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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 21, 2000

REGISTRATION STATEMENT NO. 333-45996
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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HARVARD BIOSCIENCE, INC.
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 3826 04-3306140
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)

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84 OCTOBER HILL ROAD
HOLLISTON, MASSACHUSETTS 01746-1371
(508) 893-8066
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive office)

------------------------------

CHANE GRAZIANO
CHIEF EXECUTIVE OFFICER
HARVARD BIOSCIENCE, INC.
84 OCTOBER HILL ROAD
HOLLISTON, MASSACHUSETTS 01746-1371
(508) 893-8066
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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COPIES TO:

H. DAVID HENKEN, P.C. STANFORD N. GOLDMAN, JR., ESQ.
GOODWIN, PROCTER & HOAR LLP JOHN J. CHENEY, ESQ.
EXCHANGE PLACE MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
BOSTON, MASSACHUSETTS 02109-2881 ONE FINANCIAL CENTER
(617) 570-1000 BOSTON, MASSACHUSETTS 02111
(617) 542-6000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / / ____________

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. / / ____________

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 OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.

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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE IN WHICH THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED NOVEMBER 21, 2000

PROSPECTUS

[THOMAS WEISEL PARTNERS LLC LOGO]

[HARVARD BIOSCIENCE LOGO]

6,422,450 SHARES
COMMON STOCK

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We are selling 6,250,000 shares of our common stock and our president as a
selling stockholder is offering an additional 172,450 shares. We will not
receive any of the proceeds from the sale of shares by the selling stockholder.
We have granted the underwriters a 30-day option to purchase up to an additional
937,500 shares to cover over-allotments, if any.

This is an initial public offering of our common stock. We currently expect the
initial public offering price to be between $11.00 and $13.00 per share. We have
applied for approval for quotation of our common stock on the Nasdaq National
Market under the symbol "HBIO."
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 6.
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PER SHARE TOTAL

Public offering price $ $
Underwriting discount $ $
Proceeds, before expenses, to us $ $
Proceeds, before expenses, to the selling stockholder $ $

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THOMAS WEISEL PARTNERS LLC

DAIN RAUSCHER WESSELS

ING BARINGS

The date of this prospectus is , 2000

EDGAR GRAPHICS DESCRIPTIONS

INSIDE FRONT COVER-GATEFOLD

Pages 2 and 3: Gatefold has title "Harvard Bioscience Products and the
Bottlenecks in Post-Genomics Drug Discovery" at the top. Below these words is a
process flow diagram illustrating the drug discovery process and the key
bottlenecks within this process. The diagram begins on the upper left portion of
the gatefold and flows horizontally to the upper right portion of the gatefold.
Below and to the right of the diagram is an orange arrow indicating that orange
portions of the diagram represent bottlenecks in the drug discovery process. The
diagram is initially split into two parallel tracks which merge into a single
track near the middle of the pages as the flow diagram moves to the right. The
upper track of the diagram is titled "Compound Development" and includes a green
arrow titled "Compound Libraries". Below the arrow are the words "Combinatorial
Chemistry". The lower track of the diagram is titled "Target Discovery" and
includes two arrows. The first arrow is green and is titled "Target
Identification". Above this arrow is the word "Genomics". The next arrow to the
right is orange and is titled "Target Validation". Above this arrow is the word
"Proteomics". Following the "Compound Libraries" arrow on the upper track and
the "Target Validation" arrow on the lower track, the two tracks of the diagram
combine and include green and orange arrows to illustrate the remaining stages
and key bottlenecks in the drug discovery process. The individual arrows from
left to right include an orange arrow titled "Assay Development" followed by a
green arrow titled "High Throughput Screening". These two arrows in the diagram
appear under the title "Primary Screening". To the right of the "High Throughput
Screening" arrow is an orange arrow titled "Lead Optimization" followed by an
orange arrow titled "ADMET Screening". These two arrows in the diagram appear
under the title "Secondary Screening". To the right of the "ADMET Screening"
arrow is a green arrow titled "Clinical Trials", the final arrow in the process
flow diagram.

The lower portion of the gatefold consists of product descriptions. The
lower left portion begins with the words "Protein Purification" with the
following product photos and short descriptions appearing below "Protein
Purification". A drawing of a pipette tip is followed by the words "PrepTip-TM
Coated pipette tips for the purification of minute protein samples". Below this
is a photo of spin columns followed by the words "UltraMicro Spin Columns Small
plastic tubes containing purification media that are spun in a centrifuge".
Below this is a photo of disposable dialyzers followed by the words "Disposable
Dialyzers small plastic chambers capped with a membrane that retains proteins
but passes contaminants". Below this are the words "Protein Analysis" with the
following product photos and short descriptions appearing below "Protein
Analysis". A photo of a DNA/RNA/protein calculator followed by the words
"GeneQuant Pro-TM DNA/RNA/Protein calculators". Below this are photos of a
purple spectrophotometer, a yellow spectrophotometer and a green
spectrophotometer followed by the words "UltroSpec-TM Range of
spectrophotometers for molecular biology". Below this is a photo of an amino
acid analysis system followed by the words "Biochrom-TM 20 Amino Acid Analysis
System".

The lower right portion begins with the word "Absorption". Below this is a
photo of an absorption measurement chamber followed by the words "NaviCyte-TM
Absorption measurement chambers". Below this is the word "Distribution" with a
photo of an equilibrium dialysis plate and followed by the words "96 Well
Equilibrium Dialysis Plate Equilibrium dialysis plate for the measurement of the
interaction of drugs and proteins". Below this are the words "Metabolism and
Elimination" with a photo of an isolated organ system and followed by the words
"Isolated Organ Systems Liver and kidney systems used for studying metabolism
and elimination". Below this is the word "Toxicology" with a photo of a desktop
computer and the ScanTox product followed by the words "ScanTox-TM Screening
system for testing toxicology without the use of laboratory animals". Below this
is a photo of an infusion pump followed by the words "PHD 2000 Infusion pump for
toxicology testing".

TABLE OF CONTENTS

PAGE
--------

Prospectus Summary.......................................... 1

Risk Factors................................................ 6

Information Regarding Forward-Looking Statements............ 15

Use of Proceeds............................................. 16

Dividend Policy............................................. 16

Capitalization.............................................. 17

Dilution.................................................... 18

Selected Financial Data..................................... 19

Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 20

Business.................................................... 28

Management.................................................. 44

Relationships and Related Party Transactions................ 51

Principal and Selling Stockholders.......................... 53

Description of Capital Stock................................ 55

Shares Eligible for Future Sale............................. 59

Underwriting................................................ 61

Legal Matters............................................... 64

Experts..................................................... 64

Where You Can Find More Information......................... 64

Index to Consolidated Financial Statements.................. F-1

PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS"
SECTION.

OUR COMPANY

We are a global developer, manufacturer and marketer of innovative, enabling
tools used in drug discovery research at pharmaceutical and biotechnology
companies, universities and government laboratories. We sell approximately
10,000 products to more than 5,000 customers in over 60 countries. Our
proprietary products accounted for approximately 82% of our revenues for the
nine months ended September 30, 2000. We have designed our tools to accelerate
the speed and to reduce the cost at which our customers can discover and
commercialize new drugs. By providing research tools, we participate in the
revolutions in genomics, the study of genes, and proteomics, the study of
proteins, without bearing the risks inherent in attempting to discover new
drugs.

Since our reorganization in March 1996, we have focused on developing tools
to alleviate two critical bottlenecks in the drug discovery process:

- PROTEIN PURIFICATION, which is the removal of contaminants such as salts,
buffers, detergents and cellular debris from a protein sample, and

- ADMET SCREENING, which is the testing of the absorption, distribution,
metabolism, elimination and toxicology properties of drug candidates.

Our proteomics products are tools that allow researchers to purify and analyze
proteins contained in a sample. Our ADMET screening products are tools that
enable researchers to test drug candidates to determine their absorption,
distribution, metabolism, elimination and toxicology properties prior to
conducting costly clinical trials.

We market our products primarily through our 1,000 page catalog to
approximately 100,000 researchers worldwide. Our catalog is also available on
our website. We distribute most of our products directly through our operations
in the United States, the United Kingdom, Germany, France and Canada. In
addition to our catalog distribution channel, we have a long-standing
distribution and marketing relationship with Amersham Pharmacia Biotech, or
APBiotech, one of the largest companies in the life sciences industry.

OUR OPPORTUNITY

Drug discovery is a time-consuming and costly process. In the pre-genomics
era, the compound development, primary screening and clinical trials stages were
bottlenecks in this process. The recent successes of genomics, combinatorial
chemistry (the automated production of large numbers of chemical compounds) and
high throughput screening have alleviated the bottlenecks at the compound
development and primary screening stages. However, these bottlenecks have been
replaced by bottlenecks at later stages in the drug discovery process. Our
opportunity lies in alleviating these bottlenecks with products that increase
the productivity and reduce the cost of drug discovery.

OUR PRODUCTS

We have a broad array of established products for proteomics and ADMET
screening. We believe our products offer drug discovery researchers the most
comprehensive protein purification and

ADMET screening solutions. In the past two years, we have expanded our product
base by introducing the following proprietary tools:

PROTEIN PURIFICATION:

- specially coated pipette tips, which are small plastic tubes coated on
the inside with a material that selectively extracts proteins but not
contaminants,

- micro spin columns, which are small plastic tubes partially filled with
a material that selectively extracts proteins but not contaminants, and

- micro dialyzers, which are small plastic tubes each containing a
dialysis membrane which allows small molecules to pass through but
retains large molecules such as proteins.

ADMET SCREENING:

- NaviCyte diffusion chambers, which measure drug absorption by
simulating membranes in the human body,

- small plastic plates with 96 wells, which each contain a dialysis
membrane that allows small molecules to pass through but retains large
molecules such as proteins, and

- ScanTox instruments, which enable toxicology testing without the use of
animals.

In protein purification, these new products increase productivity and reduce
cost by avoiding the cumbersome sample handling steps required by current
technology and by being compatible with automated liquid-handling robots. Many
of the products are available in 96 well plate formats. In ADMET screening,
these new products lower cost and increase automation by using molecular,
cellular, tissue and organ based assays to reduce the use of live animals.

In addition to our proprietary products, we provide a broad selection of
non-proprietary products that are frequently used in conjunction with our
proprietary products. We seek to be a single source for our customers' product
needs in protein purification and ADMET screening.

OUR STRATEGY

Our goal is to become the leading provider of innovative, enabling
technologies and products for proteomics and ADMET research in the drug
discovery process. Key elements of our strategy are to:

- establish our new proteomics and ADMET screening products as industry
standards,

- launch a broad range of innovative new tools for drug discovery,

- leverage our existing distribution and marketing channels,

- provide a single source of tools for our customers' research needs in
proteomics and ADMET screening, and

- acquire complementary technologies.

------------------------

We organized our company as a Massachusetts corporation on March 7, 1996 in
connection with our purchase of a portion of the assets of Harvard Apparatus, a
business which, with its predecessors, had been in existence since 1901. The
initial Harvard Apparatus catalog was published in 1901 by Dr. William T.
Porter, a professor at Harvard Medical School and the founder of the Harvard
Apparatus business. We will be reincorporated by merger in Delaware prior to the
closing of this offering. In connection with the reincorporation, we will change
our corporate name from Harvard Apparatus, Inc. to Harvard Bioscience, Inc. We
have no affiliation with Harvard University. Our principal executive offices are
located at 84 October Hill Road, Holliston, Massachusetts 01746. Our telephone
number at that location is (508) 893-8066 and our Internet address is
www.harvardbioscience.com. The information contained on our website is not part
of this prospectus.

We have six wholly-owned subsidiaries, Biochrom Ltd. (United Kingdom),
Harvard Apparatus Limited (United Kingdom), Hugo Sachs Elektronik-Harvard
Apparatus GmbH (Germany), Harvard Apparatus S.A.R.L. (France), Harvard Apparatus
FSC, Inc. (United States) and Ealing Scientific Ltd. (Canada).

The names Harvard Bioscience and Harvard Apparatus and our logo are names
and trademarks that we believe belong to us. We have the rights to numerous
trademarks and trade names including AmiKa, Biochrom, CPK, GeneQuant,
GeneQuantPro, NaviCyte, NovaSpec, PrepTip, PureTip, ScanTox, Stronghold and
UltroSpec. This prospectus also contains the trademarks and trade names of other
entities that are the property of their respective owners.

THE OFFERING

Common stock offered by us................... 6,250,000 shares

Common stock offered by our president as a
selling stockholder........................ 172,450 shares

Common stock outstanding after the
offering................................... 24,782,422 shares

Use of proceeds.............................. For payment of existing debt, redemption of
our series A redeemable preferred stock,
potential acquisitions, working capital and
general corporate purposes.

Proposed Nasdaq National Market symbol....... HBIO

The above information is based on 18,532,422 shares outstanding as of
October 15, 2000 and excludes:

- 599,096 shares issuable upon exercise of options then outstanding at a
weighted average exercise price of $1.00 per share.

Unless otherwise noted, this prospectus assumes:

- no exercise of the underwriters' over-allotment,

- an assumed initial offering price of $12.00 per share,

- a 19.71-for-1 stock split of our common stock effected in connection with
this offering,

- our reincorporation by merger in Delaware and our related name change
prior to the closing of this offering,

- the redemption of our outstanding series A redeemable preferred stock upon
the closing of this offering,

- the automatic conversion of our outstanding series B convertible preferred
stock into 955,935 shares of our common stock upon the closing of this
offering,

- the issuance of 8,509,905 shares of our common stock upon exercise of all
outstanding warrants at a weighted average exercise price of $0.0005 per
share prior to the closing of this offering, and

- the amendment and restatement of our certificate of incorporation in
connection with this offering.

SUMMARY FINANCIAL DATA

PREDECESSOR
PREDECESSOR COMPANY FOR THE PERIOD
COMPANY FOR THE PERIOD FROM INCEPTION
FISCAL YEAR FROM JANUARY 1, MARCH 15,
ENDED 1996 TO 1996 TO
DECEMBER 31, MARCH 14, DECEMBER 31,
1995 1996 1996
------------ --------------- --------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues....................... $ 10,032 $ 1,989 $ 8,198
Cost of goods sold............. 5,286 1,059 4,080
Stock compensation expense..... -- -- --
---------- ---------- ----------
Gross profit............... 4,746 930 4,118
Other operating expenses....... 4,252 810 3,141
Stock compensation expense..... -- -- --
---------- ---------- ----------
Operating income (loss).... 494 120 977
---------- ---------- ----------
Other (expense) income:
Common stock warrant interest
expense...................... -- -- --
Interest expense, net........ (472) (90) (177)
Amortization of deferred
financing costs.............. -- -- --
Other........................ (62) (139) 98
---------- ---------- ----------
Other expense, net......... (534) (229) (79)
---------- ---------- ----------
(Loss) income before income
taxes...................... (40) (109) 898
Income taxes................... 85 -- 362
---------- ---------- ----------
Net (loss) income.......... $ (125) $ (109) $ 536
Preferred stock dividends...... -- -- (97)
---------- ---------- ----------
Net (loss) income available
to common stockholders..... $ (125) $ (109) $ 439
========== ========== ==========
(Loss) income per share:
Basic........................ $ (0.01) $ (0.01) $ 0.04
========== ========== ==========
Diluted...................... $ (0.01) $ (0.01) $ 0.02
========== ========== ==========
Weighted average common shares:
Basic........................ 10,259,410 10,259,410 10,259,410
========== ========== ==========
Diluted...................... 10,259,410 10,259,410 20,241,145
========== ========== ==========
Pro forma (loss) income per
share:
Basic........................
Diluted......................
Pro forma weighted average
common shares:
Basic........................
Diluted......................

NINE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ ------------------------
1997 1998 1999 1999 2000
---------- ---------- ---------- ----------- ----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues....................... $ 11,464 $ 12,154 $ 26,178 $ 18,470 $ 22,069
Cost of goods sold............. 5,128 5,351 13,547 9,359 11,462
Stock compensation expense..... -- -- -- -- 151
---------- ---------- ---------- --------- ----------
Gross profit............... 6,336 6,803 12,631 9,111 10,456
Other operating expenses....... 4,217 4,391 8,151 5,862 7,723
Stock compensation expense..... -- -- 3,284 937 13,181
---------- ---------- ---------- --------- ----------
Operating income (loss).... 2,119 2,412 1,196 2,312 (10,448)
---------- ---------- ---------- --------- ----------
Other (expense) income:
Common stock warrant interest
expense...................... (117) (1,379) (29,694) (7,403) (70,920)
Interest expense, net........ (223) (210) (657) (468) (655)
Amortization of deferred
financing costs.............. -- -- (63) (44) (56)
Other........................ 10 31 (65) 46 (428)
---------- ---------- ---------- --------- ----------
Other expense, net......... (330) (1,558) (30,479) (7,869) (72,059)
---------- ---------- ---------- --------- ----------
(Loss) income before income
taxes...................... 1,789 854 (29,283) (5,557) (82,507)
Income taxes................... 682 783 137 649 1,354
---------- ---------- ---------- --------- ----------
Net (loss) income.......... $ 1,107 $ 71 $ (29,420) $ (6,206) $ (83,861)
Preferred stock dividends...... (122) (122) (157) (115) (123)
---------- ---------- ---------- --------- ----------
Net (loss) income available
to common stockholders..... $ 985 $ (51) $ (29,577) $ (6,321) $ (83,984)
========== ========== ========== ========= ==========
(Loss) income per share:
Basic........................ $ 0.13 $ (0.01) $ (5.28) $ (1.13) $ (13.11)
========== ========== ========== ========= ==========
Diluted...................... $ 0.06 $ (0.01) $ (5.28) $ (1.13) $ (13.11)
========== ========== ========== ========= ==========
Weighted average common shares:
Basic........................ 7,406,486 5,598,626 5,598,626 5,598,626 6,407,682
========== ========== ========== ========= ==========
Diluted...................... 17,500,194 5,598,626 5,598,626 5,598,626 6,407,682
========== ========== ========== ========= ==========
Pro forma (loss) income per
share:
Basic........................ $ 0.01 $ (0.82)
========== ==========
Diluted...................... $ 0.01 $ (0.82)
========== ==========
Pro forma weighted average
common shares:
Basic........................ 14,902,100 15,873,527
========== ==========
Diluted...................... 17,381,677 15,873,527
========== ==========

Pro forma basic and diluted net (loss) income per share have been calculated
assuming the conversion of all outstanding shares of convertible preferred stock
into common stock and the exercise of all outstanding warrants for common stock
as if they had been converted or exercised on the dates of issuance.
Accordingly, common stock warrant interest expense and dividends associated with
convertible preferred shares are excluded from the pro forma per share amounts.

The financial data presented above for the year ended December 31, 1995 and
for the period from January 1, 1996 to March 14, 1996 represents the financial
data of our predecessor company without any adjustments relating to our purchase
of a portion of its assets.

AS OF SEPTEMBER 30, 2000
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- ----------- -----------

BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 2,149 $ 2,154 $68,904
Working capital........................................... 1,025 1,030 67,780
Total assets.............................................. 23,236 23,241 89,991
Long-term obligations, net of current portion............. 5,730 5,730 5,730
Preferred stock........................................... 2,500 1,500 --
Common stock warrants..................................... 102,115 -- --
Stockholders' equity (deficit)............................ (97,018) 6,102 74,352

The preceding table presents a summary of our balance sheet data as of
September 30, 2000:

- on an actual basis assuming the filing of an amended and restated
certificate of incorporation to increase the number of authorized shares
of common stock,

- on a pro forma basis to give effect to the conversion of all outstanding
shares of convertible preferred stock into an aggregate of 955,935 shares
of common stock, the exercise of all outstanding warrants for an aggregate
of 8,509,905 shares of common stock upon the closing of this offering and
the filing of our amended and restated certificate of incorporation prior
to the effective date of this offering, and

- on a pro forma as adjusted basis to reflect the sale of 6,250,000 shares
of common stock by us in this offering at an assumed initial offering
price of $12.00 per share, after deducting estimated underwriting
discounts, commissions and offering expense and the redemption of all
outstanding shares of redeemable preferred stock upon the closing of this
offering.

RISK FACTORS

AN INVESTMENT IN OUR COMMON STOCK INVOLVES SIGNIFICANT RISKS. YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE YOU DECIDE TO BUY OUR COMMON
STOCK.

IF WE ARE UNABLE TO ACHIEVE AND SUSTAIN MARKET ACCEPTANCE OF OUR NEW PROTEOMICS
AND ADMET SCREENING PRODUCTS ACROSS THEIR BROAD INTENDED RANGE OF APPLICATIONS,
WE WILL NOT GENERATE EXPECTED REVENUE GROWTH.

Our business strategy depends on our successfully developing and
commercializing our new proteomics and ADMET screening technologies to meet our
customers' expanding needs and demands. For example, our recent acquisition of
AmiKa Corporation involved the purchase of the technology that we are using to
develop our 96 well plate for serum protein binding analysis. Market acceptance
of this and other new products will depend on many factors, including the extent
of our marketing efforts and our ability to demonstrate to existing and
potential customers that our technologies are superior to other technologies and
products that are available now or may become available in the future. If our
new products do not gain market acceptance, it could materially adversely affect
our business and future growth prospects.

OUR PRODUCTS COMPETE IN MARKETS THAT ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE,
AND THEREFORE ONE OR MORE OF OUR PRODUCTS COULD BE MADE OBSOLETE BY NEW
TECHNOLOGIES.

Because the market for drug discovery tools is characterized by rapid
technological change and frequent new product introductions, our product lines
may be made obsolete unless we are able to continually improve our existing
products and develop new products. To meet the evolving needs of our customers,
we must continually enhance our current and planned products and develop and
introduce new products. However, we may experience difficulties which may delay
or prevent the successful development, introduction and marketing of new
products or product enhancements. In addition, our product lines are based on
complex technologies which are subject to rapid change as new technologies are
developed and introduced in the marketplace. We may have difficulty in keeping
abreast of the rapid changes affecting each of the different markets we serve or
intend to serve. Our failure to develop and introduce products in a timely
manner in response to changing technology, market demands or the requirements of
our customers could cause our product sales to decline, and we could experience
significant losses.

We offer and plan to offer a broad product line and have incurred and expect
to continue to incur substantial expenses for development of new products and
enhanced versions of our existing products. The speed of technological change in
our market may prevent us from being able to successfully market some or all of
our products for the length of time required to recover their often significant
development costs. Failure to recover the development costs of one or more
products or product lines could decrease our profitability or cause us to
experience significant losses.

WE HAVE LIMITED EXPERIENCE IN MANUFACTURING SOME OF OUR PRODUCTS WHICH COULD
CAUSE PROBLEMS OR DELAYS RESULTING IN LOST REVENUE.

We have only recently begun to manufacture and therefore currently have
limited manufacturing capacity for some of our products, such as our PrepTip
protein purification pipette tips. If we fail to manufacture and deliver
products in a timely manner, our relationships with our customers could be
seriously harmed, and our revenue could decline. To achieve the production
levels necessary for successful commercialization, we will need to scale-up our
manufacturing facilities and establish automated manufacturing methods and
quality control procedures. We cannot assure you that manufacturing or quality
control problems will not arise as we attempt to scale-up our production or that
we can scale-up manufacturing and quality control in a timely manner or at
commercially

reasonable costs. If we are unable to manufacture these products consistently on
a timely basis because of these or other factors, we may not achieve the level
of sales from these products that we otherwise anticipate.

IF AMERSHAM PHARMACIA BIOTECH TERMINATES ITS DISTRIBUTION AGREEMENT WITH US OR
FAILS TO PERFORM ITS OBLIGATIONS UNDER OUR DISTRIBUTION AGREEMENT, IT COULD
IMPAIR THE MARKETING AND DISTRIBUTION EFFORTS FOR SOME OF OUR PRODUCTS AND
RESULT IN LOST REVENUES.

For the nine months ended September 30, 2000, approximately 39% of our
revenues were generated through an agreement with Amersham Pharmacia Biotech, or
APBiotech, under which APBiotech acts as our primary marketing and distribution
channel for the products of our Biochrom subsidiary. Under the terms of this
agreement, we are restricted from allowing another person or entity to
distribute, market and sell the majority of the products of our Biochrom
subsidiary. We are also restricted from making or promoting sales of the
majority of the products of our Biochrom subsidiary to any person or entity
other than APBiotech or its authorized subdistributors. We have little or no
control over APBiotech's marketing and sales activities or the use of its
resources. APBiotech may fail to purchase sufficient quantities of products from
us or perform appropriate marketing and sales activities. The failure by
APBiotech to perform these activities could materially adversely affect our
business and growth prospects during the term of this agreement. In addition,
our inability to maintain our arrangement with APBiotech for product
distribution, could materially impede the growth of our business and our ability
to generate sufficient revenue. Our agreement with APBiotech may be terminated
under some circumstances, including in the event of a breach of a material term
by us. This agreement has a perpetual term; however, it may be terminated by
either party upon 18 months' prior written notice. While we believe our
relationship with APBiotech is good, we cannot guarantee that the contract will
be renewed or that APBiotech will aggressively market our products in the
future.

WE MAY BE ADVERSELY AFFECTED BY THREATENED LITIGATION INVOLVING HARVARD
UNIVERSITY.

We received correspondence from counsel to Harvard University on
November 7, 2000 alleging trademark infringement, false designation of origin,
unfair competition and cybersquatting and threatening legal action against us if
we do not take certain steps, including ceasing our use of the term "Harvard
Bioscience" and other terms containing the term "Harvard." We do not currently
intend to take such steps, and we believe it is likely that Harvard University
will pursue this matter against us. This legal action could include, among other
things, the filing of a complaint against us seeking injunctive relief and
treble damages with respect to these claims. We may suffer adverse consequences
as a result of this matter which we cannot now predict. If claims for injunctive
relief or other damages are asserted and are decided against us, we could suffer
monetary damages, lose our ability to use the names "Harvard Bioscience" and
"Harvard Apparatus," lose the reputation and goodwill associated with these
names and ultimately experience decreased revenues and earnings in subsequent
periods. In addition, any lawsuit or claim for injunctive relief may result in
significant litigation expenses.

OUR COMPETITORS AND POTENTIAL COMPETITORS MAY DEVELOP PRODUCTS AND TECHNOLOGIES
THAT ARE MORE EFFECTIVE OR COMMERCIALLY ATTRACTIVE THAN OUR PRODUCTS.

We expect to encounter increased competition from both established and
development-stage companies that continually enter our market. We anticipate
that these competitors will include:

- companies developing and marketing life sciences research tools,

- health care companies that manufacture laboratory-based tests and
analyzers,

- diagnostic and pharmaceutical companies, and

- companies developing drug discovery technologies.

Currently, our principal competition comes from established companies that
provide products which perform many of the same functions for which we market
our products. Our competitors may develop or market products that are more
effective or commercially attractive than our current or future products. Many
of our competitors have substantially greater financial, operational, marketing
and technical resources than we do. Moreover, these competitors may offer
broader product lines and tactical discounts, and may have greater name
recognition. In addition, we may face competition from new entrants into our
field. We may not have the financial resources, technical expertise or
marketing, distribution or support capabilities to compete successfully in the
future.

IF WE ARE UNABLE TO EFFECTIVELY PROTECT OUR INTELLECTUAL PROPERTY, THIRD PARTIES
MAY USE OUR TECHNOLOGY, WHICH WOULD IMPAIR OUR ABILITY TO COMPETE IN OUR
MARKETS.

Our continued success will depend in significant part on our ability to
obtain and maintain meaningful patent protection for our products throughout the
world. Patent law relating to the scope of claims in the technology fields in
which we operate is still evolving. The degree of future protection for our
proprietary rights is uncertain. We own ten U.S. patents and have four patent
applications pending in the U.S. We also own numerous U.S. registered trademarks
and trade names and have applications for the registration of trademarks and
trade names pending. We rely on patents to protect a significant part of our
intellectual property and to enhance our competitive position. However, our
presently pending or future patent applications may not issue as patents, and
any patent previously issued to us may be challenged, invalidated, held
unenforceable or circumvented. Furthermore, the claims in patents which have
been issued or which may be issued to us in the future may not be sufficiently
broad to prevent third parties from producing competing products similar to our
products. In addition, the laws of various foreign countries in which we compete
may not protect our intellectual property to the same extent as do the laws of
the United States. If we fail to obtain adequate patent protection for our
proprietary technology, our ability to be commercially competitive will be
materially impaired.

In addition to patent protection, we also rely on protection of trade
secrets, know-how and confidential and proprietary information. To maintain the
confidentiality of trade secrets and proprietary information, we generally seek
to enter into confidentiality agreements with our employees, consultants and
strategic partners upon the commencement of a relationship with us. However, we
may not obtain these agreements in all circumstances. In the event of
unauthorized use or disclosure of this information, these agreements, even if
obtained, may not provide meaningful protection for our trade secrets or other
confidential information. In addition, adequate remedies may not exist in the
event of unauthorized use or disclosure of this information. The loss or
exposure of our trade secrets and other proprietary information would impair our
competitive advantages and could have a material adverse effect on our operating
results, financial condition and future growth prospects.

WE MAY BE INVOLVED IN LAWSUITS TO PROTECT OR ENFORCE OUR PATENTS WHICH WOULD BE
EXPENSIVE AND TIME-CONSUMING.

In order to protect or enforce our patent rights, we may initiate patent
litigation against third parties. We may also become subject to interference
proceedings conducted in the patent and trademark offices of various countries
to determine the priority of inventions. Several of our products are based on
patents which are closely surrounded by patents held by competitors or potential
competitors. As a result, we believe there is a greater likelihood of a patent
dispute than would be expected if our patents were not closely surrounded by
other patents. The defense and prosecution, if necessary, of intellectual
property suits, interference proceedings and related legal and administrative
proceedings would be costly and divert our technical and management personnel
from their normal responsibilities. We may not prevail in any of these suits. An
adverse determination of any litigation or defense proceedings could put our
patents at risk of being invalidated or interpreted narrowly and could put our
patent applications at risk of not issuing.

Furthermore, because of the substantial amount of discovery required in
connection with intellectual property litigation, there is a risk that some of
our confidential information could be compromised by disclosure during this type
of litigation. For example, during the course of this kind of litigation, there
could be public announcements of the results of hearings, motions or other
interim proceedings or developments in the litigation. Securities analysts or
investors may perceive these announcements to be negative, which could cause the
market price of our stock to decline.

OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING ON
OR MISAPPROPRIATING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.

We may be sued for infringing on the intellectual property rights of others,
including the patent rights, trademarks and trade names of third parties.
Intellectual property litigation is costly and the outcome is uncertain. If we
do not prevail in any intellectual property litigation, in addition to any
damages we might have to pay, we could be required to stop the infringing
activity, or obtain a license to or design around the intellectual property in
question. If we are unable to obtain a required license on acceptable terms, or
are unable to design around any third party patent, we may be unable to sell
some of our products and services, which could result in reduced revenue.

AmiKa Corporation, whose assets we purchased in July 2000, has received and
responded to correspondence from counsel to a third party competitor regarding
the possible infringement by it of a patent and other pending patent
applications held by such third party. Because this competitor has not pursued
this matter since AmiKa's reply on June 7, 2000 in which AmiKa stated that it
did not believe it was infringing on this competitor's patents, we believe that
this matter has been concluded. However, we cannot assure you that this third
party competitor will not assert these or similar claims in the future. We do
not currently derive a significant portion of our revenue from products which
depend on the intellectual property related to this alleged infringement.

CHANGES IN ACCOUNTING FOR GOODWILL AMORTIZATION MAY HAVE A MATERIAL ADVERSE
AFFECT ON US.

We currently amortize goodwill purchased in our acquisitions on a straight
line basis ranging from 5 to 15 years. At September 30, 2000, we had unamortized
goodwill of $9.1 million, or 39.4% of total assets. Any changes in accounting
rules under generally accepted accounting principles that reduce the period over
which we may amortize goodwill may have an adverse effect on our ability to
consummate future acquisitions and our financial results. A shorter goodwill
amortization period would increase annual amortization expense and reduce our
net income over the amortization period. In addition, we continually evaluate
whether any portion of the remaining balance of goodwill may not be recoverable.
If it is determined in the future that a portion of our goodwill is impaired, we
may be required to write off that portion of our goodwill which would have an
adverse effect on our net income for the period in which the write off occurs.

WE ARE DEPENDENT UPON OUR LICENSED TECHNOLOGIES AND MAY NEED TO OBTAIN
ADDITIONAL LICENSES IN THE FUTURE TO OFFER OUR PRODUCTS AND REMAIN COMPETITIVE.

We have licensed key components of our technologies from third parties.
While we do not currently derive a material portion of our revenue from products
that depend on these licensed technologies, we may in the future. If our license
agreements were to terminate prematurely or if we breach the terms of any
licenses or otherwise fail to maintain our rights to these technologies, we may
lose the right to manufacture or sell our products that use these licensed
technologies. In addition, we may need to obtain licenses to additional
technologies in the future in order to keep our products competitive. If we fail
to license or otherwise acquire necessary technologies, we may not be able to
develop new products that we need to remain competitive.

MANY OF OUR CURRENT AND POTENTIAL CUSTOMERS ARE FROM THE PHARMACEUTICAL AND
BIOTECHNOLOGY INDUSTRIES AND ARE SUBJECT TO RISKS FACED BY THOSE INDUSTRIES.

We derive a substantial portion of our revenues from pharmaceutical and
biotechnology companies. We expect that pharmaceutical and biotechnology
companies will continue to be our major source of revenues for the foreseeable
future. As a result, we are subject to risks and uncertainties that affect the
pharmaceutical and biotechnology industries, such as pricing pressures as
third-party payers continue challenging the pricing of medical products and
services, government regulation, ongoing consolidation and uncertainty of
technological change, and to reductions and delays in research and development
expenditures by companies in these industries. In particular, several proposals
are being contemplated by lawmakers in the United States to extend the federal
Medicare program to include reimbursement for prescription drugs. Many of these
proposals involve negotiating decreases in prescription drug prices or imposing
price controls on prescription drugs. If appropriate reimbursement cannot be
obtained, it could result in our customers purchasing fewer products from us as
they reduce their research and development expenditures.

In addition, we are dependent, both directly and indirectly, upon general
health care spending patterns, particularly in the research and development
budgets of the pharmaceutical and biotechnology industries, as well as upon the
financial condition of various governments and government agencies. Many of our
customers, including universities, government research laboratories, private
foundations and other institutions, obtain funding for the purchase of our
products from grants by governments or government agencies. There exists the
risk of a potential decrease in the level of governmental spending allocated to
scientific and medical research which could substantially reduce or even
eliminate these grants. If government funding necessary to purchase our products
were to decrease, our business and results of operations could be materially
adversely affected.

OUR BUSINESS IS SUBJECT TO ECONOMIC, POLITICAL AND OTHER RISKS ASSOCIATED WITH
INTERNATIONAL REVENUES AND OPERATIONS.

Since we manufacture and sell our products worldwide, our business is
subject to risks associated with doing business internationally. Our revenues
from our non-U.S. operations represented approximately 69% of our total revenues
for the nine months ended September 30, 2000. We anticipate that revenue from
international operations will continue to represent a substantial portion of our
total revenues. In addition, a number of our manufacturing facilities and
suppliers are located outside the United States. Accordingly, our future results
could be harmed by a variety of factors, including:

- changes in foreign currency exchange rates, which resulted in a foreign
currency loss of $456,000 for the nine months ended September 30, 2000,

- changes in a specific country's or region's political or economic
conditions, including Western Europe, in particular,

- potentially negative consequences from changes in tax laws affecting our
ability to expatriate profits,

- difficulty in staffing and managing widespread operations, and

- unfavorable labor regulations applicable to our European operations, such
as the unenforceability of non-competition agreements in the United
Kingdom.

WE MAY LOSE MONEY WHEN WE EXCHANGE FOREIGN CURRENCY RECEIVED FROM INTERNATIONAL
REVENUES INTO U.S. DOLLARS.

