
the Warrantholder converts its shares of Series 2000-A Preferred
Stock, or the date on which said preferred shares are redeemed.
The Warrants are exercisable from December 1, 2000, or earlier
upon the occurrence of an event of default or a change in control of
the Company. Series 2000-A Warrants are exercisable through the
anniversary date of their issuance in 2004, provided that at the
time of exercise a current prospectus relating to the Common Stock
is then in effect and the Common Stock is qualified for sale or
exempt from qualification under applicable state securities laws.
The Series 2000-A Warrants are not subject to early redemption by
the Company.
The Series 2000-A Warrants may be exercised upon surrender of
the certificate(s) therefore on or prior to the expiration or the
redemption date at the offices of Colonial Stock Transfer Company,
544 E. 400 S. Suite 100, Salt Lake City, Utah 84111, the Company's
warrant agent (the "Warrant Agent") with the subscription form on
the reverse side of the certificate(s) completed and executed as
indicated, accomplished by payment (in the form of a certified or
cashier's check payable to the order of the Company) of the full
exercise price for the number of warrants being exercised.
The Securities Purchase Agreement provides that the Warrantholder
may exercise by paying for the underlying shares of Common Stock in
cash or by means of a cashless exercise, whereby, if applicable, the
requisite number of shares of Common Stock to be issued on such
exercise would be reduced as if they had been sold and the excess
proceeds applied to cover the exercise price of the remaining shares
of Common Stock.
The Series 2000-A Warrants contain provisions that protect
the holders thereof against dissolution by adjustment of the
exercise price per share and the number of shares issuable upon
exercise thereof upon the occurrence of certain events including
issuances of Common Stock (or options or securities convertible,
exchangeable or exercisable into Common Stock) at less than market
value, stock dividends, stock splits, mergers, sale of substantially
all of the Company's assets, and for other extraordinary events;
provided, however, that no such adjustment shall be made upon, among
other things (i) the issuance or exercise of options or other
securities under employee benefit plans (ii) the sale or exercise of
outstanding Series 2000-A Warrants, or (iii) the conversion of
shares of the Company's Preferred Stock to Common Stock.
The holder of Series 2000-A Warrants will not possess any right
as a shareholder of the Company unless or until it exercises the Series
2000-A Warrants. It is anticipated that, through September 16,
2000, the Warrantholder will purchase, although it is not required
to, additional shares of Series 2000-A Preferred Stock, whereupon
the Company will issue to the Warrantholder additional Series 2000-A
Warrants, which, together with such warrants it currently holds, could
be adjusted to as many as 2,000,000 such warrants. Therefore, the Company
has reserved a total of 2,000,000 shares of Common Stock in the event the
holder of the now and subsequently issued and adjusted Series 2000-A
Warrants elects to exercise the same and thereby to purchase Common Stock.
As of June 9, 2000, no Series 2000-A Warrants have been exercised.
CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION. The Company's
Certificate of Incorporation provides that to the fullest extent permitted
by Delaware law, its directors shall not be liable to the Company. The
Certificate of Incorporation also contains provisions entitling the officers
and directors to indemnification by the Company to the fullest extent
permitted by the Delaware General Corporation Law.
INDEMNIFICATION AGREEMENTS. The Company has entered into
Indemnification Agreements with its officers and directors.
Such Indemnification Agreements provide that the Company will
indemnify its officers and directors against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
arising out of threatened, pending or completed legal action against
any officer or director to the fullest extent permitted by the
Delaware General Corporate Law.
TRANSFER AND WARRANT AGENT. The Company's transfer agent
and registrar for its Common Stock and the Series 2000-A Preferred
Stock and the Warrant Agent for the Series 2000-A Warrants is Colonial
Stock Transfer Co., 544 East 400 South, Suite 100, Salt Lake City, Utah
84111.
PLAN OF DISTRIBUTION
Selling Securityholders may effect sales by selling their
shares of Common Stock directly to purchasers, through
broker-dealers acting as agents for the Selling Securityholders or
to broker-dealers who may purchase securities as principals and
thereafter sell the Common Stock from time to time in the
over-the-counter market, in negotiated transactions or otherwise.
Such broker-dealers, if any, may receive compensation in the form of
discounts, concessions or commissions from the Selling
Securityholders and/or the purchasers for whom such broker-dealers
act as agents or to whom they may sell as principals or otherwise
(which compensation as to a particular broker-dealer may exceed
customary commissions). The Selling Securityholders will pay all
commissions, transfer taxes, and other expenses associated with the
sale of Common Stock by them.
