SCHICK TECHNOLOGIES INC, 424B1, 1997-07-01

SCHICK TECHNOLOGIES INC
424B1, 1997-07-01
X-RAY APPARATUS & TUBES & RELATED IRRADIATION APPARATUS

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<PAGE>

PROSPECTUS

1,750,000 SHARES

[LOGO]

SCHICK TECHNOLOGIES, INC.
COMMON STOCK

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

All of the shares (the 'Shares') of Common Stock offered hereby (the
'Offering') are being sold by Schick Technologies, Inc. (the 'Company'). Prior
to the Offering, there has been no public market for the Common Stock. See
'Underwriting' for a list of the factors to be considered in determining the
initial public offering price. The Company's Common Stock has been approved for
listing, subject to final notification, on the Nasdaq National Market under the
symbol 'SCHK.'

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

THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE 'RISK FACTORS' BEGINNING ON PAGE 7.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
PER SHARE.... $18.50 $1.295 $17.205
TOTAL(3)..... $32,375,000 $2,266,250 $30,108,750
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the 'Securities Act'). See 'Underwriting.'

(2) Before deducting expenses of the Offering payable by the Company, estimated
at $750,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
262,500 additional shares of Common Stock on the same terms and conditions

set forth above, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $37,231,250, $2,606,188 and
$34,625,062, respectively. See 'Underwriting.'

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

The shares of Common Stock offered by this Prospectus are offered by the
Underwriters, subject to prior sale, to withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of certificates
representing the shares of Common Stock will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about July 7, 1997.

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

LEHMAN BROTHERS

J.P. MORGAN & CO.

PACIFIC GROWTH EQUITIES, INC.

July 1, 1997

<PAGE>
[INSIDE FRONT COVER]
[COVER 2]

[LOGO]

[Graphics depicting the principal components of the CDR(Trademark)
system and showing the CDR(Trademark) system in use in a dentist's
office.]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING THE
PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON STOCK
OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE TRANSACTIONS, SEE
'UNDERWRITING.'

IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934. SEE
'UNDERWRITING.'

<PAGE>
[INSIDE FRONT COVER]
[COVER 3]

[Graphics depicting the CDR(Trademark) System and CDR(Trademark)
intra-oral sensors.]

[Captions: Sensors by Schick. Intraoral CDR(Trademark) sensors correspond
to three standard sizes of conventional X-ray film to suit a variety of needs.
Computed Dental Radiography (CDR(Trademark)) System. Introduced by Schick
Technologies in March 1994, the CDR(Trademark) System instantly produces
full-sized, high resolution dental X-rays on a color computer monitor without
film or chemical development and with up to 90% less radiation than conventional
X-rays.]

<PAGE>
[INSIDE FRONT COVER]
[COVER 4]

[Graphics depicting the CDR(Trademark) System and CDR(Trademark)
intra-oral sensors.]

[Captions: The AccuDEXA(Trademark) Bone Mineral Density Measurement
System.* The low-cost, easy-to-use and highly-precise diagnostic tool that
instantly measures bone mineral density. *(Scheduled for market introduction in
the second half of 1997, pending FDA 510(k) pre-market clearance. There can be
no assurance that such clearance will be obtained.) CDRCam(Trademark). The
innovative intraoral camera that fully integrates with the CDR(Trademark)
system.]

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information and financial statements,
including the accompanying notes, appearing elsewhere in this Prospectus. Unless
otherwise indicated or required by the context, references to the 'Company' mean
Schick Technologies, Inc. and its predecessors and subsidiary and references to
a fiscal year mean the fiscal year ended March 31 of the same calendar year.
Unless otherwise indicated, all information in this Prospectus (i) assumes no
exercise of the over-allotment option granted to the Underwriters and (ii) gives
effect to the formation of a holding company, the change of the state of
incorporation of the Company, the adoption of the Company's Amended and Restated
Certificate of Incorporation (the 'Certificate of Incorporation') and By-Laws
(the 'By-Laws'), and the 2.8 for 1 stock exchange effected on June 4, 1997, all
as described under 'The Company.' For a discussion of considerations relevant to
an investment in the common stock, $.01 par value per share (the 'Common
Stock'), see 'Risk Factors.'

THE COMPANY

Schick Technologies, Inc. designs, develops and manufactures innovative
digital radiographic imaging systems and devices for the dental and medical
markets. The Company's products, which are based on proprietary digital imaging
technologies, create instant high resolution radiographs with reduced levels of
radiation. In the field of dentistry, the Company has developed, and currently
manufactures and markets, the leading intra-oral digital radiography system. The
Company has also developed an inexpensive and easy to operate bone mineral
density ('BMD') measurement device to assist in the diagnosis of osteoporosis.
This device is scheduled for introduction in the second half of 1997, pending
marketing clearance by the United States Food and Drug Administration (the
'FDA'), and will be sold for use in primary care physicians' offices. In
addition, the Company is developing large-area radiographic imaging products for
digital mammography, additional medical applications and selected industrial
markets using its proprietary technology.