For the nine months ended September 30, 2000, approximately 69% of our
business was conducted in currencies other than the U.S. dollar, which is our
reporting currency. As a result, currency

fluctuations among the U.S. dollar and the currencies in which we do business
have caused and will continue to cause foreign currency transaction gains and
losses. Currently, we attempt to manage foreign currency risk through the
matching of assets and liabilities. In the future, we may undertake to manage
foreign currency risk through additional hedging methods. We recognize foreign
currency gains or losses arising from our operations in the period incurred. We
cannot guarantee that we will be successful in managing foreign currency risk or
in predicting the effects of exchange rate fluctuations upon our future
operating results because of the number of currencies involved, the variability
of currency exposure and the potential volatility of currency exchange rates.

IF WE ENGAGE IN ANY ACQUISITION, WE WILL INCUR A VARIETY OF COSTS, AND MAY NEVER
REALIZE THE ANTICIPATED BENEFITS OF THE ACQUISITION.

Our business strategy includes the future acquisition of businesses,
technologies, services or products that we believe are a strategic fit with our
business. If we do undertake any acquisition, the process of integrating an
acquired business, technology, service or product may result in unforeseen
operating difficulties and expenditures and may absorb significant management
attention that would otherwise be available for ongoing development of our
business. Moreover, we may fail to realize the anticipated benefits of any
acquisition. Future acquisitions could reduce your ownership and could cause us
to incur debt, expose us to future liabilities and result in amortization
expenses related to goodwill and other intangible assets.

IF WE FAIL TO RETAIN OUR KEY PERSONNEL AND HIRE, TRAIN AND RETAIN QUALIFIED
EMPLOYEES, WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY, WHICH COULD RESULT IN
REDUCED REVENUE.

Our success is highly dependent on the continued services of key management,
technical and scientific personnel. Our management and other employees may
voluntarily terminate their employment with us at any time upon short notice.
The loss of the services of any member of our senior management team, including
our Chief Executive Officer, Chane Graziano, and our President, David Green, or
any of our technical or scientific staff may significantly delay or prevent the
achievement of product development and other business objectives. We maintain
key person life insurance on Messrs. Graziano and Green. Our future success will
also depend on our ability to identify, recruit and retain additional qualified
scientific, technical and managerial personnel. Competition for qualified
personnel in the technology area is intense, and we operate in several
geographic locations where labor markets are particularly competitive, including
Boston, Massachusetts and London and Cambridge, England, and where demand for
personnel with these skills is extremely high and is likely to remain high. As a
result, competition for qualified personnel is intense, particularly in the
areas of information technology, engineering and science and the process of
hiring suitably qualified personnel is often lengthy. If we are unable to hire
and retain a sufficient number of qualified employees, our ability to conduct
and expand our business could be seriously reduced.

WE PLAN SIGNIFICANT GROWTH, AND THERE IS A RISK THAT WE WILL NOT BE ABLE TO
MANAGE THIS GROWTH.

Our success will depend on the expansion of our operations. Effective growth
management will place increased demands on our management, operational and
financial resources. To manage our growth, we must expand our facilities,
augment our operational, financial and management systems, and hire and train
additional qualified personnel. Our failure to manage this growth effectively
could impair our ability to generate revenue or could cause our expenses to
increase more rapidly than revenue, resulting in operating losses.

OUR EXISTING STOCKHOLDERS WILL HAVE SUBSTANTIAL INFLUENCE OVER MATTERS REQUIRING
A STOCKHOLDER VOTE.

Following the completion of this offering, our current stockholders will
beneficially own or control approximately 74% of the outstanding shares of our
common stock. If all of these stockholders were to

vote together as a group, they would have the ability to elect our board of
directors and control the outcome of stockholder votes, including votes
concerning by-law amendments and possible mergers, corporate control contests
and other significant corporate transactions. In addition, this concentration of
ownership may delay or prevent a change of control of our company at a premium
price if these stockholders oppose it. The interests of these stockholders may
not always coincide with our interests as a company or the interests of other
stockholders.

BECAUSE OUR STOCK PRICE IS LIKELY TO BE HIGHLY VOLATILE, OUR STOCK PRICE COULD
EXPERIENCE SUBSTANTIAL DECLINES AND OUR MANAGEMENT'S ATTENTION MAY BE DIVERTED
FROM MORE PRODUCTIVE TASKS.

The market price of our common stock is likely to be volatile and could
decline, perhaps substantially, following this offering in response to various
factors, many of which are beyond our control, including:

- technological innovations by competitors or in competing technologies,

- revenues and operating results fluctuating or failing to meet the
expectations of securities analysts or investors in any quarter,

- downward revisions in securities analysts' estimates,

- conditions or trends in the biotechnology and pharmaceutical industries,

- announcements by us of significant acquisitions or financings or changes
in strategic partnerships, and

- a decrease in the demand for our common stock.

In addition, the stock market in general, and the Nasdaq National Market and
the biotechnology industry market in particular, have experienced significant
price and volume fluctuations that at times have been unrelated or
disproportionate to the operating performance of those companies. These broad
market and industry factors may seriously harm the market price of our common
stock, regardless of our operating performance. In the past, securities class
action litigation has often been instituted following periods of volatility in
the market price of a company's securities. A securities class action suit
against us could result in substantial costs, potential liabilities and the
diversion of our management's attention and resources.

PROVISIONS OF DELAWARE LAW AND OF OUR CHARTER AND BY-LAWS MAY MAKE A TAKEOVER
MORE DIFFICULT WHICH COULD CAUSE OUR STOCK PRICE TO DECLINE.

Provisions in our certificate of incorporation and by-laws and in the
Delaware corporate law may make it difficult and expensive for a third party to
pursue a tender offer, change in control or takeover attempt which is opposed by
our management and board of directors. Public stockholders who might desire to
participate in such a transaction may not have an opportunity to do so. We also
have a staggered board of directors which makes it difficult for stockholders to
change the composition of the board of directors in any one year. These
anti-takeover provisions could substantially impede the ability of public
stockholders to change our management and board of directors. Such provisions
may also limit the price that investors might be willing to pay for shares of
our common stock in the future.

FAILURE TO RAISE ADDITIONAL CAPITAL OR GENERATE THE SIGNIFICANT CAPITAL
NECESSARY TO EXPAND OUR OPERATIONS AND INVEST IN NEW PRODUCTS COULD REDUCE OUR
ABILITY TO COMPETE AND RESULT IN LOWER REVENUE.

We anticipate that our existing capital resources and the net proceeds from
this offering will enable us to maintain currently planned operations for at
least the next two years. However, we premise this expectation on our current
operating plan, which may change as a result of many factors, including market
acceptance of our new products and future opportunities with collaborators.

Consequently, we may need additional funding sooner than anticipated. Our
inability to raise capital could seriously harm our business and product
development efforts.

If we raise additional funds through the sale of equity or convertible debt
or equity-linked securities, your percentage ownership in the company will be
reduced. In addition, these transactions may dilute the value of our outstanding
stock. We may issue securities that have rights, preferences and privileges
senior to our common stock. If we raise additional funds through collaborations
or licensing arrangements, we may relinquish rights to certain of our
technologies or products, or grant licenses to third parties on terms that are
unfavorable to us. We may be unable to raise additional funds on terms
acceptable to us. If future financing is not available to us or is not available
on terms acceptable to us, we may have to curtail or cease operations.

SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY AFFECT OUR
STOCK PRICE.

The market price of our common stock could decline as a result of sales of
shares by our existing stockholders after this offering, or the perception that
such sales will occur. These sales also might make it difficult for us to sell
equity securities in the future at a time and at a price that we deem
appropriate. After this offering, we will have 24,782,422 shares of common stock
outstanding. Of these shares, all of the shares sold in this offering will be
freely tradeable. All of our existing stockholders have executed lock-up
agreements. Those lock-up agreements restrict all of our existing stockholders
from selling, pledging or otherwise disposing of their shares for a period of
180 days after the date of this prospectus without the prior written consent of
Thomas Weisel Partners LLC. However, Thomas Weisel Partners LLC may, in its sole
discretion, release all or any portion of the common stock from the restrictions
of the lock-up agreements. In addition, after this offering, we also intend to
register 3,750,000 shares of common stock for issuance under our 2000 Stock
Option and Incentive Plan and 500,000 shares under our Employee Stock Purchase
Plan.

WE WILL HAVE BROAD DISCRETION AS TO THE USE OF THE PROCEEDS FROM THIS OFFERING
AND MAY USE THE PROCEEDS IN A MANNER WITH WHICH YOU DISAGREE.

Our board of directors and our management will have broad discretion over
the use of the net proceeds of this offering. You may disagree with the judgment
of our board of directors and our management regarding the application of the
proceeds of this offering. We intend to use a majority of the proceeds from this
offering for payment of existing debt, redemption of our series A preferred
stock, working capital and general corporate purposes and to fund potential
acquisitions, if any. Because of the number and variability of factors that
determine our use of the net proceeds from this offering, we cannot assure you
that our actual use will not vary substantially from our currently planned uses.
Initially, we intend to invest the net proceeds from this offering in income
producing, investment grade securities.

FUTURE ISSUANCE OF OUR PREFERRED STOCK MAY DILUTE THE RIGHTS OF OUR COMMON
STOCKHOLDERS.

Our board of directors has the authority to issue up to 5,000,000 shares of
preferred stock and to determine the price, privileges and other terms of these
shares. The board of directors may exercise this authority without any further
approval of our stockholders. The rights of the holders of common stock may be
adversely affected by the rights of future holders of our preferred stock.

YOU WILL NOT RECEIVE CASH DIVIDENDS ON YOUR INVESTMENT IN OUR COMMON STOCK.

We intend to retain all of our earnings to finance the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Moreover, our ability to declare and pay cash dividends on
our common stock is restricted by covenants in our senior credit

facility and in the indenture governing our senior subordinated notes. As a
result, capital appreciation, if any, of our common stock will be your sole
source of gain for the foreseeable future.

AN ACTIVE TRADING MARKET FOR OUR COMMON STOCK MAY NOT DEVELOP.

Prior to this offering, there has been no public market for our common
stock. Although we expect our common stock to be quoted on the Nasdaq National
Market, an active trading market for our shares may not develop or be sustained
following this offering. You may not be able to resell your shares at prices
equal to or greater than the initial public offering price. The initial public
offering price will be determined through negotiations between us and the
underwriters and may not be indicative of the market price for these shares
following this offering. You should read "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. The forward-looking
statements are principally contained in the sections on "Prospectus Summary,"
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." These statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by the forward-looking statements.
Forward-looking statements include, but are not limited to:

- our business strategy,

- the market opportunity for our products, including the willingness of our
customers to expand proteomics and ADMET investments,

- our plans for hiring additional personnel,

- our estimates regarding our capital requirements and our needs for
additional financing, and

- our plans, objectives, expectations and intentions contained in this
prospectus that are not historical facts.

In some cases, you can identify forward-looking statements by terms such as
"may," "will," "should," "could," "would," "expects," "plans," "anticipates,"
"believes," "estimates," "projects," "predicts," "intends," "potential" and
similar expressions intended to identify forward-looking statements. These
statements reflect our current views with respect to future events and are based
on assumptions and subject to risks and uncertainties. Given these
uncertainties, you should not place undue reliance on these forward-looking
statements. We discuss many of these risks in greater detail under the heading
"Risk Factors." Also, these forward-looking statements represent our estimates
and assumptions only as of the date of this prospectus.

You should read this prospectus completely and with the understanding that
our actual future results may be materially different from what we expect. We
may not update these forward-looking statements, even though our situation may
change in the future, unless we have obligations under the Federal securities
laws to update and disclose material developments related to previously
disclosed information. We qualify all of our forward-looking statements by these
cautionary statements.

USE OF PROCEEDS

We estimate that the net proceeds we will receive from the sale of 6,250,000
shares of common stock will be approximately $68.3 million, or approximately
$78.7 million if the underwriters fully exercise their over-allotment option, at
the assumed offering price of $12.00 per share, in each case after deducting
estimated underwriting discounts, commissions and offering expenses payable by
us. We will not receive any proceeds from the sale of shares by our president as
a selling stockholder in this offering.

The principal purposes of this offering are as follows:

- to permit us to repay approximately $665,000 in subordinated debt and
$9.6 million under our credit facility,

- to permit us to redeem our series A redeemable preferred stock at a cost
of approximately $1.5 million,

- to provide us with funds to complete potential acquisitions and enhance
our ability to use our common stock as consideration for potential
acquisitions,

- to increase our equity capital and facilitate our future access to public
equity markets,

- to increase our working capital, and

- to increase funds available for general corporate purposes.

Except for the payment of existing debt and the redemption of preferred
stock listed above, the use of proceeds has not been specifically identified or
allocated due to the flexible nature of our planning process and the constantly
changing nature of our industry. We will retain broad discretion in the
allocation and use of the net proceeds of this offering. Pending the uses
described above, we intend to invest the remaining net proceeds from this
offering in short-term, investment grade, interest-bearing securities.

Our subordinated debt bears interest at an annual rate of 13.0% and matures
upon the consummation of this offering. All of the subordinated debt will be
retired out of the proceeds of this offering.

Our credit facility consists of two term loans and a revolving credit line.
One term loan and the revolving line of credit mature in January 2002. The other
term loan matures in June 2004. The interest rate for the credit facility is
equal to our lender's base rate plus 1.0%. This interest rate was 10.5% at
October 15, 2000. In July 2000, we increased our borrowings under our credit
facility by $2.5 million to finance the acquisition of AmiKa Corporation. All of
our outstanding indebtedness under our credit facility will be repaid out of the
proceeds of this offering.

DIVIDEND POLICY

We have never declared or paid dividends on our common stock in the past and
do not intend to pay dividends on our common stock in the foreseeable future.
Any future determination to pay dividends will be at the discretion of our board
of directors and will depend on our financial condition, results of operations,
capital requirements and other factors the board of directors deems relevant. In
addition, our existing credit facility does not permit us to pay cash dividends,
and any future credit facilities may not permit us to pay cash dividends.

CAPITALIZATION

The following table describes our capitalization as of September 30, 2000:

- on an actual basis assuming the filing of an amended certificate of
incorporation to increase the number of authorized shares of common stock,

- on a pro forma as adjusted basis to reflect the sale of 6,250,000 shares
of common stock by us in this offering at an assumed initial offering
price of $12.00 per share, after deducting estimated underwriting
discounts, commissions and offering expenses payable by us and the
application of the net proceeds therefrom.

AS OF SEPTEMBER 30, 2000
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
--------- --------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)

Series A redeemable preferred stock, par value $0.01 per
share; 469,300 shares authorized, issued and outstanding,
actual; 469,300 shares authorized, issued and outstanding,
pro forma and no shares issued and outstanding pro forma
as adjusted............................................... $ 1,500 $ 1,500 $ --
Series B convertible preferred stock, par value $0.01 per
share; 48,500 shares authorized, issued and outstanding,
actual; no shares authorized, issued and outstanding, pro
forma and pro forma as adjusted........................... 1,000 -- --
--------- --------- ---------
Total preferred stock..................................... $ 2,500 $ 1,500 --
--------- --------- ---------
Common stock warrants....................................... 102,115 -- --
--------- --------- ---------

Undesignated preferred stock, par value $0.01 per share;
82,200 shares authorized, no shares issued and
outstanding, actual; 5,000,000 shares authorized, no
shares issued and outstanding, pro forma and pro forma as
adjusted.................................................. -- -- --
Common stock, par value $0.01 per share; 80,000,000 shares
authorized, 13,727,365 shares issued and outstanding,
actual; 80,000,000 shares authorized, 23,193,210 shares
issued and outstanding pro forma; 80,000,000 shares
authorized, 29,443,210 shares issued and outstanding, pro
forma as adjusted......................................... 137 232 294
Additional paid-in capital.................................. 18,132 121,157 189,345
Treasury stock.............................................. (668) (668) (668)
Notes receivable............................................ (1,548) (1,548) (1,548)
Retained earnings (accumulated deficit)..................... (112,358) (112,358) (112,358)
Accumulated other comprehensive income (loss)............... (713) (713) (713)
--------- --------- ---------
Total stockholders' equity................................ (97,018) 6,102 74,352
--------- --------- ---------
Total capitalization.................................... $ 7,597 $ 7,602 $ 74,352
========= ========= =========

The above table excludes 598,612 shares of common stock issuable upon
exercise of stock options outstanding as of September 30, 2000 at a weighted
average exercise price of $1.00 per share. The above table also assumes no
exercise of the underwriters' over-allotment option.

DILUTION

Our pro forma net tangible book value as of September 30, 2000, was
approximately $(3.0) million, or $(0.19) per share of common stock. Pro forma
net tangible book value per share represents the amount of our total pro forma
tangible assets less total liabilities divided by the pro forma number of shares
of common stock outstanding. After giving effect to the issuance and sale by us
of 6,250,000 shares of common stock offered by this prospectus at an assumed
initial offering price of $12.00 per share and after deducting estimated
underwriting discounts, commissions and offering expenses payable by us, our pro
forma net tangible book value as of September 30, 2000 would have been $65
million, or $2.63 per share. This represents an immediate increase in the pro
forma net tangible book value of $2.82 per share to existing stockholders and an
immediate dilution of $9.37 per share to new stockholders in this offering
illustrated by the following table:

Assumed initial public offering price per share........... $ 12.00

Pro forma net tangible book value per share before this
offering.............................................. $(0.19)

Increase per share attributable to new stockholders..... 2.82
------

Pro forma net tangible book value per share after the
offering................................................ 2.63
--------

Dilution per share to new investors....................... $ 9.37
========

The following table sets forth on a pro forma basis as of September 30,
2000, the number of shares of common stock purchased from us, the total
effective cash consideration and the average price per share paid and to be paid
by existing and new stockholders before deducting underwriting discounts,
commissions and offering expenses payable by us:

SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- -------- ----------- -------- -------------

Existing
stockholders......... 18,532,422 74.8% $ 2,558,106 3.3% $ 0.14
New stockholders....... 6,250,000 25.2 75,000,000 96.7 12.00
---------- ------ ----------- -----
Total.............. 24,782,422 100.0% $77,558,106 100.0%
========== ====== =========== =====

The foregoing discussion and tables assume no issuance of shares by us
pursuant to the underwriters' over-allotment option and no exercise of any stock
options outstanding. As of September 30, 2000, there were options outstanding to
purchase a total of approximately 598,612 shares of common stock with a weighted
average exercise price of $1.00 per share. To the extent that any of these
options are exercised, your investment will be further diluted. In addition, we
may grant more options in the future under our stock plans.

SELECTED FINANCIAL DATA

You should read the following selected consolidated financial data in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and related
notes included elsewhere in this prospectus. The statement of operations data
for the years ended December 31, 1997, 1998 and 1999 and for the nine-month
period ended September 30, 2000 and the balance sheet data at December 31, 1998
and 1999 and September 30, 2000 are derived from our audited consolidated
financial statements appearing elsewhere in this prospectus. The balance sheet
data at December 31, 1997 and 1996, and the statement of operations data for
the period from March 15, 1996 to December 31, 1996 are derived from our audited
consolidated financial statements not included in this prospectus. The statement
of operations data for the year ended December 31, 1995 and for the period from
January 1, 1996 to March 14, 1996 and the balance sheet data at December 31,
1995 represents data of a predecessor company and are derived from their
unaudited consolidated financial statements not included in this prospectus. The
interim statement of operations data for the nine-month period ended
September 30, 1999 are derived from our unaudited consolidated interim financial
statements appearing elsewhere in this prospectus which, in the opinion of
management, have been prepared on the same basis as the audited consolidated
financial statements and reflect all adjustments necessary for a fair
presentation of that data. The data for the nine-month period ended
September 30, 2000 are not necessarily indicative of results for the year ending
December 31, 2000 or any future period.

PREDECESSOR
COMPANY
FOR THE PERIOD FOR THE PERIOD FROM
FROM JANUARY 1, INCEPTION MARCH 15,
PREDECESSOR COMPANY 1996 TO 1996
FISCAL YEAR ENDED MARCH 14, TO DECEMBER 31,
DECEMBER 31, 1995 1996 1996
------------------- --------------- -------------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues..................... $ 10,032 $ 1,989 $ 8,198
Cost of goods sold........... 5,286 1,059 4,080
Stock compensation expense... -- -- --
---------- ---------- ----------
Gross profit............. 4,746 930 4,118
General and administrative
expense.................... 2,435 487 1,834
Marketing and selling
expense.................... 1,469 232 1,058
Research and development..... 348 91 249
Amortization of goodwill..... -- -- --
Stock compensation expense... -- -- --
---------- ---------- ----------
Operating income
(loss)................... 494 120 977
---------- ---------- ----------
Other (expense) income:
Foreign currency (loss)
gain....................... 23 (4) 108
Common stock warrant
interest expense........... -- -- --
Interest expense, net...... (472) (90) (177)
Amortization of deferred
financing costs............ -- -- --
Other...................... (85) (135) (10)
---------- ---------- ----------
Other expense, net....... (534) (229) (79)
---------- ---------- ----------
(Loss) income before
income taxes............. (40) (109) 898
Income taxes................. 85 -- 362
---------- ---------- ----------
Net (loss) income........ $ (125) $ (109) $ 536
Preferred stock dividends.... -- -- (97)
---------- ---------- ----------
Net (loss) income
available to common
shareholders........... $ (125) $ (109) $ 439
========== ========== ==========
(Loss) income per share:
Basic...................... $ (0.01) $ (0.01) $ 0.04
========== ========== ==========
Diluted.................... $ (0.01) $ (0.01) $ 0.02
========== ========== ==========
Weighted average common shares:
Basic...................... 10,259,410 10,259,410 10,259,410
========== ========== ==========
Diluted.................... 10,259,410 10,259,410 20,241,145
========== ========== ==========

FISCAL YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------- -------------------------------
1997 1998 1999 1999 2000
---------- --------- --------- -------------- --------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues..................... $ 11,464 $ 12,154 $ 26,178 $ 18,470 $ 22,069
Cost of goods sold........... 5,128 5,351 13,547 9,359 11,462
Stock compensation expense... -- -- -- -- 151
---------- --------- --------- --------- ---------
Gross profit............. 6,336 6,803 12,631 9,111 10,456
General and administrative
expense.................... 2,338 2,317 4,147 2,927 3,733
Marketing and selling
expense.................... 1,672 1,722 2,448 1,842 2,359
Research and development..... 207 325 1,188 841 1,208
Amortization of goodwill..... -- 27 368 252 423
Stock compensation expense... -- -- 3,284 937 13,181
---------- --------- --------- --------- ---------
Operating income
(loss)................... 2,119 2,412 1,196 2,312 (10,448)
---------- --------- --------- --------- ---------
Other (expense) income:
Foreign currency (loss)
gain....................... (96) 21 (48) 61 (456)
Common stock warrant
interest expense........... (117) (1,379) (29,694) (7,403) (70,920)
Interest expense, net...... (223) (210) (657) (468) (655)
Amortization of deferred
financing costs............ -- -- (63) (44) (56)
Other...................... 106 10 (17) (15) 28
---------- --------- --------- --------- ---------
Other expense, net....... (330) (1,558) (30,479) (7,869) (72,059)
---------- --------- --------- --------- ---------
(Loss) income before
income taxes............. 1,789 854 (29,283) (5,557) (82,507)
Income taxes................. 682 783 137 649 1,354
---------- --------- --------- --------- ---------
Net (loss) income........ $ 1,107 $ 71 $ (29,420) $ (6,206) $ (83,861)
Preferred stock dividends.... (122) (122) (157) (115) (123)
---------- --------- --------- --------- ---------
Net (loss) income
available to common
shareholders........... $ 985 $ (51) $ (29,577) $ (6,321) $ (83,984)
========== ========= ========= ========= =========
(Loss) income per share:
Basic...................... $ 0.13 $ (0.01) $ (5.28) $ (1.13) $ (13.11)
========== ========= ========= ========= =========
Diluted.................... $ 0.06 $ (0.01) $ (5.28) $ (1.13) $ (13.11)
========== ========= ========= ========= =========
Weighted average common share
Basic...................... 7,406,486 5,598,626 5,598,626 5,598,626 6,407,682
========== ========= ========= ========= =========
Diluted.................... 17,500,194 5,598,626 5,598,626 5,598,626 6,407,682
========== ========= ========= ========= =========

AS OF DECEMBER 31,
------------------------------------------------------- AS OF
1995 1996 1997 1998 1999 SEPTEMBER 30, 2000
----------- -------- -------- -------- -------- ------------------
(UNAUDITED)
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 1,043 $1,088 $ 707 $ 957 $ 2,396 $ 2,149
Working capital.................................... (4,910) 1,677 1,698 2,205 3,783 1,025
Total assets....................................... 11,204 6,397 6,161 7,220 20,610 23,236
Long-term obligations, net of current portion...... 498 1,112 829 638 5,073 5,730
Preferred stock.................................... -- 1,504 1,621 1,500 2,500 2,500
Common stock warrants.............................. -- -- -- 1,500 31,194 102,115
Stockholders' equity (deficit)..................... 1,203 516 737 678 (25,711) (97,018)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

YOU SHOULD READ THE FOLLOWING DISCUSSION IN CONJUNCTION WITH OUR
CONSOLIDATED FINANCIAL STATEMENTS, THE RELATED NOTES AND OTHER FINANCIAL
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

We are a provider of innovative, enabling tools for drug discovery research
at pharmaceutical and biotechnology companies, universities and government
research laboratories. We focus on two critical bottlenecks in the drug
discovery process, proteomics during the target validation stage of the drug
discovery process and ADMET screening during the secondary screening stage of
the drug discovery process. Our proteomics products consist of tools that allow
our customers to purify and analyze proteins. Our ADMET screening products are
tools that enable our customers to test drug candidates to determine their
absorption, distribution, metabolism, elimination and toxicology properties
prior to conducting costly clinical trials.

In providing tools for drug discovery generally, we have established a
significant base business and have achieved brand recognition through our sale
of precision pumps, ventilators and tissue/organ systems. Since our
reorganization in 1996, we have built upon our base business and brand
recognition by adding new technologies within the areas of proteomics and ADMET
screening. Specifically, we have acquired the following product lines,
businesses and technologies:

- In June 1998, we acquired products for cell injection systems from Medical
Systems Corporation for $1.0 million in cash,

- In March 1999, we acquired Biochrom, which develops and manufactures
DNA/RNA/protein calculators, spectrophotometers, amino acid analyzers and
related consumables in the United Kingdom, from Pharmacia Biotech
(Biochrom) Ltd for $7.0 million in cash,

- In March 1999, we entered into an exclusive license for the technology
underlying our ScanTox in vitro toxicology testing product for $25,000 in
cash and ongoing royalties and licensing fee payments,

- In September 1999, we acquired products for intracellular research from
Clark Electromedical Instruments for $349,000 in cash,

- In November 1999, we acquired our NaviCyte diffusion chamber systems
product for drug absorption testing from a subsidiary of Trega Biosciences
for $390,000 in cash and future royalties,

- In November 1999, we acquired substantially all the assets and certain
liabilities of Hugo Sachs Elektronik, consisting primarily of products for
organ testing, for $568,000 in cash,

- In May 2000, we acquired certain assets of Biotronik, consisting primarily
of products for amino acid analysis, for $469,000 in cash, and

- In July 2000, we acquired substantially all the assets of AmiKa
Corporation consisting of purification tips, spin columns, a 96 well drug
binding assay and related technology and intellectual property for
$3.1 million in cash.

We have also entered into a non-binding letter of intent to acquire
substantially all the assets and certain liabilities of a company that produces
tools for toxicity testing. The non-binding letter of intent provides for an
initial cash payment of $200,000, a second cash payment of $100,000
approximately one month following the initial cash payment and additional
contingent payments and royalty payments based on future sales of the acquired
products. This non-binding letter of intent will expire on

December 15, 2000. We are working to complete this acquisition by that date
although we cannot be certain that this acquisition will be completed by that
date or at all.

REVENUES. We generate revenues by selling instruments, devices and
consumables through our catalog, our distributors and our website. Every two to
three years, we intend to distribute a new, comprehensive catalog initially in a
series of bulk mailings, first to our existing customers, followed by mailings
to targeted markets of potential customers. Distribution will then made
periodically to potential and existing customers through direct mail and trade
shows and in response to telephone inquiries over the life of this catalog. From
time to time, we also intend to distribute catalog supplements that promote
selected areas of our catalog or new products to targeted subsets of our
customer base. Future distributions of our comprehensive catalog and our catalog
supplements will be determined primarily by the incidence of new product
introductions, which cannot be predicted. Our customers are end user research
scientists at pharmaceutical and biotechnology companies, universities and
government laboratories. Revenue from catalog sales in any period is a function
of time elapsed since the last mailing of the catalog, the number of catalogs
mailed and the number of new items included in the catalog. Catalog sales tend
to increase immediately following a mailing and level off or decline slightly
from the increased level until the next mailing, which repeats the cycle. For
the nine months ended September 30, 2000, approximately 82% of our revenues were
derived from products we manufacture. The remaining 18% of our revenues were
derived from complementary products we distribute in order to provide
researchers with a single source for all equipment needed to conduct a
particular experiment. Approximately one-half of our revenues are derived
through catalog sales and through reference to our website, which is an
electronic version of our catalog. We do not currently have the capability to
accept purchase orders through our website. For the nine months ended
September 30, 2000, approximately 69% of our revenues were derived from sales
made by our non-U.S. operations. A majority of our international sales during
this period consisted of sales to Amersham Pharmacia Biotech, the distributor
for our spectrophotometers and amino acid analyzers. Amersham Pharmacia Biotech
distributes these products to customers around the world from its distribution
center in Upsalla, Sweden, including to many customers located in the United
States. As a result, we believe our international sales would have been less as
a percentage of our revenues for the nine months ended September 30, 2000 than
indicated above if we had shipped our products directly to their end users.

COST OF GOODS SOLD. Cost of goods sold includes material, labor and
manufacturing overhead costs, obsolescence charges, packaging costs, warranty
costs, shipping charges and royalties. Our costs of goods sold may vary over
time based on the mix of products sold. We sell products that we manufacture and
products that we purchase from third parties. The products that we purchase from
third parties have lower margins because the profit is effectively shared with
the original manufacturer. For the nine months ended September 30, 2000, our
manufactured products had lower cost of goods sold. We anticipate that our
manufactured products will continue to have a lower cost of goods sold for the
forseeable future.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
consists primarily of salaries and other related costs for personnel in
executive, finance, accounting, information technology and human relations
functions. Other costs include facility costs, professional fees for legal and
accounting services, and provision for doubtful accounts.

SALES AND MARKETING EXPENSE. Sales and marketing expense consists primarily
of salaries and related expenses for personnel in sales, marketing and customer
support functions. We also incur costs for trade shows, demonstration equipment,
public relations and marketing materials, consisting primarily of the printing
and distribution of our 1,000 page catalog and the maintenance of our web site.
We may from time to time in the future expand our marketing efforts by employing
additional

technical marketing specialists in an effort to increase sales of selected
categories of products in our catalog.

RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense consists
primarily of salaries and related expenses for personnel and capital resources
used to develop and enhance our products. Other research and development expense
includes fees paid to consultants and outside service providers, and material
costs for prototype and test units. We expense research and development costs as
incurred. We believe that significant investment in product development is a
competitive necessity and plan to continue this investment in order to realize
the potential of our new technologies for proteomics and ADMET.

STOCK COMPENSATION EXPENSE. Stock compensation resulting from stock option
grants to our employees represents the difference between the fair market value
and the exercise price of the stock options on the date the stock options were
granted for those options that are considered fixed awards. Stock compensation
expense is also recorded for stock option grants that were considered variable
awards as the number of shares to be acquired by employees was indeterminable at
the date of grant. Deferred compensation on fixed awards is amortized as a
charge to operations over the vesting period of the options. Based on grants in
2000, we incurred deferred compensation of $9.9 million and recognized deferred
compensation expense of $3.3 million for the nine months ended September 30,
2000.

Since our reorganization in 1996, we have experienced substantial revenue
growth. In the future we intend to introduce new products for proteomics and
ADMET research that support emerging and potentially large markets. In order to
support the anticipated growth of these new products, we may expand our product
development and sales and marketing activities. In the event we pursue
activities which increase our product development and sales and marketing
expenses, operating results will be adversely affected if revenues do not
increase proportionately. If revenues are below expectations, our business,
operating results and financial condition are likely to be materially and
adversely affected. Net income may be disproportionately affected by a reduction
in revenues as a relatively smaller amount of our expenses vary with changes in
our revenues. As a result, we believe that period-to-period comparisons of our
results of operations are not necessarily meaningful and should not be relied
upon as indications of future performance.

NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1999

REVENUES. Revenues increased $3.6 million, or 20%, to $22.1 million in 2000
from $18.5 million in 1999. Excluding the impact of changes in foreign currency
exchange rates, revenues based on 1999 rates would have been approximately
$22.8 million in 2000. Approximately $1.1 million of the $3.6 million increase,
or 31%, was attributable to the full period effect of revenues from the
acquisition of our Biochrom subsidiary in March 1999 net of exchange rate
effects of $508,000. The balance of the increase was attributable to
$2.5 million of revenue from product line acquisitions made in the second half
of 1999 partially offset by the cyclical nature of catalog sales of traditional
products. During the year preceding the mailing of a new catalog in April 2000,
traditional products were not promoted because we were concentrating on the
acquisition of new products or businesses as well as the development of the new
catalog to include these newly acquired products. This new catalog was the first
new, comprehensive catalog produced since April 1997.

COST OF GOODS SOLD. Cost of goods sold increased $2.1 million, or 23%, to
$11.5 million in 2000 from $9.4 million in 1999. The increase in cost of goods
sold as a percentage of revenues was due to slightly higher cost of goods sold
on acquired product lines and for our Biochrom subsidiary acquired in
March 1999. Our Biochrom subsidiary experiences lower revenues and
correspondingly lower general and administration and sales and marketing
expenses relative to cost of goods sold as a consequence of marketing its
products primarily through a distributor.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased $807,000, or 28%, to $3.7 million in 2000 from $2.9 million in 1999
due primarily to the full period effect of Biochrom as well as increased support
for operations.

SALES AND MARKETING EXPENSE. Sales and marketing expense increased
$517,000, or 28%, to $2.4 million in 2000 from $1.8 million in 1999. The
increase was primarily due to expenses of acquisitions as well as the addition
of marketing personnel and additional catalog costs. As a percentage of
revenues, marketing and sales expense was 11% in 2000 and 10% in 1999. This
increasing percentage reflects the addition of marketing personnel to promote
newly acquired technology. In the future we may add employees to expand selected
categories of our catalog as well as to expand the capabilities of our web site
and integrate it into our business planning and processes.

RESEARCH AND DEVELOPMENT EXPENSE. Research and development spending
increased $367,000, or 44%, to $1.2 million in 2000 from $841,000 in 1999. The
increase in research and development expense resulted from expenses of
acquisitions, spending on product enhancement and new product development,
primarily on ScanTox in vitro toxicology testing and other core technology. As a
percentage of revenues, research and development expense was 6% in 2000 and 5%
in 1999. This increasing percentage reflects expanded efforts on ADMET testing
products.

STOCK COMPENSATION EXPENSE. We recorded $13.3 million of stock compensation
expense in the nine months ended September 30, 2000. In connection with the
grant of stock options to employees in 2000, we recorded deferred compensation
of approximately $3.3 million and will recognize approximately $6.6 million of
additional expense over the remaining vesting life of the options. In addition,
in the third quarter of 2000, we also recorded $10.0 million of stock
compensation expense in connection with options granted in 1996 and 1999. In
1999, we recorded $937,000 of stock compensation expense related to these 1996
and 1999 option grants.

AMORTIZATION OF GOODWILL. Amortization of goodwill was $423,000 in 2000 and
$252,000 in 1999. The increase is the result of amortizing additional goodwill
incurred in connection with our acquisitions in 2000.

