SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): January 5, 2000
FIRST SCIENTIFIC, INC.
(Exact name of registrant as specified in this Charter)
Delaware 0-24378 33-0611745
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1877 West 2800 South, Suite 200, Ogden, Utah 84401
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (801) 393-5781
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ITEM 5. OTHER MATTERS.
On May 16, 2000, the issuer signed a securities Purchase Agreement (the
"Purchase Agreement") with Aspen Capital Resources, L.L.C. ("Aspen Capital").
Under the Purchase Agreement, Aspen Capital purchased 1,000 shares of Series
2000-A Convertible Preferred Stock ("Series A Preferred Stock") for $1,000,000,
less a 10% placement fee paid to Aspen Capital, and warrants exercisable for the
purchase of additional shares of common stock by Aspen Capital. The Purchase
Agreement provided for subsequent purchases of an additional 3,000 shares of
Series A Preferred Stock, with accompanying warrants, for an aggregate purchase
price of $3,000,000, less the 10% placement fee. From May through September
2000, the issuer issued a total of 4,000 shares of Series A Preferred Stock in
exchange for net proceeds of $3,600,000.
On June 14, 2000, the issuer filed a registration statement with the Securities
and Exchange Commission to register the resale by Aspen Capital of (1) 2,000,000
shares of common stock issuable upon conversion of the Series A Preferred Stock,
(2) 2,000,000 shares of common stock issuable upon exercise of the related
warrants, and (3) all additional shares of common stock issued or issuable to
Aspen Capital pursuant to the Purchase Agreement. That registration statement
was declared effective on July 7, 2000. The selling stockholder subsequently
converted 348 shares of Series A Preferred Stock into 2,000,000 shares of common
stock. As of the date hereof, Aspen Capital has sold all shares of the 2,000,000
issued in that conversion.
On November 13, 2000, the issuer entered into an arrangement (the "Amendment
Agreement") with Aspen Capital to amend the terms of the Purchase Agreement and
the warrants. Under the Amendment Agreement, Aspen Capital was granted the right
to convert the stated value and any accrued and unpaid dividends on the Series A
Preferred Stock into shares of common stock by dividing the stated value of such
shares to be converted together with any accrued but unpaid dividends thereon by
the conversion price, which is 80% of the average of the three lowest closing
bid prices for the issuer's common stock quoted on the Nasdaq Stock Market
system or reported on the NASD Electronic Bulletin Board during the 15 trading
days preceding the conversion date, subject to a maximum conversion price of
$1.20 per share.
As of December 29, 2000, the issuer entered into a second amendment to the
Purchase Agreement (the "Second Amendment Agreement"), which modified the terms
of the Purchase Agreement and the Amendment Agreement. Under the Second
Amendment Agreement, the issuer agreed to adopt a Certificate of Designation for
a new series of Preferred Stock, the Series 2000-B Convertible Preferred Stock
(the "Series B Preferred Stock").
The terms of the Series B Preferred Stock are contained in the attached copy of
the Certificate of Designation, filed as an exhibit to this report and by this
reference made a part hereof. Under the Second Amendment Agreement, Aspen
Capital agreed to exchange its remaining 3,652 shares of Series A Preferred
Stock for an equal number of shares of Series B Preferred Stock. Further, Aspen
Capital agreed that prior to April 3, 2001, it would not (1) offer or sell any
shares of the issuer's common stock or enter into any swap or other similar
arrangement at prices less than $0.25 per share, or (2) convert any shares of
Series B Preferred Stock. Aspen Capital agreed to surrender for cancellation all
of the warrants received in connection with the Purchase Agreement, provided
that (1) all of the terms of the second Amendment Agreement have been met; (2)
the issuer shall have redeemed all of the Series B Preferred Stock as provided
in the Certificate of Designation, and (3) no event of noncompliance shall have
occurred under the Purchase Agreement, as amended, including the failure to have
filed a registration statement to register the resale of the underlying shares
of common stock issuable upon conversion of the Series B Preferred Stock on or
before January 16, 2001 and to have the registration statement declared
effective on or before April 2, 2001, subject, however, to certain contingencies
that may extend the requirement for effectiveness to April 15, 2001.
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Under the Second Amendment Agreement the issuer acquired the right to redeem
all, but not less than all of the outstanding shares of Series B Preferred Stock
on or before April 2, 2001, for a redemption price of $6.5 million. Aspen
Capital acquired the right to require that the issuer redeem the Series B
Preferred Stock at a mandatory redemption price of 125% of the stated value of
the Series B Preferred Stock per share, plus accrued and unpaid dividends and
penalties, if any, through the date of redemption. The mandatory redemption may
be exercised on or after April 3, 2001; provided, however, that Aspen Capital
may exercise the mandatory redemption right before April 3, 2001 if an event of
noncompliance occurs. Aspen Capital also may exercise the mandatory redemption
right prior to April 3, 2001 if either Randall L. Hales ceases to be employed by
the issuer or if Pharmulations, LLC (specifically, Dr. Edward B. Walker) ceases
to provide services as the issuer's consultant. Similarly, the restrictions on
Aspen Capital's exercise of conversion and trading rights are contingent on the
continued employment of Randall L. Hales and the continued consulting services
of Pharmulations, LLC.
Under the second Amendment Agreement, the issuer also agreed to appoint Aspen
Capital's nominee to its board of directors. On January 8, 2001, the issuer
appointed Joe K. Johnson, the manager of Aspen Capital to serve as a member of
the board of directors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
None.
(b) Pro forma financial information
None.
(c) Exhibits. The following exhibits are incorporated herein by this reference:
Exhibit No. Description of Exhibit
4.3 Certificate of Designation creating Series 2000-B Convertible
Preferred Stock
10.12 Amendment Agreements dated November 13, 2000, between the Issuer and
Aspen Capital Resources, LLC
10.13 Agreement dated as of December 29, 2000, between the Issuer and Aspen
Capital Resources, LLC
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST SCIENTIFIC, INC.
(Registrant)
By:
Randall L. Hales, President and
Chief Executive Officer
Date:
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
4.3 Certificate of Designation creating Series 2000-B Convertible
Preferred Stock
10.12 Amendment Agreements dated November 13, 2000, between the Issuer and
Aspen Capital Resources, LLC
10.13 Agreement dated as of December 29, 2000, between the Issuer and Aspen
Capital Resources, LLC