The Company's CDR(Trademark) computed dental radiography imaging system was
introduced in March 1994 and has become the leading product in its field. As of
March 31, 1997, the Company had sold over 3,200 CDR(Trademark) systems for use
in dental offices, hospitals and universities. The CDR System, which represents
approximately 98% of the Company's total revenues, is the subject matter of
pending litigation. See 'Risk Factors--Litigation.' The CDR(Trademark) system
produces instant, full size, high resolution dental x-ray images on a color
computer monitor, without film or the need for chemical development, and with a
radiation dose that is approximately 10% of that required for conventional x-ray
film. The CDR(Trademark) system uses an intra-oral sensor to capture the x-ray
image. Once captured, the x-ray image is transmitted to a computer where it is
permanently stored as part of the patient's x-ray records and can be analyzed
using diagnostic software developed by the Company. The Company's
CDRCam(Trademark), an intra-oral camera which fully integrates with the
CDR(Trademark) system, was introduced in early 1997. The Company believes that
the potential market for dental digital radiography products exceeds $4 billion.

The Company believes that its accuDEXA(Trademark) device measures BMD more
quickly, accurately and easily than any comparable BMD measurement device
currently on the market, with a minimal radiation dosage. The device is a highly
precise point-of-treatment diagnostic tool for use in the primary care
physician's office as part of a patient's regular physical examination. In
connection with the development of accuDEXA(Trademark), the Company entered into
an agreement with Merck & Co., Inc. ('Merck') pursuant to which Merck agreed to
provide the Company with financing and to develop certain clinical protocols.
See 'Business--Merck Agreement.' The Company filed its 510(k) application with
the FDA in May 1997 and, pending FDA marketing clearance, the Company plans to
introduce this product in the second half of 1997. The Company believes that the
potential market for the accuDEXA(Trademark) exceeds $2 billion in the United
States.

The Company is developing a digital mammography sensor which it believes
will offer high quality diagnostic capability at a substantially lower cost than
other available devices. The Company intends to produce an 8 x 8 cm 'spot'
mammography sensor prototype by the end of 1997, and, subsequently, a 24 x 30 cm
'full field' sensor. The Company is also developing digital imaging products for
additional medical and industrial applications.

<PAGE>

The Company's CDR(Trademark) dental products are sold in the United States,
via its direct sales force, and abroad, via independent regional distributors.
The Company has also entered into an original equipment manufacturer ('OEM')
sales agreement with Henry Schein Inc. ('HSI'), pursuant to which HSI will sell
the CDR(Trademark) system under its own trade name. The Company intends to sell
accuDEXA(Trademark) through a direct sales force and established independent
distributors and manufacturers of medical and radiological equipment. The
Company has entered into an OEM sales agreement with Norland Medical Systems,
Inc. ('Norland'), by which Norland will sell accuDEXA(Trademark) under its own
trade name. The Company intends to sell its mammography devices through
established manufacturers in the mammography market. See 'Business--Sales and
Marketing.'

The Company's products are based on its proprietary enhanced charged
coupled device ('CCD') and active pixel sensor ('APS') imaging technologies. The
Company's CDR(Trademark) system is made using an enhanced, low-cost, large-area,
high resolution CCD device. APS allows the fabrication of large-area imaging
devices with high resolution at a fraction of the cost of traditional
technologies. APS technology was originally developed by the Jet Propulsion
Laboratory at the California Institute of Technology ('Cal Tech'), and is
licensed to the Company for a broad range of health care applications. See
'Business--Patents, Trade Secrets and Proprietary Rights.'

<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered............ 1,750,000 shares

Common Stock to be outstanding
after the Offering............ 9,707,231 shares(1)

Use of proceeds................. The Company intends to use the net proceeds
from the Offering: (i) to repay the principal
of the Merck Loan (as defined in 'Use of
Proceeds') in the amount of $1,512,833 and
accrued interest thereon which, at March 31,
1997, totaled $101,654; (ii) to expand its
research and development capabilities in the
approximate amount of $5 million; and (iii) to
expand its sales and marketing effort in the
approximate amount of $5 million, with the
remaining balance of net proceeds to be used
for working capital and general corporate
purposes. Pending such uses, the Company
intends to invest the net proceeds in
short-term, investment grade, interest bearing
securities. See 'Use of Proceeds.'

Nasdaq National Market symbol... SCHK
</TABLE>

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(1) Excludes (i) 470,400 shares reserved for issuance upon the exercise of
options under the Company's 1996 Employee Stock Option Plan (the '1996
Employee Stock Option Plan'), under which options covering 74,953 shares
with a weighted average exercise price of $7.14 per share are outstanding,
(ii) 35,000 shares reserved for issuance upon the exercise of options under
the Company's 1997 Stock Option Plan for Non-Employee Directors (the
'Directors Stock Option Plan,' and together with the 1996 Employee Stock
Option Plan, the 'Option Plans'), (iii) 526,470 shares reserved for issuance
upon the exercise of warrants issued by the Company in 1996 (the 'Warrants')
with a weighted average exercise price of $8.31 per share and (iv) 56,000
shares reserved for issuance upon the exercise of options which were granted
prior to the implementation of the 1996 Employee Stock Option Plan at an
exercise price of $1.79 per share. See 'Management--1996 Employee Stock
Option Plan, --Directors Stock Option Plan' and 'Description of Capital
Stock--Warrants.'