OTHER EXPENSE, NET. Other expense, net, was $72.1 million in 2000 compared
to $7.9 million in 1999. Other expense, net, included a non-cash charge for
common stock warrant interest expense of $70.9 million in 2000 and $7.4 million
in 1999. This amount represents the difference between the fair value of the
warrant for financial reporting purposes and its exercise price. This liability
represents the right of warrant holders to require us to pay cash equal to the
fair market value of the warrants in exchange for the warrants, or any common
stock from the exercise of the warrants, beginning March 15, 2002. Effective
with this offering, the warrants will be exercised for common stock and the
right to be paid cash will terminate. The liability previously recorded will
become part of common stock and additional-paid-in capital, and no additional
liability will be incurred with respect to these warrants. Net interest expense
increased $186,000, or 40%, to $655,000 in 2000 from $468,000 in 1999. The
increase resulted primarily from higher debt balances in 2000, which were
incurred to finance acquisitions.

INCOME TAXES. The Company's effective income tax rates were 39% for 2000
and 33% for 1999 notwithstanding the impacts for common stock warrant interest
expense and stock compensation expense in excess of allowable tax benefits on
exercise of options, which are not deductible for income tax purposes. The
increase in the rate is principally due to certain blended higher foreign
statutory jurisdiction income tax rates. The effective income tax rates may
change compared to the remainder of each respective calendar year if operating
results differ significantly from the interim results.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

REVENUES. Revenues increased $14.0 million, or 115%, to $26.2 million in
1999 from $12.2 million in 1998. Approximately $12.2 million, or 87%, of the
increase was derived from the March 1999 acquisition of Biochrom. Excluding the
impact of changes in foreign currency exchange rates, revenues based on 1998
rates would have been approximately $26.3 million in 1999. Revenues from our
existing business increased $1.8 million, or 15%, to $14.0 million in 1999 from
$12.2 million in 1998. The increase was attributable to full year revenues of
$570,000 from the products acquired from Medical Systems in June 1998, increased
sales resulting from our expanded direct marketing efforts on traditional
products of $884,000, which included hiring additional marketing staff,
producing a CD-ROM of our catalog, and creating and installing an electronic
version of our catalog on our website, with the balance due to revenues from
product lines acquired in the second half of 1999.

COST OF GOODS SOLD. Cost of goods sold increased $8.2 million, or 153%, to
$13.5 million in 1999 from $5.4 million in 1998. As a percentage of revenues,
cost of goods sold increased to 52% in 1999 from 44% in 1998. The increase in
cost of goods sold in 1999 was primarily the result of the acquisition of
Biochrom. The percentage increase was also the result of Biochrom, which
experiences higher costs of goods sold as a percentage of revenues due to the
marketing of its products primarily through a distributor, which receives a
discount to the list price that is calculated to cover the distributor's costs
and profits.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administration expense
increased $5.1 million, or 221%, to $7.4 million in 1999 from $2.3 million in
1998. Biochrom accounted for $1.1 million, or 22%, of the increase. Also in
1999, $3.3 million was recorded as non-cash compensation expense from options
granted in 1996. Excluding the Biochrom acquisition and the compensation
expense, expenses increased $800,000, or 35%, to $3.1 million in 1999 from
$2.3 million in 1998. The increase was due to the need to support expanding
operations. As a percentage of revenues, general and administration expense
increased to 28% in 1999 from 19% in 1998.

SALES AND MARKETING EXPENSE. Sales and marketing expense increased
$727,000, or 42%, to $2.4 million in 1999 from $1.7 million in 1998. Biochrom
accounted for $608,000, or 84%, of the increase. Excluding the Biochrom
acquisition, expenses increased $119,000, or 7%, to $1.8 million in 1999 from
$1.7 million in 1998. The increase was due to expanded direct marketing efforts
and the full year effect of support for the products acquired in June 1998. As a
percentage of revenues, sales and marketing expense decreased to 9% in 1999 from
14% in 1998. The decrease in sales and marketing expense as a percentage of
revenues was primarily due to the acquisition of Biochrom, which has lower sales
and marketing expense because those expenses are primarily borne by its
distributor.

RESEARCH AND DEVELOPMENT EXPENSE. Research and development spending
increased $863,000 in 1999, or 266%, to $1.2 million from $325,000 in 1998. The
acquisition of Biochrom contributed $577,000 to the increase. The balance of the
increase was spending for development of our newly licensed ScanTox technology
and expansion of our core drug screening products. As a percentage of revenues,
research and development expense increased to 5% in 1999 from 3% in 1998. The
increase in research and development expense as a percentage of revenues was
primarily due to Biochrom, our employment of additional engineers and increased
charges for outside services.

AMORTIZATION OF GOODWILL. Amortization of goodwill was $368,000 in 1999 and
$28,000 in 1998. The increase is the result of amortizing additional goodwill
incurred in connection with our acquisitions in 1999 and the full year effect of
the acquisition of the Medical Systems products in June 1998.

OTHER EXPENSE, NET. Other expense, net was $30.5 million in 1999 compared
to $1.6 million in 1998. Other expense, net, included a non-cash charge for
common stock warrant interest expense of $29.7 million in 1999 and $1.4 million
in 1998. Net interest expense increased $447,000, or 214%, to

$656,000 in 1999 from $209,000 in 1999. The increase resulted primarily from
higher debt balances in 1999, which were incurred to finance acquisitions.

INCOME TAXES. The Company's effective income tax rates were 33% for 1999
and 35% for 1998 notwithstanding the impact for common stock warrant interest
expense which is not deductible for income tax purposes. The decrease in the
rate is principally due to certain lower foreign statutory jurisdiction income
tax rates, specifically the result of the acquisition of a United Kingdom
subsidiary.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

REVENUES. Revenues increased $690,000, or 6%, to $12.2 million in 1998,
from $11.5 million in 1997. The increase was due to the introduction of new
products from the acquisition of Medical Systems in June 1998, which accounted
for $510,000 of the increase, as well as growth in sales of existing products,
primarily due to the issuance of two catalog supplements in 1998 compared to one
supplement issued in 1997.

COST OF GOODS SOLD. Cost of goods sold increased approximately $224,000, or
4%, to $5.4 million in 1998 from $5.1 million in 1997. As a percentage of
revenues, cost of goods sold decreased to 44% in 1998 from 45% in 1997. The
decrease was due to spreading manufacturing overhead across increased production
relating to the products acquired with the purchase of Medical Systems.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
remained constant at $2.3 million from 1997 to 1998. As a percentage of
revenues, general and administrative expense decreased to 19% in 1998 from 20%
in 1997. The decrease in general and administrative expense as a percentage of
revenues was primarily due to spreading general and administrative costs over a
greater revenue base.

SALES AND MARKETING EXPENSE. Sales and marketing expense increased $49,000,
or 3%, to $1.7 million in 1998 from $1.7 million in 1997. As a percentage of
revenues, sales and marketing expense decreased to 14% in 1998 from 15% in 1997.
The decrease in sales and marketing expense as a percentage of revenues was
primarily due to spreading sales and marketing costs over a greater revenue
base.

RESEARCH AND DEVELOPMENT EXPENSE. Research and development spending
increased $118,000, or 57%, to $325,000 in 1998 from $206,000 in 1997. The
increase in spending represented investments in product development and
enhancement of the existing family of products. As a percentage of revenues,
research and development expense increased to 3% in 1998 from 2% in 1997.

AMORTIZATION OF GOODWILL. Amortization of goodwill consisted of a charge of
$28,000 in 1998 resulting from the acquisition of Medical Systems. There was no
corresponding charge in 1997.

OTHER EXPENSES, NET. Other expenses, net were $1.6 million in 1998 compared
to $330,000 in 1997. The increase was due primarily to a charge of $1.4 million
for common stock warrant interest expense.

INCOME TAXES. The Company's effective income tax rates were 35% for 1998
and 36% for 1997 notwithstanding the impact for common stock warrant interest
expense which is not deductible for income tax purposes. The change in the tax
rate is principally due to certain tax rates in foreign jurisdictions.

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have financed our business through cash provided by
operating activities, the issuance of common and preferred stock, and bank
borrowings. Our liquidity requirements have arisen primarily from investing
activities, including funding of acquisitions, payments on outstanding
indebtedness, research and development expenditures, and capital expenditures.
As of September 30,

2000, we had cash of $2.1 million. Since our reorganization in March 1996, we
have raised $14.2 million, consisting of $2.5 million of preferred and common
stock and $11.7 million of debt. As of September 30, 2000, we had $6.8 million
in debt under a bank term loan, $478,000 in subordinated debt and $3.1 million
outstanding under a $3.8 million revolving credit facility.

Our operating activities generated cash of $2.0 million in the first nine
months of 2000, $2.9 million in fiscal 1999, $1.8 million in fiscal 1998 and
$1.1 million in fiscal 1997. For all periods presented, operating cash flows
were primarily due to operating results, including the full-year effect of
acquisitions prior to non-cash charges, partially offset by working capital
requirements. Working capital requirements were affected by acquisitions, which
increased accounts receivable and inventory carrying amounts partially offset by
increased amounts in accounts payable and accrued expenses.

Our investing activities used cash of $4.7 million in the first nine months
of 2000, $8.5 million in fiscal 1999, $1.4 million in fiscal 1998 and $653,000
in fiscal 1997. Cash has been used in the following technology and business
acquisitions:

- $469,000 for Biotronik's amino acid analysis systems business in
May 2000,

- $390,000 for the NaviCyte diffusion chamber systems product line in
November 1999,

- $568,000 for Hugo Sachs Elektronik in November 1999,

- $349,000 for intracellular research products from Clark Electromedical
Instruments in September 1999,

- $7.0 million for Biochrom in March 1999,

- $1.0 million for Medical Systems Corporation's cell injection systems
business in June 1998, and

- $3.1 million for substantially all the assets of AmiKa Corporation in July
2000.

Our financing activities provided cash of $2.5 million for the first nine
months of 2000 and $7.0 million in fiscal 1999, and used cash of $105,000 in
fiscal 1998 and $874,000 in fiscal 1997. Financing cash flows consisted of
borrowings under a revolving credit facility, long-term debt and the issuance of
preferred stock. As of September 30, 2000, we had approximately $600,000
available under our revolving credit facility, subject to our ability to
maintain compliance with all of the covenants contained in our revolving credit
agreement. We were not in compliance with the net income covenants as of
September 30, 2000 due to non-cash stock compensation and imputed interest on
warrants. Our credit facility was amended to exclude the accounting treatment
for stock option compensation and warrant interest expense. This amendment
brought us into compliance with our credit facility and we are currently in
compliance with all of the covenants in our credit facility.

Prior to 1999, we had historically generated sufficient cash flow from
operations to fund expenditures on capital equipment, debt service, equity
transactions, stock repurchases and preferred dividend payments. In 1999, in
connection with the acquisition of Biochrom, we increased our long-term
indebtedness by approximately $5.5 million and issued approximately
$1.0 million in convertible preferred stock. As a result, the level of debt
service required increased substantially compared to historical levels. Upon
completion of the offering, we intend to use a portion of the proceeds to redeem
our series A redeemable preferred stock in the amount of $1.5 million, and to
repay the bank term loan, the subordinated debt and the revolving credit
facility.

Based on our operating plans, we expect that proceeds from this offering,
available cash, cash generated from operations, and cash available from our
revolving credit facility will be sufficient to finance operations and capital
expenditures for at least two years from the date of this prospectus. However,
we may use a substantial portion of the proceeds from this offering to
accelerate product development, expand our sales and marketing activities or
consummate acquisitions, although we have no current plans in this regard.
Therefore, we may need to raise additional capital, which may be

dilutive to existing stockholders. The additional capital may not be available
on acceptable terms or at all. Accordingly, there can be no assurance that we
will be successful in raising additional capital.

IMPACT OF FOREIGN CURRENCIES

We sell our products in many countries and a substantial portion of our
sales, costs and expenses are denominated in foreign currencies, especially the
United Kingdom pound sterling and the Euro. In the first nine months of 2000 and
in 1999, the U.S. dollar strengthened against these currencies resulting in
reduced consolidated revenue growth, as expressed in U.S. dollars. In addition,
the currency fluctuations resulted in foreign currency losses of approximately
$48,000 in 1999 and $456,000 in the first nine months of 2000.

Historically, we have not hedged our foreign currency position. Currently,
we attempt to manage foreign currency risk through the matching of assets and
liabilities. However, as our sales expand internationally, we plan to evaluate
our currency risks and we may enter into foreign exchange contracts from time to
time to mitigate foreign currency exposure.

BACKLOG

Our order backlog was approximately $2.7 million as of September 30, 2000
and $2.1 million as of September 30, 1999. We include in backlog only those
orders for which we have received valid purchase orders. Purchase orders may be
cancelled at any time prior to shipment. Our backlog as of any particular date
may not be representative of actual sales for any succeeding period. We expect
to ship substantially all of the September 30, 2000 backlog by December 31,
2000.

ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standard Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
SFAS 133, as amended by SFAS 137 and SFAS 138, is effective for years beginning
after June 15, 2000. SFAS 133 will be adopted on January 1, 2001. We believe the
adoption of this statement will not have a significant impact on our financial
position, results of operations or cash flows.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk and foreign currency rate risk are the primary sources of
market risk to our operations. As of September 30, 2000, we had aggregate
variable rate long-term debt of $6.8 million and revolving credit facility debt
of $3.2 million. A 10% change in interest rates, from 10.5% to 11.55%, would
change the annual interest expense on our long-term debt by approximately
$71,400 and on our revolving credit facility by approximately $33,600.

BUSINESS

OVERVIEW

We are a global provider of innovative, research enabling tools for drug
discovery. We provide a broad array of tools designed to accelerate the speed
and to reduce the cost at which our customers can introduce new drugs. Since our
1996 reorganization, we have focused on alleviating the protein purification and
ADMET screening bottlenecks in drug discovery.

To address these two critical bottlenecks in protein purification and ADMET
screening, we recently introduced several new proprietary tools. For protein
purification, these tools include specially treated pipette tips, spin columns
and micro-dialyzers. For ADMET screening, these tools include NaviCyte diffusion
chambers for drug absorption testing, 96 well equilibrium dialysis plates for
drug distribution testing and ScanTox in vitro toxicology screening instruments.

We also have an established product base in proteomics, which is the study
of gene function through the analysis of protein interactions. This product base
consists of DNA/RNA/protein calculators, life science spectrophotometers and
amino acid analysis systems, as well as precision infusion pumps, organ testing
systems and ventilators used in ADMET screening.

OUR HISTORY

Our business began in 1901 and has grown over the intervening years with the
development and evolution of modern drug discovery tools. Our past inventions
include the mechanical syringe pump in the 1950s for drug infusion and the
microprocessor controlled syringe pump in the 1980s.

In March 1996, a group of investors led by our current management team
acquired a majority of the then existing business of our predecessor, Harvard
Apparatus. Following this acquisition, we redirected our strategy to focus on
high growth areas within drug discovery by acquiring innovative technologies
through strategic acquisitions and licensing while continuing to grow our
existing business through internal product development and marketing. We have
completed five business acquisitions, including Biochrom, the licensing of key
new technology for in vitro toxicology assays and drug absorption measurement
chambers, the internal development of new product lines, including new
generation syringe pumps and DNA/RNA/protein calculators and the mailing of
expanded new catalogs.

INDUSTRY OVERVIEW

The life sciences research industry is undergoing fundamental change and
growth resulting principally from the explosive growth in gene discovery and the
demand for greater efficiency in the drug discovery process. Industry experts
estimate that in 2000, the life sciences research industry will spend more than
$50 billion on drug discovery research and development. The goal of drug
discovery is to find compounds that will bind specifically to a given target
without significantly affecting any other molecules in the body. Traditionally,
chemists have laboriously synthesized new compounds with potential therapeutic
activity one at a time or painstakingly isolated them from natural resources.
Today, combinatorial chemistry techniques are used to greatly increase the
supply and diversity of such compounds. Libraries of hundreds of thousands, or
even millions, of compounds are now available for testing in biological assays
against targets.

Until recently, life sciences researchers had identified only a few hundred
targets against which to test these compounds. Driven by large-scale DNA
sequencing projects, such as the Human Genome Project, life sciences researchers
expect to identify tens of thousands of new genes as they decipher the genomes
of both humans and disease-causing organisms. When a gene, which is a segment of
DNA, is expressed, a copy of the gene sequence is carried in messenger RNA, or
mRNA, which is used to direct the manufacture of a protein. Although genes, DNA,
mRNA and proteins are all targets for

drug discovery, proteins are by far the most common. Proteins are the molecular
machines of the cell that are responsible for performing the majority of
cellular functions. Once proteins are identified and validated as potential
targets, they need to be screened against hundreds of thousands, if not
millions, of compounds in a process known as primary screening.

Drug discovery is a time-consuming and costly process. In the pre-genomics
era, the compound development, primary screening and clinical trials stages were
bottlenecks in this process. The successes of genomics, combinatorial chemistry
and high throughput screening in recent years have alleviated the bottlenecks at
the compound development and primary screening stages. However, these
bottlenecks have been replaced by bottlenecks at the target validation, assay
development and absorption, distribution, metabolism, elimination and
toxicology, or ADMET, testing stages. The revolution in genomics is expected to
increase the number of targets from 500 to 10,000, which will consequently
greatly increase the need for protein purification and analysis. The increase in
the number of compounds in libraries from tens of thousands to millions together
with the increase in the number of targets is greatly increasing the number of
leads requiring ADMET screening.

THE DRUG DISCOVERY PROCESS

The drug discovery process consists of several steps, which are illustrated
below.

The diagram that illustrates the drug discovery process is initially split
into two parallel tracks which merge into a single track as the diagram moves to
the right. The upper track of the diagram is titled "Compound Development" and
includes an arrow titled "Compound Libraries." Below the arrow are the words
"Combinatorial Chemistry." The lower track of the diagram is titled "Target
Discovery" and includes two arrows. The first arrow is titled "Target
Identification." Below this arrow is the word "Genomics." The next arrow to the
right is titled "Target Validation." Below this arrow is the word "Proteomics."
Following the "Compound Libraries" arrow on the upper track and the "Target
Validation" arrow on the lower track, the two tracks of the diagram combine and
include arrows to illustrate the remaining stages and key bottlenecks in the
drug discovery process. The individual arrows from left to right include an
arrow titled "Assay Development" followed by an arrow titled "High Throughput
Screening." These two arrows in the diagram appear under the title "Primary
Screening." To the right of the "High Throughput Screening" arrow is an arrow
titled "Lead Optimization" followed by an arrow titled "ADMET Screening." These
two arrows in the diagram appear under the title "Secondary Screening." To the
right of the "ADMET Screening" arrow is an arrow titled "Clinical Trials," the
final arrow in the process flow diagram.

TARGET IDENTIFICATION involves isolating a particular molecule, typically a
protein, and evaluating the role that it plays in the body to determine whether
it might be a viable target for further investigation. Today, this activity is
most often initiated by genomics studies, including DNA sequencing, RNA analysis
and genetic mapping.

TARGET VALIDATION involves demonstrating that affecting the function of a
particular target has a positive effect on the course of a disease. Target
validation employs a variety of methods including RNA analysis, protein analysis
and cell biology. Target validation is a more time-consuming process than target
identification.

PRIMARY SCREENING involves the large-scale testing of collections of
chemical compounds, known as compound libraries, against validated targets.
These libraries are tested using high throughput assays. The goal is to find
individual compounds that bind to and inhibit or activate a particular target,
commonly referred to as a hit. An assay, in the context of screening compounds
against a new target, refers to a test a researcher must develop for measuring
whether particular compounds in a library interact with the target in a certain
manner. An assay must be developed for each target to be screened. The major
pharmaceutical companies are moving towards screening up to 100 targets annually
with libraries of up to one million compounds each.

SECONDARY SCREENING involves the refinement of hits into leads that can be
used in clinical trials. This step consists of lead optimization and ADMET
testing. Lead optimization involves conducting successive rounds of chemical
alterations and biological tests to find compounds similar to the original
compound identified in primary screening which have improved drug properties
over the initial compound, particularly efficacy. ADMET testing involves the
conducting of various tests on compounds

to ensure that they are safe and have good pharmacological properties such as
high adsorption into the blood from the digestive tract and good distribution to
the site of the target molecule in the body. This stage also involves the
testing of compounds to determine therapeutic activity in animal models of
disease and to ensure that the compounds can be manufactured with consistent
quality.

CLINICAL TRIALS involve the testing of pharmaceutical compounds in humans to
demonstrate their safety and efficacy. Because clinical trials are by far the
most expensive part of drug discovery, and undesirable ADMET properties are the
most common reasons for failure, pharmaceutical and biotechnology companies can
achieve substantial cost savings by identifying drug candidates with poor ADMET
properties as early in the drug discovery process as possible. Drugs with
successful clinical trials are almost always commercialized.

PROTEOMICS

Proteomics involves the large-scale purification, identification and
analysis of proteins. Proteins are manufactured in the body's cells according to
the code contained in DNA and are the molecular machines of the cell that are
responsible for performing the majority of cellular functions. Proteins are the
most common targets in the field of drug discovery because proteins tend to be
far more accessible to drugs than either DNA or mRNA which are located in the
nucleus of the cell.

Every protein that is identified as a potential target must be analyzed. The
trend in protein analysis currently is moving towards the use of mass
spectrometry, which is the fastest and most accurate technique for protein
analysis. Because mass spectrometers are highly sensitive, they require the use
of pure samples in order to properly analyze the protein. Thus, protein
purification, the removal of reagents such as salts, detergents and buffers, is
essential to target discovery.

In the last few years the revolution in genomics and the completion of the
Human Genome Project has vastly increased the number of known targets. Before
the Human Genome Project there were only approximately 500 known targets. Some
experts believe that the sequencing of the human genome will ultimately lead to
the identification of 50,000 to 100,000 genes and over 1,000,000 proteins. Many
scientists expect that this will in turn lead to the identification of up to
10,000 targets. Each of these targets, many of which will be proteins, will need
to be purified and analyzed many times prior to becoming a validated target for
primary screening. As a result of the recent and projected increases in the
number of known drug targets, purifying protein samples has been and will
continue to be a significant bottleneck in the drug discovery process.

ADMET SCREENING

The goal of ADMET screening is to identify compounds that have toxic side
effects or undesirable pharmacological properties. These compounds are then
either eliminated or further chemically modified and re-screened. While ADMET
screening is traditionally conducted late in the drug discovery process, early
application of ADMET screening can be highly beneficial. This is because more
than half of the 90% of lead compounds which fail in the costly clinical trial
stage of drug discovery fail due to poor pharmacological properties. These
important pharmacological properties consist of absorption, distribution,
metabolism and elimination which, together with toxicology, are described below:

ABSORPTION. Absorption describes the ability of a drug to pass through the
wall of the digestive tract and enter the blood stream. Absorption is an
important property of an effective drug because adequate absorption allows a
drug to be administered orally rather than by direct injection into the blood.
If a lead candidate cannot be absorbed easily from the digestive tract into the
blood, its commercial viability will be adversely impacted even if it
effectively acts against the target.

DISTRIBUTION. Distribution describes the amount of a drug that different
tissues in the body take in from the blood. Distribution of the drug to the
tissue containing the target molecule is necessary for the drug to have the
desired effect. Moreover, undesirable side effects may occur if the drug is
distributed to tissues other than the one containing the target molecule.
Effective distribution requires the drug to be transported around the body and
released into the tissue containing the target molecule at an appropriate rate.
The flow of blood alone is often an effective distribution method. However,
while the binding of a drug to blood proteins can increase the proper
distribution of a drug, it can cause toxic problems if the bond formed is too
strong.

METABOLISM. Metabolism describes the chemical changes that the body makes
to a drug. This is an important property of an effective drug for three reasons.
First, some drugs must be metabolized in order to become effective. Second, some
drugs may have no toxic side effects, but the byproducts of their metabolism,
known as metabolites, may be toxic. Third, metabolism usually makes drugs more
soluble in water, which in turn makes it easier for the body to eliminate them
in the urine.

ELIMINATION. Elimination describes the process by which the body expels a
drug. If the blood absorbs a drug, it will be primarily eliminated in the urine
either in its native or metabolized forms. Elimination is important because
toxicity is primarily a matter of concentration--even common compounds such as
aspirin and caffeine are toxic at high enough concentrations. If the body does
not eliminate a drug, the drug's concentration will build up with every dose
taken, eventually reaching toxic levels.

TOXICOLOGY. Toxicology describes the adverse effects a drug has on the
body. These range from nausea to death. All drugs must be shown to be safe to
the satisfaction of regulatory authorities prior to commercialization.
Toxicology consists of tests designed to determine the likelihood that a drug
will cause death or the growth of tumors, disrupt normal reproductive function
or the immune system or mutate DNA.

For every 1,000 hits identified through primary screening, only about ten
survive secondary screening and make it into clinical trials, the final stage of
drug discovery. Of those ten, only one, on average, survives the regulatory
process to be commercialized as a new drug.

CURRENT TECHNOLOGIES FOR PROTEIN PURIFICATION AND ADMET SCREENING

PROTEIN PURIFICATION. Protein purification is an essential step in
proteomics. Researchers must remove any salts, buffers, detergents and cellular
debris prior to analyzing a protein sample. Current technologies for protein
purification include packed bed columns and dialysis. In order to isolate a
specific protein, two-dimensional gel electrophoresis, or 2DGE, is typically
used in advance of running a sample through a packed bed column or dialysis.
Two-dimensional gel electrophoresis isolates different types of proteins in a
two-stage process using electric currents passed through gels. Each protein
migrates to a specific location in the gel. The protein can then be separated
from the gel residue using packed bed columns or dialysis.

PACKED BED COLUMNS are small disposable plastic tubes containing
chromatography media. A protein sample is typically pipetted into the top of
the column, which is then placed in a centrifuge or vacuum manifold to draw
the sample through the media. These columns will remove salts, detergents,
buffers and 2DGE gel residue, but may retain some of the protein in the
media.

DIALYSIS involves the use of a porous membrane which allows small
molecules such as salts, detergents, buffers and 2DGE gel residue to pass
through but blocks larger molecules such as proteins from passing through.
Dialysis involves pipetting the protein sample into a device which consists
of a chamber with the porous membrane covering one otherwise open end. The
chamber is then placed in a large volume of pure water and stirred for a
period of time, which may be minutes or hours.

ADMET SCREENING. ADMET testing at the secondary screening stage has
traditionally relied almost exclusively on live animal testing instead of tools.
The most common animals used in drug discovery studies are laboratory rats and
mice. As a drug compound moves closer to human clinical trials, the United
States Food and Drug Administration requires that studies be performed using
larger animals, such as rabbits and dogs.

LIMITATIONS OF CURRENT TECHNOLOGIES

PROTEIN PURIFICATION. Current technologies for protein purification in
proteomics have the following limitations:

- LOW PRODUCTIVITY. Neither packed bed columns nor dialyzers are easily
capable of automated sample handling. Using packed bed columns, either
alone or in connection with two-dimensional gel electrophoresis, requires
centrifugation or the use of a vacuum to move the sample through the
purification media. This means the sample must be physically moved to the
centrifuge or vacuum pump, left to run--typically for several
minutes--then removed, washed and the protein eluted.

- LOSS OF PROTEIN SAMPLE. Packed bed columns consume a portion of the
sample leading to sample loss. The amount of sample lost in the
purification process may only be microliters. This is not a significant
problem if several milliliters of sample are available, as is common in
DNA purification. However, if only a few microliters of sample are
available, as is common in protein purification, the loss of even one
microliter may be a large percentage of the total. In addition, protein
samples are typically expensive and thus sample loss must be minimized.

ADMET SCREENING. Current technologies for ADMET screening have the
following limitations:

- HIGH COST. Animal assays are costly because all animals have to be housed
and cared for under strict government regulations often in clean room
environments and with a significant staff to care for the animals. A
standard 14-day range finding study performed using laboratory rats costs
approximately $75,000, and a two-year carcinogenicity study carried out
with laboratory rats costs approximately $1 million. A later stage 90-day
study carried out using dogs typically costs almost twice as much as the
same test performed using laboratory rats.

- LABOR INTENSITY. By their nature, animal assays cannot be automated and
thus require the time of highly skilled research scientists, such as
surgeons and pathologists.

- ETHICAL CONSIDERATIONS. Even though researchers must use the lowest
number of the least sentient animals to achieve the scientifically needed
information, avoid pain and consider alternatives to the use of live
animals, the large number of animals used still creates ethical
considerations.

OUR SOLUTIONS

We overcome the limitations of current technologies by providing innovative,
enabling tools for protein purification and ADMET screening.

PROTEIN PURIFICATION

Our protein purification technologies are designed to be quick to use and to
reduce sample loss.

- HIGHER PRODUCTIVITY. Our purification pipette tips are quicker to use
than packed bed columns because a centrifugation or vacuuming step is not
necessary. This avoids both the moving of the sample to and from the
centrifuge or vacuum pump and the run time in the centrifuge or vacuum
pump. We believe our protein purification pipette tips are the only
pipette tips capable of being fitted to standard pipetting workstations
and thus being used for automated protein

purification. This automation increases our customers' productivity. In
addition, our 96 well plate versions of dialyzers and spin columns can be
used directly in automated equipment, again increasing our customers'
productivity.

- REDUCED SAMPLE LOSS. Our miniaturization of dialyzers and spin columns
reduces sample loss in the membrane or column material. Our purification
pipette tips contain smaller volumes of material than packed bed columns
and thus less sample is retained in the material.

ADMET SCREENING

Our ADMET screening technologies employ novel approaches to obtaining ADMET
data while reducing the use of large numbers of live animals.

- LOWER COST. Most of our ADMET screening products use organs, tissue or
blood proteins rather than live animals. For example, our in vitro
toxicology assay uses the lenses of cows' eyes obtained as a by-product of
the beef industry, and our 96 well plate for serum protein binding uses
blood proteins in vitro rather than in the bloodstream of live laboratory
animals.

- IMPROVED AUTOMATION. Our in vitro toxicology assay can be run in a few
minutes of instrument time and a few hours of elapsed time. By contrast,
basic toxicology tests in animals typically take days of elapsed time and
more advanced tests take weeks or months. Our 96 well plate for serum
protein binding, for instance, can be run on automated liquid handling
equipment.

- REDUCED ANIMAL USAGE. Our in vitro toxicology assay uses cow eye lenses
instead of live animals to detect toxic effects of compounds. Our drug
absorption chamber uses cultured human colon cells instead of animal
intestinal tissue to simulate the absorption of a drug into the blood from
the digestive tract. Our 96 well plate for serum protein binding tests the
binding ability of compounds on extracted blood proteins instead of
infusing the compounds into the bloodstreams of live test animals.

OUR STRATEGY

Our goal is to become the leading provider of innovative, enabling
technologies and products for proteomics and ADMET research in the drug
discovery process. Key elements of our strategy are to:

ESTABLISH OUR PROTEOMICS AND ADMET SCREENING PRODUCTS AS INDUSTRY STANDARDS

In order to establish our products as industry standards, we intend to
provide a broad selection of products focused on the target validation and ADMET
screening stages of the drug discovery process. We have recently introduced
several new innovative products designed to reduce the cost and time associated
with protein purification and ADMET screening in drug discovery. We have already
begun to realize revenue from the sales of our products, including purification
pipette tips, spin columns, dialyzers, in vitro toxicology assays and
equilibrium dialysis plates. We intend to rapidly increase the market acceptance
of these products through the development of new uses for these products,
focused, direct marketing campaigns to our extensive customer base and
promotions at scientific exhibitions.

LAUNCH A BROAD RANGE OF INNOVATIVE NEW TOOLS FOR DRUG DISCOVERY

Since our reorganization in 1996, we have focused on becoming a leading
provider of tools for proteomics and ADMET screening. We believe that our
customers are eager to acquire new and innovative tools that reduce drug
discovery time and expense. Since 1996, we have introduced several new tools for
proteomics and ADMET screening such as our protein and DNA purification pipette
tips, protein purification dialyzers, ScanTox in vitro toxicology assay and
NaviCyte diffusion chambers. We intend to continue to identify, develop and
introduce new tools to alleviate bottlenecks in all stages of the drug discovery
process.

LEVERAGE OUR EXISTING DISTRIBUTION AND MARKETING CHANNELS

We intend to leverage the strength of our existing distribution channels to
launch new products. Our 1,000 page catalog is currently distributed worldwide
to approximately 100,000 researchers engaged in drug discovery and is also
accessible on our website. Our customer list consists primarily of research
personnel, who are the end-users of our products and largely responsible for
initiating the purchase of our products. We also have wholly-owned subsidiaries
in the United Kingdom, Germany, France and Canada providing us with an
international market presence. In addition, some of our products are sold
through a distribution arrangement with Amersham Pharmacia Biotech, or
APBiotech, providing us with access to APBiotech's extensive customer base,
reputation and support infrastructure. We believe that our extensive existing
distribution channels, when combined with our strong reputation for high
quality, reliable and durable tools, provides us with a competitive advantage in
bringing new products to market quickly and cost effectively.

PROVIDE A SINGLE SOURCE OF TOOLS FOR OUR CUSTOMERS' RESEARCH NEEDS IN
PROTEOMICS AND ADMET SCREENING

We seek to provide our customers with all of the tools necessary to conduct
a wide variety of proteomic and ADMET experiments that are crucial to the drug
discovery process. We believe that being a single source sets us apart from our
competitors by increasing the likelihood that our customers will turn to our
catalog or website first when looking for help with a particular experiment.
Currently, our catalog and website include approximately 10,000 products. In
addition, our extensive product selection allows us to leverage the sales of our
proprietary products through the simultaneous sale of complementary products.

ACQUIRE COMPLEMENTARY TECHNOLOGIES

We intend to selectively acquire companies and technologies which we believe
will strengthen our portfolio of tools for drug discovery, particularly in the
areas of proteomics and ADMET screening. Since 1996, we have completed the
acquisition of Biochrom, four other acquisitions involving the integration of
acquired products and technology into our existing manufacturing base and
distribution channel, and three technology acquisition or licensing
transactions. In the future, we may pursue acquisitions of new products and
technologies through business acquisitions, partnerships or licensing
arrangements.

OUR PRODUCTS

Our broad array of products includes the following:

REPRESENTATIVE PRODUCT NUMBER OF YEAR OF INTRODUCTION FOR
PRODUCT CATEGORY AREAS DESCRIPTION PRODUCTS PRODUCT CATEGORY
- ---------------- ------------------------ ------------------------ --------- -------------------------

PROTEOMICS
Protein Purification Purification Pipette Disposable pipette tips 50 1999 (coated)
Tips - coated with Est. Q4 2000 (loaded)
purification media
- loaded with
purification media
-----------------------------------------------------------------------------------------
Macro Spin Columns Disposable tubes 20 1998
containing purification
media
-----------------------------------------------------------------------------------------
Ultra Micro Spin Columns Disposable tubes 20 1998
containing purification
media
-----------------------------------------------------------------------------------------
Dialyzers Membrane capped plastic 45 1996 and prior
chambers
- reusable
- disposable
- plates with 96 wells
-----------------------------------------------------------------------------------------
Equilibrium Dialyzers Membrane separating two 9 1996-1999
plastic chambers
- disposable
- plates with 96 wells
- -----------------------------------------------------------------------------------------------------------------
Protein Analysis Molecular Biology Range of 6 1970s (initial)
Spectrophotometers spectrophotometers 2000 (latest)
-----------------------------------------------------------------------------------------
DNA/RNA/Protein Spectrophotometers with 2 1993 (initial)
Calculators application software 2000 (latest)
-----------------------------------------------------------------------------------------
Multi-Well Plate Readers Range of automated 3 Est. Q4 2000 (absorbance)
readers Est. 2001 (luminescence)
- absorbance Est. 2001 (fluorescence)
- luminescence
- fluorescence
-----------------------------------------------------------------------------------------
Amino Acid Analysis Ninhydrin-based amino 2 1970s (initial)
Systems acid detection systems 2000 (latest)
-----------------------------------------------------------------------------------------

ADMET SCREENING
Absorption (in vitro) NaviCyte Diffusion Simulated digestive 6 1999
Chambers tract/ blood stream
interfaces
- -----------------------------------------------------------------------------------------------------------------
Distribution Equilibrium Dialysis Membrane separating two 9 1996-1999
Plate chambers
- -----------------------------------------------------------------------------------------------------------------
Metabolism/ Organ Testing Systems Chambers with 8 1970s-1999
Elimination stimulators, perfusion
and recording devices
- -----------------------------------------------------------------------------------------------------------------
Toxicology ScanTox Assay In vitro toxicology 1 2000
assay
-----------------------------------------------------------------------------------------
Precision Infusion Pumps Microprocessor 80 1952 (mechanical)
controlled syringe pumps 1986 (microprocessor)
1998 (latest)
- -----------------------------------------------------------------------------------------------------------------

PROTEOMICS PRODUCTS--PROTEIN PURIFICATION

PREPTIP PROTEIN PURIFICATION PIPETTE TIPS

Our proprietary PrepTip pipette tips consist of a standard disposable
pipette tip coated on the inside with the same chromatography media used in
packed bed columns. This coating selectively binds proteins, but not the salts,
detergents, electrophoresis gels, buffers and cellular debris that are often
mixed in with the proteins. Our PrepTip pipette tip enables customers to rapidly
purify proteins by avoiding the time-consuming usage of a centrifuge required
when using spin columns. In addition, it is easy to use because the protein
solution is handled entirely within the pipette tip and does not have to

be moved through a separate device like a packed bed column or dialyzer. Because
our PrepTip pipette tips use the same chromatography media as packed bed
columns, they can take advantage of the wide range of existing purification
protocols using these media.

