SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934
         For the quarterly period ended September 30, 1996

[ ]      TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934 for the transition
         period from ____  to _____

         Commission File Number 0-28392
                                 HARVARD SCIENTIFIC CORP.
(Exact Name of Small Business Issuer as specified in its Charter)

            Nevada                                   88-0226455
State or other Jurisdiction of                I.R.S. Employer
Incorporation or Organization                Identification No.)

           1601 E. Flamingo Road, Suite 18, Las Vegas, Nevada 89119
           (Address of principal executive offices) (Zip Code)

                                          (702) 796-1173
                                    (Issuer's telephone number)

           Check  whether the Issuer (1) filed all reports  required to be filed
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports) and (2) has been subject to such filing  requirements  for
the past 90 days.
                                            Yes   X           No

           Indicate  the number of shares  outstanding  of each of the  issuer's
classes of Common Equity, as of the latest practicable date.

Common Stock, $.001 par value                     9,289,379
----------------------------------           ----------------
Title of Class                                Number of Shares
                                             outstanding at
                                             November 1, 1996


<PAGE>


<TABLE>
<CAPTION>

                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEETS

                                     ASSETS

                                                                             September 30,           December 31,
                                                                                 1996                    1995
Current Assets:
<S>                                                                             <C>                  <C>              
    Cash (Note 2)                                                               $     96,231         $    799,466
    Accounts Receivable                                                               56,647
    Prepaid expense (Note 7)                                                         138,232              425,094
                                                                                     -------              -------
               Total Current Assets                                                  291,110            1,224,560
                                                                                 -----------         ------------

Equipment and Leasehold Improvements,
    at cost, less accumulated depreciation of
    $9,789  in 1996 and $6,637 in 1995 (Note 3)                                       15,107               10,861
                                                                                   ---------            ---------

Intangible Assets:
    Intellectual property, net of accumulated amortization
        of $3,323 in 1996 and $1,771 in 1995 (Notes 4 and 7)                           7,012                8,563
    Organizational cost, net of  accumulated amortization
        of  $97,009 in 1996 and $70,754 in 1995 (Note 7)                              78,541              104,796
                                                                                   ---------              -------
                                                                                      85,553              113,359
Other Assets:
    Deposits     300                                                                     300
            --------                                                                   -----

                                                                                   $ 392,070          $ 1,349,080
                                                                                   =========          ===========
</TABLE>

                     The accompanying notes are an integral part of these
financial statements


<PAGE>

<TABLE>
<CAPTION>


                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                           BALANCE SHEETS (CONTINUED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                             September 30,           December 31,
                                                                                   1996                  1995

Current Liabilities:
<S>                                                                              <C>                   <C>        
    Accounts payable                                                             $    33,457           $   105,791
    Accrued expenses (Notes 5 and 10)                                                 59,950                84,380
    Due to related parties (Note 7)                                                  170,308               406,881
    Note payable to related parties (Note 6)                                          37,275                67,675
    Notes payable (Note 13)                                                          250,000                -
                                                                                     ------------------------
        Total Current Liabilities                                                    550,990               664,727
                                                                                 -----------          ------------

Contingencies (Note 10)                                                                -                     -

Stockholders' Equity:
    Common stock, $.001 par value, 100,000,000 shares authorized;  9,289,379 and
        8,749,125  shares  issued and  outstanding  at  September  30,  1996 and
        December 31, 1995,
        respectively (Note 12)                                                         9 289                 8 749
    Additional paid-in capital                                                     2 416 905             1 902 445
    Deficit accumulated during the development stage                              (2 585 114)  (1 226 841)
                                                                                  -----------------------
               Total Stockholders' Equity                                          (158 920)               684 353
                                                                               -------------         -------------

               Total Liabilities and Stockholders' Equity                        $   392 070            $1 349 080
                                                                                 ===========            ==========

</TABLE>


                     The accompanying notes are an integral part of these
financial statements


<PAGE>

<TABLE>
<CAPTION>


                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                                                                   For the Period
                                                                                                       1/13/87
                                                                                                     (Inception)
                                        For the Quarter                 For the Nine Months            through
                                      Ended September 30,               Ended September 30,         September 30,
                                    1996              1995             1996            1995              1996
                                    ----              ----             ----            ----              ----