<PAGE>

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------------------------
1993 1994 1995 1996 1997
----------- --------- ---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue, net...................... $ -- $ 29 $ 2,726 $ 6,804 $ 16,101
Gross profit...................... -- 15 1,225 3,461 8,080
Operating expenses:
Selling and marketing........... -- 158 517 1,620 4,961
General and administrative...... 166 121 560 1,388 2,088
Research and development........ 247 393 150 458 1,418
----------- --------- ---------- ---------- -----------
Total operating expenses..... 413 672 1,227 3,466 8,467
----------- --------- ---------- ---------- -----------
Total other income (expense)...... 2 1 (22) (108) 35
----------- --------- ---------- ---------- -----------

Net loss.......................... $ (411) $ (656) $ (24) $ (113) $ (352)
----------- --------- ---------- ---------- -----------
----------- --------- ---------- ---------- -----------
Net loss per common share(1)(2)... $ (0.08) $ (0.10) $ -- $ (0.02) $ (0.04)
----------- --------- ---------- ---------- -----------
----------- --------- ---------- ---------- -----------
Weighted average number of common
shares outstanding(1)(2)........ 4,960,069 6,438,380 7,119,083 7,287,670 8,217,180
----------- --------- ---------- ---------- -----------
----------- --------- ---------- ---------- -----------
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1997
---------------------------
ACTUAL AS ADJUSTED(3)
--------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents... $ 1,710 $ 29,490
Working capital............. 5,518 33,262
Total assets................ 11,060 38,804
Total liabilities........... 4,973 3,359
Stockholders' equity........ 6,087 35,446
</TABLE>

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

(1) For information concerning the computation of net loss per share and
weighted average number of common shares outstanding, see Note 2 to the
financial statements.

(2) Reflects the restructuring and recapitalization effected on June 4, 1997,
described in Note 15 to the financial statements.

(3) As adjusted to give effect to (i) the sale of the Shares, net of expenses,
and (ii) the repayment of the Merck Loan in the principal amount of
$1,512,833 and accrued but unpaid interest thereon. See 'Use of Proceeds.'

<PAGE>

RISK FACTORS

An investment in the Shares involves a high degree of risk. Prospective
investors should consider carefully the following factors, in addition to the
other information included in this Prospectus, before purchasing any of the
Shares.

LIMITED OPERATING HISTORY; LOSSES FROM OPERATIONS

The Company began operations in 1992 and has a limited operating history.
The Company has sustained losses since its inception and had an accumulated
deficit at March 31, 1997 of $1.6 million. The Company may be subject to many
risks common to companies with limited operating histories, including reliance
on key personnel, a competitive environment and difficulty addressing
unanticipated problems, delays and expenses. There can be no assurance that the
Company will become profitable. Since its formation, the Company's operations
have required substantial capital.

DEPENDENCE ON CDR(TRADEMARK)

The Company's revenues are primarily generated from sales of its
CDR(Trademark) system and, to a lesser extent, the CDRCam(Trademark). There can
be no assurance that the CDR(Trademark) system or CDRCam(Trademark) will not be
rendered obsolete or inferior as a result of technological change, changing
customer needs or new product introductions, each of which would have a material
adverse effect on the Company. There can be no assurance that the Company's
competitors will not succeed in developing or marketing technologies and
products that are more commercially attractive than the CDR(Trademark) system or
CDRCam(Trademark). The Company's success will depend in part on its ability to
improve and enhance the CDR(Trademark) system and CDRCam(Trademark) in a timely
manner. While the Company is actively engaged in research and development to
improve and enhance the CDR(Trademark) system and CDRCam(Trademark), there can
be no assurance that the Company will be successful. The failure to enhance the
CDR(Trademark) system or CDRCam(Trademark) in a timely manner could have a
material adverse effect on the Company. See 'Business--Products; --Sales and
Marketing; --Overview of Company Technology; --Competition.'