PURETIP DNA PURIFICATION PIPETTE TIPS

PureTip pipette tip uses a pipette tip that is similar to the PrepTip
pipette tip, but is loaded with a gel rather than coated. This is well suited
for performing DNA purification. PureTip pipette tips are more adaptable to
automation than spin columns because they fit onto automated pipetting
workstations. We expect to launch the PureTip pipette tip later this year.

SPIN COLUMNS

Spin columns are short plastic tubes that contain purification media. Once a
sample is placed in the tube, it is typically spun in a centrifuge to move the
sample through the media and separate the proteins from the other cellular
debris. Our Ultra Micro spin columns, which we provide in both single and 96
well plate versions, contain chromatography media for use in purifying sample
volumes as small as five microliters. This is significantly smaller than the
sample volume required by columns produced by our largest competitors.

PROTEIN PURIFICATION DIALYZERS

Dialyzers are small chambers with an open end covered with a membrane. The
membrane allows small molecules to pass through but not large molecules. Because
proteins are large molecules and most contaminants are small molecules, this is
an effective way to purify proteins. We make single- and double-sided reusable
and disposable dialyzers.

DISPOSABLE EQUILIBRIUM DIALYZERS

Our proprietary disposable equilibrium dialyzers are effective
cost-efficient products for protein binding studies and can handle sample sizes
as small as 75 microliters. These disposable products are particularly useful
for binding studies involving radioactively labeled compounds because the
dialyzer does not require cleaning after use.

PROTEOMICS PRODUCTS--PROTEIN ANALYSIS

MOLECULAR BIOLOGY SPECTROPHOTOMETERS

A spectrophotometer is an instrument widely used in molecular biology and
cell biology to quantify the amount of a compound in a sample by shining a beam
of white light through a prism or grating to divide it into component
wavelengths. Each wavelength in turn is shone through a liquid sample and the
spectrophotometer measures the amount of light absorbed at each wavelength. This
enables the quantification of the amount of a compound in a sample. We sell a
wide range of spectrophotometers under the names UltroSpec and NovaSpec. These
products are manufactured by our Biochrom subsidiary and sold primarily through
our distribution arrangement with Amersham Pharmacia Biotech.

DNA/RNA/PROTEIN CALCULATORS

A DNA/RNA/protein calculator is a bench top instrument dedicated to
quantifying the amount of DNA, RNA or protein in a sample. It uses a process
similar to that of a molecular biology spectrophotometer. These are sold under
the names GeneQuant and GeneQuantPro. Launched in 1993, we believe that we were
the first company to sell such an instrument. These products are manufactured by
our Biochrom subsidiary and sold primarily through Amersham Pharmacia Biotech.

MULTI-WELL PLATE READERS

Multi-well plate readers are widely used for high throughput screening
assays in the drug discovery process. The most common format is 96 wells. They
use light to detect chemical interactions. We plan to introduce a range of these
products beginning with absorbance readers in the fourth quarter of 2000

and luminescence and fluorescence readers in 2001 primarily for distribution
through Amersham Pharmacia Biotech.

AMINO ACID ANALYSIS SYSTEMS

An amino acid analysis system uses chromatography to separate the amino
acids in a sample and then uses a chemical reaction to detect each one in turn
as they flow out of the chromatography column. Amino acids are the building
blocks of proteins. In June 2000, we acquired substantially all of the amino
acid analysis systems business of the Biotronik subsidiary of
Eppendorf-Netheler-Hinz GmbH and integrated it with the existing amino acid
analysis systems business in our Biochrom subsidiary.

ADMET SCREENING PRODUCTS

We have traditionally sold products for ADMET testing that are based upon
animal models. However, as a result of a series of acquisitions and licensing
transactions, we have begun to develop and manufacture organ testing systems,
tissue testing systems and serum protein binding assays for early toxicology
testing.

NAVICYTE DIFFUSION CHAMBERS

A diffusion chamber is a small plastic chamber with a membrane separating
the two halves of the chamber used to measure the absorption of a drug into the
bloodstream. The membrane can either be tissue such as intestinal tissue or a
cultured layer of cells such as human colon cells. This creates a miniaturized
model of intestinal absorption. We entered this market with our 1999 acquisition
of the assets of NaviCyte Inc., a wholly owned subsidiary of Trega Biosciences.

96 WELL EQUILIBRIUM DIALYSIS PLATE FOR SERUM PROTEIN BINDING ASSAYS

Our 96 well equilibrium dialysis plate operates in a similar way to the
equilibrium dialyzers for target validation described above. The difference is
that both chambers on either side of the membrane are capped. The protein target
is placed on one side of the membrane and the drug on the other. The small
molecule drug diffuses through the membrane. If it binds to the target, it
cannot diffuse back again. If it does not bind, it will diffuse back and forth
until an equilibrium is established. Thus, measuring the drug concentration
determines the strength of binding. This product is principally used for ADMET
screening to determine if a drug binds to blood proteins. A certain level of
reversible binding is advantageous in order to promote good distribution of a
drug through the human body. However, if the binding is too strong, it may
impair normal protein function and cause toxic effects.

ORGAN TESTING SYSTEMS

Organ testing systems use glass or plastic chambers together with
stimulators and recording electrodes to study organ function. Organ testing
systems enable either whole organs or strips of tissue from organs such as
hearts, livers and lungs to be kept functioning outside the body while
researchers perform experiments with them. They are typically used in place of
live animals. We have sold basic versions of these systems for many years, but
have significantly expanded our product offerings through our November 1999
acquisition of Hugo Sachs Elektronik. Studies on isolated livers are useful in
determining metabolism and studies on kidneys are useful in determining
elimination.

SCANTOX IN VITRO TOXICOLOGY SCREENING

Our proprietary ScanTox in vitro toxicology screening system uses a living
organ system, a bovine eye lens, to detect the toxic effect of compounds by
measuring the refraction of laser light passing through the eye lens. A healthy
lens focuses light to a point, but when a toxic compound is added to

the lens environment, the lens reacts by defocusing. The extent of defocusing is
measured and analyzed by the instrument. Its advantages include:

- higher relevance to whole body toxicology than a cell-based assay, without
the complicated support and measurement apparatus needed for other organs
such as hearts or lungs,

- higher sensitivity and reproducibility than live animal assays,

- higher sensitivity than other tissue assays, and

- easier operation than other animal or tissue assays because the data is
collected and analyzed automatically.

PRECISION INFUSION PUMPS

Infusion pumps, typically syringe pumps, are used to accurately infuse very
small quantities of liquid, commonly drugs. Infusion pumps are typically used
for long-term toxicology testing of drugs by infusion into animals, typically
laboratory rats. We sell 80 types of syringe pumps.

OTHER PRODUCTS

CELL INJECTION SYSTEMS

Cell injection systems use extremely fine bore glass capillaries to
penetrate and inject drugs into or around individual cells. Cell injection
systems are used to study the effects of drugs on single cells. Injection is
accomplished either with air pressure or, if the drug molecule is electrically
charged, by applying an electric current. We entered this market with our 1998
acquisition of the research products of Medical Systems Corporation.

VENTILATORS

Ventilators use a piston driven air pump to inflate the lungs of an
anesthestised animal. Ventilators are typically used in surgical procedures
common in drug discovery. Our advanced Inspira ventilators have significant
safety and ease of use features, such as default safety settings, not found on
other ventilators.

CPK ATOMIC MODELS

CPK atomic models use colored plastic parts to accurately model molecular
structures, such as DNA. We offer a wide range of components and assembled
models.

STRONGHOLD LABORATORY CLAMPS

Stronghold laboratory clamps are made from glass reinforced nylon. Our
clamps resist rusting which is a common problem with steel clamps. We provide a
wide variety of clamps, stands and lattices.

OEM PRODUCTS

Our reputation for quality, durability and reliability has led to the
formation of a number of original equipment manufacturer, or OEM, relationships
with major life science instrument companies. These relationships are conducted
through purchase orders and are not contractual. A good example of these
relationships is with respect to our syringe pumps. Our syringe pumps are
capable of delivering flow rates as low as 0.001 microliters per hour while
maintaining high accuracy. We have adapted, in conjunction with our OEMs, the
core technology embodied in our syringe pumps to make specialized sample
injectors for many of the major mass spectrometry manufacturers.

DISTRIBUTED PRODUCTS

In addition to the manufactured products described above, we buy and resell
through our catalog products made by other manufacturers. We have negotiated
supply agreements with the majority of the companies that provide our
distributed products. These supply agreements specify pricing only and contain
no minimum purchase commitments. None of these agreements represents more than
two percent of our revenues. Distributed products accounted for approximately
18% of our revenues for the nine months ended September 30, 2000. These
distributed products enable us to provide our customers with a single source for
their experimental needs. These complementary products consist of a large
variety of devices, instruments and consumable items used in experiments
involving animals and biological tissue in the fields of proteomics, physiology,
pharmacology, neuroscience, cell biology, molecular biology and toxicology. Our
manufactured products are often leaders in their fields, but researchers often
need complementary products in order to conduct their particular experiments.
Most of these complementary products come from small companies without our
extensive distribution and marketing channel.

OUR CUSTOMERS

Our customers are primarily end user research scientists at pharmaceutical
and biotechnology companies, universities and government laboratories, such as
the U.S. National Institutes of Health, or NIH. Our largest customers in the
United States include Baylor College of Medicine, Bristol-Myers Squibb Company,
Eli Lilly and Company, Johns Hopkins University, Merck & Co., Inc., NIH, Parke-
Davis, Pfizer Inc., Schering-Plough Corporation, SmithKline Beecham plc and the
University of California.

We conduct direct sales in the United States, the United Kingdom, Germany,
France and Canada. We also maintain distributors in other countries. Aggregate
sales to our largest customer, Amersham Pharmacia Biotech, as a distributor with
end users similar to ours, accounted for approximately 39% of our revenue for
the nine months ended September 30, 2000, and 44% of our revenue for the fiscal
year ended December 31, 1999. We have several thousand customers worldwide and
no other customer accounted for more than five percent of our revenue for such
periods.

SALES AND MARKETING

DIRECT SALES

We periodically produce and mail approximately 100,000 copies of our
1,000-page catalog, which contains approximately 10,000 items. We distribute the
majority of our products ordered from our catalog through our worldwide
subsidiaries. Our manufactured products accounted for approximately 82% of our
revenues for the nine months ended September 30, 2000. The complete catalog is
also available as a CD-ROM and can be accessed on our website,
www.harvardbioscience.com. Our significant positions in many of our manufactured
products create traffic to the catalog and web site which enables cross-selling
and facilitates the introduction of new products. In addition to the
comprehensive catalog, we create and mail abridged catalogs which focus on
specific product areas along with direct mailers which introduce or promote new
products.

AMERSHAM PHARMACIA BIOTECH DISTRIBUTOR

Since the 1970s, our Biochrom subsidiary has used Amersham Pharmacia
Biotech, or APBiotech, and its predecessors as its primary marketing and
distribution channel. When we acquired Biochrom from Pharmacia and Upjohn in
1999, we signed a distribution, marketing and new product development agreement
with APBiotech. Under the terms of this agreement, APBiotech serves as the
exclusive distributor, marketer and seller of a majority of the products of our
Biochrom subsidiary. During the term of this agreement, APBiotech has agreed to
purchase a minimum number of our products for an

annual amount of $12.5 million, subject to adjustment for price increases and
product sales volume. We have certain affirmative duties under the agreement to
assist APBiotech in the sale of our products. For example, we have agreed to
cooperate with APBiotech in its sales and marketing program and to provide
sales, demonstration and support training for APBiotech. This agreement may be
terminated early under specified circumstances. For example, if we breach the
exclusivity, pricing or shipping provisions of the agreement and fail to remedy
the breach within 30 days of receiving written notice of the breach from
APBiotech, then the agreement may be terminated. In addition, we may terminate
the agreement under specified circumstances. For example, failure by APBiotech
to place certain information in escrow, to pay for products or to purchase a
minimum number of products each year enables us to terminate the agreement
unless APBiotech remedies the breach within 30 days of receiving written notice
of the breach from us. This agreement may be terminated by either party upon
18 months' prior written notice. This agreement does not have a finite term, but
remains in effect until terminated by either us or APBiotech.

RESEARCH AND DEVELOPMENT

Our principal research and development mission is to develop a broad
portfolio of technologies, products and core competencies in drug discovery
tools, particularly for application in the areas of proteomics and ADMET.

Our development expenditures were $206,000 in 1997, $325,000 in 1998 and
$1.2 million in 1999. We anticipate that we will continue to make significant
development expenditures. We plan to continue to pursue a balanced development
portfolio strategy of originating new products from internal research and
development programs and business and technology acquisitions.

We maintain development staff in each of our manufacturing facilities to
design and develop new products. In-house development is focused on our current
technologies. For new technologies, our strategy has been to license or acquire
proven technology from universities and biotechnology companies and then develop
the technology into commercially viable products.

MANUFACTURING

We manufacture and test the majority of our products in our four principal
manufacturing facilities located in the United States, the United Kingdom and
Germany. We have considerable manufacturing flexibility at our various
facilities, and each facility can manufacture multiple products at the same
time. We maintain in-house key manufacturing know-how, technologies and
resources. We seek to maintain multiple suppliers for key components that are
not manufactured in-house.

Our manufacturing operations are essentially to assemble and test. Our
manufacturing of syringe pumps, ventilators, cell injectors and protein
purification products takes place in Holliston, Massachusetts. Our manufacturing
of spectrophotometers and amino acid analysis systems takes place in Cambridge,
England. Our manufacturing of surgery-related products and teaching products
takes place in Edenbridge, England. Our manufacturing of complete organ testing
systems takes place in March-Hugstetten, Germany. Our Cambridge, England
facility is certified to ISO 9001.

COMPETITION

The markets into which we sell our products are highly competitive, and we
expect the intensity of competition to increase. We compete with many companies
engaged in developing and selling tools for drug discovery. Many of our
competitors have greater financial, operational, sales and marketing resources,
and more experience in research and development and commercialization than we
have. Moreover, competitors may have greater name recognition than we do, and
many offer discounts as a competitive tactic. These competitors and other
companies may have developed or could in the future develop new technologies
that compete with our products or which could render our products obsolete.

We cannot assure you that we will be able to make the enhancements to our
technologies necessary to compete successfully with newly emerging technologies.
We are not aware of any significant products sold by us which are currently
obsolete.

We believe that we offer one of the broadest selections of protein
purification and ADMET technologies to companies engaged in drug discovery. We
are not aware of any competitor which offers a product line of comparable
breadth within the protein purification and ADMET product markets. We have
numerous competitors on a product line basis. We believe that we compete
favorably with our competitors on the basis of product performance, including
quality, reliability and speed, technical support, price and delivery time. We
compete with several companies that provide instruments for proteomics and ADMET
screening. In the DNA/RNA/protein calculator area, we compete with PerkinElmer
Instruments, Inc. and Bio-Rad Laboratories, Inc. In the molecular biology
spectrophotometer area, we compete with Beckman Coulter, Inc. and PerkinElmer
Instruments, Inc. In the protein sample preparation area, we compete with
Millipore Corporation, Pierce Chemical Company and Spectrum Medical. In the
ADMET screening area, we compete with KD Scientific, Razel Scientific
Instruments, Inc., Experimetria Ltd., Kent Scientific Corporation, Warner
Instruments, General Valve Company, Eppendorf-Netheler-Hinz GmbH, Ugo Basile and
Becton, Dickinson and Company. In the area of OEM products, we face competition
primarily from the in-house engineering teams of our OEM customers.

INTELLECTUAL PROPERTY

To establish and protect our proprietary technologies and products, we rely
on a combination of patent, copyright, trademark and trade-secret laws, as well
as confidentiality provisions in our contracts. Most of our new technology is
covered by patents or patent applications. Most of our base business is
protected by trade names and trade secrets only.

We have implemented a patent strategy designed to provide us with freedom to
operate and facilitate commercialization of our current and future products. We
currently own ten issued U.S. patents and have four pending applications. We
also hold exclusive licenses for the technologies used in our ScanTox in vitro
toxicology products, our NaviCyte drug absorption products and our PureTip
pipette tip products. In addition to these licenses, our principal technologies
are covered by issued patents for our dialyzers and our Ultra Micro spin columns
and by pending applications for our PrepTip pipette tips. Furthermore,
international patent applications are pending in connection with one of our U.S.
patent applications and one of our licensed patents.

Generally, U.S. patents have a term of 17 years from the date of issue for
patents issued from applications filed with the U.S. Patent Office prior to
June 8, 1995, and 20 years from the application filing date or earlier claimed
priority date in the case of patents issued from applications filed on or after
June 8, 1995. Our issued US patents will expire between 2011 and 2018. Our
success depends to a significant degree upon our ability to develop proprietary
products and technologies. We intend to continue to file patent applications as
we develop new products and technologies.

Patents provide some degree of protection for our intellectual property.
However, the assertion of patent protection involves complex legal and factual
determinations and is therefore uncertain. The scope of any of our issued
patents may not be sufficiently broad to offer meaningful protection. In
addition, our issued patents or patents licensed to us may be successfully
challenged, invalidated, circumvented or unenforceable so that our patent rights
would not create an effective competitive barrier. Moreover, the laws of some
foreign countries may not protect our proprietary rights to the same extent as
do the laws of the United States. In addition, the laws governing patentability
and the scope of patent coverage continue to evolve, particularly in areas of
interest to us. As a result, there can be no assurance that patents will issue
from any of our patent applications or from applications

licensed to us. In view of these factors, our intellectual property positions
bear some degree of uncertainty.

We also rely in part on trade-secret protection of our intellectual
property. We attempt to protect our trade secrets by entering into
confidentiality agreements with third parties, employees and consultants. Our
employees and consultants also sign agreements requiring that they assign to us
their interests in patents and copyrights arising from their work for us. Many
of our U.S. employees have signed agreements not to compete unfairly with us
during their employment and after termination of their employment, through the
misuse of confidential information, soliciting employees, soliciting customers
and the like. However, it is possible that these agreements may be breached or
invalidated and if so, there may not be an adequate corrective remedy available.
Despite the measures we have taken to protect our intellectual property, we
cannot assure you that third parties will not independently discover or invent
competing technologies, or reverse engineer our trade secrets or other
technologies. Therefore, the measures we are taking to protect our proprietary
rights may not be adequate.

We do not believe that our products infringe on the intellectual property
rights of any third party. We cannot assure you, however, that third parties
will not claim such infringement by us or our licensors with respect to current
or future products. We expect that product developers in our market will
increasingly be subject to such claims as the number of products and competitors
in our market segment grows and the product functionality in different market
segments overlaps. In addition, patents on production and business methods are
becoming more common and we expect that more patents will issue in our technical
field. Any such claims, with or without merit, could be time-consuming, result
in costly litigation and diversion of management's attention and resources,
cause product shipment delays or require us to enter into royalty or licensing
agreements. Moreover, such royalty or licensing agreements, if required, may not
be on terms acceptable to us, or at all, which could seriously harm our business
or financial condition.

GOVERNMENT REGULATION

We are not subject to direct governmental regulation other than the laws and
regulations generally applicable to businesses in the domestic and foreign
jurisdictions in which we operate. In particular, we are not subject to
regulatory approval by the United States Food and Drug Administration as none of
our products are sold for use in diagnostic procedures or on human clinical
patients. In addition, we believe we are in compliance with all relevant
environmental laws.

EMPLOYEES

As of October 15, 2000, we had 127 full-time employees and 6 part-time
employees, 38 of whom resided in the United States, 77 of whom resided in the
United Kingdom, 11 of whom resided in Germany, 3 of whom resided in France and 4
of whom resided in Canada. None of our employees is subject to any collective
bargaining agreement. We believe that our relationship with our employees is
good.

FACILITIES

Our four principal facilities incorporate manufacturing, development, sales
and marketing and administration functions. Our facilities consist of:

- a leased 20,000 square foot facility in Holliston, Massachusetts, which is
our corporate headquarters,

- a leased 28,000 square foot facility in Cambridge, England,

- an owned 15,500 square foot facility in Edenbridge, England, and

- a leased 9,000 square foot facility in March-Hugstetten, Germany.

We lease additional facilities for sales and administrative support in Les
Ulix, Paris France and Montreal, Quebec Canada.

LEGAL PROCEEDINGS

On November 7, 2000, we received correspondence from counsel to Harvard
University claiming that our use of the term "Harvard Bioscience" and other
terms containing or consisting of the term "Harvard" constitutes trademark
infringement, false designation of origin, unfair competition and
cybersquatting. Counsel to Harvard University has also threatened us with legal
action if we do not cease and permanently refrain from using these terms. We do
not currently intend to take such steps, and we believe it is likely that
Harvard University will pursue this matter against us. We believe that these
claims are without merit, and we will vigorously seek to protect our rights
regarding such claims. While we are still investigating the matter, we do not
believe that the matter will have a material adverse effect on our business,
financial position or results of operations.

From time to time, we may be involved in various other claims and legal
proceedings arising in the ordinary course of business. We are not currently a
party to any other claims or proceedings which, we believe, if decided adversely
to us, would either individually or in the aggregate have a material adverse
effect on our business, financial condition or results of operations.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table shows information about our executive officers and
directors as of October 15, 2000.

NAME AGE POSITION
- ---- -------- ----------------------------------------------

Chane Graziano.................................. 62 Chief Executive Officer and Director

David Green..................................... 36 President and Director

James Warren.................................... 55 Chief Financial Officer

Mark Norige..................................... 46 Chief Operating Officer

John House...................................... 56 Managing Director, Biochrom Ltd

Susan Luscinski................................. 44 Vice President of Finance and Administration

Christopher W. Dick............................. 46 Director

Robert Dishman.................................. 56 Director

John F. Kennedy................................. 51 Director

Richard C. Klaffky, Jr.......................... 54 Director

Earl R. Lewis................................... 56 Director

Messrs. Dick and Klaffky are members of our compensation committee.

Messrs. Kennedy, Klaffky and Lewis are members of our audit committee.

CHANE GRAZIANO has served as our Chief Executive Officer and as a member of
our board of directors since March 1996. Prior to joining Harvard Bioscience,
Mr. Graziano served as the President of Analytical Technology Inc., an
analytical electrochemistry instruments company, from 1993 to 1996 and as the
President and Chief Executive Officer of its predecessor, Analytical
Technology Inc.-Orion, an electrochemistry instruments and laboratory products
company, from 1990 until 1993. Mr. Graziano served as the President of Waters
Corporation, an analytical instrument manufacturer, from 1985 until 1989.
Mr. Graziano has over 36 years experience in the laboratory products and
analytical instruments industry.

DAVID GREEN has served as our President and as a member of our board of
directors since March 1996. Prior to joining Harvard Bioscience, Mr. Green was a
strategy consultant with Monitor Company, a strategy consulting company, in
Cambridge, Massachusetts and Johannesburg, South Africa from June 1991 until
September 1995 and a brand manager for household products with Unilever PLC, a
packaged consumer goods company, in London from September 1985 to
February 1989. Mr. Green graduated from Oxford University with a B.A. Honors
degree in physics and holds a M.B.A. degree with distinction from Harvard
Business School.

JAMES WARREN has served as our Chief Financial Officer since July 2000.
Prior to joining Harvard Bioscience, Mr. Warren served as the Chief Financial
Officer of Aquila Biopharmaceuticals, Inc., a life sciences company, from
January 1998 until July 2000 and as the Corporate Controller of Genzyme
Corporation, a biotechnology company, from 1991 until January 1998. Mr. Warren
holds a M.B.A. degree from Boston University.

MARK NORIGE has served as our Chief Operating Officer since January 2000 and
in various other positions with us since September 1996. Prior to joining
Harvard Bioscience, Mr. Norige served as a Business Unit Manager at
QuadTech, Inc., an impedance measuring instrument manufacturer, from May 1995
until September 1996. Mr. Norige worked at Waters Corporation from 1977 until
May 1995.

JOHN HOUSE has served as Managing Director of our Biochrom Ltd subsidiary
since July 2000. Prior to joining Biochrom, Mr. House was retired from January
1995 until July 2000 and engaged during that period primarily in charitable
activities. Mr. House served in various positions with, and most recently as a
Managing Director of, Unicam Ltd., a manufacturer of analytical instruments,
from 1987 until January 1995.

SUSAN LUSCINKSI has served as our Vice President of Finance and
Administration since May 1999. Ms. Luscinski served as our Corporate Controller
from May 1988 until May 1999 and has served in various other positions at our
company and its predecessor since January 1985.

CHRISTOPHER W. DICK has served as a director of Harvard Bioscience since
March 1996. Mr. Dick has served as Managing Director of Ascent Venture
Management, Inc., a private equity firm, since March 1999. Mr. Dick has served
as a Managing Member or General Partner of Ascent Venture Partners, L.P. fund
and Ascent Venture Partners II, L.P. fund since 1999. Prior to joining Ascent
Venture Management, Inc., Mr. Dick served as General Partner of Pioneer Capital
Corporation, a private equity management firm, from 1991 until March 1999.
Mr. Dick is a graduate of Cornell University and holds a M.B.A. degree from
Babson College.

ROBERT DISHMAN has served as a director of Harvard Bioscience since
October 2000. Since 1994, Mr. Dishman has served in various positions with, and
most recently as an Executive Vice President and Director of Dyax Corp.
(formerly Biotage, Inc.), a commercial physical and biological research company.
Mr. Dishman holds a Ph.D. in Analytical Chemistry from the University of
Massachusetts-Amherst.

JOHN F. KENNEDY has served as a director of Harvard Bioscience since
October 2000. Mr. Kennedy has served as the Senior Vice President, Finance,
Chief Financial Officer and Treasurer of RSA Security Inc., an e-business
security company, since August 1999. Prior to joining RSA Security, Mr. Kennedy
was Chief Financial Officer of decalog, NV, a developer of enterprise investment
management software, from 1998 to 1999. From 1993 to 1998, Mr. Kennedy served as
Vice President of Finance, Chief Financial Officer and Treasurer of Natural
MicroSystems Corporation, a telecommunications company. Mr. Kennedy holds a
M.S.B.A. in Accounting from the University of Massachusetts-Amherst.

RICHARD C. KLAFFKY, JR. has served as a director of Harvard Bioscience since
March 1996. Since 1987, Mr. Klaffky has served as President of FINEC Corp., the
corporate general partner of two private equity partnerships, First New England
Capital L.P. and First New England Capital 2 L.P., based in Hartford,
Connecticut. Mr. Klaffky also serves as a director of Centrum Industries, a
manufacturing company in the metal forming, material handling and motor
production industries. Mr. Klaffky is a graduate of Brown University and holds a
M.B.A. degree from Columbia University.

EARL R. LEWIS has served as a director of Harvard Bioscience since
October 2000. Mr. Lewis has served in various capacities with Thermo Instrument
Systems (now merged into Thermo Electron Corporation) since 1986 and was
subsequently named President in 1997 and Chief Executive Officer in 1998.
ThermoElectron Corporation develops, manufactures and markets measuring and
controlling devices. Mr. Lewis is Chairman of Thermo BioAnalysis Corporation,
Thermo Vision Corporation, Thermo Optek Corporation, ThermoQuest Corporation,
each of which is a developer of laboratory analytical instruments, and ONIX
Systems, Inc., a developer of measuring and controlling devices. Mr. Lewis is a
director of SpectRx, Inc., an electromedical and electrotherapeutic company,
Metrika Systems Corporation, a developer of industrial instruments for
measurement, display and control, and ThermoSpectra Corporation, a developer of
instruments for measuring and testing of electricity and electric signals.

BOARD COMPOSITION

Following the closing of this offering, our board of directors will be
divided into three classes, each of whose members will serve for a staggered
three-year term. Our board of directors will consist of Messrs. Dick, Dishman
and Klaffky as Class I directors, whose term of office will continue until the
2001 annual meeting of stockholders, Messrs. Green and Kennedy as Class II
directors, whose term of office will continue until the 2002 annual meeting of
stockholders, and Messrs. Graziano and Lewis as Class III directors, whose term
of office will continue until the 2003 annual meeting of stockholders. At each
annual meeting of stockholders, a class of directors will be elected for a
three-year term to succeed the directors of the same class whose terms are then
expiring.

BOARD COMMITTEES

Effective upon the closing of this offering, our board of directors will
reconstitute the audit committee and compensation committee.

AUDIT COMMITTEE. The members of the audit committee will be responsible for
recommending to the board of directors the engagement of our outside auditors
and reviewing our accounting controls and the results and scope of audits and
other services provided by our auditors. Our audit committee will consist of
three independent directors.

COMPENSATION COMMITTEE. The members of the compensation committee, a
majority of whom will be independent directors, will be responsible for
approving or recommending to the board of directors the amount and type of
consideration to be paid to senior management, administering our stock option
plans and establishing and reviewing general policies relating to compensation
and benefits of employees.

DIRECTOR COMPENSATION

We reimburse our non-employee directors for their expenses incurred in
connection with attending board and committee meetings but do not provide cash
compensation for their services as board or committee members. Directors are
eligible to participate in our 2000 Stock Option and Incentive Plan. Each of our
non-employee directors, other than Messrs. Dick and Klaffky, will receive a
one-time option grant of 10,000 shares vesting annually over three years upon
joining the board and an annual option grant of 2,500 shares vesting annually
over three years on the date of each annual meeting of stockholders following
the closing of this offering. The exercise price for each of these option grants
will be equal to the fair market value of the underlying shares of our common
stock on the date of grant.

EXECUTIVE COMPENSATION

The following table sets forth the total compensation paid or accrued in the
fiscal year ended December 31, 1999 to our Chief Executive Officer and the three
other executive officers whose aggregate compensation exceeded $100,000.

SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- -------------
NUMBER
OF SECURITIES
UNDERLYING ALL
OPTIONS OTHER
NAME AND POSITION SALARY BONUS GRANTED COMPENSATION
- ----------------- -------- -------- ------------- ------------

Chane Graziano ................................ $219,000 $232,000 458,257 $19,592(1)
Chief Executive Officer

David Green ................................... 175,000 186,000 458,257 15,507(2)
President

Mark A. Norige ................................ 108,000 35,000 -- 5,447(3)
Chief Operating Officer

Susan M. Luscinski ............................ 95,000 47,500 -- 4,832(3)
Vice President of Finance and Administration

- ------------------------------
(1) Includes $7,357 in automobile lease payments, $7,520 in contributions by us
to Mr. Graziano's 401(k) account and $4,715 representing life insurance
purchased for Mr. Graziano's benefit.

(2) Includes $7,687 in automobile lease payments, $7,165 in contributions by us
to Mr. Green's 401(k) account and $655 representing life insurance purchased
for Mr. Green's benefit.

(3) Represents contributions by us to the executive officers' 401(k) accounts.

OPTION GRANTS IN LAST FISCAL YEAR AND OPTION VALUES AT FISCAL YEAR END

The following table provides information regarding stock options granted to
the named executive officers during the fiscal year ended December 31, 1999.

OPTION GRANTS IN FISCAL YEAR 1999

POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------------------- ANNUAL RATE OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(3)
DATE OF OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANT GRANTED(1) FISCAL YEAR(2) PER SHARE DATE 5% 10%
- ---- -------- ---------- ---------------- --------- ---------- --------- ---------

Chane Graziano.............. 3/2/1999 458,257 50% $1.0461 3/2/2009 $301,480 $764,009

David Green................. 3/2/1999 458,257 50% 1.0461 3/2/2009 301,480 764,009

- --------------------------
(1) The options, as amended in September 2000, vest upon the sale of all or
substantially all of our assets or capital stock for a price per share of
common stock of at least $2.09, or if our fair market value at any time
prior to December 31, 2000 results in a per share valuation, on a
fully-diluted basis, of not less than $2.09 per share. The exercise price of
the options is equal to the fair market value of our common stock on the
date of grant.

(2) Based on an aggregate of 916,514 options granted in fiscal 1999.

(3) The amounts shown as potential realizable value illustrate what might be
realized upon exercise immediately prior to expiration of the option term
using the 5% and 10% appreciation rates compounded annually as established
in regulations of the Securities and Exchange Commission.

The following table sets forth the potential realizable value of the options
granted to the listed executive officers using our assumed initial public
offering price of $12.00 per share:

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
NUMBER OF APPRECIATION
SECURITIES FOR OPTION TERM
UNDERLYING ------------------------
OPTIONS GRANTED 5% 10%
--------------- ---------- -----------

Chane Graziano........................................ 458,257 $8,478,047 $13,783,827

David Green........................................... 458,257 $8,478,047 $13,783,827

The potential realizable value is not intended to predict future
appreciation of the price of our common stock. The values shown do not
consider non-transferability, vesting or termination of the options upon
termination of the employee's employment relationship with us.

FISCAL YEAR-END OPTION VALUES

The following table sets forth information concerning the number and value
of unexercised options to purchase common stock held as of December 31, 1999 by
the executive officers listed in the Summary Compensation Table. There was no
public trading market for our common stock as of December 31, 1999. Accordingly,
the values of the unexercised in-the-money options have been calculated on the
basis of the estimated fair value of our common stock at December 31, 1999 of
$3.67, less the applicable exercise price multiplied by the number of shares
which may be acquired on exercise. None of the executive officers listed in the
Summary Compensation Table exercised any stock options in fiscal 1999.

AGGREGATE OPTION AMOUNTS AND FISCAL YEAR-END OPTION VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------

Chane Graziano................................ 783,808 570,229 $2,872,746 $1,610,825

David Green................................... 783,808 570,229 2,872,746 1,610,825

Mark A. Norige................................ 55,976 55,996 204,366 204,438

Susan M. Luscinski............................ 83,965 28,007 307,742 102,653

BENEFIT PLANS

2000 STOCK OPTION AND INCENTIVE PLAN. Our board of directors has adopted
the 2000 Stock Option and Incentive Plan, subject to stockholder approval. The
2000 Stock Option and Incentive Plan will be submitted to our stockholders for
approval in November 2000. The 2000 Stock Option and Incentive Plan allows for
the issuance of up to 3,750,000 shares of common stock plus an additional amount
equal to 15% of any net increase in the total number of shares of common stock
outstanding after this offering. Our compensation committee will administer the
2000 Stock Option and Incentive Plan.