<S>                             <C>               <C>              <C>             <C>              <C>          
Net Sales                       $      100,000    $         --     $     181,000   $          --    $     187,387
Cost of Sales                           77,244              --           216,870              --          221,557
    Gross Profit                        22,756              --          (35,870)              --         (34,170)
Operating Expenses:
    General and administrative
      expenses                         602,262         160,088         1,214,176         304,741        2,010,775
    Research and development
      (Notes 7 and 9)                   25,078              --            66,947              --          386,278
    Depreciation and
      amortization (Note 7)             10,462           9,836            30,959          29,509          110,118

    Total Operating Expenses           637,802         169,924         1,312,082         334,250        2,507,171

    Loss from Operations             (615,046)       (169,924)       (1,347,952)       (334,250)      (2,541,341)

Other Income (Expense):
    Interest Income                         --              --                --              --              397
    Interest Expense                     6,019           1,245            10,321           3,696         (19,668)
    Loss on disposition of
      marketable securities                 --              --                --              --         (24,500)
                                         6,019           1,245            10,321           3,696         (43,771)

Net Loss                        $    (621,065)    $  (171,169)     $ (1,358,273)   $   (337,946)    $ (2,585,112)

Loss per Common Share           $       (0.07)    $     (0.09)     $      (0.15)   $      (0.18)    $      (1.60)

Weighted Average Shares
    Outstanding                      9,133,398       1,868,431         8,941,735       1,860,830        1,614,560


  </TABLE>
                  The accompanying notes are an integral part of these financial
 statements


<PAGE>

<TABLE>
<CAPTION>


                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS

                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

                                                                                            January 13,
                                                                                            1987
                                                                                            (Inception) to
                                                                  Nine Months               September 30,
                                                                 Ended September 30,              1996
                                                                1996                1995
Cash Flows from Operating Activities:
<S>                                                         <C>                      <C>         <C>          
    Cash received from customers                            $  131,000               $           $  131,000
    Cash paid to suppliers and employees                    (1,294,825)              (29,214)    (1,617,058)
    Cash paid for interest                                      (1,612)                  -           (1,612)
                                                             ---------                 ------    -----------

        Net Cash Used in Operating
         Activities                                         (1,165,437)              (29,214)    (1,487,670)
                                                            -----------              --------    -----------

Cash Flows from Investing Activities:
    Purchase of equipment                                       (7,398)                    -        (24,896)
    Capitalized organization costs                                   -                     -       (150,924)
    Purchase of marketable securities                            -                      -           (24,500)
                                                             ---------              --------        --------
        Net Cash Used in Investing
         Activities                                             (7,398)                 -          (200,320)
                                                             ---------              --------       ---------

Cash Flows from Financing Activities:
    Proceeds from issuance of capital stock,
      net of offering costs                                    250,000                  -         1,496,946
    Proceeds from debt                                         250,000                31,719        317,675
    Principal payments on debt                                 (30,400)                 -           (30,400)
                                                              --------              --------     ----------
        Net Cash Provided by Financing
         Activities                                            469,600                31,719      1,784,221
                                                              --------              --------     ----------

Net Increase (Decrease) in Cash                               (703,235)                2,505         96,231

Cash, at beginning of period                                   799,466                   724          -
                                                              --------              --------     ------

Cash, at end of period                                       $  96,231              $  3,229      $  96,231
                                                             =========              ========      =========

</TABLE>

                     The accompanying notes are an integral part of these
 financial statements


<PAGE>

<TABLE>
<CAPTION>


                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                      STATEMENTS OF CASH FLOWS (CONTINUED)

                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


                                                                                                     January 13,
                                                                                                      1987
                                                                                                   (Inception) to
                                                                     Nine Months                     September 30,
                                                                 Ended Sepember 30,                   1996
                                                             1996                 1995
                                                       ----------------    -----------

<S>                                                      <C>                     <C>                   <C>           
Reconciliation of Net Loss to Net Cash
      Used in Operating Activities:

Net Loss                                                  $ (1,358,273)          $ (337,946)           $(2,585,114)
                                                          ------------           ----------            -----------