DEPENDENCE ON DEVELOPING AND MARKETING NEW PRODUCTS AND ENHANCEMENTS TO EXISTING
PRODUCTS

The Company is currently developing new products for the dental and medical
markets. The Company has filed a 510(k) application with the FDA, seeking
approval for general use and marketing of accuDEXA(Trademark). Additionally, the
Company expects to file 510(k) applications with the FDA in connection with the
digital mammography sensors currently under development by the Company and other
future products. There can be no assurance that the Company will obtain
pre-market clearance for accuDEXA(Trademark), digital mammography sensors or any
other future products, or that in order to obtain 510(k) clearance, the Company
will not be required to submit additional data or meet additional FDA
requirements that may substantially delay the 510(k) process and result in
substantial additional expense. Moreover, such pre-marketing clearance, if
obtained, may be subject to conditions on the marketing or manufacturing of
accuDEXA(Trademark) which could impede the Company's ability to manufacture
and/or market the product. In addition, while the Company intends to distribute
accuDEXA(Trademark) pursuant to an OEM sales agreement with Norland and through
a direct sales force and other established independent distributors and
manufacturers of medical and radiological equipment, there can be no assurance
that the Company will be able to successfully develop any such distribution
channel. Furthermore, there can be no assurance that accuDEXA(Trademark) will be
accepted by physicians as an attractive alternative to BMD measurement devices
currently available. While the Company is actively engaged in research and
development to develop accuDEXA(Trademark) and other new products, there can be
no assurance that the Company will be successful in such endeavors. There can be
no assurance that accuDEXA(Trademark) or any other products to be developed by
the Company will be approved by or receive marketing clearance from applicable
governmental authorities. If the Company is unable to develop, obtain regulatory
approval for and market new products and enhancements to existing products, it
will have a material adverse effect on the Company. See 'Business--
Products; --Sales and Marketing; --Overview of Company
Technology; --Competition.'

RAPID AND SIGNIFICANT TECHNOLOGICAL CHANGE

The market for the Company's products is characterized by rapid and
significant technological change, evolving industry standards and new product
introductions. The Company's products require significant planning, design,
development and testing which require significant capital commitments and
investment by the Company. There can be no assurance that the Company's products
or proprietary technologies will not become uncompetitive or obsolete as a
result of technological change, evolving industry standards or new product

<PAGE>

introductions or that the Company will be able to generate any economic return
on its investment in product development. If the Company's products or
technologies become uncompetitive or obsolete, it will have a material adverse
effect on the Company.

RELIANCE ON PATENTS AND PROPRIETARY TECHNOLOGY; RISK OF PATENT INFRINGEMENT

The Company currently has an issued United States patent for an 'Intra-Oral

Sensor For Computer Aided Radiography,' which expires on October 16, 2012, and
an allowed United States patent application for a 'Large Area Image Detector'
which will expire on November 20, 2016. The Company also has five additional
patent applications currently pending before the United States Patent and
Trademark Office (the 'PTO').

The Company is the licensee in certain fields of biomedical radiology of
certain patents, patent applications and other know-how related to APS
technology (collectively, the 'APS Technology'), which was developed by Cal
Tech. The Company has been advised by the licensor of the APS Technology that
the Company's rights to such technology are subject to government rights to use,
noncommercial educational rights to use by Cal Tech and the right of a third
party to obtain a nonexclusive license from Cal Tech with respect to such
technology. The Company believes that, as of the date of this Prospectus, except
for such third party's exercise of its right to obtain a nonexclusive license to
use APS Technology in a field other than biomedical radiology, none of the
foregoing parties have given notice of their exercise of any of their respective
rights to the APS Technology. There can be no assurance that this will continue
to be the case, and any such exercise could have a material adverse effect on
the Company.

There can be no assurance that any of the Company's patents, any of the
patents of which the Company is a licensee or any patents which may issue to the
Company or which the Company may license in the future, will provide the Company
with a competitive advantage or afford the Company protection against
infringement by others, or that the patents will not be successfully challenged
or circumvented by competitors of the Company.

The Company is also the owner of certain trade secrets, which it protects
by, among other things, entering into non-disclosure, confidentiality,
non-solicitation and non-competition agreements. However, there can be no
assurance that the duties imposed by these agreements, such as the duty to
maintain confidentiality and the duty not to compete, will not be breached, or
that such breaches will not have a material adverse effect on the Company. See
'Business--Patents, Trade Secrets and Proprietary Rights.'

There also can be no assurance that the technology practiced by the Company
will not infringe upon the patents of others. The Company's CDR(Trademark)
system is currently the subject of litigation regarding the patent rights of
others. See '--Litigation' and 'Business--Litigation.' In the event that any
such infringement claim is successful, there can be no assurance that the
Company would be able to negotiate with the patent holder for a license, in
which case the Company could be prevented from practicing the subject matter
claimed by such patent. In addition, there can be no assurance that the Company
would be able to redesign its products to avoid infringement. The inability of
the Company to practice the subject matter of patents claimed by others or to
redesign its products to avoid infringement could have a material adverse effect
on the Company.

LITIGATION

The Company is a named defendant in two lawsuits instituted by Trophy
Radiologie, S.A. ('Trophy S.A.'). One lawsuit was instituted in France and the
other in the United States.

The French lawsuit was filed in November 1995, in the tribunal de Grande
Instance de Bobigny, the French patent court, and originally alleged that the
Company's CDR(Trademark) system infringes French Patent No. 2,547,495, European
Patent No. 129,451 and French Certificate of Addition No. 2,578,737. These
patents, all of which are related, are directed to a CCD-based intra-oral
sensor. Since filing its lawsuit, Trophy S.A. has withdrawn its allegation of
infringement with respect to the Certificate of Addition. Trophy S.A. is seeking
a permanent injunction and unspecified damages, including damages for its
purported lost profits. The Company believes that the lawsuit is without merit,
and is vigorously defending it. The Company is represented by the French law
firm of Pierre Cousin and French patent counsel Cabinet beau de lomenie.