Under the 2000 Stock Option and Incentive Plan, our compensation committee
may:

- grant incentive stock options,

- grant non-qualified stock options,

- grant stock appreciation rights,

- issue or sell common stock with vesting or other restrictions, or without
restrictions,

- grant rights to receive common stock in the future with or without
vesting,

- grant common stock upon the attainment of specified performance goals, and

- grant dividend rights in respect of common stock.

These grants and issuances may be made to our officers, employees,
directors, consultants, advisors and other key persons.

Our compensation committee has the right, in its discretion, to select the
individuals eligible to receive awards, determine the terms and conditions of
the awards granted, accelerate the vesting schedule of any award and generally
administer and interpret the plan.

The exercise price of options granted under the 2000 Stock Option and
Incentive Plan is determined by our compensation committee. Under present law,
incentive stock options and options intended to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986 may not
be granted at an exercise price less than the fair market value of the common
stock on the date of grant, or less than 110% of the fair market value in the
case of incentive stock options granted to optionees holding more than 10% of
the voting power.

Non-qualified stock options may be granted at prices which are less than the
fair market value of the underlying shares on the date granted. Options are
typically subject to vesting schedules, terminate 10 years from the date of
grant and may be exercised for specified periods after the termination of the
optionee's employment or other service relationship with us. Upon the exercise
of options, the option exercise price must be paid in full either in cash or by
certified or bank check or other instrument acceptable to the committee or, in
the sole discretion of the committee, by delivery of shares of common stock that
have been owned by the optionee free of restrictions for at least six months.

The 2000 Stock Option and Incentive Plan and all awards issued under the
plan will terminate upon a merger, reorganization or consolidation, the sale of
all or substantially all of our assets or all of our outstanding capital stock
or a liquidation or other similar transaction, unless Harvard Bioscience and the
other parties to such transactions have agreed otherwise. All participants under
the 2000 Stock Option and Incentive Plan will be permitted to exercise for a
period of 30 days before any such termination all awards held by them which are
then exercisable or will become exercisable upon the closing of the transaction.

EMPLOYEE STOCK PURCHASE PLAN. The Employee Stock Purchase Plan was adopted
by our board of directors in October 2000 subject to stockholder approval. The
Employee Stock Purchase Plan will be submitted to stockholders in November 2000.
Up to 500,000 shares of our common stock may be issued under the Employee Stock
Purchase Plan. The Employee Stock Purchase Plan is administered by our
compensation committee.

The first offering under the Employee Stock Purchase Plan will commence on
January 1, 2001 and end on June 30, 2001. Subsequent offerings will commence on
each January 1 and July 1 thereafter and will have a duration of six months.
Generally, all employees who are customarily employed for more than 20 hours per
week as of the first day of the applicable offering period are eligible to
participate in the Employee Stock Purchase Plan. Any employee who owns or is
deemed to own shares of stock representing in excess of 5% of the combined
voting power of all classes of our stock may not participate in the Employee
Stock Purchase Plan.

During each offering, an employee may purchase shares under the Employee
Stock Purchase Plan by authorizing payroll deductions of up to 10% of his cash
compensation during the offering period. Unless the employee has previously
withdrawn from the offering, his accumulated payroll deductions will be used to
purchase shares of our common stock on the last business day of the period at a
price equal to 85% of the fair market value of our common stock on the first or
last day of the offering period, whichever is lower. Under applicable tax rules,
an employee may purchase no more than

$25,000 worth of our common stock in any calendar year under the Employee Stock
Purchase Plan. We have not issued any shares to date under the Employee Stock
Purchase Plan.

1996 STOCK OPTION AND GRANT PLAN. Our 1996 Stock Option and Grant Plan was
initially approved by our board of directors and was approved by our
stockholders in March 1996. Our 1996 Stock Option and Grant Plan provides for
the issuance of 4,072,480 shares of our common stock. As of October 15, 2000,
options to purchase 599,096 shares of our common stock were outstanding under
our 1996 Stock Option and Grant Plan. Options granted under our 1996 Stock
Option and Grant Plan generally vest over four years and terminate on the tenth
anniversary of the date of grant. We will not make any additional grants under
our 1996 Stock Option and Grant Plan after the completion of this offering.

EMPLOYMENT ARRANGEMENTS

We anticipate entering into employment agreements with each of Messrs.
Graziano, Green and Warren. Each proposed agreement is for a period of two
years, other than Mr. Warren's agreement which is for one year. Messrs. Graziano
and Green's agreement automatically extends for two additional years on the
second anniversary date and Mr. Warren's agreement automatically extends for one
additional year on the anniversary date unless either party has given notice
that it does not wish to extend the agreement. Each agreement provides for the
payment of base salary and incentive compensation and for the provision of
certain fringe benefits to the executive. Under their respective employment
agreements, the annual salary for Mr. Graziano is $275,000, the annual salary
for Mr. Green is $225,000 and the annual salary for Mr. Warren is $185,000. The
agreements require our executive officers to refrain from competing with us and
from soliciting our employees for a period of 12 months following termination
for any reason. Each agreement also provides for certain payments and benefits
for an executive officer should his or her employment with us be terminated
because of death or disability, by the executive for good reason or by us
without cause, as further defined in the agreements. In general, in the case of
a termination by the executive officer for good reason, or by us without cause,
the executive officer will receive up to two years' salary and bonus in the
cases of Messrs. Graziano and Green and one years' salary and bonus in the case
of Mr. Warren, an extension of benefits for one year and an acceleration of
vesting for stock options and restricted stock which otherwise would vest during
the next twenty-four months. Upon a change of control, as defined in the
agreements, the executive officer is eligible for payment of up to three years'
salary and bonus in the cases of Messrs. Graziano and Green and one-and-a-half
years' salary and bonus in the case of Mr. Warren, an extension of benefits for
one year and an acceleration of vesting for all outstanding stock options and
restricted stock.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Dick and Klaffky are the members of our compensation committee.
Neither Mr. Dick nor Mr. Klaffky is an executive officer of our company or has
received any compensation from us within the last three years other than in his
capacity as a director.

RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

STOCK REDEMPTIONS AND LOAN REPAYMENTS WITH STOCKHOLDERS

In March 1996, our business was acquired by a group that was led by our
current management team of Chane Graziano, our Chief Executive Officer, and
David Green, our President, and that also included Paul Grindle, a former member
of our board of directors, Ascent Venture Partners, L.P. (formerly known as
Pioneer Venture Limited Partnership), Ascent Venture Partners II, L.P. (formerly
known as Pioneer Venture Limited Partnership II) and First New England Capital,
L.P. In connection with this acquisition, we issued redeemable preferred stock
for an aggregate purchase price of $1.5 million and subordinated debentures with
an aggregate principal amount of $1.0 million to our investors. The redeemable
preferred stock pays cumulative dividends at the rate of $0.26 per share
quarterly in arrears and the subordinated debentures bear interest at an annual
rate of 13% payable quarterly in arrears. The terms of the redeemable preferred
stock and the subordinated debentures require us to redeem or repay these
instruments upon the completion of this offering. A portion of the proceeds of
this offering will be used to retire the redeemable preferred stock and the
subordinated debentures. The redemption of the preferred stock and the
retirement of the subordinated debentures will result in payments of
approximately $167,000 to Mr. Graziano, our Chief Executive Officer and a member
of our board of directors, $500,000 to Ascent Venture Partners, L.P.,
$1.0 million to Ascent Venture Partners II, L.P. and $500,000 to First New
England Capital, L.P. Christopher W. Dick, a member of our board of directors,
is a Managing Director of Ascent Venture Management, Inc., the general partner
of Ascent Venture Partners, L.P., and Ascent Management SBIC Corp., the general
partner of Ascent Venture Partners II, L.P., and Richard C. Klaffky, Jr., a
member of our board of directors, is the President of FINEC Corp., the general
partner of First New England Capital, L.P.

TRANSACTIONS WITH AN AFFILIATE OF AN EXECUTIVE OFFICER

In March 1996, we acquired our business from a company now known as Harvard
Clinical Technology Inc. Following this acquisition, we entered into several
transition-related transactions with Harvard Clinical. In 1997, we sold Harvard
Clinical several items of furniture, fixtures, appliances and equipment, leased
Harvard Clinical office space on the same terms as the underlying lease with the
third-party landlord, provided transition support services and assumed Harvard
Clinical's obligations to pay $10,000 in professional fees in exchange for
1,529,180 shares of our common stock held by a principal stockholder of Harvard
Clinical at an agreed upon value of $0.11 per share. The assets purchased by
Harvard Clinical had an aggregate purchase price of approximately $93,000, which
reflected their estimated fair market value as determined by Mr. Graziano, our
Chief Executive Officer, and the value at which they were recorded on our
balance sheet. We originally purchased these assets as part of the March 1996
acquisition of our business. We believe that each of these transactions was
consummated on terms at least as favorable to us as could have been obtained
from unaffiliated parties. Diane Green, who is an officer, director and
stockholder of Harvard Clinical, is the spouse of Mr. Green, our President and a
member of our board of directors.

LOANS TO OFFICERS IN CONNECTION WITH OPTION EXERCISES

In September 2000, Mr. Graziano, our Chief Executive Officer, and
Mr. Green, our President, each exercised options to purchase 740,228 shares of
our common stock. Each of these officers paid substantially all of the exercise
price for these shares by issuing promissory notes to the Company. The aggregate
loans to Mr. Graziano are $789,000 and to Mr. Green are $789,000 pursuant to
these promissory notes. Each of these promissory notes is due in September 2003
and bears interest at an annual rate of 10%. These promissory notes are secured
by a pledge of all of the shares for which the exercise price was paid with the
respective promissory notes as well as additional shares held by each of these
officers.

CONSULTING RELATIONSHIP WITH FORMER DIRECTOR

Mr. Grindle, a former member of our board of directors, was retained by us
as a consultant to provide general marketing and other advice to our senior
management team and to review all of the revisions to our catalog from March
1996 to September 2000 when the consulting agreement was terminated. In
connection with this consulting agreement, Mr. Grindle received consulting fees
of $294,583 for the nine months ended September 30, 2000 and $258,437, $262,040
and $268,030 for the years ended December 31, 1999, 1998 and 1997, respectively.
Mr. Grindle is no longer affiliated with us.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of Harvard Bioscience common stock as of October 15, 2000 and on an as
adjusted basis to reflect the sale of the common stock offered hereby by:

- all persons known by us to own beneficially 5% or more of the common
stock,

- each of our directors,

- the executive officers listed in the summary compensation table,

- the stockholder selling shares in this offering, and

- all of our directors and executive officers as a group.

The number of shares beneficially owned by each stockholder is determined
under rules issued by the Securities and Exchange Commission and includes voting
or investment power with respect to securities. Under these rules, beneficial
ownership includes any shares as to which the individual or entity has sole or
shared voting power or investment power and includes any shares as to which the
individual or entity has the right to acquire beneficial ownership within
60 days after October 15, 2000 through the exercise of any warrant, stock option
or other right. The inclusion in this prospectus of such shares, however, does
not constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares. Unless otherwise indicated, the address of all
listed stockholders is c/o Harvard Bioscience, Inc., 84 October Hill Road,
Holliston, MA 01746-1371.

BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) AFTER OFFERING(1)
---------------------- SHARES TO ----------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT BE SOLD SHARES PERCENT
- ------------------------ ---------- --------- --------- ---------- ---------

Christopher W. Dick(2) .............................. 6,465,037 34.9% -- 6,465,037 26.1%
255 State Street
Boston, MA 02109

Chane Graziano(3) ................................... 5,089,929 27.5% -- 5,089,929 20.5%

Ascent Venture Partners II, L.P.(4) ................. 3,927,651 21.2% -- 3,927,651 15.8%
255 State Street
Boston, MA 02109

David Green ......................................... 3,479,386 18.8% 172,450 3,306,936 13.3%

Ascent Venture Partners, L.P.(5) .................... 2,537,386 13.7% -- 2,537,386 10.2%
255 State Street
Boston, MA 02109

First New England Capital, L.P.(6) .................. 1,963,825 10.6% -- 1,963,825 7.9%
100 Pearl Street
Hartford, CT 06103

Richard C. Klaffky(7) ............................... 1,963,825 10.6% -- 1,963,825 7.9%
100 Pearl Street
Hartford, CT 06103

NEGF, II, L.P.(8) ................................... 955,935 5.2% -- 955,935 3.9%
One Boston Place
Suite 2100
Boston, MA 02108

Susan M. Luscinski .................................. 111,972 * -- 111,972 *

Mark A. Norige ...................................... 83,964 * -- 83,964 *

Robert Dishman ...................................... -- * -- -- *

John F. Kennedy ..................................... -- * -- -- *

Earl R. Lewis ....................................... -- * -- -- *

All executive officers and directors, as a group
(9 persons) ....................................... 17,194,113 92.8% 172,450 17,021,663 68.7%

- --------------------------

* Represents less than 1% of the outstanding shares of common stock.

(1) All percentages assume the underwriters do not elect to exercise the
over-allotment option to purchase an additional 937,500 shares of common
stock. The number of shares of common stock set forth herein includes
shares to be issued upon completion of this offering pursuant to the
conversion of all outstanding shares of our series B convertible preferred
stock into shares of common stock and the exercise of all outstanding
warrants to purchase shares of our common stock.

(2) Consists solely of the shares described in notes (4) and (5) below, of
which Mr. Dick may be considered the beneficial owner. Mr. Dick disclaims
beneficial ownership of such shares, except to the extent of his pecuniary
interest therein.

(3) Includes 1,291,004 shares held by two trusts for the benefit of
Mr. Graziano's children, of which Mr. Graziano is a trustee.

(4) Ascent Management SBIC Corp. is the general partner of Ascent Venture
Management II, L.P., which is the general partner of Ascent Venture
Partners II, L.P., which exercises sole voting and investment power with
respect to all of the shares held of record by Ascent Venture Partners II,
L.P. Mr. Dick, a member of our board of directors, is the Managing Director
of Ascent Management SBIC Corp. Mr. Dick disclaims any beneficial ownership
of the shares held by Ascent Venture Partners II, L.P., except to the
extent of his pecuniary interest therein.

(5) Ascent Venture Management, Inc. is the general partner of Ascent Venture
Partners, L.P., which exercises sole voting and investment power with
respect to all of the shares held of record by Ascent Venture Partners,
L.P. Mr. Dick, a member of our board of directors, is the Managing Director
of Ascent Venture Management, Inc. Mr. Dick disclaims any beneficial
ownership of the shares held by Ascent Venture Partners, L.P., except to
the extent of his pecuniary interest therein.

(6) FINEC Corp. is the general partner of First New England Capital, L.P.,
which exercises sole voting and investment power with respect to all of the
shares held of record by First New England Capital, L.P. Mr. Klaffky, a
member of our board of directors, is the President of FINEC Corp.
Mr. Klaffky disclaims any beneficial ownership of the shares held by First
New England Capital, L.P., except to the extent of his pecuniary interest
therein.

(7) Consists solely of the shares described in note (6) above, of which
Mr. Klaffky may be considered the beneficial owner. Mr. Klaffky disclaims
beneficial ownership of such shares, except to the extent of his pecuniary
interest therein.

(8) NEGF Ventures, Inc. is the general partner of New England Partners, II,
L.P., which is the general partner of NEGF II, L.P. NEGF Ventures, Inc.
exercises sole voting and investment power with respect to all of the
shares held of record by NEGF II, L.P. Individually, no stockholder,
director or officer of NEGF Ventures, Inc. is deemed to have or share such
voting or investment power.

DESCRIPTION OF CAPITAL STOCK

Following this offering, our authorized capital stock will consist of
80,000,000 shares of common stock and 5,000,000 shares of undesignated preferred
stock, issuable in one or more series designated by our board of directors. No
other class of capital stock will be authorized. Prior to this offering, our
common stock was held by seven stockholders of record. The following information
relates only to our certificate of incorporation and by-laws, as they will exist
after this offering.

COMMON STOCK

VOTING RIGHTS. The holders of our common stock have one vote per share.
Holders of our common stock are not entitled to vote cumulatively for the
election of directors. Generally, all matters to be voted on by stockholders
must be approved by a majority, or, in the case of election of directors, by a
plurality, of the votes cast at a meeting at which a quorum is present, voting
together as a single class, subject to any voting rights granted to holders of
any then outstanding preferred stock.

DIVIDENDS. Holders of common stock will share ratably in any dividends
declared by our board of directors, subject to the preferential rights of any
preferred stock then outstanding. Dividends consisting of shares of common stock
may be paid to holders of shares of common stock.

OTHER RIGHTS. Upon our liquidation, dissolution or winding up, all holders
of common stock are entitled to share ratably in any assets available for
distribution to holders of shares of common stock. No shares of common stock are
subject to redemption or have preemptive rights to purchase additional shares of
common stock.

PREFERRED STOCK

Our certificate of incorporation provides that 5,000,000 shares of preferred
stock may be issued from time to time in one or more series. Our board of
directors is authorized to fix the voting rights, if any, designations, powers,
preferences, qualifications, limitations and restrictions thereof, applicable to
the shares of each series. Our board of directors may, without stockholder
approval, issue preferred stock with voting and other rights that could
adversely affect the voting power and other rights of the holders of the common
stock and could have anti-takeover effects, including preferred stock or rights
to acquire preferred stock in connection with implementing a shareholder rights
plan. We have no present plans to issue any shares of preferred stock. The
ability of our board of directors to issue preferred stock without stockholder
approval could have the effect of delaying, deferring or preventing a change of
control with respect to our company or the removal of existing management.

WARRANTS

As of October 15, 2000, we had outstanding warrants to purchase 8,509,905
shares of common stock at an exercise price of $0.0005 per share. The warrants
will expire on March 15, 2003. These warrants will be exercised in connection
with this offering.

REGISTRATION RIGHTS

Following this offering, the holders of 17,208,101 shares of our common
stock will have rights with respect to registration of these shares under the
Securities Act of 1933. These rights are provided under the terms of a
securityholders agreement between us and certain of the holders of registrable
securities. Under these registration rights, holders of registrable securities
holding 30% or more of the then outstanding registrable securities held by all
holders of registrable securities may require on two occasions that we register
their shares for public resale. In addition, certain holders of registrable
securities may require that we register their shares for public resale on
Form S-3 or similar short-form registration, if we are eligible to use Form S-3
or similar short form registration and the value of the

securities to be registered is at least $2,000,000. If we elect to register any
of our shares of common stock for any public offering, the holders of
registrable securities are entitled to include shares of common stock in the
registration. However, we may reduce the number of shares proposed to be
registered in view of market conditions. We will pay all expenses in connection
with any registration, other than underwriting discounts and commissions.

INDEMNIFICATION MATTERS

Prior to the offering, we will have entered into indemnification agreements
with each of our directors. The form of indemnification agreement provides that
we will indemnify our directors for expenses incurred because of their status as
a director to the fullest extent permitted by Delaware law, our certificate of
incorporation and our by-laws.

Our certificate of incorporation contains a provision permitted by Delaware
law that generally eliminates the personal liability of directors for monetary
damages for breaches of their fiduciary duty, including breaches involving
negligence or gross negligence in business combinations, unless the director has
breached his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock repurchase in violation of the Delaware General Corporation Law
or obtained an improper personal benefit. This provision does not alter a
director's liability under the federal securities laws and does not affect the
availability of equitable remedies, such as an injunction or rescission, for
breach of fiduciary duty. Our by-laws provide that directors and officers shall
be, and in the discretion of our board of directors, non-officer employees may
be, indemnified by us to the fullest extent authorized by Delaware law, as it
now exists or may in the future be amended, against all expenses and liabilities
reasonably incurred in connection with service for or on behalf of us. Our
by-laws also provide for the advancement of expenses to directors and, in the
discretion of our board of directors, to officers and non-officer employees. In
addition, our by-laws provide that the right of directors and officers to
indemnification shall be a contract right and shall not be exclusive of any
other right now possessed or hereafter acquired under any by-law, agreement,
vote of stockholders or otherwise. We also have directors' and officers'
insurance against certain liabilities. We believe that the indemnification
agreements, together with the limitation of liability and indemnification
provisions of our certificate of incorporation and by-laws and directors' and
officers' insurance will assist us in attracting and retaining qualified
individuals to serve as our directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be provided to directors, officers or persons controlling us as
described above, we have 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. At present, there is no
pending material litigation or proceeding involving any of our directors,
officers, employees or agents in which indemnification will be required or
permitted.

PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS THAT MAY HAVE
ANTI-TAKEOVER EFFECTS

Certain provisions of our certificate of incorporation and by-laws described
below, as well as the ability of our board of directors to issue shares of
preferred stock and to set the voting rights, preferences and other terms
thereof, may be deemed to have an anti-takeover effect and may discourage
takeover attempts not first approved by our board of directors, including
takeovers which particular stockholders may deem to be in their best interests.
These provisions also could have the effect of discouraging open market
purchases of our common stock because they may be considered disadvantageous by
a stockholder who desires subsequent to such purchases to participate in a
business combination transaction with us or to elect a new director to our
board.

NO STOCKHOLDER ACTION BY WRITTEN CONSENT

Our certificate of incorporation provides that any action required or
permitted to be taken by our stockholders at an annual or special meeting of
stockholders must be effected at a duly called meeting and may not be taken or
effected by a written consent of stockholders.

SPECIAL MEETINGS OF STOCKHOLDERS

Our certificate of incorporation and by-laws provide that a special meeting
of stockholders may be called only by our board of directors. Our by-laws
provide that only those matters included in the notice of the special meeting
may be considered or acted upon at that special meeting unless otherwise
provided by law.

ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND STOCKHOLDER PROPOSALS

Our by-laws include advance notice and informational requirements and time
limitations on any director nomination or any new proposal which a stockholder
wishes to make at an annual meeting of stockholders. For the first annual
meeting following the completion of this offering, a stockholder's notice of a
director nomination or proposal will be timely if delivered to our secretary at
our principal executive offices not later than the close of business on the
later of the 75th day prior to the scheduled date of such annual meeting or the
10th day following the day on which public announcement of the date of such
annual meeting is made by us.

AMENDMENT OF THE CERTIFICATE OF INCORPORATION

As required by Delaware law, any amendment to our certificate of
incorporation must first be approved by a majority of our board of directors
and, if required by law, thereafter approved by a majority of the outstanding
shares entitled to vote with respect to such amendment, except that any
amendment to the provisions relating to stockholder action by written consent,
directors, limitation of liability and the amendment of our certificate of
incorporation must be approved by not less than 75% of the outstanding shares
entitled to vote with respect to such amendment.

AMENDMENT OF BY-LAWS

Our certificate of incorporation and by-laws provide that our by-laws may be
amended or repealed by our board of directors or by the stockholders. Such
action by the board of directors requires the affirmative vote of a majority of
the directors then in office. Such action by the stockholders requires the
affirmative vote of at least 75% of the shares present in person or represented
by proxy at an annual meeting of stockholders or a special meeting called for
such purpose unless our board of directors recommends that the stockholders
approve such amendment or repeal at such meeting, in which case such amendment
or repeal only requires the affirmative vote of a majority of the shares present
in person or represented by proxy at the meeting.

STATUTORY BUSINESS COMBINATION PROVISION

Following the offering, we will be subject to Section 203 of the Delaware
General Corporation Law, which prohibits a publicly-held Delaware corporation
from consummating a "business combination," except under certain circumstances,
with an "interested stockholder" for a period of three years after the date such
person became an "interested stockholder" unless:

- before such person became an interested stockholder, the board of
directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the
business combination;

- upon the closing of the transaction that resulted in the interested
stockholder becoming such, the interested stockholder owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding shares held by directors who are also
officers of the corporation and shares held by employee stock plans; or

- following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders
by the affirmative vote of the holders of at least two-thirds of the
outstanding voting stock of the corporation not owned by the interested
stockholder.

The term "interested stockholder" generally is defined as a person who,
together with affiliates and associates, owns, or, within the prior three years,
owned, 15% or more of a corporation's outstanding voting stock. The term
"business combination" includes mergers, consolidations, asset sales involving
10% or more of a corporation's assets and other similar transactions resulting
in a financial benefit to an interested stockholder. Section 203 makes it more
difficult for an "interested stockholder" to effect various business
combinations with a corporation for a three-year period. A Delaware corporation
may "opt out" of Section 203 with an express provision in its original
certificate of incorporation or an express provision in its certificate of
incorporation or by-laws resulting from an amendment approved by holders of at
least a majority of the outstanding voting stock. Neither our certificate of
incorporation nor our by-laws contain any such exclusion.

TRADING ON THE NASDAQ NATIONAL MARKET SYSTEM

We have applied to have our common stock approved for quotation on the
Nasdaq National Market under the symbol "HBIO."

NO PREEMPTIVE RIGHTS

No holder of any class of our stock has any preemptive right to purchase any
of our securities.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock will be Registrar and
Transfer Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the offering, we will have outstanding 24,782,422
shares of common stock or 25,719,922 shares if the underwriters' over-allotment
option is exercised in full, in each case excluding shares underlying
outstanding options. Of these shares, all of the shares sold in this offering
(6,422,450 shares, or 7,359,950 shares if the underwriters' over-allotment
option is exercised in full) will be freely tradeable without restriction or
further registration under the Securities Act except for any shares purchased by
an "affiliate," which will be subject to the limitations of Rule 144 of the
Securities Act. As defined in Rule 144, an "affiliate" of an issuer is a person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the issuer. The remaining
outstanding shares of common stock will be "restricted securities" as defined in
Rule 144 and may not be resold in the absence of registration under the
Securities Act or pursuant to an exemption from such registration, including
exemptions provided by Rule 144.

In addition, our executive officers, directors, and existing stockholders,
who own all of the shares of our capital stock outstanding prior to this
offering, have signed lock-up agreements in which they have agreed not to offer,
sell, contract to sell or otherwise dispose of any common stock or any
securities convertible into or exchangeable for common stock for a period of
180 days after the date of this prospectus without the prior written consent of
Thomas Weisel Partners LLC. Immediately following this offering, the shares
subject to the lock-up agreements will represent approximately 74% of the then
outstanding shares of common stock (71% if the underwriters' over-allotment
option is exercised in full). While the underwriters have indicated no present
intention to waive these restrictions, were they to do so, up to approximately
an additional 18,359,972 shares of our common stock could be available for sale
during the period following the offering, which could harm our stock price or
make it more difficult to sell our shares. Historically, factors that have led
underwriters to waive lock-up restrictions on a case by case basis include bona
fide gifts to charitable institutions and other small waivers which underwriters
reasonably believe will have minimal effect on the trading price of the common
stock of the applicable company.

RULE 144

In general, under Rule 144, beginning 90 days after the date of this
prospectus, a person who has beneficially owned restricted shares for at least
one year, including persons who are affiliates, would be entitled to sell within
any three-month period a number of shares that does not exceed the greater of:

- 1% of the then outstanding shares of our common stock, approximately
247,824 shares immediately after this offering; or

- the reported average weekly trading volume of our common stock during the
four calendar weeks preceding a sale by such person.

Sales under Rule 144 are also subject to manner-of-sale provisions, notice
requirements and the availability of current public information.

RULE 144(k)

Under Rule 144(k), a person who has not been one of our affiliates during
the 90 days preceding a sale, and who has beneficially owned the shares proposed
to be sold for at least two years, is free to sell such shares without regard to
the volume, manner-of-sale or certain other limitations contained in Rule 144.
Upon completion of this offering, no holders of shares of our common stock will
be eligible to freely sell shares under Rule 144(k).

Prior to this offering, there has been no public market for our common stock
and we can make no predictions about the effect, if any, that market sales of
shares or the availability of shares for sale will have on the market price of
our common stock prevailing from time to time. Future sales of substantial

amounts of our common stock in the public market, or the perception that such
sales may occur, may cause the market prices of our common stock to decline.

REGISTRATION RIGHTS

After the 180-day period following the closing of this offering, the holders
of 17,208,101 shares of our common stock will have rights which require us to
register their shares for sale. See "Description of Capital Stock--Registration
Rights."

OPTIONS

As of October 15, 2000, options to purchase 599,096 shares of our common
stock were outstanding. At some time following the effectiveness of the offering
chosen by the board of directors in its discretion, we intend to file a
registration statement on Form S-8 under the Securities Act to register all of
the shares of our common stock reserved for issuance under our 2000 Stock Option
and Incentive Plan, our Employee Stock Purchase Plan and our 1996 Stock Option
and Grant Plan. The filing of this registration statement will allow these
shares, other than those held by members of management who are deemed to be
affiliates, to be eligible for resale without restriction, subject to the
lock-up period related to this offering, or further registration upon issuance
to participants. After the effective date of the registration statement on
Form S-8 and, if applicable, the expiration of the lock-up period related to
this offering, shares purchased upon exercise of options granted pursuant to
these plans, generally will be available for resale in the public market by
non-affiliates without restriction. Sales by our affiliates of shares registered
on this registration statement are subject to all of the Rule 144 restrictions
except for the one-year minimum holding period requirement.

In addition to possibly being able to sell option shares without restriction
under a Form S-8 registration statement when effective, persons other than our
affiliates are allowed under Rule 701 of the Securities Act to sell shares of
our common stock issued upon exercise of stock options beginning 90 days after
the date of this prospectus, subject only to the manner of sale provisions of
Rule 144 and to the lock-up period related to this offering. Our affiliates may
also begin selling option shares beginning 90 days after the date of this
prospectus but are subject to all of the Rule 144 restrictions except for the
one-year holding period requirement and to the 180-day lock-up period related to
this offering.

UNDERWRITING

GENERAL

Subject to the terms and conditions set forth in an agreement among the
underwriters and us, each of the underwriters named below, through their
representatives, Thomas Weisel Partners LLC, Dain Rauscher Incorporated and ING
Barings LLC have severally agreed to purchase from us the aggregate number of
shares of common stock set forth opposite its name below:

NUMBER OF
UNDERWRITERS SHARES
- ------------ ---------

Thomas Weisel Partners LLC..................................
Dain Rauscher Incorporated..................................
ING Barings LLC.............................................
---------

Total................................................... 6,422,450
=========

Of the 6,422,450 shares to be purchased by the underwriters, 6,250,000
shares will be purchased from us and 172,450 shares will be purchased from our
president as a selling stockholder.

The underwriting agreement provides that the obligations of the several
underwriters are subject to various conditions. The nature of the underwriters'
obligations commits them to purchase and pay for all of the shares of common
stock listed above if any are purchased.

The underwriting agreement provides that we and the selling stockholder will
indemnify the underwriters against liabilities specified in the underwriting
agreement under the Securities Act or will contribute to payments that the
underwriters may be required to make relating to these liabilities.

Thomas Weisel Partners LLC expects to deliver the shares of common stock to
purchasers on , 2000.

OVER-ALLOTMENT OPTION

We have granted a 30-day over-allotment option to the underwriters to
purchase up to a total of 937,500 additional shares of our common stock from us
at the initial public offering price, less the underwriting discounts and
commissions payable by us, as set forth on the cover page of this prospectus. If
the underwriters exercise this option in whole or in part, then each of the
underwriters will be separately committed, subject to conditions described in
the underwriting agreement, to purchase the additional shares of our common
stock in proportion to their respective commitments set forth in the table
above.

DETERMINATION OF OFFERING PRICE

Prior to this offering, there has been no public market for our common
stock. The initial public offering price will be determined through negotiations
between us and the representatives. In addition to prevailing market conditions,
the factors to be considered in determining the initial public offering price
will include:

- the valuation multiples of publicly-traded companies that the
representatives believe are comparable to us,

- our financial information,

- our history and prospects and the outlook for our industry,

- an assessment of our management, our past and present operations, and the
prospects for, and timing of, our future revenues,

- the present state of our development and the progress of our business
plan, and

- the above factors in relation to market values and various valuation
measures of other companies engaged in activities similar to ours.

We cannot assure you that an active or orderly trading market will develop
for our common stock or that our common stock will trade in the public markets
subsequent to this offering at or above the initial offering price.

COMMISSIONS AND DISCOUNTS

The underwriters propose to offer the shares of common stock directly to the
public at the public offering price set forth on the cover page of this
prospectus, and at this price less a concession not in excess of $ per
share of common stock to other dealers specified in a master agreement among
underwriters who are members of the National Association of Securities
Dealers, Inc. The underwriters may allow, and the other dealers specified may
reallow, concessions, not in excess of $ per share of common stock to these
other dealers. After this offering, the offering price, concessions and other
selling terms may be changed by the underwriters. Our common stock is offered
subject to receipt and acceptance by the underwriters and to other conditions,
including the right to reject orders in whole or in part.

The following table summarizes the compensation to be paid to the
underwriters by us and the expenses payable by us:

TOTAL
-------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------

Public offering price................................... $ $ $
Underwriting discount...................................
Proceeds, before expenses, to us........................
Proceeds, before expenses, to our president as a selling
stockholder...........................................

INDEMNIFICATION OF THE UNDERWRITERS

We and the selling stockholder will indemnify the underwriters against some
civil liabilities, including liabilities under the Securities Act and
liabilities arising from breaches of our representations and warranties
contained in the underwriting agreement. If we are unable to provide this
indemnification, we will contribute to payments the underwriters may be required
to make in respect of those liabilities.

RESERVED SHARES

The underwriters, at our request, have reserved for sale at the initial
public offering price up to 300,000 shares of common stock to be sold in this
offering for sale to our employees and other persons designated by us. The
number of shares available for sale to the general public will be reduced to the
extent that any reserved shares are purchased. Any reserved shares not purchased
in this manner will be offered by the underwriters on the same basis as the
other shares offered in this offering.

NO SALES OF SIMILAR SECURITIES

Our directors, officers, selling stockholder and other stockholders holding
all of the outstanding shares of our capital stock prior to this offering have
agreed or have a contractual obligation to agree, subject to specified
exceptions, not to offer, sell, agree to sell, directly or indirectly, or
otherwise dispose of any shares of common stock or any securities convertible
into or exchangeable for shares of common stock without the prior written
consent of Thomas Weisel Partners LLC for a period of 180 days after the date of
this prospectus.

We have agreed that for a period of 180 days after the date of this
prospectus we will not, without the prior written consent of Thomas Weisel
Partners LLC, offer, sell, or otherwise dispose of any shares of common stock,
except for the shares of common stock offered in the offering and the shares of
common stock issuable upon exercise of outstanding options and warrants on the
date of this prospectus.

INFORMATION REGARDING THOMAS WEISEL PARTNERS LLC

Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners LLC has been named as a lead or co-manager on 148
completed transactions and has acted as a syndicate member in an additional 129
public offerings of equity securities. Thomas Weisel Partners LLC does not have
any material relationship with us or any of our officers, directors or other
controlling persons, except with respect to its contractual relationship with us
pursuant to the underwriting agreement entered into in connection with this
offering.

NASDAQ NATIONAL MARKET LISTING

We have applied to have our common stock approved for quotation on the
Nasdaq National Market under the symbol "HBIO."

DISCRETIONARY ACCOUNTS

The underwriters do not expect sales of shares of common stock offered by
this prospectus to any accounts over which they exercise discretionary authority
to exceed five percent of the shares offered.

SHORT SALES, STABILIZING TRANSACTIONS AND PENALTY BIDS

In order to facilitate this offering, persons participating in this offering
may engage in transactions that stabilize, maintain or otherwise affect the
price of our common stock during and after this offering. Specifically, the
underwriters may engage in the following activities in accordance with the rules
of the U.S. Securities and Exchange Commission.

SHORT SALES. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the offering. "Covered"
short sales are sales made in an amount not greater than the underwriters'
option to purchase additional shares from the issuer in the offering. The
underwriters may close out any covered short position by either exercising their
option to purchase shares or purchasing shares in the open market. In
determining the source of shares to close out the covered short position, the
underwriters will consider, among other things, the price of shares available
for purchase in the open market as compared to the price at which they may
purchase shares through the over-allotment option. "Naked" short sales are any
sales in excess of such over-allotment option. The underwriters must close out
any naked short position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the common stock in the open
market after pricing that could adversely affect investors who purchase in the
offering.

STABILIZING TRANSACTIONS. The underwriters may make bids for or purchases
of the shares for the purpose of pegging, fixing or maintaining the price of the
shares, so long as stabilizing bids do not exceed a specified maximum.