Adjustments to Reconcile Net Loss to
  Net Cash Provided by (Used in)
  Operating Activities:
    Loss on disposition of marketable
    securities                                                     -                     -                  24,500
    Depreciation and amortization                               30,959                20 509               110,121
    Issuance of stock for director's fees
     and services                                              265,000                71,975               894,288
    (Increase) decrease in assets:
      Prepaid expenses                                         286,859                 4,000             (138,232)
      Accounts Receivable                                     (56,647)                                    (56,647)
      Deposits                                                    -                        -                 (300)
    Increase (decrease) in liabilities:
      Accounts payable                                        (72,331)                23,175                33,457
      Accrued expenses                                        (24,430)                 1,999                59,950
      Due to related parties                                 (236,574)               178,074               170,307
                                                             --------             ----------           -----------
               Total Adjustments                             (192,836)               308,732             1,097,444
                                                            ---------            -----------         -------------

Net Cash Used in Operating Activities                   $  (1,165,437)           $  (29,214)          $(1,487,670)
                                                        =============            ==========           ===========

</TABLE>

                     The accompanying notes are an integral part of these
financial statements


<PAGE>


<TABLE>
<CAPTION>

                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                      STATEMENTS OF CASH FLOWS (CONTINUED)

                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


                                                                                                    January 13,
                                                                                                      1987
                                                                       Nine Months                 (Inception) to
                                                             Ended September 30,                      September 30,
                                                           1996                   1995                  1996


<S>                                                          <C>                  <C>                  <C>
Supplemental Schedule of Non-Cash
    Investing and Financing Activities:
    Issuance of stock for director's
      services, salaries, consultants and
      rent                                                  $   285 000           $ 71 975             $  1,099,433
    Issuance of stock for intellectual
      properties                                                    -                 -                      10,335
    Issuance of stock for organization
      costs                                                         -                    -                   24,625
                                                      -----------------    -----------------         --------------

               Total                                          $ 285,000       $     71,975           $    1,134,393
                                                              =========       ==============         ==============




</TABLE>


                     The accompanying notes are an integral part of these 
financial statements


<PAGE>



                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS


Note 1 - The Company and Significant Accounting Policies

         The Company

         Harvard Scientific Corp. (the Company),  is a majority owned subsidiary
of Bio-sphere  Technology,  Inc. (the Parent).  The Company was  incorporated in
Nevada on January 13, 1987, under the name of Witch Doctors Bones,  Inc. On June
17, 1988, the name of the Company was changed to Carey Ward,  Inc.,  pursuant to
an Amendment to the Articles of Incorporation.  On October 6, 1993,  pursuant to
an Agreement and Plan of Reorganization  and an Agreement of Merger,  Grant City
Corporation, a Nevada corporation,  was merged into the Company and the name was
changed to Grant City Corporation.  In January, 1994, pursuant to an Articles of
Amendment,  the name of the Company  was changed to The Male Edge,  Inc. In May,
1994, the name was changed to Harvard Scientific Corp.

         The Company's primary business  operations  consist of the research and
development,  registration,  commercialization,  marketing and  distribution  of
products  relating to  Prostaglandin  E-1 (PGE-1) in Liposomes,  utilized in the
treatment of male erectile dysfunction.  The Company has reached the development
stage in which  preliminary data is available,  indicating the possible benefits
of such a  therapy.  PGE-1 in  Liposomes  is  considered  a drug  and  therefore
approval is required from the Food and Drug Administration.

         The Company  shares  resources  with the Parent and costs are allocated
between the Companies based on a pre-determined  percentage.  Certain members of
the Parent's management and directors serve the Company in various roles.

         The Company has  100,000,000  shares of common  stock  authorized  with
9,289,379 and  8,749,125  shares of common stock issued as of September 30, 1996
and December 31, 1995, respectively.

         Among the  outstanding  common  stock of the Company  are 50,000  units
issued and  outstanding.  Each unit consists of one common  share,  four Class A
warrants  and four  Class B  warrants.  Each  Class A and  Class B  warrant  was
exercisable for one year  commencing on the effective date of registration  with
the Securities and Exchange  Commission at an exercise price of $8.00 and $10.00
per common share, respectively. The Company has not registered these warrants to
date.  The  Company  determined  that it has no  intention,  nor is  required to
register these warrants.  The Company,  therefore exercised its rights under the
warrant agreement to effectively cancel the warrants.