The lawsuit in the United States was filed in March 1996 by Trophy S.A.,
Trophy Radiology, Inc., a United States subsidiary of Trophy S.A. ('Trophy
Inc.') and the named inventor on the patent in suit, Francis Mouyen, a French
citizen. The suit was brought in the United States District Court for the
Eastern District of New York, and alleges that the Company's CDR(Trademark)
system infringes United States Patent No. 4,593,400 (the ' '400 patent'), which
is related to the patents in the French lawsuit. Trophy S.A., Trophy Inc. and
Mouyen are seeking a permanent injunction and unspecified damages, including
damages for purported lost profits, enhanced damages

<PAGE>

for the Company's purported willful infringement and an award of attorney fees.
The Company believes that the lawsuit is without merit, and is vigorously
defending it. The Company is represented by Fitzpatrick, Cella, Harper & Scinto,
which has issued a formal opinion that the CDR(Trademark) system does not
infringe the '400 patent.

In addition, the Company has counter-sued Trophy S.A. and Trophy Inc. for
infringement of United States Patent No. 4,160,997, a recently expired patent
which was exclusively licensed to the Company by its inventor, Dr. Robert
Schwartz, and for false advertising and unfair competition. The Company believes
that its counter-suits are meritorious, and is vigorously pursuing them.

The Company has also been sued by Radworks Corp. ('Radworks') and the Board
of Regents of the University of Texas (the 'University of Texas'). That suit,
filed in December 1996 in the United States District Court for the Western
District of Texas, alleges that the Company's CDR(Trademark) system infringes
United States Patent No. 5,179,579 (the ' '579 patent'). The '579 patent is
directed to a display system for digital dental radiographs. Radworks and the
University of Texas are seeking a permanent injunction and unspecified damages,
including enhanced damages for the Company's purported willful infringement and
an award of attorney fees. The Company believes that the lawsuit is without
merit, and is vigorously defending it. The Company is represented by the law
firm of Darby & Darby, which has issued a formal opinion that the CDR(Trademark)
system does not infringe the '579 patent, and Soules & Wallace, Texas local
counsel.

There can be no assurance that the Company will be successful in its

defense of any of these actions, or in its counter-suits. If the Company is
unsuccessful in its defense of any of these actions, it could have a material
adverse effect upon the Company. As of March 31, 1997, the subject matter of the
lawsuit, the Company's CDR(Trademark) system, represented approximately 98% of
the Company's total revenues. Moreover, regardless of their outcome, the Company
may be forced to expend significant amounts of money in legal fees in connection
with these lawsuits.

DEPENDENCE ON KEY SUPPLIERS; VOLATILITY OF SEMICONDUCTOR MARKET

Semiconductors are the most significant product components the Company
purchases. Since its inception, the Company has purchased virtually all of its
semiconductors principally from one supplier. The Company has entered into a
'blanket' purchase order with such supplier to purchase a minimum number of
semiconductors over the course of one year. The availability and price of these
components may be subject to change due to interruptions in production, changing
market conditions and other events. There can be no assurance that, if the
Company were to enter into purchase arrangements with other suppliers, such
suppliers would be able to deliver such semiconductors at an acceptable price or
in a timely manner. If the Company were unable to develop reasonably priced
alternative sources in a timely manner, or if the Company encountered delays or
other difficulties in the supply of such products and other materials from third
parties, there could be a material adverse effect on the Company. In past years,
semiconductors have been subject to significant price fluctuations. There can be
no assurance that the Company can mitigate the effect of future price increases
on its results of operations and financial condition. See 'Business--
Manufacturing.'

PRODUCT WARRANTIES

The Company generally warrants each of its products against defects in
materials and workmanship for a period of one year from the date of shipment.
Costs associated with product returns, including servicing and/or repair of
products, during the warranty period, as a percentage of total revenues during
fiscal 1997, were less than 5%. Should the Company experience an increase in
product returns, there could be material adverse effect on the Company by, among
other things, requiring additional expenditures for parts and personnel as well
as damaging the Company's reputation and goodwill.

REGULATORY AND LEGISLATIVE RISKS

The Company must obtain certain approvals by and marketing clearances from
governmental authorities, including the FDA and similar health authorities in
foreign countries, to market and sell its products in those countries. The FDA
regulates the marketing, manufacturing, labeling, packaging, advertising, sale
and distribution of 'medical devices,' as do various foreign authorities in
their respective jurisdictions. The FDA enforces additional regulations
regarding the safety of equipment utilizing x-rays. Various states also impose
similar regulations. The Company's CDR(Trademark) system is currently regulated
by such authorities and certain of the Company's new products, including
accuDEXA(Trademark), will require approval by or marketing clearance from
various governmental authorities, including the FDA.