PENALTY BIDS. If the underwriters purchase shares in the open market in a
stabilizing transaction or syndicate covering transaction, they may reclaim a
selling concession from the underwriters and selling group members who sold
those shares as part of this offering. Stabilization and syndicate covering
transactions may cause the price of the shares to be higher than it would be in
the absence of these transactions. The imposition of a penalty bid might also
have an effect on the price of the shares if it discourages resales of the
shares.

The transactions above may occur on the Nasdaq National Market or otherwise.
Neither we nor the underwriters make any representation or prediction as to the
effect that the transactions described above may have on the price of the
shares. If these transactions are commenced, they may be discontinued without
notice at any time.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for us by Goodwin, Procter & Hoar LLP, Boston, Massachusetts. Various legal
matters related to the sale of the common stock offered hereby will be passed
upon for the underwriters by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., Boston, Massachusetts.

EXPERTS

The consolidated financial statements of Harvard Apparatus, Inc. and
subsidiaries as of December 31, 1998, 1999 and September 30, 2000, and for each
of the years ended December 31, 1997, 1998 and 1999, and for the nine months
ended September 30, 2000, have been included herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, appearing elsewhere herein, and the authority of said firm as
experts in auditing and accounting.

The audited consolidated financial statements of Pharmacia & Upjohn
(Cambridge) Limited as of December 31, 1997 and 1998, and for each of the years
ended December 31, 1997 and 1998, have been included herein and in the
registration statement in reliance upon the report of PricewaterhouseCoopers,
independent chartered accountants, appearing elsewhere herein, and the authority
of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission, or SEC, a
registration statement on Form S-1 (including the exhibits and schedules
thereto) under the Securities Act and the rules and regulations thereunder, for
the registration of the common stock offered hereby. This prospectus is part of
the registration statement. This prospectus does not contain all the information
included in the registration statement because we have omitted certain parts of
the registration statement as permitted by the SEC rules and regulations. For
further information about us and our common stock, you should refer to the
registration statement. Statements contained in this prospectus as to any
contract, agreement or other document referred to are not necessarily complete.
Where the contract or other document is an exhibit to the registration
statement, each statement is qualified by the provisions of that exhibit.

You can inspect and copy the registration statement at the public reference
facility maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the SEC's regional offices at Seven World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison

Street, Suite 1400, Chicago, Illinois 60661. You may call the SEC at
1-800-732-0330 for further information about the operation of the public
reference rooms. Copies of all or any portion of the registration statement can
be obtained from the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, the registration
statement is publicly available through the SEC's site on the Internet's World
Wide Web, located at http://www.sec.gov.

We will also file annual, quarterly and current reports, proxy statements
and other information with the SEC. You can also request copies of these
documents, for a copying fee, by writing to the SEC. We intend to furnish to our
stockholders annual reports containing audited financial statements for each
fiscal year.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

HARVARD APPARATUS, INC. AND SUBSIDIARIES

Independent Auditors' Report................................ F-2
Consolidated Balance Sheets at December 31, 1998 and 1999
and September 30, 2000.................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1997, 1998 and 1999 and the nine months ended
September 30, 1999 (unaudited) and 2000................... F-5
Consolidated Statements of Stockholders' Equity (Deficit)
and Comprehensive Income (Loss) for the years ended
December 31, 1997, 1998 and 1999 and the nine months ended
September 30, 2000........................................ F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1998 and 1999 and the nine months ended
September 30, 1999 (unaudited) and 2000................... F-7
Notes to Consolidated Financial Statements.................. F-8

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

Directors' Report........................................... F-28
Statement of Directors' Responsibilities.................... F-30
Report of the Auditors...................................... F-31
Profit and Loss Account for the years ended December 31,
1997 and 1998............................................. F-32
Balance Sheet for the years ended December 31, 1997 and
1998...................................................... F-33
Cash Flow Statement for the years ended December 31, 1997
and 1998.................................................. F-34
Notes to the Accounts....................................... F-35

F-1

When the stock split referred to in note 20 of the notes to the consolidated
financial statements has been consummated, we will be in a position to render
the following report:

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Harvard Apparatus, Inc.:

We have audited the accompanying consolidated balance sheets of Harvard
Apparatus, Inc. and subsidiaries (the "Company") as of September 30, 2000,
December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity (deficit) and comprehensive income (loss), and
cash flows for the nine months ended September 30, 2000 and for each of the
years in the three-year period ended December 31, 1999. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Harvard Apparatus, Inc. and subsidiaries at September 30, 2000, December 31,
1999 and 1998, and the results of their operations and their cash flows for the
nine months ended September 30, 2000 and for each of the years in the three-year
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States of America.

KPMG LLP
October 19, 2000, except as to
note 20 which is
as of October 25, 2000
Boston, Massachusetts

F-2

HARVARD APPARATUS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1998 1999 2000
------------- ------------- --------------

ASSETS (NOTES 6 AND 7)

Current assets:
Cash and cash equivalents............................ $ 956,771 $ 2,396,053 $ 2,148,880
Trade accounts receivable, net of reserve for
uncollectible accounts of $61,004 and $87,642 at
December 31, 1998 and 1999, respectively, and
$88,648 at September 30, 2000...................... 1,659,766 4,191,850 3,878,152
Other receivables and other assets................... 49,716 201,946 223,090
Inventories (note 4)................................. 1,656,318 2,849,670 3,679,735
Catalog costs........................................ 450,087 66,829 394,558
Prepaid expenses..................................... 202,916 593,348 265,340
Deferred tax asset (note 13)......................... 96,736 987,853 344,714
---------- ----------- -----------
Total current assets............................. 5,072,310 11,287,549 10,934,469
---------- ----------- -----------

Property, plant and equipment, net (notes 5 and 10).... 969,905 1,559,922 1,513,098
---------- ----------- -----------

Other assets:
Catalog costs, less current portion.................. 163,497 165,419 193,712
Deferred tax asset (note 13)......................... 28,182 432,797 344,304
Deferred initial public offering costs............... -- -- 596,365
Goodwill, net of accumulated amortization of $27,661,
$395,896 and $902,891 at December 31, 1998 and 1999
and September 30, 2000, respectively (note 3)...... 925,973 6,583,354 9,148,744
Other assets (notes 3 and 12)........................ 60,626 580,829 505,387
---------- ----------- -----------
Total other assets............................... $1,178,278 $ 7,762,399 $10,788,512
---------- ----------- -----------
$7,220,493 $20,609,870 $23,236,079
========== =========== ===========

See accompanying notes to consolidated financial statements.

F-3

HARVARD APPARATUS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1998 1999 2000
------------- ------------- --------------

Current liabilities:
Short-term debt (note 6)........................... $1,050,000 $ 2,200,000 $ 3,150,000
Current installments of long-term debt (note 7).... 190,389 794,173 1,556,618
Trade accounts payable............................. 751,338 1,880,246 2,107,838
Accrued income taxes payable (note 13)............. 162,726 957,834 638,862
Accrued expenses (note 17)......................... 586,289 1,399,523 2,266,547
Other liabilities.................................. 101,271 272,731 183,478
Current deferred income tax liability.............. 24,524 -- 6,011
---------- ------------ -------------
Total current liabilities...................... 2,866,537 7,504,507 9,909,354
---------- ------------ -------------

Long-term debt, less current installments (note 7)... 638,466 5,072,941 5,730,313
Deferred income tax liability (note 13).............. 37,601 48,649 --
---------- ------------ -------------
Total long-term liabilities.................... 676,067 5,121,590 5,730,313
---------- ------------ -------------

Commitments and contingencies (notes 8, 9, 10, 11,
and 18)

Preferred stock, 600,000 shares authorized (note 8);
Redeemable series "A" 469,300 shares issued and
outstanding.................................... 1,500,000 1,500,000 1,500,000
Convertible and redeemable series "B" 48,500
shares issued and outstanding.................. -- 1,000,000 1,000,000
Common stock warrants (note 9)....................... 1,500,352 31,194,371 102,114,613
---------- ------------ -------------
Total redeemable preferred stock and common
stock warrants............................... 3,000,352 33,694,371 104,614,613
---------- ------------ -------------

Stockholders' equity (deficit) (notes 9 and 14):
Common stock, par value $.01 per share, 80,000,000
shares authorized; 10,259,410 shares issued and
outstanding at December 31, 1998 and 1999,
13,727,365 shares issued and outstanding at
September 30, 2000............................... 102,604 102,604 137,274
Accumulated other comprehensive loss............... (34,720) (54,690) (713,265)
Additional paid-in capital--stock options.......... -- 3,283,164 3,292,593
Additional paid-in capital--common stock........... -- -- 14,838,792
Retained earnings (accumulated deficit)............ 1,277,398 (28,373,931) (112,357,900)
Notes receiveable.................................. -- -- (1,547,950)
Treasury stock, 4,660,784 common shares, at cost... (667,745) (667,745) (667,745)
---------- ------------ -------------
Total stockholders' equity (deficit)........... 677,537 (25,710,598) (97,018,201)
---------- ------------ -------------
$7,220,493 $ 20,609,870 $ 23,236,079
========== ============ =============

See accompanying notes to financial statements.

F-4

HARVARD APPARATUS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------- --------------------------
1997 1998 1999 1999 2000
----------- ----------- ------------ ----------- ------------
(UNAUDITED)

Revenues (notes 15 and 19).......... $11,464,157 $12,154,025 $ 26,177,814 $18,469,913 $ 22,069,026
Cost of goods sold.................. 5,127,709 5,351,271 13,546,933 9,359,160 11,461,610
Stock compensation expense (note
14)............................... -- -- -- -- 151,200
----------- ----------- ------------ ----------- ------------
Gross profit.................... 6,336,448 6,802,754 12,630,881 9,110,753 10,456,216

General and administrative
expense........................... 2,338,423 2,317,021 4,146,564 2,926,818 3,733,613
Sales and marketing expense......... 1,672,388 1,721,606 2,448,505 1,841,771 2,358,965
Research and development............ 206,497 324,792 1,187,584 840,767 1,207,522
Stock compensation expense (note
14)............................... -- -- 3,283,164 937,138 13,180,743
Amortization of goodwill
(note 3).......................... -- 27,661 368,235 251,843 423,126
----------- ----------- ------------ ----------- ------------
Operating (loss) income......... 2,119,140 2,411,674 1,196,829 2,312,416 (10,447,753)
----------- ----------- ------------ ----------- ------------

Other (expense) income:
Foreign currency (loss) gain...... (96,549) 21,418 (47,982) 60,967 (456,393)
Common stock warrant interest
expense (note 9)................ (116,574) (1,379,460) (29,694,019) (7,402,457) (70,920,242)
Interest expense.................. (238,669) (221,932) (679,122) (484,330) (689,066)
Interest income................... 16,176 12,567 22,767 16,159 34,536
Amortization of deferred financing
costs........................... -- -- (63,442) (44,437) (56,102)
Other............................. 106,013 10,067 (17,468) (14,813) 27,830
----------- ----------- ------------ ----------- ------------
Other expense, net.............. (329,603) (1,557,340) (30,479,266) (7,868,911) (72,059,437)
----------- ----------- ------------ ----------- ------------

(Loss) income before income
taxes......................... 1,789,537 854,334 (29,282,437) (5,556,495) (82,507,190)

Income taxes (note 13).............. 682,329 783,192 137,480 649,392 1,354,351
----------- ----------- ------------ ----------- ------------
Net (loss) income............... 1,107,208 71,142 (29,419,917) (6,205,887) (83,861,541)
Preferred stock dividends........... (121,668) (121,666) (156,586) (115,444) (122,428)
----------- ----------- ------------ ----------- ------------
Net (loss) income available to
common shareholders............... $ 985,540 $ (50,524) $(29,576,503) $(6,321,331) $(83,983,969)
=========== =========== ============ =========== ============

(Loss) income per share
(note 16):
Basic............................. $ 0.13 $ (0.01) $ (5.28) $ (1.13) $ (13.11)
=========== =========== ============ =========== ============
Diluted........................... $ 0.06 $ (0.01) $ (5.28) $ (1.13) $ (13.11)
=========== =========== ============ =========== ============

Weighted average common shares:
Basic............................. 7,406,486 5,598,626 5,598,626 5,598,626 6,407,682
=========== =========== ============ =========== ============
Diluted........................... 17,500,194 5,598,626 5,598,626 5,598,626 6,407,682
=========== =========== ============ =========== ============

See accompanying notes to consolidated financial statements.

F-5

HARVARD APPARATUS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE
INCOME (LOSS)

ADDITIONAL ADDITIONAL
ACCUMULATED PAID-IN PAID-IN RETAINED
OTHER CAPITAL-- CAPITAL-- EARNINGS
COMMON COMPREHENSIVE STOCK COMMON (ACCUMULATED NOTES
STOCK LOSS OPTIONS STOCK DEFICIT) RECEIVABLE
-------- ------------- ------------ ----------- ------------- -----------

Balance at December 31, 1996........ $102,604 $ 71,183 $ -- $ -- $ 342,382 $ --
Preferred stock dividends......... -- -- -- -- (121,668) --
Purchase of treasury stock........ -- -- -- -- --
Comprehensive income (loss):
Net income...................... -- -- -- -- 1,107,208 --
Translation adjustments......... -- (97,444) -- -- -- --
Total comprehensive income........
-------- --------- ------------ ----------- ------------- -----------

Balance at December 31, 1997........ 102,604 (26,261) -- -- 1,327,922 --

Preferred stock dividends......... -- -- -- -- (121,666) --

Comprehensive income (loss):
Net income...................... -- -- -- -- 71,142 --
Translation adjustments......... -- (8,459) -- -- -- --
Total comprehensive income........
-------- --------- ------------ ----------- ------------- -----------

Balance at December 31, 1998........ 102,604 (34,720) -- -- 1,277,398 --

Preferred stock dividends......... -- -- -- -- (156,586) --

Preferred stock issuance
costs........................... -- -- -- -- (74,826) --

Stock compensation expense........ -- -- 3,283,164 -- -- --
Comprehensive income (loss):
Net loss........................ -- -- -- -- (29,419,917) --
Translation adjustments......... -- (19,970) -- -- -- --
Total comprehensive income
(loss)..........................
-------- --------- ------------ ----------- ------------- -----------

Balance at December 31, 1999........ 102,604 (54,690) 3,283,164 -- (28,373,931) --

Preferred stock dividends......... -- -- -- -- (122,428) --

Issuance of common stock.......... 34,670 -- (13,322,514) 14,838,792 -- (1,547,950)

Stock compensation expense........ -- -- 13,331,943 -- -- --
Comprehensive income (loss):
Net loss........................ -- -- -- -- (83,861,541) --
Translation adjustments......... -- (658,575) -- -- -- --
Total comprehensive income
(loss)..........................
-------- --------- ------------ ----------- ------------- -----------

Balance at September 30, 2000....... $137,274 $(713,265) $ 3,292,593 $14,838,792 $(112,357,900) $(1,547,950)
======== ========= ============ =========== ============= ===========

TOTAL
STOCKHOLDERS'
TREASURY EQUITY
STOCK (DEFICIT)
------------ -------------

Balance at December 31, 1996........ $ -- $ 516,169
Preferred stock dividends......... -- (121,668)
Purchase of treasury stock........ (667,745) (667,745)
Comprehensive income (loss):
Net income...................... -- 1,107,208
Translation adjustments......... -- (97,444)
------------
Total comprehensive income........ 1,009,764
------------ ------------
Balance at December 31, 1997........ (667,745) 736,520
Preferred stock dividends......... -- (121,666)
Comprehensive income (loss):
Net income...................... -- 71,142
Translation adjustments......... -- (8,459)
------------
Total comprehensive income........ 62,683
------------ ------------
Balance at December 31, 1998........ (667,745) 677,537
Preferred stock dividends......... -- (156,586)
Preferred stock issuance
costs........................... -- (74,826)
Stock compensation expense........ -- 3,283,164
Comprehensive income (loss):
Net loss........................ -- (29,419,917)
Translation adjustments......... -- (19,970)
------------
Total comprehensive income
(loss).......................... (29,439,887)
------------ ------------
Balance at December 31, 1999........ (667,745) (25,710,598)
Preferred stock dividends......... (122,428)
Issuance of common stock.......... -- 2,998
Stock compensation expense........ -- 13,331,943
Comprehensive income (loss):
Net loss........................ -- (83,861,541)
Translation adjustments......... -- (658,575)
------------
Total comprehensive income
(loss).......................... (84,520,116)
------------ ------------
Balance at September 30, 2000....... $ (667,745) $(97,018,201)
============ ============

See accompanying notes to consolidated financial statements.

F-6

HARVARD APPARATUS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- --------------------------
1997 1998 1999 1999 2000
---------- ----------- ------------ ----------- ------------
(UNAUDITED)

Cash flows from operating activities:
Net (loss) income........................................ $1,107,208 $ 71,142 $(29,419,917) $(6,205,887) $(83,861,541)
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Common stock warrant interest expense.................. 116,574 1,379,460 29,694,019 7,402,457 70,920,242
Stock compensation expense............................. -- -- 3,283,164 937,138 13,331,943
Depreciation........................................... 127,555 154,776 331,822 219,965 284,747
Amortization of catalog costs.......................... 328,713 525,600 493,428 481,488 228,978
Loss (gain) on sale of fixed assets.................... (33,980) (4,075) 7,584 (7,584) --
Provision for bad debts................................ 14,321 (41,388) 26,877 2,901 2,480
Amortization of goodwill............................... -- 27,661 368,235 226,250 423,126
Amortization of deferred financing costs............... -- -- 63,442 44,437 56,102
Deferred income taxes.................................. (106,321) (16,277) (1,310,325) (504,188) 669,584
Changes in operating assets and liabilities, net of
effects of business acquisition:
(Increase) decrease in accounts receivable........... (193,547) 46,214 (2,282,344) (1,758,222) 22,884
(Increase) decrease in other receivables............. (2,741) 57,711 (113,949) (134,915) (40,785)
(Increase) decrease in inventories................... 58,631 80,430 215,152 165,203 (777,071)
(Increase) decrease in prepaid expenses and other
assets............................................. (19,306) (5,514) (260,285) (115,048) 304,718
(Increase) decrease in other assets.................. 112,716 (184,534) (202,460) (162,220) 74,237
Increase (decrease) in trade accounts payable........ (211,303) (115,065) 541,065 371,739 351,636
Increase (decrease) in accrued income taxes
payable............................................ 27,247 (191,013) 797,633 488,632 (224,673)
Increase (decrease) in accrued expense............... (178,965) 19,874 666,637 406,952 366,788
Increase (decrease) in other liabilities............. (30,881) 1,388 26,663 (23,912) (106,253)
---------- ----------- ------------ ----------- ------------
Net cash provided by operating activities.......... 1,115,921 1,806,390 2,926,441 1,835,186 2,027,142
---------- ----------- ------------ ----------- ------------
Cash flows from investing activities:
Additions to property, plant and equipment............... (389,543) (87,405) (332,474) (247,748) (363,716)
Additions to catalog costs............................... (429,207) (250,183) (121,644) (73,853) (606,069)
Proceeds from sales of fixed assets...................... 165,528 8,173 34,566 41,946 --
Acquisition of businesses, net of cash acquired.......... -- (1,090,553) (8,126,656) (7,164,454) (3,682,482)
---------- ----------- ------------ ----------- ------------
Net cash used in investing activities.............. (653,222) (1,419,968) (8,546,208) (7,444,109) (4,652,267)
---------- ----------- ------------ ----------- ------------
Cash flows from financing activities:
Proceeds from short-term debt............................ 275,000 600,000 2,300,000 1,050,000 1,350,000
Repayments of short-term debt............................ -- (300,000) (1,150,000) (650,000) (400,000)
Proceeds from long-term debt............................. -- -- 5,500,000 5,500,000 2,000,000
Repayments of long-term debt............................. (263,050) (283,433) (460,663) (336,313) (282,778)
Dividends paid........................................... (218,667) (121,666) (121,666) (91,000) (91,000)
Net proceeds from issuance of preferred stock............ -- -- 925,174 925,174 --
Treasury stock purchase.................................. (667,745) -- -- -- --
Issuance of common stock................................. -- -- -- -- 2,998
Deferred initial public offering costs paid.............. -- -- -- -- (63,905)
---------- ----------- ------------ ----------- ------------
Net cash provided by (used in) financing
activities....................................... (874,462) (105,099) 6,992,845 6,397,861 2,515,315
---------- ----------- ------------ ----------- ------------
Effect of exchange rate changes on cash.................... 30,572 (31,505) 66,204 (57,867) (137,363)
---------- ----------- ------------ ----------- ------------
Increase (decrease) in cash and cash equivalents........... (381,191) 249,818 1,439,282 731,071 (247,173)
Cash and cash equivalents at beginning of period........... 1,088,144 706,953 956,771 956,771 2,396,053
---------- ----------- ------------ ----------- ------------
Cash and cash equivalents at end of period................. $ 706,953 $ 956,771 $ 2,396,053 $1,687,842 $ 2,148,880
========== =========== ============ =========== ============
Supplemental disclosures of cash flow information:
Cash paid for interest................................... $ 227,747 $ 241,002 $ 671,452 $ 392,414 $ 634,089
========== =========== ============ =========== ============
Cash paid for income taxes............................... $ 761,251 $ 1,128,929 $ 686,675 $ 617,076 $ 697,049
========== =========== ============ =========== ============

See accompanying notes to consolidated financial statements.

F-7

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(1) ORGANIZATION

On March 15, 1996, HAI Acquisition Corp. and its subsidiary, Guell Limited,
purchased certain assets and assumed certain liabilities of the former Harvard
Apparatus, Inc. and its subsidiary in the United Kingdom, Harvard
Apparatus, Ltd. (the "Purchase"). For cash consideration of approximately
$3,342,000 (including $342,000 of acquisition related expenses). The costs of
the acquisition were allocated based on the fair market value of the assets
acquired. The assets acquired consisted principally of cash of $441,000,
accounts receivable of $1,397,000, inventories of $1,661,000, miscellaneous
prepaid assets of $241,000, fixed assets of $846,000, and catalog costs of
$366,000. The Company assumed liabilities of approximately $1,605,000. The
acquisition was financed principally by issuing preferred stock of $1,500,000
and debt of $1,750,000. Assets acquired at the time of the purchase included 79%
of the capital stock of Ealing Scientific Ltd. (Canada) and Ealing S.A.R.L., now
Harvard Apparatus S.A.R.L. (France). The remainder of the capital stock of
Ealing Scientific Ltd. and Ealing S.A.R.L. was also acquired directly from the
stockholder at the time of the Purchase. After the date of the Purchase, HAI
Acquisition Corp. and Guell Limited legally changed their names to Harvard
Apparatus, Inc. and Harvard Apparatus, Ltd., respectively.

The Company manufactures and distributes syringe pumps, ventilators, cell
injectors, diffusion chambers and other products principally used in the
toxicology, metabolism and efficacy testing of new drugs, as well as
spectrophotometers and amino acid analyzers primarily used in molecular biology
which are manufactured by Biochrom Ltd., a wholly owned subsidiary acquired
during 1999.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Harvard
Apparatus, Inc. and its subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.

(B) INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The interim consolidated financial statements for the nine months ended
September 30, 1999 are unaudited. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary
for the fair presentation of the financial position and results of
operations have been included in such unaudited consolidated financial
statements. The results of operations for the nine months ended
September 30, 2000 are not necessarily indicative of the results to be
expected for the entire year.

For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid instruments with original maturities of three
months or less to be cash equivalents.

(D) INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined
using a standard costing system which approximates the first-in,
first-out (FIFO) method.

F-8

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(E) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Equipment under capital
leases is stated at the present value of the minimum lease payments at
the lease agreement date. Property, plant and equipment is depreciated
using the straight-line method over the estimated useful lives of the
assets as follows:

Buildings................................................ 40 years
Machinery and equipment.................................. 3-10 years
Computer equipment....................................... 3-7 years
Furniture and fixtures................................... 5-10 years
Automobiles.............................................. 4-6 years

(F) CATALOG COSTS

Significant costs of product catalog design, development and production
are capitalized and amortized over the expected useful life of the
catalog (usually two to three years). Costs of drawings and design that
were acquired at the purchase on March 15, 1996 are being amortized over
their estimated useful life of six years.

(G) INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to be applied to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

(H) FOREIGN CURRENCY TRANSLATION

All assets and liabilities of the Company's foreign subsidiaries are
translated at exchange rates in effect at year-end. Income and expenses
are translated at rates which approximate those in effect on the
transaction dates. The resulting translation adjustment is recorded as a
separate component of stockholders' equity in other comprehensive income.

(I) STOCK OPTIONS

The Company accounts for stock options granted to employees in accordance
with the requirements of Statement of Financial Accounting Standards
(SFAS) No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. As is permitted
by this Statement, the Company has elected to account for stock options
in accordance with the provisions of APB Opinion No. 25, ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES and provide the additional disclosures that are
required by SFAS No. 123.

F-9

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(J) USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of management's
estimates. Such estimates include the determination and establishment of
certain accruals and provisions, including those for inventory
obsolescence, catalog cost amortization and reserves for bad debts.
Actual results could differ from those estimates.

(K) REVENUE RECOGNITION

The Company recognizes revenue from product sales at the time of
shipment. Product returns are estimated and provided for based on
historical experience.

(L) GOODWILL

Goodwill, which represents the excess of purchase price over fair value
of net assets acquired, is amortized on a straight-line basis over the
expected periods to be benefited, ranging from 5 to 15 years. The Company
continually evaluates whether events or circumstances have occurred that
indicate that the remaining useful life of goodwill may warrant revision
or that the remaining balance may not be recoverable. When factors
indicate that goodwill should be evaluated for possible impairment, the
Company estimates the undiscounted cash flow of the business segment, net
of tax, over the remaining life of the asset in determining whether the
asset is recoverable. Charges for impairment of goodwill would be
recorded to the extent unamortized book value exceeds the related future
discounted cash flow, net of tax. The discount factor would be the
long-term debt rate currently obtainable by the Company.

(M) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

The Company uses the provisions of SFAS No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF. This statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to
undiscounted future net cash flows expected to be generated by the asset.
If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to
sell.

(N) EFFECT OF ACCOUNTING CHANGES

In 1998, the Financial Accounting Standards Board issued SFAS 133,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS 133,
which was deferred through the issuance of SFAS 137 and subsequently
amended by SFAS 138, is effective for fiscal years beginning after
June 15, 2000. SFAS 133 will be adopted on January 1, 2001. Its impact on
the consolidated financial statements is still being evaluated, but is
not expected to be material.

F-10

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(O) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of the Company's cash and cash equivalents, trade
accounts receivable, trade accounts payable and accrued expenses
approximate their fair values because of the short maturities of those
instruments. The carrying value of the Company's debt approximates its
fair value because of the short maturities and/or interest rates which
are comparable to those available to the Company on similar terms.

(3) ACQUISITION OF BUSINESSES

On June 30, 1998, the Company acquired certain assets of Medical Systems
Corporation, a manufacturer and product developer of research medical equipment.
Cash consideration of approximately $1,000,000 plus certain acquisition costs
was paid for the assets. The costs of the acquisition were allocated on the
basis of the estimated fair market value of the assets acquired. The net
purchase price resulted in an allocation of $784,047 to goodwill and $281,506 to
tangible net assets.

On February 26, 1999, the Company acquired substantially all of the assets
and certain liabilities of Pharmacia Biotech (Biochrom) Ltd. ("Biochrom"), a UK
manufacturer and developer of spectrophotometers, amino acid analyzers and other
related research equipment. Cash consideration of approximately $6,981,000
(including $502,000 of acquisition related expenses) was paid for the assets.
The costs of the acquisition allocated on the basis of estimated fair market
value of the assets acquired using the purchase method of accounting resulted in
an allocation of $5,446,000 to goodwill and other intangibles. The assets
acquired consisted of approximately $61,000 of accounts receivable, $1,039,000
of inventory, $100,000 of prepaid expenses, $612,000 of fixed assets, $372,000
of pension assets and liabilities assumed totaled approximately $649,000.

On September 10, 1999, the Company acquired certain assets of Clark
Electromedical Instruments, a manufacturer of glass capillaries and distributor
of research equipment. Cash consideration of approximately $349,000 was paid for
the assets. The costs of the acquisition allocated on the basis of estimated
fair market value of the assets acquired using the purchase method of accounting
resulted in an allocation of $288,000 to goodwill and other intangibles.

On November 19, 1999, the Company acquired the NaviCyte diffusion chamber
systems product line from NaviCyte, a wholly-owned subsidiary of Trega
Biosciences, Inc. Cash consideration of approximately $390,000 (including
$33,000 of acquisition related expenses) was paid for the assets. The costs of
the acquisition allocated on the basis of estimated fair market value of the
assets acquired and the purchase method of accounting resulted in an allocation
of $333,000 to goodwill and other intangibles.

On November 30, 1999, the Company acquired substantially all of the assets
and certain liabilities of Hugo Sachs Elektronik a developer and manufacturer of
perfusion systems for research. Cash consideration of approximately $568,000 was
paid for the assets, net of cash acquired of $31,000. The costs of the
acquisition allocated on the basis of estimated fair market value of the assets
acquired and the purchase method of accounting resulted in an allocation of
$89,000 to goodwill and other intangibles.

F-11

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(3) ACQUISITION OF BUSINESSES (CONTINUED)
On May 19, 2000, the Company acquired substantially all of the assets of
Biotronik, a manufacturer of Amino Acid Analyzers. Cash consideration of
approximately $469,000 was paid for the assets (including approximately $12,000
of acquisition related expenses). The cost of the acquisition was allocated on
the basis of fair market value of the assets acquired and the purchase method of
accounting resulted in an allocation of $335,000 to goodwill.

On July 14, 2000, the Company acquired substantially all of the assets of
Amika Corporation, a manufacturer and distributor of sample preparation devices
and consumables. Cash consideration of $3,096,000 was paid for the assets
including approximately $61,000 of acquisition related expenses. The cost of the
acquisition allocated on the basis of fair market value of the assets acquired
and the purchase method of accounting resulted in an allocation of $3,011,000 to
goodwill and other intangibles. The assets acquired consisted of approximately
$85,000 of inventory. In addition, the Company acquired the right of first
refusal to all new technologies developed and offered for sale by the
predecessor Company for a period of four years on a fair value licensing
arrangement.

All acquisitions have been accounted for by the purchase method of
accounting for business combinations. Accordingly, the accompanying consolidated
statements of operations do not include any revenues or expenses related to
these acquisitions prior to the respective acquisition dates.

The following unaudited pro forma results of operations gives effect to the
acquisition of Biochrom as if it had occurred at the beginning of fiscal 1998
(the effect of the other acquisitions are considered insignificant). Such pro
forma information reflects certain adjustments including amortization of
goodwill, interest expense, income tax effect and an increase in the number of
weighted average shares outstanding. The pro forma information does not
necessarily reflect the results of operations that would have occurred had the
acquisition taken place as described and is not necessarily indicative of
results that may be obtained in the future.

YEARS ENDED DECEMBER 31,
--------------------------
1998 1999
----------- ------------
(UNAUDITED)

Pro forma revenues................................ $23,942,973 $ 27,590,714
=========== ============
Pro forma net earnings (loss)..................... $ (120,186) $(29,415,046)
=========== ============
Pro forma basic net earnings (loss) per share:
Basic........................................... $ (0.04) $ (5.25)
=========== ============
Diluted......................................... $ (0.04) $ (5.25)
=========== ============
Pro forma weighted average common shares:
Basic........................................... 5,598,626 5,598,626
=========== ============
Diluted......................................... 5,598,626 5,598,626
=========== ============

F-12

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(4) INVENTORIES

Inventories consist of the following:

DECEMBER 31,
----------------------- SEPTEMBER 30,
1998 1999 2000
---------- ---------- -------------

Finished goods........................... $ 686,555 $ 857,202 $1,194,810
Work in process.......................... 335,150 359,505 448,744
Raw materials............................ 634,613 1,632,963 2,036,181
---------- ---------- ----------
$1,656,318 $2,849,670 $3,679,735
========== ========== ==========

(5) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

DECEMBER 31,
----------------------- SEPTEMBER 30,
1998 1999 2000
---------- ---------- -------------

Land and buildings....................... $ 654,172 $ 636,250 $ 576,366
Machinery and equipment.................. 126,891 726,933 913,617
Computer equipment....................... 103,218 378,400 398,639
Furniture and fixtures................... 234,882 326,978 348,022
Automobiles.............................. 190,354 123,113 122,051
---------- ---------- ----------
1,309,517 2,191,674 2,358,695
Less accumulated depreciation............ 339,612 631,752 845,597
---------- ---------- ----------
$ 969,905 $1,559,922 $1,513,098
========== ========== ==========

(6) SHORT-TERM DEBT

At September 30, 2000, December 31, 1999 and 1998, short-term debt consisted
of an amount outstanding under a bank line of credit that is secured by a first
priority security interest in all assets of the Company and a pledge of 65% of
the capital stock of the Company's subsidiaries. Interest on the line of credit
is payable monthly, in arrears, at the related bank's "base rate" plus 1%
(10.5%, 9.5% and 8.75% at September 30, 2000, December 31, 1999 and 1998,
respectively). Borrowings under the line of credit are limited to an available
amount determined by an accounts receivable and inventory based formula,
$3,750,000, $3,750,000 and $2,000,000 at September 30, 2000, December 31, 1999
and 1998, respectively. This line of credit is due to mature on January 29,
2002. At September 30, 2000, December 31, 1999 and 1998, borrowings under the
line of credit were $3,150,000, $2,200,000 and $700,000, respectively.

At December 31, 1998, short-term debt also included a note from the same
bank in the amount of $350,000 with interest payable monthly, in arrears at the
bank's "base rate" plus 1.5% (9.25%). This debt was rolled into long-term debt
on March 2, 1999 as part of the financing arrangement to acquire Biochrom in
March 1999 (see notes 3 and 7).

F-13

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(7) LONG-TERM DEBT

Long-term debt consists of the following:

DECEMBER 31,
--------------------- SEPTEMBER 30,
1998 1999 2000
-------- ---------- -------------

Subordinated debentures, at 13%, payable
in quarterly installments through March
15, 2003................................ $787,500 $ 727,500 $ 477,500
Notes payable............................. -- 5,125,000 6,800,000
Capital lease obligations (note 10)....... 41,355 14,614 9,431
-------- ---------- -----------
828,855 5,867,114 7,286,931
Less current installments................. 190,389 794,173 1,556,618
-------- ---------- -----------
$638,466 $5,072,941 $ 5,730,313
======== ========== ===========

On March 2, 1999, the Company entered into two loan agreements with two
banks to borrow up to $5.5 million. The purpose of the loan agreements was to
partially finance the acquisition of Biochrom (see note 3). Principal and
interest are being paid in quarterly installments, with the final payment due in
January 2002. The interest rate is determined by one of the banks base rate plus
1%, (10.5% and 9.5% at September 30, 2000 and December 31, 1999, respectively).
The loans are secured by substantially all of the Company's assets. The loan
agreements contain covenants relating to net income, debt service coverage and
cash flow coverage. At September 30, 2000 and December 31, 1999, the Company was
not in compliance with certain of its covenants. The Company has either received
waivers from its banks or had the covenants amended by its banks.

Financing costs of $221,074 were incurred in 1999. These costs were
capitalized and are being amortized over the term of the loans. Amortization
expense was $56,102 for the nine months ended September 30, 2000 and $63,442 for
the year ended December 31, 1999.