                                            
<PAGE>



                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 1 - The Company and Significant Accounting Policies (Continued)

         Equipment and Leasehold Improvements

         Equipment and leasehold  improvements are stated at cost.  Expenditures
for  additions,  renewals and  betterments  are  capitalized,  expenditures  for
maintenance and repairs are charged to expenses as incurred.  Upon retirement or
disposal of assets,  the cost and accumulated  depreciation  are eliminated from
the account and any resulting gain or loss is included in expense.

         Equipment  and  leasehold   improvements  are  depreciated   using  the
straight-line method over their estimated useful lives of five years.

         Intellectual Properties

         Intellectual  properties  costs are amortized  using the  straight-line
method over their estimated useful lives of five years.

         Organizational Costs

         Organizational  costs are amortized using the straight-line method over
their estimated useful lives of five years.

         Loss Per Share

         Net loss per common share is based on weighted average number of shares
of common stock outstanding in each period.

         Income Tax Status

         Income taxes are provided  based on the liability  method of accounting
pursuant  to  Statement  of  Financial   Accounting  Standard  (SFAS)  No.  109,
Accounting  for Income Taxes.  SFAS No. 109 allows  deferred  income taxes to be
recorded to reflect the tax consequences on future years of differences  between
the tax basis of assets and liabilities and their financial reporting amounts at
each year-end.


                                            

<PAGE>



                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)



Note 2 - Concentration of Credit Risk

         The  Company  currently   maintains  cash  balances  at  one  financial
institution.  Cash accounts at financial  institutions are federally insured for
up to $100,000.  However,  cash  balances at various  times have  exceeded  this
amount.  Management has  determined the amount of risk is minimal,  based on the
financial strength of the institution.


Note 3 - Equipment and Leasehold Improvements

         Equipment and building  improvements at September 30, 1996 and December
31, 1995, consist of the following:

                                              September 30,         December 31,
                                                   1996               1995

         Equipment                         $       19,080      $       11,682
         Leasehold improvements                     5,816               5,816
                                                   24,896              17,498
         Less accumulated depreciation             (9,789)             (6,637)
                                           $       15,107      $       10,861


Note 4 - Intellectual Properties

         On January 7, 1994, the Company  exchanged  2,856,000  shares  (714,000
after considering the effect of the four-for-one  reverse split) of common stock
with the Parent for the intellectual rights to patent, develop,  manufacture and
market the Parent's PGE-1 product for the treatment of male sexual  dysfunction.
The Company has  recorded  the transfer of  intellectual  properties  at the par
value of stock transferred to the Parent which amounted to $2,856.

         On July 6, 1994, the Company exchanged  1,340,000 shares (335,000 after
considering the effect of the  four-for-one  reverse split) of common stock with
an  affiliated  group,  which  included the President and a family member of the
President,  that  maintained  property  rights  for  technology  related  to the
development  of a home HIV test kit.  The Company has  recorded  the transfer of
technology  at the par  value  of stock  transferred  to the  individuals  which
amounted to $1,340.


                                                                

<PAGE>



                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 4 - Intellectual Properties (Continued)

         On November 16, 1995, The Company exchanged  6,138,500 shares of common
stock  with the  Parent  for  assistance  in  raising  working  capital,  patent
application,  management assistance and distribution  agreements associated with
the PGE-1 product.  The Company has recorded the transfer from the Parent at the
par value of stock transferred which amounted to $6,139.


Note 5 - Accrued Expenses

         Accrued  expenses at September 30, 1996 and December 31, 1995,  consist
of the following:

                                          September 30,             December 31,
                                             1996                      1995

Settlement costs (Note 10)             $            -             $      50,000
Payroll                                        54,000                    32,000
Payroll taxes                                     676                     1,680
Interest                                        5,274                         -
Transfer fees                                       -                       700

                                       $       59,950             $      84,380


Note 6 - Notes Payable to Related Party

The Company had the following  notes payable at September 30, 1996, and December
31, 1995:
                                                September 30,      December 31,
                                                        1996               1995
8% note, payable to former director, due on demand,
   unsecured (Note 7)                          $      37,275      $      62,675

8% note, payable to a related party, due on
   demand, unsecured (Note 7)                              -              5,000
                                               $      37,275      $      67,675

                                                                     

<PAGE>



                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 7 - Related Party Transactions

         The Company entered into three significant transactions with the Parent
and an affiliated group for the acquisition of intellectual  rights,  technology
and distribution agreements (Note 4).