The Selling Securityholders and broker-dealers, if any,
acting in connection with such sales may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities
Act and any commission received by them and any profit on the resale
of the securities by them might be deemed to be underwriting
discounts and commissions under the Securities Act. We have agreed
to indemnify the Series 2000-A Preferred Stockholders and Warrantholders
against certain liabilities under the Securities Act.
From time to time this Prospectus will be supplemented and
amended as required by the Securities Act of 1933, as amended.
During any time when a supplement or amendment is so required, the
Selling Securityholders are to cease sales until the Prospectus has
been supplemented or amended. Pursuant to the registration rights
granted to certain of the Selling Securityholders, we have agreed to
update and maintain the effectiveness of this Prospectus. Certain
of the Selling Securityholders also may be entitled to sell their
Shares without the use of this Prospectus, provided that they comply
with the requirements of Rule 144 promulgated under the Securities Act.
We do not plan to solicit the holder of Series 2000-A Preferred
Stock regarding the conversion of its Series 2000-A Preferred shares into
shares of Common Stock which have been registered for resale upon
conversion, or the holder of Series 2000-A Warrants regarding the
exercise of its Warrants into shares of Common Stock which have been
registered for resale upon exercise.
EXPERTS
The consolidated financial statements of the Company as of
December 31, 1999 and 1998, and for the years then ended, appearing
in the Company's Annual Report (Form 10-K) for the year ended
December 31, 1999, filed with the Securities and Exchange Commission
on March 14, 2000 and incorporated by reference in this Prospectus,
included therein and incorporated herein by reference in reliance
upon the report of Hansen, Barnett & Maxwell, independent certified
public accountants, given upon the authority of such firm as experts
in auditing and accounting.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock
offered hereby and certain other legal matters in connection with
this offering have been passed upon for us by Mackey Price & Williams,
Salt Lake City, Utah.
<PAGE>
7,210,780 Shares of Common Stock
FIRST SCIENTIFIC, INC.
-------------------------------
PROSPECTUS
-------------------------------
No dealer, salesman or any other person has been authorized to
give information or to make any representations other than those
contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon as having
been authorized by the Company or the Underwriter. This
Prospectus does not constitute an offer to sell or a solicitation
of any offer to buy any of the securities offered hereby by
anyone in any jurisdiction in which such offer or solicitation is
not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is
unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date
hereof.
_____________________
TABLE OF CONTENTS
Page
Available Information. . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . 2
Documents Incorporated by Reference. . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . 3 June ____, 2000
Use of Proceeds. . . . . . . . . . . . . . . . . 10
Securityholders Registering Shares . . . . . . . 10
Description of Securities. . . . . . . . . . . . 17
Plan of Distribution . . . . . . . . . . . . . . 19
Experts. . . . . . . . . . . . . . . . . . . . . 19
Legal Matters. . . . . . . . . . . . . . . . . . 20
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses payable by the Company
in connection with the issuance and distribution of the securities
being registered, other than underwriting discount (all amounts
except the Securities and Exchange Commission filing fee and the
NASD fee are estimated):
Filing fee -- Securities and Exchange Commission . . . . $ 5,710.94
Printing and engraving expenses. . . . . . . . . . . . . 250.00
Legal fees and disbursements . . . . . . . . . . . . . . 25,000.00
Accounting fees and disbursements. . . . . . . . . . . . 10,000.00
Blue Sky fees and expenses (including legal fees). . . . 0.00
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 500.00
----------
Total expenses . . . . . . . . . . . . . . . . . . . . . $41,460.94
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of
Delaware (the "Delaware Law") empowers a Delaware corporation to
indemnify any person who is, or is threatened to be made, a party to
any threatened, pending or completed legal action, suit or
proceedings, whether civil, criminal, administrative or
investigative (other than action by or in the right of such
corporation), by reason of the fact that such person was an officer
or director of such corporation, or is or was serving at the request
of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided that
such officer or director acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the corporation's
best interests, and, for criminal proceedings, had no reasonable
cause to believe his or her conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or
in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if
the officer or director is adjudged to be liable to the corporation
in the performance of his or her duty. Where an officer or director
is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him or her
against the expenses which such officer or director actually and
reasonably incurred.