<PAGE>

The FDA review process typically requires extended proceedings pertaining
to the safety and efficacy of new products. A 510(k) application is required in
order to market a new or modified medical device. If specifically required by
the FDA, a pre-market approval ('PMA') may be necessary. Such proceedings, which
must be completed prior to marketing a new medical device, are potentially
expensive and time consuming. They may delay or hinder a product's timely entry
into the marketplace. Moreover, there can be no assurance that the review or
approval process for these products by the FDA or any other applicable
governmental authorities will occur in a timely fashion, if at all, or that
additional regulations will not be adopted or current regulations amended in
such a manner as will adversely affect the Company. The FDA also regulates the
content of advertising and marketing materials relating to medical devices.
Failure to comply with such regulations may result in a delay in obtaining
approval for the marketing of such products or the withdrawal of such approval
if previously obtained. There can be no assurance that the Company's advertising
and marketing materials regarding its products are and will be in compliance
with such regulations. The Company is also subject to other federal, state and
local laws, regulations and recommendations relating to safe working conditions,
laboratory and manufacturing practices. The extent of government regulation that
might result from any future legislation or administrative action cannot be
accurately predicted. Failure to comply with regulatory requirements could have
a material adverse effect on the Company. International sales of the Company's
products are subject to the regulatory agency product registration requirements
of each country in which the Company's products are sold. The regulatory review
process varies from country to country and may in some cases require the
submission of clinical data. The Company typically relies on its distributors in
foreign countries to obtain the required regulatory approvals. There can be no
assurance, however, that such approvals will be obtained on a timely basis, if
at all, or that the failure to obtain such approval by a distributor will not
have a material adverse effect on the Company. See 'Business--Government
Regulation.' The Company's customers operate in the health care industry, which
is highly regulated. Both existing and future governmental regulations could
adversely impact the Company. Additionally, cost-containment efforts by health
maintenance organizations may adversely affect the potential market for the
Company's devices.

POTENTIAL FOR PRODUCT RECALL AND PRODUCT LIABILITY CLAIMS

Products such as those sold by the Company may be subject to recall for
unforeseen reasons. In addition, certain applications, including projected
applications, of the Company's products entail the risk of product liability
claims. Such risks will exist even with respect to those products that have
received, or in the future may receive, regulatory approval for commercial sale.
These claims may be made by consumers, distributors, wholesalers or others. The
Company maintains insurance coverage related to product liability claims in the
amount of $1 million per occurrence, annual aggregate maximum coverage in the
amount of $2 million, and umbrella coverage in the amount of $10 million. No
assurance can be given that product liability insurance coverage will continue
to be available or, if available, that it can be obtained in sufficient amounts
or at reasonable cost or that it will be sufficient to cover any claims that may
arise. The Company does not maintain any insurance relating to potential recalls

of its products. Costs associated with potential product recalls or product
liability claims could have a material adverse effect on the Company. See
'Business--Insurance.'

DEPENDENCE ON THIRD-PARTY REIMBURSEMENT

Third-party payors, including government health administration authorities,
private health care insurers and other organizations regulate the reimbursement
of fees related to certain diagnostic procedures or medical treatments.
Third-party payors are increasingly challenging the price and cost-effectiveness
of medical products and services. While the Company cannot predict what effect
the policies of government entities and other third-party payors will have on
future sales of the Company's products, there can be no assurance that such
policies would not have a material adverse effect on the Company. See
'Business--Products.'

INTENSE COMPETITION

Competition relating to the Company's current products is intense and
includes various companies, both within and outside of the United States. The
Company anticipates that competition for its future products will also be
intense and include various companies, both within and outside of the United
States. Many of the Company's competitors are large companies with substantially
greater financial, sales and marketing, and technical resources, larger and more
experienced research and development staffs, more extensive physical facilities
and substantially greater experience in obtaining regulatory approvals and in
marketing products than the Company. In addition, there can be no assurance that
the Company's competitors are not currently

<PAGE>

developing, or will not attempt to develop, technologies and products that are
more effective than those being developed by the Company or that would otherwise
render the Company's existing and new technology and products obsolete or
uncompetitive. No assurance can be given that the Company will be able to
compete successfully. The inability of the Company to compete successfully or
the development by the Company's competitors of technology and products that are
more effective than those being developed by the Company would have a material
adverse effect on the Company. See 'Business--Competition.'

DEPENDENCE ON THIRD-PARTY DISTRIBUTORS

The Company markets and distributes a significant portion of its
CDR(Trademark) systems overseas through third-party independent distributors.
From time to time, a limited number of distributors account for a significant
portion of the Company's revenues. In 1996, one distributor, Dental
Computer / Dental Technologies, accounted for 18.0% of the Company's sales. In
general, these distributors may discontinue marketing the Company's products
with little or no notice. Certain of the Company's distributors also may market
products which compete with the Company's products. Additionally, the Company
intends to market its current and future products in the United States and its

future products overseas through independent third-party distributors. The loss
of, or a significant reduction in sales volume through, one or more of the
Company's distributors could have a material adverse effect on the Company. See
'Business--Products;--Sales and Marketing.'