         The Company has a payable to the Parent of $167,450  and $270,592 as of
September  30,  1996 and  December  31,  1995.  The  payable is related to costs
incurred by the Parent on the Company's  behalf for research and  development of
the PGE-1 product.

        The Company has notes  payable to related  parties as of  September  30,
1996 and December 31, 1995 (Note 6). The amount of accrued  interest  associated
with the notes  payable at  September  30, 1996 and December 31, 1995 was $5,674
and $8,097, respectively.

        On  March  1,  1994 , the  Company  entered  into an  agreement  with an
individual  (Landlord)  to rent office space located in Las Vegas,  Nevada.  The
agreement was for a two-year  period  ending  February 29, 1996. In exchange for
the right to occupy the space,  the Company issued 12,000 shares of common stock
(3,000 after  considering the effect of the four-for-one  reverse split) for the
first year of the lease.  The Company  recorded the transaction at $24,000 or $2
per share, which represents the fair value of the rent received. On December 29,
1995,  the Company paid the Landlord  $24,000 cash for rent for the second year.
Included in prepaid expenses is $4,000 as of December 31, 1995.

        During November 1995, the Company entered into a two-year agreement with
a consultant  to provide an array of business  services to enhance the Company's
asset base and further the  development  of the  Company's  business  plan.  The
contracted  services  include  public/investor  relations,  marketing  and sales
plans, identifying strategic partnership  arrangements,  and other opportunities
that would  enhance the market value and  viability of the Company.  In December
1995, the Company  issued the  consultant  350,000 shares of its common stock in
consideration  of the  services to be provided  for the two year  duration.  The
Company has valued the transaction at $1.3125 per share,  which represents fifty
percent of the market  value at the date the  agreement  was entered  into.  The
amount has been  capitalized  and is included  as a prepaid as of  December  31,
1995.


                                                                          
<PAGE>



                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 7 - Related Party Transactions (Continued)

         In July,  1996, the Company  entered suit in Nevada and Florida seeking
to void the  agreement  for  non-performance,  and a return of the shares issued
thereunder. The suit is currently pending in both jurisdictions.

         While the Company  believes its position will eventually be upheld,  it
has written off the remaining  amount of $421,094,  reflected a prepaid expense,
for the consultant future services.


         The Company  compensated a member of the Company's  scientific advisory
board with  10,000  shares of stock in exchange  for  research  and  development
conducted by the individual.  The Company placed a two-year selling  restriction
on the stock given to the individual.  At the conclusion of the two-year period,
the restriction may be lifted and the individual may sell the stock.

Note 8 - Income Taxes

         The Company has federal net operating loss  carryforwards for financial
statement purposes of approximately  $1,600,000 at December 31, 1995, which will
be used to offset future earnings of the Company.  The loss carryforwards expire
from 2002 to 2011 if not used.  The  Company  has not  recorded  any tax benefit
related to the net  operating  loss  carryforwards,  as the  ultimate use of the
carryforwards is uncertain as of September 30, 1996.


Note 9 - Agreements

         In conjunction  with the agreements  entered into by the Parent and the
Company on November 16, 1995, (Note 4), the Parent  transferred all distribution
agreements to the Company  related to the PGE-1  product.  Below is a summary of
the agreements.

         The  Parent and  Aerobic  Life  Industries  (Aerobic)  entered  into an
agreement on December 16, 1994,  whereas the Parent granted Aerobic the sole and
exclusive  right to market,  distribute  and sell the PGE-1  product  within the
Country of Mexico.  The term of the  agreement is for a initial five year period
and  automatically  renews at the  expiration of the initial  term.  The minimum
monthly quota for the term of the agreement is 25,000 units. As of September 30,
1996, Aerobic has not purchased any units of the product.