In accordance with the Delaware Law, the Certificate of
Incorporation of the Company contains a provision to limit the
personal liability of the directors of the Company for violations of
their fiduciary duty. This provision eliminates each director's
liability to the Registrant or its stockholders for monetary damages
except (i) for any breach of the director's duty of loyalty to the
Registrant or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware Law
providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions, or (iv) for
any transaction from which a director derived an improper personal
benefit. The effect of this provision is to eliminate the personal
liability of directors for monetary damages for actions involving a
breach of their fiduciary duty of care, including any such actions
involving gross negligence.
The Company may not indemnify an individual unless
authorized and a determination is made in the specific case that
indemnification of the individual is permissible in the
circumstances because 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 Company'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. The Company may not advance
expenses to an individual to whom the Company may ultimately be
responsible for indemnification unless authorized in the specific
case after the individual furnishes the following to the Company: (A)
a written affirmation of his or her good faith belief that his or her
conduct was in good faith, that he or she reasonably believed that
his or her conduct was in, or not opposed to, the Company'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; and
(B) the individual furnishes to the Company a written undertaking,
executed personally or on his or her behalf, to repay the advance if
it is ultimately determined that he or she did not meet the standard
of conduct referenced in part (A) of this sentence. In addition to
the individual furnishing the aforementioned written affirmation and
undertaking, in order for the Company to advance expenses, a
determination must also be made that the facts then- known to those
making the determination would not preclude indemnification.
All determinations relative to indemnification must be made
as follows: (1) by the Board of Directors of the Company by a
majority vote of those present at a meeting at which a quorum is
present, and only those directors not parties to the proceeding
shall be counted in satisfying the quorum requirement; or (2) if a
quorum cannot be obtained as contemplated in part (1) of this
sentence, by a majority vote of a committee of the Board of
Directors designated by the Board of Directors of the Company, which
committee shall consist of two or more directors not parties to the
proceeding, except that directors who are parties to the proceeding
may participate in the designation of directors for the committee;
or (3) by special legal counsel selected by the Board of Directors
or its committee in the manner prescribed in part (1) or part (2) of
this sentence (however, if a quorum of the Board of Directors cannot
be obtained under part (1) of this sentence and a committee cannot
be designated under part (2) of this sentence, then a special legal
counsel shall be selected by a majority vote of the full board of
directors, in which selection directors who are parties to the
proceeding may participate); or (4) 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 Company has also entered into Indemnification Agreements
with its executive officers and directors. These Indemnification
Agreements are substantially similar in effect to the Bylaws and the
provisions of the Company's Certificate of Incorporation relative to
providing indemnification to the maximum extent and in the manner
permitted by the Delaware General Corporation Law. Additionally,
such Indemnification Agreements contractually bind the Company with
respect to indemnification and contain certain exceptions to
indemnification, but do not limit the indemnification available
pursuant to the Company's Bylaws, the Company's Certificate of
Incorporation or the Delaware General Corporation Law.
ITEM 16. EXHIBITS
(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 No. Document Description
----------- ------------------------
2.1 Agreement and Plan of Reorganization, dated August
10, 1998, among the Registrant, Linco, Linco
Acquisition Corp. and Edward Walker. (1)
2.2 Purchase Agreement dated as of March 15, 2000 among
Registrant, David Wilich, Frank Wilich, Jr.,
Gene Dubois and PureSoft Solutions, LLC. (7)
3.1 Articles of Incorporation (2)
3.2 Bylaws (2)
3.3 Amendment to Articles of Incorporation (1)
3.4 Restated Bylaws. (5)
4.1 Certificate of Designation creating Series 2000-A
Convertible Preferred Stock. (8)
4.2 Warrant Certificate for Series 2000-A Warrants. (8)
5. Opinion of Mackey Price & Williams
10.1 Non-qualified Stock Option Agreement with Jerral R. Pulley (3)
10.2 Non-qualified Stock Option Agreement with Peter Sundwall, M.D.(3)
10.3 1998 Stock Incentive Plan (4)
10.4 Agreement with Weldon Phillips. (5)
10.5 Employment Agreement with Randy Hales. (5)
10.6 Consulting Agreement with Jerral R. Pulley. (5)
10.7 Consulting Agreement with Edward Walker. (5)
10.8 Exclusive License and Supply Agreement with Convatec
(Confidential Treatment Requested for Certain Portions).(6)
10.9 Employment Agreement with David Wilich. (7)
10.10 Stock Option Agreement with David Wilich, Frank Wilich and
Gene Dubois. (7)
10.11 Purchase Agreement dated as of May 16, 2000, between the
Registrant and Aspen Capital Resources, LLC. (8)
23.4 Consent of Mackey Price & Williams
23.5 Consent of Hansen, Barnett & Maxweell
27. Financial data schedule.
_____________________
(1) 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.