Aggregate annual principal payments on all long-term debt, excluding capital
lease obligations, for the next five years and thereafter at September 30, 2000
are as follows:

2001........................................................ $ 1,550,004
2002........................................................ 4,449,996
2003........................................................ 777,500
2004........................................................ 500,000
Thereafter.................................................. --
-----------
$ 7,277,500
===========

(8) CONVERTIBLE AND REDEEMABLE PREFERRED STOCK

During 1999, 48,500 shares of Series B convertible and redeemable preferred
stock were issued to partially finance the acquisition of Biochrom (note 3). The
net proceeds from this issuance were $925,174. The Company's Series B
convertible redeemable preferred stock has a dividend preference over the
Series A preferred stock, and as a result, no dividends shall be paid in respect
of shares of

F-14

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(8) CONVERTIBLE AND REDEEMABLE PREFERRED STOCK (CONTINUED)
Series A preferred stock unless all accrued dividends that become payable in
respect of Series B preferred stock have been paid. The Series B redeemable
convertible preferred stock is convertible at the option of the holder, at any
time, into shares of common stock of the Company at a conversion rate of 19.71
shares of common stock for each share of Series B redeemable convertible
preferred stock, subject to adjustment for subdivision of Series B preferred
stock or any issuance of additional shares of Series B preferred stock.

Redeemable preferred Series A stock pays quarterly cumulative dividends in
arrears at a rate of approximately $0.26 per share. On March 3, 2000,
convertible and redeemable preferred "B" stock started to accrue dividends at a
rate of $1.44 that will be payable a year in arrears on March 3, 2001, and
thereafter quarterly in arrears.

In the event of any liquidation of the Company, the holders of the Company's
redeemable preferred stock are entitled to be paid from the assets available for
distribution to holders of the Company's capital stock $2,500,000, plus any
related dividends that are accrued but unpaid at such time, prior to other stock
distributions.

Mandatory redemption requirements for the preferred stock are as follows:

SERIES "A" SERIES "B"
------------ ------------

March 15, 2002....................................... $ 500,000 $ 333,320
March 15, 2003....................................... 500,000 333,320
March 15, 2004....................................... 500,000 333,320
---------- ----------
$1,500,000 $1,000,000
========== ==========

(9) COMMON STOCK WARRANTS

At September 30, 2000, December 31, 1999 and 1998, there were outstanding
8,509,905 warrants, which enable the holders to purchase a like amount of the
Company's common stock for $0.0005 per share. The warrants were issued in
connection with the issuance of Series A redeemable preferred stock (6,046,510
warrants) and subordinated debentures (2,463,395 warrants) that occurred on
March 15, 1996.

Commencing on March 15, 2002, the holders of the warrants may at any time
require the Company to repurchase the warrants, or any common shares previously
acquired from exercise of the warrants, for their fair market value as
determined in good faith by the Company's board of directors. Such repurchase
price would be repaid in 12 equal quarterly installments beginning on the first
business day of the month following the surrender of the warrants or applicable
shares of common stock. In 1999, 1998 and 1997 and for the nine months ended
September 30, 2000 and 1999, $29,694,019, $1,379,460, $116,574, $70,920,242 and
$7,402,457, respectively, has been recorded as interest expense to accrue the
estimated amount of this potential liability in accordance with EITF 96-13,
ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS INDEXED TO AND POTENTIALLY
SETTLED IN, A COMPANY'S OWN STOCK. Future changes in the fair value of common
stock warrants will also be recorded as interest expense.

In September 2000, the holders of the warrants agreed to automatically
terminate the requirement of the Company to repurchase the warrants in the event
of an initial public offering of the Company's Common Stock.

F-15

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(10) LEASES

The Company leases automobiles under various leases that are classified as
capital leases. The carrying value of automobiles under capital leases at
September 30, 2000, December 31, 1999 and 1998 was $9,502, $14,532 and $40,795,
respectively, which is net of $48,871, $68,602 and $76,352, respectively, of
accumulated depreciation.

The Company has noncancelable operating leases for office and warehouse
space expiring at various dates through 2009. Rent expense for the nine months
ended September 30, 2000 and for the years ended December 31, 1999, 1998 and
1997 was approximately $439,000, $484,000, $134,000 and $151,262, respectively.

Future minimum lease payments for both capital and operating leases, with
initial or remaining terms in excess of one year at September 30, 2000, are as
follows:

CAPITAL OPERATING
LEASES LEASES
-------- ----------

2001................................................... $ 9,116 $ 660,861
2002................................................... 1,157 417,710
2003................................................... -- 372,238
2004................................................... -- 352,806
2005 and thereafter.................................... -- --
------- ----------
Net minimum lease payments........................... 10,273 $1,803,615
==========
Less amount representing interest...................... 842
-------
Present value of net minimum lease payments............ $ 9,431
=======

(11) RELATED PARTY TRANSACTIONS

The Company paid an annual consulting fee to a former stockholder who
formerly served on its board of directors and, by written agreement, provided no
less than five days of consulting services each month. The agreement was
scheduled to expire on March 15, 2001 or at the time of any initial public
offering of the Company's stock or other sale of a material portion of the
Company's stock or assets, if such a transaction occurred before that date. As
of September 30, 2000, the agreement with the former stockholder was rescinded.
The related consulting expense amounted to $294,583 for the nine months ended
September 30, 2000 and $258,437, $262,040 and $268,030 for the years ended
December 31, 1999, 1998 and 1997, respectively.

(12) EMPLOYEE BENEFIT PLANS

The Company sponsors a profit sharing retirement plan for its U.S.
employees, which includes an employee savings plan established under
Section 401(k) of the U.S. Internal Revenue Code. The plan covers substantially
all full-time employees who meet certain eligibility requirements. Contributions
to the profit sharing retirement plan are at the discretion of management. For
the nine months ended September 30, 2000 and for the years ended December 31,
1999, 1998 and 1997, the Company contributed approximately $60,000, $67,000,
$41,000 and $27,000, respectively, to the plan.

F-16

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(12) EMPLOYEE BENEFIT PLANS (CONTINUED)
Certain of the Company's subsidiaries in the United Kingdom (UK), Harvard
Apparatus Limited, and Biochrom Limited maintain contributory, defined benefit
pension plans for substantially all of their employees.

The components of the Company's pension expense, primarily for Biochrom, for
the nine months ended September 30, 2000 and for the year ended December 31,
1999 follow:

DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------

Components of net periodic benefit cost:
Service cost...................................... $ 288,640 $ 182,376
Interest cost..................................... 250,437 197,263
Expected return on plan assets.................... (364,684) (291,771)
Net amortization gain............................. 6,965 (9,364)
--------- ---------
Net periodic benefit cost....................... $ 181,358 $ 78,504
========= =========

F-17

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(12) EMPLOYEE BENEFIT PLANS (CONTINUED)
The funded status of the Company's defined benefit pension plans and the
amount recognized in the balance sheet at September 30, 2000 and December 31,
1999 follow:

DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------

Change in benefit obligation:
Balance at beginning of period.................... $1,215,000 $5,829,403
Acquisitions...................................... 4,848,552 --
Service cost...................................... 288,640 182,376
Interest cost..................................... 250,437 197,263
Participants' contributions....................... 60,745 45,931
Actuarial (gain)/loss............................. (824,672) 571,532
Benefits paid..................................... (9,299) (42,993)
Currency translation adjustment................... -- (594,437)
---------- ----------
Balance at end of period........................ 5,829,403 6,189,075
---------- ----------

Change in fair value of plan assets:
Balance at beginning of period.................... 1,158,138 7,062,645
Acquisitions...................................... 5,231,470 --
Actual return on plan assets...................... 440,606 (39,627)
Participants' contributions....................... 60,745 45,931
Employer contributions............................ 180,985 153,275
Benefits paid..................................... (9,299) (42,993)
Currency translation adjustment................... -- (673,592)
---------- ----------
Balance at end of period........................ 7,062,645 6,505,639
---------- ----------
Funded status:
Plan assets greater than benefit obligation....... 1,233,242 316,564
Unrecognized (gain) loss.......................... (881,299) 73,808
---------- ----------
Prepaid pension expense in consolidated balance
sheet......................................... $ 351,943 $ 390,372
========== ==========

The weighted average assumptions used in determining the net pension cost
for the Company's plans follows:

DECEMBER 31, SEPTEMBER 30,
1999 2000
-------------- --------------

Weighted average assumptions:
Discount rate..................................... 5.5% 6.5-8.5%
Expected return on assets......................... 7.0-8.0% 7.0-8.0%
Rate of compensation increase..................... 3.8-4.0% 4.5%

F-18

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(13) INCOME TAXES

The significant components of the Company's deferred tax assets and
liabilities at September 30, 2000, December 31, 1999 and 1998 are as follows:

DECEMBER 31,
--------------------- SEPTEMBER 30,
1998 1999 2000
-------- ---------- -------------

Deferred tax assets:
Accounts receivable..................................... $ -- $ 31,755 $ 31,755
Inventory............................................... 111,676 129,097 141,113
Operating loss carryforward............................. 28,182 34,417 387,188
Accrued expenses........................................ (14,940) 1,196,338 135,398
Goodwill................................................ -- 37,679 46,567
Catalog costs........................................... -- 8,503 --
-------- ---------- ----------
Total deferred tax assets................................. 124,918 1,437,789 742,021
-------- ---------- ----------
Deferred tax liabilities:
Catalog costs........................................... 24,524 -- 6,011
Pension fund asset...................................... 15,051 18,461 16,725
Property, plant and equipment........................... 22,053 42,632 36,278
Other................................................... 497 4,695 --
-------- ---------- ----------
Total deferred tax liabilities............................ 62,125 65,788 59,014
-------- ---------- ----------
Net deferred tax assets................................... $ 62,793 $1,372,001 $ 683,007
======== ========== ==========

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. Based upon the level of historical taxable income
and projections for future taxable income over the periods during which deferred
tax assets are deductible, management believes it is more likely than not that
the Company will realize the benefits of these deductible differences.

Income tax expense is based on the following pre-tax income (loss) for the
nine months ended September 30, 2000 and for the years ended December 31, 1999,
1998 and 1997:

DECEMBER 31,
------------------------------------ SEPTEMBER 30,
1997 1998 1999 2000
---------- -------- ------------ -------------

Domestic.................... $1,253,916 $115,418 $(32,040,219) $(83,771,998)
Foreign..................... 535,621 738,916 2,757,782 1,264,808
---------- -------- ------------ ------------
$1,789,537 $854,334 $(29,282,437) (82,507,190)
========== ======== ============ ============

F-19

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(13) INCOME TAXES (CONTINUED)
Income tax expense (benefit) for the nine months ended September 30, 2000
and for the years ended December 31, 1999, 1998 and 1997 consisted of:

DECEMBER 31,
---------------------------------- SEPTEMBER 30,
1997 1998 1999 2000
--------- -------- ----------- -------------

Current income tax expense:
Federal and state............ $ 584,239 $579,152 $ 403,149 $ --
Foreign...................... 208,103 214,112 1,043,539 506,532
--------- -------- ----------- -----------
792,342 793,264 1,446,688 506,532
--------- -------- ----------- -----------
Deferred income tax (benefit)
expense:
Federal and state............ (56,939) (19,380) (1,238,399) 840,106
Foreign...................... (53,074) 9,308 (70,809) 7,713
--------- -------- ----------- -----------
(110,013) (10,072) (1,309,208) 847,819
--------- -------- ----------- -----------
Total income tax expense... $ 682,329 $783,192 $ 137,480 $ 1,354,351
========= ======== =========== ===========

F-20

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(13) INCOME TAXES (CONTINUED)
Income tax expense for the nine months ended September 30, 2000 and for the
years ended December 31, 1999, 1998 and 1997 differed from the amount computed
by applying the U.S. federal income tax rate of 34% to pretax income as a result
of the following:

DECEMBER 31,
----------------------------------- SEPTEMBER 30,
1997 1998 1999 2000
-------- --------- ------------ -------------

Computed "expected" income
tax (benefit) expense...... $608,443 $ 290,474 $ (9,956,029) $(28,052,445)
Increase (decrease) in income
taxes resulting from:
Foreign tax rate and
regulation
differential............. (3,625) (27,811) 35,804 85,909
State income taxes, net of
federal income tax
benefit.................. 73,757 86,068 (154,569) 130,804
Interest expense (common
stock warrants).......... 39,564 469,002 10,254,946 24,177,992
Foreign Subsidiary
Corporation tax
benefits................. -- (27,804) (28,761) (32,876)
Other...................... 9,220 (6,737) (13,911) 7,698
Stock compensation expense
in excess of allowable
tax benefits on exercise
of options............... -- -- -- 5,037,269
Decrease in deferred tax
valuation allowance...... (45,030) -- -- --
-------- --------- ------------ ------------
Total.................... $682,329 $ 783,192 $ 137,480 $ 1,354,351
======== ========= ============ ============

Undistributed earnings of the Company's foreign subsidiaries amounted to
approximately $4,013,000, $3,185,000 and $1,565,000 at September 30, 2000,
December 31, 1999 and 1998, respectively. Those earnings are considered to be
indefinitely reinvested and, accordingly, no related provision for U.S federal
and state income taxes has been provided. Upon distribution of those earnings in
the form of dividends or otherwise, the Company will be subject to both U.S.
income taxes (subject to an adjustment for foreign tax credits) and withholding
taxes in the various foreign countries.

(14) STOCK OPTION PLAN

The Company has adopted a stock option plan (the "Plan") pursuant to which
the Company's Board of Directors may grant stock options to employees. The Plan
authorizes grants of options to purchase up to 4,072,480 shares of authorized
but unissued stock.

For the nine months ended September 30, 2000, and for the years ended
December 31, 1999 and 1998, 2,254,272, 1,119,725 and 1,119,725 "Incentive Stock
Options," and 1,812,295, 1,812,295 and 895,780 "Non-qualified Stock Options,"
respectively, had been granted to employees. The Incentive Stock Options become
fully vested over a four year period, on a pro rata basis. The Non-qualified

F-21

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(14) STOCK OPTION PLAN (CONTINUED)
Stock Options granted prior to 1999 only become vested if, prior to the end of
the year 2000: a sale of substantially all of the Company's assets or capital
stock occurs; or an initial public offering of the Company's common stock at a
net price of not less than $1.42 per share; or the fair market value of the
Company's common stock is otherwise determined to be, on a fully diluted basis,
not less than $1.42 per common share. For non-qualified options granted under
the plan during 1999, prior to an amendment to the plan dated September 29,
2000, the options were deemed to be vested and exercisable upon either (i) the
sale of all or substantially all of the assets or capital stock of the Company
for an actual or implied price per share of not less than $2.09 or (ii) an
initial public offering of the Company's stock with a price per share of not
less than $2.09 and gross proceeds to the Company of at least $15 million. On
September 29, 2000, the vesting schedule was amended so that the options are
vested and exercisable upon either (i) a sale of all or substantially all of the
assets or capital stock of the Company for an actual or implied net price per
share of Common Stock of not less than $2.09 or (ii) if the fair market value of
the Company at any time prior to December 31, 2000 results in a per share
valuation, on a fully diluted basis, of not less than $2.09 per share. As a
result of the Plan amendment, the related options vested immediately as a per
share valuation of $2.09 was attained.

The Company applies APB Opinion No. 25 in accounting for the Plan. APB
No. 25 requires no recognition of compensation expense for stock option awards
when on the date of grant the exercise price is equal to the estimated fair
market value of the Company's common stock and the number of options granted is
fixed. During the nine months ended September 30, 2000, 1,134,547 stock options
were granted to employees at an exercise price of $1.05 which was estimated to
be less than the fair market value of the Company's common stock on the date of
grant. Accordingly, compensation expense of $3,292,593 was recognized on these
stock option grants. Additional compensation expense will be recognized in
future periods over the four year vesting period of the options. The Company's
1996 and 1999 Non-qualified Stock Option awards are considered variable awards
as the number of shares to be acquired by the employees is indeterminable at the
date of grant. Accordingly, in 1999 and for the nine months ended September 30,
1999, the Company recognized compensation expense of $3,283,164 and $937,138,
respectively, on the non-qualified Stock Options granted in 1996. At
December 31, 1999, all non-qualified stock options granted in 1996 were fully
vested because a per share valuation of $1.42 was attained. For the nine months
ended September 30, 2000, the Company recognized compensation expense of
$10,039,350 on the non-qualified options granted in 1999.

On September 29, 2000, two employees exercised 563,942 non-vested options
that were granted during 2000 for 563,942 shares of restricted common shares for
cash consideration of $286 and two promissory notes amounting to $589,652
payable to the Company. The notes have a three-year maturity and a fixed
interest rate of 10% per annum, compounded annually. The restricted stock
becomes fully vested over a four-year period, on a pro rata basis. The estimated
fair market value of the shares awarded on the original option date grant and on
the date of exercise was estimated to be $6,767,310 of which $2,412,865 has been
recognized as stock compensation expense for the nine months ended
September 30, 2000. The remaining unearned compensation is being amortized to
expense over the four year vesting period. Also on September 29, 2000, two
employees of the Company exercised 916,514 fully vested options for cash of $465
and two promissory notes amounting to $958,298 payable to the Company. The notes
have a three-year maturity and a fixed interest rate of 10% per annum,
compounded annually.

F-22

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(14) STOCK OPTION PLAN (CONTINUED)
The following is a summary of stock option activity.

EMPLOYEE STOCK OPTIONS
------------------------------
OPTIONS WEIGHTED AVERAGE
OUTSTANDING EXERCISE PRICE
----------- ----------------

Balance at December 31, 1996...................... 1,903,533 $0.0005
Options granted................................. 111,972 0.0147
---------- -------
Balance at December 31, 1997...................... 2,015,505 0.0152
Options granted................................. -- --
---------- -------
Balance at December 31, 1998...................... 2,015,505 0.0152
Options granted................................. 916,515 1.0462
---------- -------
Balance at December 31, 1999...................... 2,932,020 0.3278
---------- -------
Options exercised............................... (3,467,955) 0.4475
Options granted................................. 1,134,547 1.0462
---------- -------
Balance at September 30, 2000..................... 598,612 $0.9980
========== =======

During 1999, 1998 and 1997 and the first nine months of 2000, there were no
other additional options exercised, canceled, expired or forfeited, or changes
in any option terms, including exercise prices. The weighted-average fair value
of options granted during the nine months ended September 30, 2000 and fiscal
1999 and 1997 was $9.73, $1.05 and $0.01, respectively. No options were granted
during 1998.

The following is a summary of information relating to stock options
outstanding at September 30, 2000 (no options were exercisable at September 30,
2000):

OPTIONS OUTSTANDING
---------------------------------------------
NUMBER WEIGHTED
OUTSTANDING AT WEIGHTED- AVERAGE
RANGE OF SEPTEMBER 30, AVERAGE REMAINING EXERCISE
EXERCISE PRICE 2000 CONTRACTUAL LIFE PRICE
- ------------------- -------------- ----------------- --------

$ 0.01 28,008 6.3 years $ 0.01
$ 1.05 570,605 9.5 years 1.05
- ------------------- ------- --------- ------
$ 0.01-$1.05 598,613 9.4 years $ 1.00

F-23

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(14) STOCK OPTION PLAN (CONTINUED)

Had the Company determined compensation cost based on the fair value of the
options at the grant date, as is permitted by SFAS No. 123, the Company's net
income would have been as follows:

YEARS ENDED DECEMBER 31,
------------------------------------ NINE MONTHS ENDED
SEPTEMBER 30,
1997 1998 1999 2000
---------- -------- ------------ -----------------

Net income (loss) as reported............. $1,107,208 $71,142 $(29,419,917) $(83,861,541)
---------- ------- ------------ ------------
Pro forma net income (loss)............... $1,106,988 $70,922 $(29,420,033) $(83,926,155)
---------- ------- ------------ ------------
Basic net income (loss) per share......... $ 0.13 $ (0.01) $ (5.28) $ (13.11)
---------- ------- ------------ ------------
Pro forma basic net income (loss) per
share................................... $ 0.13 $ (0.01) $ (5.28) $ (13.12)
---------- ------- ------------ ------------
Diluted net income (loss) per share....... $ 0.06 $ (0.01) $ (5.28) $ (13.11)
---------- ------- ------------ ------------
Diluted pro forma net income (loss) per
share................................... $ 0.06 $ (0.01) $ (5.28) $ (13.12)
---------- ------- ------------ ------------

The fair value of each option grant for the Company's plans is estimated on
the date of the grant using the minimum value pricing model, with the following
weighted average assumptions used for grants in 2000, 1999 and 1997. There were
no grants of options in 1998.

DECEMBER 31,
------------------- SEPTEMBER 30,
1997 1999 2000
-------- -------- -------------

Risk free interest rates...................... 6.4% 5.6% 6.1%

Expected option lives......................... 7 years 7 years 2 years

Expected dividend yields...................... 0% 0% 0%

(15) SEGMENT AND RELATED INFORMATION

The Company operates in one significant business segment.

Revenues by geographic area consists of the following:

YEARS ENDED NINE MONTHS ENDED
------------------------------------------ -----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1999 1999 2000
------------ ------------ ------------ ------------- -------------
(UNAUDITED)

United States................. $ 6,263,264 $ 7,347,907 $ 8,169,470 $ 6,266,620 $ 6,867,515
United Kingdom................ 2,668,300 2,458,772 15,353,761 10,344,187 11,549,083
Canada and Europe............. 2,532,593 2,347,346 2,654,583 1,859,106 3,652,428
----------- ----------- ----------- ----------- -----------
$11,464,157 $12,154,025 $26,177,814 $18,469,913 $22,069,026
=========== =========== =========== =========== ===========

F-24

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(15) SEGMENT AND RELATED INFORMATION (CONTINUED)
Long lived assets by geographic area consists of the following:

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1998 1999 2000
------------ ------------ -------------

United States........................... $260,977 $ 307,286 $ 259,430
United Kingdom.......................... 677,889 1,189,269 1,197,896
Canada and Europe....................... 31,039 63,367 55,772
-------- ---------- ----------
$969,905 $1,559,922 $1,513,098
======== ========== ==========

(16) INCOME (LOSS) PER SHARE

Basic income (loss) per share is based upon net income less dividends on
preferred stock divided by the weighted average common shares outstanding during
each year. The calculation of diluted net income (loss) per share assumes
conversion of convertible preferred stock, stock options and common stock
warrants into common stock, and also adjusts net income (loss) for the effect of
converting convertible preferred stock and common stock warrants into common
stock. Net income (loss) and shares used to compute net income per share, basic
and diluted, are reconciled below:

Net income (loss) available
to common shareholders..... $ 985,540 $ (50,524) $(29,576,503) $(6,321,331) $(83,983,969)
Effect of dilutive
securities:
Common stock warrants........ 116,574 -- -- -- --
---------- --------- ------------ ----------- ------------
Net income (loss), assuming
dilution................... $1,102,114 $ (50,524) $(29,576,503) $(6,321,331) $(83,983,969)
========== ========= ============ =========== ============
Weighted average common
shares outstanding during
the year................... 7,406,486 5,598,626 5,598,626 5,598,626 6,407,682
Effect of dilutive
securities:
Common stock warrants........ 8,509,911 -- -- -- --
Common stock options......... 1,583,797 -- -- -- --
---------- --------- ------------ ----------- ------------
17,500,194 5,598,626 5,598,626 5,598,626 6,407,682
========== ========= ============ =========== ============

For the years ended December 31, 1999 and 1998, and for the nine months
ended September 30, 2000 and 1999, common equivalent shares of 11,378,110,
9,688,766, 10,628,401 and 11,446,996, respectively, resulting from stock
options, warrants and restricted stock were not included in the computation of
diluted earnings per share because to do so would have been antidilutive.

F-25

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(17) ACCRUED EXPENSES

Accrued expenses consist of:

DECEMBER 31,
--------------------- SEPTEMBER 30,
1998 1999 2000
-------- ---------- -------------

Accrued compensation and payroll.................. $392,066 $ 736,021 $ 955,543
Accrued interest.................................. 8,062 158,101 153,682
Accrued legal and professional fees............... 128,812 251,926 720,599
Other............................................. 57,349 253,475 436,723
-------- ---------- ----------
$586,289 $1,399,523 $2,266,547
======== ========== ==========

(18) CONTINGENCIES

The Company is subject to legal proceedings and claims arising out of its
normal course of business. Management, after review and consultation with
counsel, considers that amounts accrued for in connection therewith are
adequate.

(19) CONCENTRATION OF CREDIT RISK

One commercial customer accounted for 44% of revenues for the year ended
December 31, 1999 and 39% and 41% for the nine months ended September 30, 2000
and 1999, respectively. At September 30, 2000 and 1999, and December 31, 1999,
one customer accounted for 41%, 46% and 48% of accounts receivable,
respectively. Except as noted above, no other individual customer accounted for
more than 10% of revenues for the nine months ended September 30, 2000 and 1999
and for the years ended December 31, 1999, 1998, and 1997. In addition, except
as noted above, no other individual customer accounted for more than 10% of
account receivable at September 30, 2000, December 31, 1999 and December 31,
1998.

(20) STOCK SPLIT

On October 25, 2000, the Board of Directors approved a merger, subject to
stockholder approval, of the Company with and into its wholly-owned subsidiary,
Harvard Bioscience, Inc., to be effected prior to the consummation of the
anticipated initial public offering ("IPO"). In the merger each share of common
stock of the Company will be exchanged for one share of Harvard Bioscience, Inc.
The Board of Directors of Harvard Bioscience, Inc. has approved a 19.71:1 stock
split effective immediately after consummation of the merger. All common stock
share and per share data have been restated in these financial statements for
all periods presented to reflect this split.

(21) SUBSEQUENT EVENT

Subsequent to September 30, 2000, 5,913 stock options were granted to
employees resulting in deferred compensation of approximately $65,000.

F-26

HARVARD APPARATUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2000, DECEMBER 31, 1999 AND 1998

(22) UNASSERTED LEGAL CLAIM (UNAUDITED)

On November 7, 2000 the Company received correspondence from counsel to
Harvard University claiming that the Company's use of the term "Harvard
Bioscience" and other terms containing or consisting of the term "Harvard"
constitutes trademark infringement, false designation of origin, unfair
competition and cybersquatting. Counsel to Harvard University has threatened
legal action if the Company does not take certain steps, including ceasing and
permanently refraining from using these terms. Management denies the allegations
contained in the above correspondence, and intends to vigorously seek to protect
the Company's rights should such claims be asserted against the Company.

F-27

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED
FORMERLY
PHARMACIA BIOTECH (BIOCHROM) LIMITED

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31ST DECEMBER 1998

The Directors present their report and the audited financial statements for the
year ended 31st December 1998.

TRADING RESULTS FOR THE YEAR AND OUTLOOK

The trading results for the year are set out on page F-29 of the accounts.
The year was satisfactory.

Following the Company's disposal of the majority of its net assets on the
26th February 1999, (note 23), the Company will cease to trade.

PRINCIPAL ACTIVITIES

During the year the Company developed, manufactured and marketed scientific
instruments and associated chemicals.

DIRECTORS

The Directors throughout the year were as listed below. None of the
Directors holds any beneficial interest in the share capital of the Company.

W.B. Brown -- Managing Resigned 01/03/99
J.G. Lee -- Joined 23/12/98
K.T. Krzywicki -- Joined 23/12/98

YEAR 2000 AND EUROPEAN MONETARY UNION

As the Company ceased to trade on the 26th February 1999 the directors are
satisfied that there are no risks associated with the impact of the Year 2000
date change or European Monetary Union.

RESEARCH AND DEVELOPMENT

It is the Company's policy to carry out research and development to develop
products in the fields of spectrophotometry and amino acid analysis. Our
objective is the rapid creation of products utilising Biochrom's strengths in
electronic, software, optical and mechanical design plus production skills.

Expenditure on research and development is set out in the profit and loss
accounts on page F-29.

CLOSE COMPANY PROVISIONS

As far as the Directors are aware the close company provisions of the Income
and Corporation Taxes Act 1988 as amended do not apply to the Company. There has
been no change in this respect since the end of the financial year.

POST BALANCE SHEET EVENT

Effective 26th February 1999, the Company sold the majority of its net
assets to Biochrom Limited.

(See note 23).

F-28

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED
FORMERLY
PHARMACIA BIOTECH (BIOCHROM) LIMITED

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31ST DECEMBER 1998

AUDITORS

Our auditors, Coopers & Lybrand, merged with Price Waterhouse on 1
July 1998, following which Coopers & Lybrand resigned and the directors
appointed the new firm, PricewaterhouseCoopers, as auditors.

A resolution to reappoint PricewaterhouseCoopers as auditors to the company
will be proposed at the annual general meeting.

BY ORDER OF THE BOARD

J.G. LEE
DIRECTOR

F-29

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

YEAR ENDED 31ST DECEMBER 1998

STATEMENT OF DIRECTORS' RESPONSIBILITIES

Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period. In preparing
these financial statements, the directors are required to:

* Select suitable accounting policies and then apply them consistently;

* Make judgements and estimates that are reasonable and prudent;

* State whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;

* Prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

BY ORDER OF THE BOARD

/s/ J.G. Lee
- ---------------------------- Director

9 April 1999
- ---------------------------- Date

F-30

REPORT OF THE AUDITORS TO THE MEMBERS OF
PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

REPORT OF INDEPENDENT ACCOUNTANTS

To the Directors of Pharmacia & Upjohn (Cambridge) Limited:

In our opinion, the accompanying balance sheet, profit and loss account and
statement of cash flows present fairly, in all material respects, the financial
position of Pharmacia & Upjohn (Cambridge) Limited as at 31 December 1997 and
1998 and the profit and loss accounts and cash flows for the years ended
31 December 1997 and 1998 in conformity with generally accepted accounting
principles in the United Kingdom, which differ in certain respects from those
accepted in the United States (see note 24 to the financial statements).

These financial statements are the responsibility of Pharmacia & Upjohn
(Cambridge) Limited's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audit of these statements in accordance with generally
accepted auditing standards in the United Kingdom and the United States. These
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management and
evaluating the overall financial statements presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.

PRICEWATERHOUSECOOPERS
Chartered Accountants and Registered Auditors
Cambridge, England
February 26, 1998 (year ended December 31, 1997)
and April 9, 1999 (year ended December 31, 1998),
except for Note 24, which is as of September 15, 2000.

F-31

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED
FORMERLY
PHARMACIA BIOTECH (BIOCHROM) LIMITED
PROFIT AND LOSS ACCOUNT
YEAR ENDED 31ST DECEMBER 1998

1998 1997
------------------------ --------------------------------
NOTES L L L L
-------- ---------- ----------- ---------- -------------------

TURNOVER............................... 2 7,101,776 8,699,944
Cost of sales.......................... (5,160,296) (6,252,278)
----------- -------------------
GROSS PROFIT........................... 1,941,480 2,447,666
Distribution costs..................... (457,939) (421,254)
Administration costs................... (604,918) (493,374)
Research and Development costs......... (395,569) (418,000)
---------- ----------
(1,458,426) (1,332,628)
Other operating income................. 4 48,808 61,019
---------- ----------
NET OPERATING EXPENSES................. (1,409,618) (1,271,609)
----------- -------------------
OPERATING PROFIT....................... 3 531,862 1,176,057
Interest receivable.................... 5 83,095 114,392
----------- -------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION............................. 614,957 1,290,449
Tax on profit on ordinary activities... 6 (194,935) (444,323)
----------- -------------------
PROFIT FOR THE YEAR.................... 420,022 846,126
Dividend Paid Net...................... -- (2,349,827)
----------- -------------------
PROFIT(LOSS) RETAINED FOR THE YEAR..... L420,022 L(1,503,701)
=========== ===================

Reserves statement see note 15

All activities are discontinued (note 23).

The company has no recognised gains and losses other than those included in
the profits above, and therefore no separate statement of total recognised gains
and losses has been presented.

There is no difference between the profit on ordinary activities before
taxation and the retained profit for the year stated above and historical cost
equivalents.

F-32

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

BALANCE SHEET

31ST DECEMBER 1998

1998 1997
------------------------------ ------------------------------
NOTES L L L L
-------- --------- ------------------ --------- ------------------

FIXED ASSETS
Tangible assets........................... 9 415,900 455,504

CURRENT ASSETS
Stock..................................... 10 636,556 706,141
Debtors................................... 11 1,603,559 1,537,499
Cash at bank and in hand.................. 1,545,230 1,026,766
--------- ---------
3,785,345 3,270,406
CREDITORS: Amounts falling due within one
year.................................... 12 888,747 804,784
--------- ---------

NET CURRENT ASSETS........................ 2,896,598 2,465,622
------------------ ------------------

TOTAL ASSETS LESS CURRENT LIABILITIES..... L3,312,498 L2,921,126
PROVISIONS FOR LIABILITIES AND CHARGES.... 13 46,350 75,000
------------------ ------------------
NET ASSETS................................ L3,266,148 L2,846,126
================== ==================

CAPITAL AND RESERVES
Called up share capital................... 14 2,000,000 2,000,000
Profit and loss account................... 15 1,266,148 846,126
------------------ ------------------

EQUITY SHAREHOLDERS' FUNDS................ 16 L3,266,148 L2,846,126
================== ==================

The financial statements on pages F-29 to F-43 were approved by the Board of
Directors on 9 April 1999 and were signed on its behalf by:

/s/ J.G. Lee
- ---------------------------- Director

9 April 1999
- ---------------------------- Date

F-33

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 1998

1998 1997
See note 19 -------- ----------

L L
Operating Activities
Net cash in flow from operating activities.................. 742,243 1,355,841

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received........................................... 81,764 118,918
-------- ----------

TAXATION
UK Corporation Tax paid..................................... (160,915) (576,323)
Advance Corporation Tax paid................................ -- (587,457)
-------- ----------
(160,915) (1,163,780)
-------- ----------

CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets........................... (144,628) (123,966)
Sale of tangible fixed assets............................... -- 350
-------- ----------
(144,628) (123,616)
-------- ----------

Equity Dividends Paid Net................................... -- (2,349,827)
-------- ----------
INCREASE/(DECREASE) IN CASH IN THE PERIOD................... 518,464 (2,162,464)
======== ==========

F-34

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS

YEAR ENDED 31ST DECEMBER 1998

1. ACCOUNTING POLICIES

(a) BASIS OF ACCOUNTING
Although it is intended that the Company shall cease to trade following the
sale of its net assets on the 26th February 1999 (note 23), the accounts
have been prepared on the going concern basis. This is because in the
directors' opinion there is no material difference between the recoverable
amounts of the assets and liabilities and their values in the balance sheet.
The accounts have been prepared on the historical cost basis and in
accordance with applicable Accounting Standards in the United Kingdom. A
summary of the more important accounting policies which have been applied
consistently is set out below:

(b) DEPRECIATION OF TANGIBLE FIXED ASSETS
The cost of fixed assets is their purchase cost, together with any
incidental costs of acquisition.

Depreciation is calculated using the straight line method to write off the
fixed assets over their estimated useful lives as follows:

Leasehold improvements...................................... -- 7 years
Plant, machinery, equipment and tooling..................... -- 3-7 years
Computer equipment.......................................... -- 5 years

(c) DEFERRED TAXATION
Provision is made using the liability method for the tax effect of all
material timing differences between profits computed for taxation purposes
and those stated in the accounts, except insofar as the timing differences
are expected to continue for the foreseeable future.

(d) FOREIGN CURRENCY
Assets and liabilities in foreign currencies are translated to sterling at
the rates of exchange ruling at the end of the financial year. Exchange
differences resulting from changes in foreign currency rates are written off
to the profit and loss account.

(e) RESEARCH AND DEVELOPMENT EXPENDITURE
Expenditure on research and development is written off to the profit and
loss account during the year in which it is incurred.

(f) OPERATING LEASES
Costs in respect of operating leases are charged on a straight line basis in
arriving at the operating profit.

F-35

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS

YEAR ENDED 31ST DECEMBER 1998

1. ACCOUNTING POLICIES (CONTINUED)

(g) STOCKS AND WORK IN PROGRESS
Stocks are stated at the lower of cost and net realisable value. Cost in
this context includes all attributable costs in getting each item to its
present location and condition and, for finished goods and work in progress,
a proportion of attributable overheads based on a normal level of activity.
Net realisable value is the price at which stock can be sold in the normal
course of business after allowing for the costs of realisation, and where
appropriate, the costs of conversion from their existing state to a finished
condition. Provision is made for obsolete, slow moving and defective stocks.