                                                                     
<PAGE>



                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 9 - Agreements (Continued)

         The Parent and Sae Han Pharmaceutical  Company, Ltd., (Sae Han) entered
into an  agreement  on January 9, 1995,  whereas the Parent  granted Sae Han the
exclusive  right to market,  distribute  and sell the PGE-1  product  within the
territory of North and South Korea.  The term of the  agreement  shall remain in
effect for a period of five years. The minimum monthly quota for the term of the
agreement is 15,000 units.  During the nine months ended September 30, 1996, Sae
Han  accepted  delivery  of the  product  to perform  clinical  trials to obtain
marketing authority.

         The Parent and Pharma  Maehle  (Pharma)  entered  into an  agreement on
November 3, 1995, whereas the Parent granted Pharma the right to manufacture the
PGE-1 product  within the territory of Western and Eastern  Europe.  The term of
the agreement shall remain in effect for the life of the patent, which is twenty
years.

         The Parent and Commercial Science,  Inc. (CSI), entered into a sale and
distribution  agreement,  which was subsequently amended to an agreement between
the Company and CSI effective  November 30, 1995, whereby the Company grants CSI
the authority to identify and qualify prospective distributors and manufacturers
on a world-wide  basis to market the Company's  PGE-1 product on a non-exclusive
basis. Should the Company accept a distribution and/or  manufacturing  agreement
through  the  efforts of CSI,  the  Company  shall pay CSI a royalty  based upon
sales.  The term of this agreement  shall remain in effect for the entire twenty
year life of the patent.

         The above agreements require the distributor,  at their cost, to obtain
marketing  authority for their respective  territories.  Marketing authority may
require  regulatory   approval  from  the  governmental   agency  that  monitors
pharmaceutical distribution. To date, only Sae Han has purchased the product for
clinical trials. The Company has no indication from the other contracts when, if
ever, they will be ordering the product. The Company may choose to terminate the
inactive contracts if the distributor  cannot demonstrate  progress in obtaining
marketing  authority  within their  territory.  All the assignments of the above
agreements  were  agreed to  bi-laterally  to  transfer  from the  Parent to the
Company.



                                                                            
<PAGE>



                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 10 - Contingencies

         The Company has been named as a defendant in certain  lawsuits  arising
in the ordinary course of business.  No accrual,  except as discussed below, for
potential  contingent  liabilities  is reflected in the  accompanying  financial
statements.

         The Company  reached a mutual  release and agreement with another party
for which the Company was named as a  defendant.  The dispute was related to the
Distribution  Agreement  entered into by the Company to manufacture,  market and
distribute HIV test kits. The settlement  agreement calls for a $50,000 payment.
The $50,000 payment has been expensed and is included in accrued  expenses as of
December 31, 1995.  The $50,000  payment was made in full by the Company  during
the nine months ended September 30, 1996.




Note 11 - Uncertainty - Going Concern

         The  Company's  continued  existence is  dependent  upon its ability to
resolve its  liquidity  problems,  principally  by obtaining  additional  equity
capital and through the sale of the PGE-1  product,  while  pursuing  regulatory
approval  for the sale of the product.  The Company must  continue to operate on
limited cash flows.  The Company has  experienced a net loss for the nine months
ended September 30, 1996 of $1,358,273.



                                                                          
                      

<PAGE>



                            HARVARD SCIENTIFIC CORP.
                          (A DEVELOPMENT STAGE COMPANY)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note  12 - Issuance of Common Stock

         During 1995, the Company completed the sale of 200,000 shares of common
stock  at $5.00  per  share.  The net  proceeds  of the  sale,  after  deducting
applicable issuance costs and expenses,  was $831,300. The proceeds were used to
fund existing operations of the Company.

         During the nine months ended  September 30, 1996,  the Company  entered
into to three one-year agreements for legal services to the Company. The Company
issued  220,000  shares of its  restricted  common stock earned in equal monthly
installments  over the 12 month period ending  between March and May,  1997. The
Company  valued the  services at $21,666 per month and the  recipiants  accepted
their shares as compensation.  The unamortized  balance as of September 30, 1996
is $138,232 and is reflected as a prepaid.