(2) Incorporated by reference to the same-numbered exhibit to
the Company's Registration Statement on Form 10-SB, file No.
0-24378.
(3) Incorporated by reference from Quarterly Report on Form
10-QSB, as filed on November 16, 1998.
(4) Incorporated by reference from Annual Report on Form
10-KSB, as filed on March 26, 1999.
(5) Incorporated by reference to the same numbered exhibit to
the Form 10-QSB filed November 15, 1999, with the Securities
and Exchange Commission.
(6) Incorporated by reference from Amended Quarterly Report on
Form 10-QSB/A as filed on March 9, 2000.
(7) Incorporated by reference from Report on Form 8-K, as filed
on March 30, 2000.
(8) Incorporated by reference from Report on Form 8-K, as filed
on May 31, 2000.
(b) Reports on Form 8-K
Report on Form 8-K, as filed on March 30, 2000.
Report on Form 8-K, as filed on May 31, 2000.
Report on Form 8-K, as filed on June 8, 2000.
Report on Form 8-K/A, as filed on June 14, 2000.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes (a) subject to
the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, to file with the Securities and Exchange Commission
such supplementary and periodic information, documents and reports
as may be prescribed by any rule or regulation of the Commission
heretofore or hereafter duly adopted pursuant to authority conferred
in that section; (b) to provide the Underwriter at the closing
specified in the Underwriting Agreement certificates in such
denominations and registered in the names as required by the
Underwriters to permit prompt delivery to each purchaser; (c) if any
public offering by the Underwriters is to be made on terms differing
from those set forth on the cover page of the Prospectus, to file a
post-effective amendment setting forth the terms of such offering;
and (d) to deregister, by means of a post-effective amendment, any
securities covered by this Registration Statement that remain unsold
at the termination of this offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or preceding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant also undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus
filed as part of a registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or Rule 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering of those securities.
The undersigned Registrant further undertakes that it will
file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to (i)
include any prospectus required by Section 10(a)(3) of the
Securities Act, (ii) reflect in the prospectus any facts or events
which, individually or together, represent a fundamental change in
the information in the Registration Statement, and (iii) include any
additional or changed material information on the plan of
distribution.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements of filing on Form S-3
and has duly caused this registration statement to be signed on its
behalf by the undersigned, in Salt Lake City, State of Utah, on June
14, 2000.
FIRST SCIENTIFIC, INC.
By: /s/ Randall L. Hales
--------------------------------
Randall L. Hales
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Randall L. Hales as
his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to
this Registration Statement, and to file the same, with all Exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite or necessary to be
done in and about the premises as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Signature Title . . . . Date
--------- ----- -----
/s/ Randall L. Hales President and Chief Executive Officer June 13, 2000
--------------------- (Principal Executive Officer)
and Director
Randall L. Hales
/s/ Gordon M. Davis Vice President of Operations June 13, 2000
-------------------- Chief Financial Officer, and
Gordon M. Davis Secretary (Principal Financial
and Accounting Officer)
/s/ Jerral R. Pulley Chariman of the Board June 13, 2000
--------------------
Jerral R. Pulley
/s/ Frank A. Cereska Director June 13, 2000
--------------------
Frank A. Cereska
/s/ Gary L. Crittenden Director June 14, 2000
----------------------
Gary L. Crittenden
/s/ Todd Heiner Director June 13, 2000
-------------------
Todd Heiner
/s/ Dan C. Jorgensen Director June 14, 2000
---------------------
Dan C. Jorgensen
/s/ Peter J. Sundwall, Jr. M.D. Director June 13, 2000
-------------------------------
Peter J. Sundwall, Jr., M.D.
/s/ Edward B. Walker, Ph.D. Director June 13, 2000
---------------------------
Edward B. Walker, Ph.D.
/s/ Doug R. Warren Director June 13, 2000
---------------------------
Doug R. Warren
</TABLE>