UNCERTAINTIES ASSOCIATED WITH INTERNATIONAL MARKETS

In fiscal 1995, 1996 and 1997, international sales accounted for 27%, 31%,
24%, respectively, of the Company's revenues, and the Company anticipates that
international sales will continue to account for a significant percentage of the
Company's revenues. International revenues are subject to a number of
uncertainties, including the following: agreements may be difficult to enforce
and receivables difficult to collect; foreign customers and distributors may
have longer payment cycles, foreign countries may impose additional withholding
taxes or otherwise tax the Company's foreign income, impose tariffs or adopt
other restrictions on foreign trade; fluctuations in exchange rates may affect
product demand in relation to foreign competitors that may achieve advantageous
pricing based on the comparative strength of the United States dollar; United
States export licenses may be difficult to obtain; and intellectual property
rights in foreign countries may be difficult to enforce. Moreover, many foreign
countries have their own regulatory approval requirements for the sale of the
Company's products. As a result, the Company's introduction of new products into
international markets can be costly and time-consuming, and there can be no
assurance that the Company will be able to obtain the required regulatory
approvals on a timely basis, if at all. There can be no assurance that any of
these factors will not have a material adverse effect on the Company.

DEPENDENCE UPON KEY PERSONNEL

The success of the Company is dependent, in part, upon its ability to hire
and retain management, sales and research personnel who are in high demand and
are often subject to competing employment opportunities. The inability of the
Company to hire or retain key management, sales or research personnel could have
a material adverse effect on the Company. In addition, the development of the
Company's business has been primarily dependent upon the efforts of David B.
Schick, the Company's President and Chief Executive Officer. Although the
Company has expanded the depth of the expertise of its personnel, the loss of
Mr. Schick or turnover in other management positions could have a material
adverse affect on the Company. The Company does not have employment agreements
with any of its employees, including Mr. Schick, and there can be no assurance
that he or any other key employee will continue to be active with the Company.
The Company maintains and is the named insured party under a $1,000,000 life
insurance policy on Mr. Schick. There is no assurance that such insurance can be
maintained or will be adequate to meet the Company's future needs.

RECENT RAPID GROWTH; ABILITY TO MANAGE GROWTH

There can be no assurance that the growth experienced by the Company will
continue or that the Company will be able to achieve the growth contemplated by
its business strategy. Furthermore, there are significant risks, expenses and
difficulties associated with managing the operation and sustaining the
development of an expanding business. The Company's growth has placed, and will
continue to place, significant demands on the Company's financial and other
resources. The Company will be required to continually improve operating,

financial, and other systems, as well as to train, motivate, and manage its
employees. If the Company's management is unable to manage growth effectively or
new employees are unable to achieve appropriate levels of performance, it could

<PAGE>

have a material adverse effect on the Company. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations.'

CONTROL OF THE COMPANY BY CERTAIN STOCKHOLDERS

Upon the completion of the Offering, the executive officers and directors
of the Company will collectively beneficially own 42.8% of the outstanding
shares of Common Stock. Accordingly, they may effectively have the ability to
elect all of the directors of the Company and determine the outcome of all other
matters submitted for the approval of the stockholders. In particular, David B.
Schick and members of his immediate family will beneficially own approximately
28.8% of the outstanding shares of Common Stock and, accordingly, may be able to
exert significant influence over the Company. See 'Principal Stockholders' and
'Description of Capital Stock.'

ABSENCE OF PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common
Stock. Although the Company has applied for listing of the Common Stock on the
Nasdaq National Market, there can be no assurance that an active trading market
will develop or be maintained. The initial public offering price of the Common
Stock will be determined by negotiation between the Company and the
Representatives (as defined herein) and may bear no relationship to the price at
which the Common Stock may trade after completion of the Offering. For factors
to be considered in determining the initial public offering price, see
'Underwriting.' The market prices for securities of medical technology companies
have historically been highly volatile. Future technological innovations or new
commercial products, results of clinical testing, changes in regulation,
litigation and public concerns as to product safety as well as period-to-period
fluctuations in financial performance and fluctuations in securities markets
generally could cause the market price of the Common Stock to fluctuate
substantially. In addition, the stock market prices of many medical technology
companies have experienced substantial fluctuations. Such price fluctuations
have often been unrelated to the operating performance of the affected
companies. These broad market fluctuations may adversely affect the market price
of the Common Stock.

POTENTIALLY SIGNIFICANT FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY

Several factors may significantly affect the Company's revenues, expenses
and results of operations from quarter to quarter, including the timing of new
product introductions by the Company or its competitors, developments regarding
new treatments for osteoporosis, developments in government reimbursement
policies, product mix, the ability to supply products to meet customer demand
and fluctuations in manufacturing costs. In addition, the Company's
CDR(Trademark) products are subject to seasonal variations. Historically, the

Company has experienced higher sales growth rates in its first and third fiscal
quarters than in its second and fourth fiscal quarters. Consequently, quarterly
results of operations can be expected to fluctuate. Such fluctuations in
quarterly results of operation could adversely affect the market price of the
Common Stock. See 'Management's Discussion and Analysis of Financial Condition
and Results of Operations.'