Note 13 - Notes Payable - Convertible to Stock

         On June 9, 1996,  the Company issued  $500,000 of 7% convertible  notes
due on December 7, 1996. The notes are convertible  into shares of the Company's
common  stock at a  conversion  price of 50% of the  market  price  pursuant  to
registration under a non-United States resident  subscription  agreement through
Regulation S promulgated under the Securities Act of 1933, as amended. The notes
are  redeemable  at the  holder's  option 41 days after the  closing  date until
maturity. The Company has the right to force the redemption of the notes 60 days
from the closing date. The proceeds were used to fund existing operations of the
Company.

         As of September 30, 1996,  notes totalling  $250,000 had been converted
into 310,254 shares of common stock of the Company.




                                                                      
<PAGE>



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

Results of Operations.
         The Company's  activities for the nine months ended  September 30, 1996
consisted  primarily  of raising  working  capital,  solidifying  organizational
personnel,   furthering  the  commercialization  of  its  product  and  pursuing
territorial  corporate  alliances  to  assist  in  the  regulatory  process  and
distribute our product through established  distribution channels.  Revenues are
derived solely from the sales of its erectile  disfunction product to a licensee
for use in clinical trials to obtain marketing approval in their territory.

         For the three month period ended Sept. 30, 1996 compared to the three 
month period
         ended Sept. 30, 1995:
         Gross Revenues from the erectile dysfunction treatment were $ 100,000 
for the three
month period  ended Sept.  30,  1996,  compared  with $ 0 revenues for the three
months ended  September  30, 1995.  Revenues  were derived  solely from sales of
clinical trial samples of our product.


         Little can be ascertained  from comparison of operations  between these
three  month  periods.   Third  quarter  operations  in  1995  were  limited  to
adminstrative  activities,  with  expenditures  totaling $ 171,169  during  this
quarter.  But  the  Company  pushed  on  with  little  cash,  and  research  and
development  activities  continued with suppliers  performing with the knowledge
that payment for services would be deferred.

         Gross Profits  (Losses) are comprised of Net Sales less Direct Costs of
products, packaging, and services. The Cost of Sales of the erectile dysfunction
product  for the three month  period  ended  Sept.  30, 1996 was $ 77,244  which
provided a gross profit of $ 22,756.
 The Cost of Sales was high due to the  relatively  small  amount of the product
produced.  No long term inference  should be drawn between the  relationship  of
sales and the cost of sales.

         The General  and  Administrative  expenses at the Company  headquarters
include the salaries of corporate officers and office staff;  accounting,  legal
and other  professional  expenses;  and rent and occupancy  costs.  Research and
Development  expenses  consist  primarily of clinical  testing costs and include
expenses  associated  with the  production  of clinical  materials  and clinical
investigators.  General and Administrative expenses were $ 602,262 for the three
month period ended Sept. 30, 1996, an increase of $ 431,093 over the three month
period ended Sept.,  1995. These costs increased  substantially due to personnel
expansion, operational and administrative activities and the decision to expense
the costs of consultant services contracted for in the amount of $ 306,250.


                  For the nine month period ended Sept. 30, 1996 compared to the
 nine month
period ended Sept. 30, 1995:
         Gross revenues were $ 181,000 for the nine month period ended Sept. 30,
1996  compared to $ 0 in 1995.  Revenues  were derived  solely from the sales of
clinical  trial  samples of our  product.  Cost of sales  during the nine months
ended Sept.  30, 1996 were $ 216,870.  Cost of sales was  unusually  high due to
problems incurred in first time production runs and those associated

                                    

<PAGE>



with producing  relatively  small amounts of the product.  The Company  believes
that it has  resolved  its  start-up  problems,  but the  higher  cost of  small
production  runs may continue in the future.  No long term  inference  should be
drawn about the relationship of sales and cost of sales as presented.

         General and Administrative expenses for  the nine months ended Sept. 
30, 1996 were
  $ 1,214,176 compared to $ 308,437 during the prior year. This increase is due
 primarily to
personnel expansion, operational and administrative activities, and the decision
to expense the costs of consultant  services  contracted  for in the amount of $
421,094.