(h) PENSION COSTS
The Company operates a funded defined benefit pension scheme which is
contracted out of the state scheme. The fund is valued every three years by
a professionally qualified independent actuary, the rates of contribution
payable being determined by the actuary. Pension costs are accounted for on
the basis of charging the expected cost of providing pensions over the
period during which the company benefits from the employees' services. The
effects of variations from regular cost are spread over the expected average
remaining service lives of members of the scheme.

2. TURNOVER

Turnover represents the invoiced value of goods and services supplied during
the year, less trade discounts and trade commissions, excluding Value Added Tax.

Turnover arises from the principal activity of the Company and was derived
from the following geographical areas by destination:

1998 1997
------------------ ------------------

L L
Europe............................................... 4,519,415 5,280,673
Asia and Australasia................................. 831,277 978,144
The Americas......................................... 1,693,897 2,301,527
Middle East and Africa............................... 57,187 139,600
------------------ ------------------
Turnover is all UK by origin......................... 7,101,776 8,699,944
================== ==================

F-36

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS

YEAR ENDED 31ST DECEMBER 1998

3. OPERATING PROFIT

1998 1997
------------------ ------------------

L L
Operating profit has been arrived at after charging:-
Auditors remuneration--audit services.............. 22,030 19,350
--non audit services............ 13,325 15,175
Operating lease rentals:-
Machinery, equipment and vehicles.................. 51,753 58,987
Premises........................................... 231,333 227,000
Depreciation....................................... 190,915 212,740

4. OTHER OPERATING INCOME

1998 1997
------------------ ------------------

L L
Miscellaneous income................................. 48,808 61,019
------------------ ------------------
L48,808 L61,019
================== ==================

5. INTEREST RECEIVABLE

1998 1997
------------------ ------------------

L L
On bank current account cash balance................. 83,095 114,392
------------------ ------------------
L83,095 L114,392
================== ==================

6. TAXATION

1998 1997
------------------ ------------------

L L
United Kingdom corporation tax at 31%
Current............................................ 193,000 439,000
Under provision in respect of prior years;
Current............................................ 1,935 5,323
------------------ ------------------
L194,935 L444,323
================== ==================

F-37

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS

YEAR ENDED 31ST DECEMBER 1998

7. EMPLOYEES

1998 1997
------------------ ------------------

NO. NO.
The average number of employees, (including the
executive Director) was made up as follows:
Manufacturing, production and development.......... 48 48
Distribution....................................... 7 8
Administration..................................... 5 5
------------------ ------------------
60 61
================== ==================
L L
Staff costs, including full time working Directors
amounted to:
Salaries and bonuses............................... 1,308,728 1,368,189
National insurance................................. 105,959 107,986
Pension costs...................................... 127,348 118,317
------------------ ------------------
L1,542,035 L1,594,492
================== ==================

8. DIRECTORS` EMOLUMENTS

1998 1997
------------------ ------------------

L L
Emoluments of Directors of Pharmacia & Upjohn
(Cambridge) Limited
Fees............................................... -- --
Other emoluments--salary, bonus and benefits in
kind............................................. 73,705 68,244
------------------ ------------------
73,705 68,244
================== ==================

Retirement benefits are accruing to one Director under a defined benefit
scheme (1997:one).

F-38

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS (CONTINUED)

YEAR ENDED 31ST DECEMBER 1998

9. TANGIBLE FIXED ASSETS

PLANT
LEASEHOLD MACHINERY
COMPUTER BUILDING EQUIPMENT &
EQUIPMENT IMPROVEMENTS TOOLING TOTAL
--------- ------------ ----------- ---------
L L L L

COST
At 1st January 1998............................ 428,534 227,692 1,263,370 1,919,596
Disposals during year.......................... (45,949) -- (12,929) (58,878)
Additions...................................... 42,429 -- 108,882 151,311
------- ------- --------- ---------
At 31st December 1998.......................... 425,014 227,692 1,359,323 2,012,029
------- ------- --------- ---------
DEPRECIATION
At 1st January 1998............................ 323,582 203,176 937,334 1,464,092
Disposals during year.......................... (45,949) -- (12,929) (58,878)
Charge for the year............................ 43,780 6,475 140,660 190,915
------- ------- --------- ---------
At 31st December 1998.......................... 321,413 209,651 1,065,065 1,596,129
------- ------- --------- ---------
NET BOOK VALUE
At 31st December 1998.......................... 103,601 18,041 294,258 415,900
======= ======= ========= =========
At 31st December 1997.......................... 104,952 24,516 326,036 455,504
======= ======= ========= =========

10. STOCK

1998 1997
--------- ---------
L L

Components, materials and supplies.......................... 528,408 636,259
Work in progress............................................ 32,002 3,053
Finished goods.............................................. 76,146 66,829
--------- ---------
L636,556 L706,141
========= =========

The Directors do not believe that the current replacement cost of stock is
materially different from its historical cost.

F-39

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS (CONTINUED)

YEAR ENDED 31ST DECEMBER 1998

11. DEBTORS

1998 1997
---------- ----------
L L

Advance Corporation Tax Recoverable......................... 307,437 306,187
Trade debtors............................................... 1,093,118 1,038,502
Amounts owed by holding company and fellow subsidiaries..... 4,145 2,814
Other debtors and prepayments............................... 198,859 189,996
---------- ----------
L1,603,559 L1,537,499
========== ==========

12. CREDITORS--AMOUNTS FALLING DUE WITHIN ONE YEAR

1998 1997
---------- ----------
L L

Trade creditors............................................. 484,770 526,387
Other creditors............................................. 181,806 86,986
Other taxation and social security.......................... 29,171 33,681
Corporation tax............................................. 193,000 157,730
---------- ----------
888,747 L804,784
========== ==========

13.(A) PROVISIONS FOR LIABILITIES AND CHARGES

1998 1997
-------- --------
L L

Pension fund liability...................................... 46,350 --

Following the net asset sale dated 26th February 1999 a pension fund
liability may crystalise when the Company's pension fund transfers scheme assets
to Biochrom Limited's new pension scheme in 1999.

1998 1997
-------- --------
L L

Building lease dilapidation provision....................... -- 75,000

The dilapidation provision was released to the Profit and Loss account in
the light of the surrender without penalty of the building lease on the sale of
net assets of the Company described in note 23.

F-40

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS (CONTINUED)

YEAR ENDED 31ST DECEMBER 1998

13.(B) DEFERRED TAXATION

The provision for deferred taxation, and the full potential asset, are made
up as follows:-

1998 1997
------------------------------ ------------------------------
FULL POTENTIAL PROVISION FULL POTENTIAL PROVISION
(ASSET)/LIABILITY MADE (ASSET)/LIABILITY MADE
----------------- ---------- ----------------- ----------
L L L L

Accelerated capital allowances............ (45,713) -- (43,881) --
Short term timing differences............. (738) -- (22,499) --
-------- ---------- ---------- ----------
L(46,451) L-- L(66,380) L--
======== ========== ========== ==========

14. CALLED UP SHARE CAPITAL

1998 1997
----------------- -----------------

AUTHORISED
Ordinary shares of L1 each.................................. L2,000,000 L2,000,000
================= =================
ALLOTTED, CALLED UP AND FULLY PAID
Ordinary shares of L1 each.................................. L2,000,000 L2,000,000
================= =================

15. STATEMENT OF RESERVES

1998 1997
----------------- -----------------
L L

At 1st January 1998......................................... 846,126 2,349,827
Retained Profit/(Loss) for the year......................... 420,022 (1,503,701)
----------------- -----------------
At 31st December 1998....................................... 1,266,148 846,126
================= =================

16. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

1998 1997
----------------- -----------------
L L

Profit for the year......................................... 420,022 846,126
Appropriation, net dividend on ordinary shares.............. -- (2,349,827)
----------------- -----------------
Net addition/(reduction) to shareholders' funds............. 420,022 (1,503,701)
Opening shareholders' funds................................. 2,846,126 4,349,827
Closing shareholders' funds................................. 3,266,148 2,846,126
================= =================

F-41

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS (CONTINUED)

YEAR ENDED 31ST DECEMBER 1998

17. CAPITAL COMMITMENTS

1998 1997
----------------- -----------------
L L

Future capital expenditure contracted, but not provided
for:...................................................... -- --
================= =================

18. CONTINGENT LIABILITIES AND FINANCIAL COMMITMENTS

1998 1997
---------------- ----------------
L L

Amount of performance bonds................................. 944 944
Guarantee given to H.M. Customs & Excise in respect of
import duty & VAT......................................... 120,000 120,000
---------------- ----------------
L120,944 L120,944
================ ================

a) The Directors do not expect liabilities to arise from the performance
bonds issued.

b) The company has entered into a composite accounting agreement with
Barclays Bank PLC., along with other members of the Pharmacia & Upjohn
Limited group. As a member of the Pharmacia & Upjohn Limited group cash
pool, the company has a contingent liability of L10 million (1997
L10 million) in respect of overdrafts of the other members in the group
cash pool.

c) At 31st December 1998, the Company had financial commitments in respect
of operating leases for vehicles, equipment and premises, terminating in
1999 and thereafter. The total amount payable in the next year under
these leases is as follows:-

1998 1997
---------------------------------- ---------------------------
LAND AND LAND AND
BUILDINGS OTHER BUILDINGS OTHER
---------------- --------------- --------- ---------------
L L L L

Leases expiring between
Less than one year.................................... 170,250 3,870 -- 2,894
One to two years...................................... -- 2,497 227,000 4,992
Two and five years inclusive.......................... -- 42,048 -- 34,356
---------------- --------------- --------- ---------------
L170,250 L48,415 L227,000 L42,242
================ =============== ========= ===============

F-42

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS (CONTINUED)

YEAR ENDED 31ST DECEMBER 1998

19. CASH FLOW STATEMENT

(a) Reconciliation of operating profit to net cash inflow from operating
activities:

1998 1997
---------------- ------------------
L L

Operating profit............................................ 531,862 1,176,057
Depreciation charges........................................ 190,915 212,740
(Gain) on sale of tangible fixed assets..................... -- (215)
Decrease/(Increase) in stocks............................... 69,585 59,566
(Increase) in debtors....................................... (63,479) (63,377)
Increase/(Decrease) in creditors............................ 13,360 (28,930)
---------------- ------------------
Net cash inflow from operating activities................... L742,243 L1,355,841
================ ==================

(b) Analysis of changes in net funds and movement during the year

1998 1997
------------------ ------------------
L L

Balance at 1st January 1998................................. 1,026,766 3,189,230
Net cash inflow/(outflow)................................... 518,464 (2,162,464)
------------------ ------------------
Balance at 31st December 1998............................... L1,545,230 L1,026,766
================== ==================

CHANGE
1998 1997 IN YEAR
--------- --------- --------
L L L

Cash at bank and in hand.................................... 1,545,230 1,026,766 518,464

20. PENSION OBLIGATIONS

The Company participates in a pension fund operated by Pharmacia Biotech UK,
a branch office of Pharmacia Biotech Europe GmbH (previously Pharmacia Limited)
providing benefits based on final pensionable pay. The assets of the fund are
held separately from those of the Company being invested with investment
managers in a managed fund.

F-43

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS (CONTINUED)

YEAR ENDED 31ST DECEMBER 1998

20. PENSION OBLIGATIONS (CONTINUED)
The total pension cost for the company is set out in note 7. The pension
cost is assessed in accordance with the advice of an independent qualified
actuary using the projected unit method. The most recent actuarial valuation
adopted by the Trustees of the Pharmacia Limited Staff Superannuation Fund was
as at 1 January 1997. The assumptions which had the most significant effect on
the results of the valuation were those relating to:

a) the future rate of investment return on the fund;

b) the future rate at which members' salaries would increase;

c) the rate of withdrawal from service.

It was assumed that the long term rate of investment return would be at an
average of 9% per annum and the rate of future salary increases would be at 7.5%
per annum. The rate of withdrawal from service was selected at a rate slightly
less than the rate experienced over the inter-valuation period.

The most recent actuarial valuation adopted by the Trustees showed that the
market value of the fund's assets was L5,564,000 and that the actuarial value of
those assets represented 112% of the benefits that had accrued to members, after
allowing for expected future increases in basic salary.

The existing pension fund was formed in 1986 by the amalgamation of the
Pharmacia Biotech Limited and Pharmacia LKB Biochrom Limited schemes. Following
the net asset sale on 26 February 1999 (note 23), all Pharmacia Biotech active
members (staff formerly employed by Pharmacia Biotech Limited) will transfer
into the Nycomed Amersham Scheme. The remaining "Biochrom" active members will
have the choice to transfer into the new Biochrom Limited pension scheme. All
current and deferred members will remain in the Pharmacia Biotech UK Pension
Fund which will be administered by Pharmacia & Upjohn at Milton Keynes.

21. RELATED PARTY TRANSACTIONS

As a wholly owned subsidiary, whose results are included in the consolidated
financial statements of Pharmacia & Upjohn, Inc. (see note 22), the company is
exempt from the requirement to disclose details of transactions with other group
companies.

The Director regards Amersham Pharmacia Biotech AB ("APB") as a related
party by virtue of the fact that the company's ultimate parent undertaking
Pharmacia & Upjohn Inc. holds a 45% interest in APB and that there are certain
common directorships. Sales to APB group companies amounted to L6,608,485 and
the company was owed L1,010,761 as at 31 December 1998 in relation to trading
balances.

F-44

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS (CONTINUED)

YEAR ENDED 31ST DECEMBER 1998

22. ULTIMATE AND IMMEDIATE PARENT UNDERTAKING

The directors regard Pharmacia & Upjohn, Inc, a company incorporated in the
USA, as the ultimate parent and controlling undertaking. Copies of the ultimate
parent's consolidated financial statements may be obtained from:

Pharmacia & Upjohn, Inc
7000 Portage Road, Kalamazoo
Michigan 49001, USA

According to the register kept by the company, Pharmacia & Upjohn Limited, a
company registered in England and Wales, has a 100% interest in the equity
capital of the company at 31 December 1998.

23. POST BALANCE SHEET EVENTS

On the 26th February 1999, the Company sold the majority of its net assets
to Biochrom Limited for a consideration of US Dollars 6,362,574. Following this,
the Company will cease to trade.

24. SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES ("GAAP")

The company has prepared financial statements in accordance with UK GAAP.
There are no reconciling differences between US and UK GAAP related to the
equity shareholders' funds as of 31 December 1997 and 1998 and the net income
for the years ended 31 December 1997 and 1998. The financial statements reflect
all costs of doing business including costs incurred by other group companies on
behalf of the Company. As of 31 December 1997 and 1998 the following other
differences exist:

DEFERRED TAXATION

Under UK GAAP, provision for deferred tax is only required to the extent
that it is probable that a taxation liability or asset will crystallise, in the
foreseeable future, as a result of timing differences between taxable profits
and accounting profit, with provision made at the known tax rate.

Under US GAAP, full provision for deferred tax is required to the extent
that accounting profit differs from taxable profit due to temporary differences.
Provision is made at the tax rate in effect at the time the difference is likely
to reverse. A valuation adjustment is made against deferred tax assets when it
is more likely than not that a deferred tax asset will not be realised. As such,
provision for the taxable losses carried forward of L46,451 would be provided
with a valuation allowance for the full amount, resulting in no net impact on
the profit and loss account or shareholders' equity, as of 31 December 1998.
Provision for the taxable losses carried forward of L66,380 would be provided
with a valuation allowance for the full amount, resulting in no net impact on
the profit and loss account or shareholders' equity, as of 31 December 1997.

F-45

PHARMACIA & UPJOHN (CAMBRIDGE) LIMITED

FORMERLY

PHARMACIA BIOTECH (BIOCHROM) LIMITED

NOTES TO THE ACCOUNTS (CONTINUED)

YEAR ENDED 31ST DECEMBER 1998

24. SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES ("GAAP") (CONTINUED)
CASH FLOW STATEMENTS

The cash flow statement is prepared in accordance with United Kingdom
Financial Reporting Standard 1 "FRS 1 (Revised 1996)", whose objective and
principles are similar to those set out in SFAS No.95, "Statement of Cash
Flows". The principal differences between the standards relate to
classification. Under FRS 1 (Revised 1996), the company presents its cash flows
for (a) operating activities, (b) returns on investments and servicing of
finance, (c) taxation, (d) capital expenditure and financial investment,
(e) equity dividends paid, (f) management of liquid resources and
(g) financing. SFAS No.95 requires only three categories of cash flow activity
being (a) operating, (b) investing and (c) financing.

Cash flows from taxation and returns on investments and servicing of finance
under FRS 1 (Revised 1996) would be included as operating activities under SFAS
No.95, capital expenditure and financial investment would be included as
investing activities, and equity dividends paid would be included as a financing
activity under SFAS No.95. Under FRS 1 (Revised 1996) cash comprises cash in
hand and deposits repayable on demand, less overdrafts repayable on demand, and
liquid resources comprise current asset investments held as readily disposable
stores of value. Under SFAS No.95 cash equivalents, comprising short-term highly
liquid investments, generally with original maturities of three months or less,
are grouped together with cash. Cash equivalents exclude overdrafts. There are
no differences between cash as stated under UK GAAP and cash and cash
equivalents as stated under US GAAP at 31 December 1997 and 1998.

Set out below, for illustrative purposes, is a summary of cash flows under
US GAAP.

YEAR ENDED 31 DECEMBER
----------------------
1998 1997
--------- ----------
L'000 L'000

Net cash provided by operating activities................... 663,092 310,979
Net cash used in investing activities....................... (144,628) (123,616)
Net cash used in financing activities....................... -- (2,349,827)
--------- ----------
Net increase/(decrease) in cash and cash equivalents........ 518,464 (2,612,464)
Cash and cash equivalents at beginning of period............ 1,026,766 3,639,230
Cash and cash equivalents at end of period.................. 1,545,230 1,026,766
--------- ----------
Supplement cash flow information:
Cash paid for interest...................................... -- --
Cash paid for income taxes.................................. (160,915) (1,163,780)
--------- ----------

F-46

PROSPECTUS ,2000

[THOMAS WEISEL PARTNERS LLC LOGO]

[HARVARD BIOSCIENCE LOGO]

6,422,450 SHARES
COMMON STOCK

THOMAS WEISEL PARTNERS LLC
DAIN RAUSCHER WESSELS
ING BARINGS

- ------------------------------------------------------------

Neither we nor any of the underwriters have authorized anyone to provide
information different from that contained in this prospectus. When you make a
decision about whether to invest in our common stock, you should not rely upon
any information other than the information in this prospectus. Neither the
delivery of this prospectus nor the sale of our common stock means that
information contained in this prospectus is correct after the date of this
prospectus. This prospectus is not an offer to sell or solicitation of an offer
to buy these shares of common stock in any circumstances under which the offer
or solicitation is unlawful.

Until , 2000 (25 days after commencement of this offering), all
dealers that buy, sell or trade these shares of common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This is
an addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated expenses payable by us in
connection with the offering (excluding underwriting discounts and commissions):

NATURE OF EXPENSE AMOUNT
- ----------------- ----------

SEC Registration Fee........................................ $ 25,260
NASD Filing Fee............................................. 8,000
Nasdaq National Market Listing Fee.......................... 95,000
Accounting Fees and Expenses................................ 550,000
Legal Fees and Expenses..................................... 600,000
Printing Expenses........................................... 200,000
Blue Sky Qualification Fees and Expenses.................... 5,000
Transfer Agent's Fee........................................ 5,000
Miscellaneous............................................... 11,740
----------
TOTAL................................................... $1,500,000

The amounts set forth above, except for the Securities and Exchange
Commission, National Association of Securities Dealers, Inc. and Nasdaq National
Market fees, are in each case estimated.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

In accordance with Section 145 of the Delaware General Corporation Law,
Article VII of our certificate of incorporation provides that none of our
directors will be personally liable to us or our stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability
(1) for any breach of the director's duty of loyalty to us or our stockholders,
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (3) in respect of unlawful dividend
payments or stock redemptions or repurchases, or (4) for any transaction from
which the director derived an improper personal benefit. In addition, our
certificate of incorporation provides that if the Delaware General Corporation
Law is amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.

Article V of our by-laws provides for our indemnification of our officers
and certain non-officer employees under certain circumstances against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement,
reasonably incurred in connection with the defense or settlement of any
threatened, pending or completed legal proceeding in which any such person is
involved by reason of the fact that such person is or was an officer or employee
of the registrant if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to our best interests, and, with
respect to criminal actions or proceedings, if such person had no reasonable
cause to believe his or her conduct was unlawful.

II-1

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Set forth in chronological order below is information regarding the number
of shares of capital stock issued by us since October 15, 1997. Also included is
the consideration, if any, received by us for such shares. There was no public
offering in any such transaction and we believe that each transaction was exempt
from the registration requirements of the Securities Act of 1933 by reason of
Section 4(2) thereof, based on the private nature of the transactions and the
financial sophistication of the purchasers, all of whom had access to complete
information concerning us and acquired the securities for investment and not
with a view to the distribution thereof. In addition, we believe that the
transactions described below with respect to issuances and option grants to our
employees and directors were exempt from the registration requirements of said
Act by reason of Section 4(2) of said Act or Rule 701 promulgated thereunder.

(a) ISSUANCE OF CAPITAL STOCK

(i) In 1999, we issued an aggregate of 48,500 shares of our series B
convertible preferred stock to Ascent Venture Partners, L.P.
(formerly known as Pioneer Capital Corp.) and Citizens Capital, Inc.
for an aggregate purchase price of $1,000,000.

(ii) In March 2000, we issued 1,091,716 shares of our common stock upon
the exercise of previously granted stock options at an aggregate
exercise price of $1,792.14.

(iii) In September 2000, we issued 2,376,236 shares of our common stock
upon the exercise of previously granted stock options at an aggregate
exercise price of $1,549,155.40.

(b) GRANTS OF STOCK OPTIONS

(i) As of October 15, 2000, options to purchase 599,096 shares of common
stock were outstanding under our 1996 Stock Option and Grant Plan.
None of these options is exercisable within 60 days of such date. All
such options were granted between March 1996 and October 2000 to our
officers, directors, employees and consultants.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS. The following is a complete list of exhibits filed or
incorporated by reference as part of this Registration Statement.

II-2

**10.1 Harvard Apparatus, Inc. 1996 Stock Option and Grant Plan.
**10.2 Harvard Bioscience, Inc. 2000 Stock Option and Incentive
Plan.
**10.3 Harvard Bioscience, Inc. Employee Stock Purchase Plan.
+10.4 Distribution Agreement dated March 2, 1999 by and between
Biochrom Limited and Amersham Pharmacia Biotech AB.
**10.5 Form of Employment Agreement between Harvard Bioscience and
Chane Graziano.
**10.6 Form of Employment Agreement between Harvard Bioscience and
David Green.
**10.7 Form of Employment Agreement between Harvard Bioscience and
James L. Warren.
**10.8 Form of Director Indemnification Agreement.
**10.9 Lease Agreement dated December 16, 1996 between Seven
October Hill LLC and Harvard Apparatus, Inc.
**10.10 First Amendment to Lease dated November 13, 1998 to Lease
Agreement dated December 16, 1996 between Seven October Hill
LLC and Harvard Apparatus, Inc.
**10.11 Lease of Unit 22 Phase I Cambridge Science Park, Milton
Road, Cambridge dated March 3, 1999 between The Master
Fellows and Scholars of Trinity College Cambridge, Biochrom
Limited and Harvard Apparatus, Inc.
**10.12 Lease Agreement for Commercial Premises dated November 26,
1999 made between Mr. Heinz Dehnert, Grunstrabe 1, 79232
March-Hugstetten, Lessor and the Company of Harvard
Apparatus GmbH, Lessee.
*10.13 Amended and Restated Loan and Security Agreement dated
March 2, 1999 between Brown Brothers Harriman & Co.,
BankBoston N.A. and Harvard Apparatus, Inc.
*10.14 Amendment and Waiver dated December 31, 1999 to Amended and
Restated Loan and Security Agreement between Brown Brothers
Harriman & Co., Fleet National Bank (formerly known as
BankBoston N.A.) and Harvard Apparatus, Inc.
*10.15 Second Amendment dated July 14, 2000 to Amended and Restated
Loan and Security Agreement between Brown Brothers
Harriman & Co., and Fleet National Bank (formerly known as
BankBoston N.A.) and Harvard Apparatus, Inc.
*10.16 Third Amendment dated October 25, 2000 to Amended and
Restated Loan and Security Agreement between Brown Brothers
Harriman & Co., and Fleet National Bank (formerly known as
BankBoston N.A.) and Harvard Apparatus, Inc.
**21.1 Subsidiaries of the Registrant.
**23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit
5.1 hereto).
23.2 Consent of KPMG LLP.
23.3 Consent of PricewaterhouseCoopers.
**24.1 Powers of Attorney for Messrs. Graziano, Warren, Green, Dick
and Klaffky.
**24.2 Powers of Attorney for Messrs. Dishman, Kennedy and Lewis.
**27.1 Financial Data Schedule.
**99.1 Consent of Robert Dishman to be named as a person to be
appointed a director of Registrant in this Registration
Statement.
**99.2 Consent of Earl R. Lewis to be named as a person to be
appointed a director of Registrant in this Registration
Statement.
**99.3 Consent of John F. Kennedy to be named as a person to be
appointed a director of Registrant in this Registration
Statement.

- ------------------------

* To be filed by amendment to this registration statement.

** Previously filed.

+ Confidential treatment requested as to this previously filed exhibit.

II-3

(B) FINANCIAL STATEMENT SCHEDULES

All schedules have been omitted because they are not required or because the
required information is given in the consolidated financial statements or notes
to those statements.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 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 proceeding) 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 public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this 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 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 purpose of determining any liability under the Securities
Act of 1933, 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 thereof.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, on November 21,
2000.

HARVARD BIOSCIENCE, INC.

By: /s/ JAMES WARREN
-----------------------------------------
James Warren
CHIEF FINANCIAL OFFICER

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

* Chief Executive Officer and
------------------------------------------- Director (Principal November 21, 2000
Chane Graziano Executive Officer)

Chief Financial Officer
/s/ JAMES WARREN (Principal Financial
------------------------------------------- Officer and Principal November 21, 2000
James Warren Accounting Officer)

*
------------------------------------------- President and Director November 21, 2000
David Green

*
------------------------------------------- Director November 21, 2000
Christopher W. Dick

*
------------------------------------------- Director November 21, 2000
Richard C. Klaffky, Jr.

*
------------------------------------------- Director November 21, 2000
Robert Dishman

*
------------------------------------------- Director November 21, 2000
John F. Kennedy

*
------------------------------------------- Director November 21, 2000
Earl R. Lewis

*By: /s/ JAMES WARREN
----------------------------------------
James Warren
Attorney-in-fact

II-5

EXHIBIT INDEX

EXHIBIT
NO. DESCRIPTION
------- ------------------------------------------------------------

*1.1 Form of Underwriting Agreement.
**2.1 Asset Purchase Agreement dated March 2, 1999 by and among
Biochrom Limited and Pharmacia Biotech Limited and
Pharmacia & Upjohn, Inc. and Harvard Apparatus, Inc.
(Excluding schedules and exhibits which Registrant agrees
to furnish supplementally to the Commission upon request.)
**2.2 Asset Purchase Agreement dated July 14, 2000 by and between
Harvard Apparatus, Inc., AmiKa Corporation and Ashok
Shukla. (Excluding schedules and exhibits which Registrant
agrees to furnish supplementally to the Commission upon
request.)
**3.1 Form of Amended and Restated Certificate of Incorporation of
the Registrant.
**3.2 Form of Second Amended and Restated Certificate of
Incorporation of the Registrant.
**3.3 Form of Amended and Restated By-laws of the Registrant.
4.1 Specimen certificate for shares of Common Stock, $0.01 par
value, of the Registrant.
**4.2 Amended and Restated Securityholders' Agreement dated as of
March 2, 1999 by and among Harvard Apparatus, Inc.,
Pioneer Ventures Limited Partnership, Pioneer Ventures
Limited Partnership II, Pioneer Capital Corp., First New
England Capital, L.P. and Citizens Capital, Inc. and Chane
Graziano and David Green.
**5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of
the securities offered.
**10.1 Harvard Apparatus, Inc. 1996 Stock Option and Grant Plan.
**10.2 Harvard Bioscience, Inc. 2000 Stock Option and Incentive
Plan.
**10.3 Harvard Bioscience, Inc. Employee Stock Purchase Plan.
+10.4 Distribution Agreement dated March 2, 1999 by and between
Biochrom Limited and Amersham Pharmacia Biotech AB.
**10.5 Form of Employment Agreement between Harvard Bioscience and
Chane Graziano.
**10.6 Form of Employment Agreement between Harvard Bioscience and
David Green.
**10.7 Form of Employment Agreement between Harvard Bioscience and
James L. Warren.
**10.8 Form of Director Indemnification Agreement.
**10.9 Lease Agreement dated December 16, 1996 between Seven
October Hill LLC and Harvard Apparatus, Inc.
**10.10 First Amendment to Lease dated November 13, 1998 to Lease
Agreement dated December 16, 1996 between Seven October
Hill LLC and Harvard Apparatus, Inc.
**10.11 Lease of Unit 22 Phase I Cambridge Science Park, Milton
Road, Cambridge dated March 3, 1999 between The Master
Fellows and Scholars of Trinity College Cambridge,
Biochrom Limited and Harvard Apparatus, Inc.
**10.12 Lease Agreement for Commercial Premises dated November 26,
1999 made between Mr. Heinz Dehnert, Grunstrabe 1, 79232
March-Hugstetten, Lessor and the Company of Harvard
Apparatus GmbH, Lessee.
*10.13 Amended and Restated Loan and Security Agreement dated
March 2, 1999 between Brown Brothers Harriman & Co.,
BankBoston N.A. and Harvard Apparatus, Inc.
*10.14 Amendment and Waiver dated December 31, 1999 to Amended and
Restated Loan and Security Agreement between Brown
Brothers Harriman & Co., Fleet National Bank (formerly
known as BankBoston N.A.) and Harvard Apparatus, Inc.
*10.15 Second Amendment dated July 14, 2000 to Amended and Restated
Loan and Security Agreement between Brown Brothers
Harriman & Co., and Fleet National Bank (formerly known as
BankBoston N.A.) and Harvard Apparatus, Inc.
*10.16 Third Amendment dated October 25, 2000 to Amended and
Restated Loan and Security Agreement between Brown
Brothers Harriman & Co., and Fleet National Bank (formerly
known as BankBoston N.A.) and Harvard Apparatus, Inc.
**21.1 Subsidiaries of the Registrant.
**23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit
5.1 hereto).
23.2 Consent of KPMG LLP.

EXHIBIT
NO. DESCRIPTION
------- ------------------------------------------------------------

23.3 Consent of PricewaterhouseCoopers.
**24.1 Powers of Attorney for Messrs. Graziano, Warren, Green, Dick
and Klaffky.
**24.2 Powers of Attorney for Messrs. Dishman, Kennedy and Lewis.
**27.1 Financial Data Schedule.
**99.1 Consent of Robert Dishman to be named as a person to be
appointed a director of Registrant in this Registration
Statement.
**99.2 Consent of Earl R. Lewis to be named as a person to be
appointed a director of Registrant in this Registration
Statement.
**99.3 Consent of John F. Kennedy to be named as a person to be
appointed a director of Registrant in this Registration
Statement.

- ------------------------

* To be filed by amendment to this registration statement.

** Previously filed.

+ Confidential treatment requested as to this previously filed exhibit.


                                                                  EXHIBIT 4.1


                                   [LOGO]

   NUMBER                                                        SHARES

 HBIO
                          HARVARD BIOSCIENCE, INC.

              INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

                                                            CUSIP  416906 10 5
                                                                  COMMON STOCK


THIS CERTIFIES that


                                                                    SEE REVERSE
                                                                    FOR CERTAIN
                                                                    DEFINITIONS



is the owner of

           FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE
                                   $.01 PER SHARE, OF

- -------------------------- HARVARD BIOSCIENCE, INC. ---------------------------
(herein called the "Corporation"), transferable on the books of the
Corporation in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued and held subject to the laws of the State of Delaware and
to the Certificate of Incorporation and the By-laws of the Corporation, as
amended from time to time.

     This Certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar.

     IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by the facsimile signatures of its duly authorized officers and
sealed with the facsimile seal of the Corporation.

     Dated:


                                        [SEAL]

        /s/ David Green                                     /s/ Chane Graziano

        PRESIDENT                                      CHIEF EXECUTIVE OFFICER
                                                         AND SECRETARY


COUNTERSIGNED AND REGISTERED:
REGISTRAR                                                        TRANSFER AGENT
AND TRANSFER COMPANY                                              AND REGISTRAR

BY  /s/ SIGNATURE
                                                           AUTHORIZED SIGNATURE


                           HARVARD BIOSCIENCE, INC.


     The Corporation is authorized to issue more than one class or series of
stock. Upon written request the Corporation will furnish without charge to
each stockholder a copy of the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions
of such preferences and/or rights.

     The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

                                         
TEN COM  -as tenants in common              UNIF GIFT MIN ACT- _________Custodian _________
TEN ENT  -as tenants by the entireties                          (Cust)             (Minor)
JT TEN   -as joint tenants with right
          of survivorship and not as                           under Uniform Gifts to Minors
          tenants in common                                    Act__________________________
                                                                         (State)

            Additional abbreviations may also be used though not in the above list.




FOR VALUE RECEIVED, ______________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO

PLEASE INSERT SOCIAL SECURITY OR OTHER
   IDENTIFYING NUMBER OF ASSIGNEE
- ----------------------------------------
|                                       |
|                                       |
- -----------------------------------------


_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

_______________________________________________________________________________

_______________________________________________________________________________

________________________________________________________________________ SHARES

OF THE COMMON STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT

_______________________________________________________________________ ATTORNEY

TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.

DATED ___________________



                                 _____________________________________________
                         NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
                                 CORRESPOND WITH THE NAME AS WRITTEN UPON THE
                                 FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
                                 WITHOUT ALTERATION OR ENLARGEMENT OR ANY
                                 CHANGE WHATEVER.


        SIGNATURE(S) GUARANTEED: _____________________________________________
                                 THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
                                 ELIGIBLE GUARANTOR INSTITUTION (BANKS,
                                 STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
                                 AND CREDIT UNIONS WITH MEMBERSHIP IN AN
                                 APPROVED SIGNATURE GUARANTEE MEDALLION
                                 PROGRAM). PURSUANT TO S.E.C. RULE 17Ad-15.


                                                                        EX. 23.2

                         INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Harvard Apparatus, Inc.:

    We consent to the inclusion of our report dated October 19, 2000, except as
to note 20 which is as of October 25, 2000, with respect to the consolidated
balance sheets of Harvard Apparatus, Inc. and subsidiaries as of September 30,
2000, December 31, 1999 and 1998 and the related consolidated statements of
operations, stockholders' equity (deficit) and comprehensive income (loss), and
cash flows for the nine months ended September 30, 2000 and for each of the
years in the three-year period ended December 31, 1999 which report appears in
this Registration Statement, and to the reference to our firm under the heading
"Experts" in this Registration Statement.

/s/ KPMG LLP


Boston, Massachusetts
November 21, 2000


                                                                    EXHIBIT 23.3

                       CONSENT OF INDEPENDENT ACCOUNTANTS

    We hereby consent to the use in this Registration Statement on Form S-1 of
our reports dated February 26, 1998 (for the year ended December 31, 1997) and
April 9, 1999 (for the year ended December 31, 1998), except for the US GAAP
reconciliation as described in Note 24 which is at September 15, 2000, relating
to the financial statements and financial statement schedules of Pharmacia &
Upjohn (Cambridge) Limited, which appear in the Registration Statement. We also
consent to the references to us under the heading "Experts" in such Registration
Statement.

/s/ PricewaterhouseCoopers

PRICEWATERHOUSECOOPERS
Cambridge, England
November 21, 2000