         Net  loss  for  the  nine  month  period  ended  Sept.   30,  1996  was
($1,358,273),  principally  as a result of  normal  general  and  administrative
expenses.  The net loss for the nine  month  period  ended  Sept.  30,  1995 was
($337,946).  During this  period,  the Company  had limited  operations  and its
primary  objective  was to raise  capital  and,  therefore,  the periods are not
readily comparable.

         Net loss per common  share was ($ 0.15) for the nine month period ended
Sept.  30,  1996 and ($0.18)  for the nine month  period of the prior year.  The
weighted  average shares of Common Stock  outstanding  and net income per common
share have been adjusted to reflect the issuance of Common Stock of the Company,
to date.

         Income  taxes for Federal  purposes  were not  recorded  due to the net
operating loss in accordance  with Statement of Financial  Accounting  Standards
No. 109  "Accounting  for Income  Taxes." The  statement  requires the use of an
asset and liability  approach for financial  reporting for income taxes.  Income
taxes are  recognized  when their  realization is assured.  Accordingly,  future
income tax benefits  resulting  from Net Operating  Losses  incurred to date are
recognized as taxable income becomes available to absorb them.

         For the fiscal year ended  December  31,  1995,  the  Company  incurred
losses  of  aproximately  $  1,200,000  for  both  financial  statement  and tax
purposes.  For the nine month period ended Sept.  30, 1996 the Company has a net
operating loss for tax purposes of approximately  $1,350,000.  The net operating
loss  carryforward  may be used to reduce  Federal income through the year 2010.
The carryforward amounts may be subject to audit and adjustment.

         The company  believes that its Net Loss for the nine month period ended
Sept.  30, 1996, is consistent  with the initial  development of the Company and
it's  activities  to  further  the   commercialization   of  the  male  erectile
dysfunction product.

         The Company does not believe that there are indications  that inflation
would have a material effect on operations.

Liquidity and Capital Resources.

         At Sept. 30, 1996, the Company had cash and short term investments on 
hand of
     $ 96,231, down substantially from $ 799,466 at December 31, 1995. The
decrease is due
primarily to the cash used in operating activities of the Company.


                                                               

<PAGE>



         Accounts  receivable  increased  to $  56,647  at Sept 30,  1996.  This
increase was due primarily to increased  sales of samples to be used in clinical
trials.

         Expenditures  were  significant  and  primarily  as a result  of making
payments ($ 72,331) on accounts  payable and expanding  the product  development
and  administrative  personnel and  activities  during the period.  Cash flow is
anticipated  to increase as a result of expanding  the product  development  and
administrative personnel and activities in the coming periods.

         The Company  received  $500,000 debt proceeds in June,  1996.  The debt
carries a 7% interest rate and conversion rights to common stock at noteholders'
option.  To date, $ 250,000 has been  converted  into  310,256  shares of common
stock.

         During the current nine month period ended Sept.  30, 1996, the Company
paid  back $ 30,400  of the  loans  payable  to  certain  shareholders  and,  no
additional debt was incurred to the  stockholders in this period.  The remaining
balance is expected to be paid during the next twelve months.

         Since its inception,  the Company has primarily financed its operations
through the sale of common stock. The Company expects to incur substantial costs
in the future to continue the development and commercialization of its treatment
for male erectile dysfunction.  The Company, currently, does not have sufficient
cash on hand  to  meet  anticipated  future  expenditures  before  revenues  are
sufficient  to  maintain  operations.  The Company  expects to issue  additional
equity or debt securities in the future, as well as pursue other capital funding
sources generated through a collaborative  partnership within the pharmaceutical
industry.  At this time,  there can be no  assurance  that any  capital  will be
available  through  equity,  debt, or corporate  alliance  arrangements  that is
either sufficient or under terms acceptable to the Company.


PART II - OTHER INFORMATION


Item 1. Legal Proceedings

                  NONE.




Item 2. Changes in Securities

                  NONE.




                                                                      

<PAGE>




Item 3. Defaults Upon Senior Securities

                  NONE.




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

                  NONE.



Item 5. Other Information.

                  NONE.



Item 6. Exhibits and Reports on Form 8-K

                  Not Applicable.

                                                        SIGNATURES



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


Date:      November 11, 1996
                                     By:/s/ Neal Armstrong
                      President and Chief Financial Officer



                                     By:/s/ Jackie R. See
                      Chairman and duly authorized officer