NEED FOR ADDITIONAL FINANCING

The Company may require additional outside financing to expand its core
technology and develop new products, for working capital and for capital
expenditures. There can be no assurance that such financing will be available on
acceptable terms or at all. The inability of the Company to obtain such
financing could have a material adverse effect on the Company. In addition, the
Company may issue additional shares of Common Stock or other securities, whether
through public or private offerings. Such offerings would have a dilutive effect
on the percentage of ownership in the Company of any holder of shares of Common
Stock. See 'Dilution.' In the event the Company is unable to raise necessary
additional financing in the future, it may have to curtail its expansion
activities.

BROAD DISCRETION OVER USE OF PROCEEDS

The Company intends to repay the principal of, and accrued interest on, the
Merck Loan, to expand its research and development capabilities and to expand
its marketing and sales efforts from the proceeds of the Offering. Any remaining
balance of the net proceeds will be applied to general corporate and working
capital purposes. Due to the number and variability of factors that will be
analyzed before the Company determines how to use such net proceeds, the Company
will have broad discretion in allocating a significant portion of the net
proceeds without any notice to or approval of stockholders. Accordingly,
investors will not have the opportunity to evaluate the business, financial and
other relevant information which will be considered by the Company in
determining the application of such net proceeds. Pending their use for specific
business purposes, the net

<PAGE>

proceeds of the Offering will be invested in short-term, investment grade,
interest bearing securities. Such investments may result in the Company
obtaining lower yields on the funds than might be achievable in the securities
markets generally. See 'Use of Proceeds.'

IMMEDIATE AND SUBSTANTIAL DILUTION

Based upon the net tangible book value of the Company at March 31, 1997,
purchasers of Shares will experience immediate and substantial dilution of
$14.85 (80.3%) in net tangible book value per Share. Purchasers of Shares will
experience additional dilution if outstanding options and warrants are
exercised. See 'Dilution.'

LACK OF DIVIDENDS

The Company does not intend to declare or pay cash dividends on the Common
Stock in the foreseeable future. See 'Dividend Policy.'

PROVISIONS WITH POSSIBLE ANTI-TAKEOVER EFFECTS

The Company's Certificate of Incorporation and its By-Laws and certain
sections of the General Corporation Law of the State of Delaware (the 'DGCL')
contain provisions concerning voting, issuance of preferred stock, removal of
officers and directors and other matters which may have the effect of
discouraging, delaying or preventing a change in control of the Company. In
particular, Section 203 of the DGCL prohibits an 'interested stockholder' of a
Delaware corporation from engaging in a business combination with such Delaware
corporation for three years following the date such person became an interested
stockholder, subject to certain exceptions. See 'Description of Capital Stock.'

SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of the Offering, the Company will have outstanding
9,707,231 shares of Common Stock (9,969,731 shares, if the over-allotment option
is exercised in full). In addition, the Company has reserved 1,087,870 shares of
Common Stock for issuance upon the exercise of the Warrants, options granted
under the Option Plans and options granted prior to the implementation of the
Option Plans. The Company intends to register all of the reserved shares under
the Option Plans for resale to the public. Of such 9,707,231 shares, the Shares
will be freely tradeable in the United States without restriction under the
Securities Act, except that shares purchased by an 'affiliate' of the Company,
within the meaning of the rules and regulations adopted under the Securities
Act, may be subject to resale restrictions. The remaining 7,957,231 outstanding
shares of Common Stock and any of the shares issued upon the exercise of the
Warrants or pursuant to the Option Plans or upon the exercise of options granted
prior to the implementation of the Option Plans may not be resold except
pursuant to an effective registration statement or Rule 144 or some other
exemption from registration under the Securities Act. Subject to the
restrictions described below, the one-year holding period under Rule 144 for
7,384,516 of such remaining shares of Common Stock has expired and such shares
are immediately available for resale pursuant to Rule 144. The one-year holding
period under Rule 144 for 438,671, 65,493 and the remaining 68,551 shares will
expire on July 30, 1997, August 29, 1997 and February 18, 1998, respectively.
The Company and each of its executive officers and directors have agreed that,
for a period of 180 days after the date of this Prospectus, they will not sell
or otherwise dispose of any shares of Common Stock without the prior written
consent of Lehman Brothers Inc. In addition, pursuant to the terms of the
By-Laws, no shares of the Company's Common Stock held immediately prior to the
date of this Prospectus may be, directly or indirectly, offered for sale, sold
or otherwise disposed of for a period of 180 days after the date of this
Prospectus without the prior written consent of the Company. The Company has
agreed that no such consent will be given without the prior written consent of
Lehman Brothers Inc. In addition, pursuant to the terms of the Option Plans and
the Warrants, any shares of Common Stock issuable upon the exercise of Options
or Warrants will not be transferable for a period of 180 days after the date of
this Prospectus without the prior written consent of the Company. The Company
has agreed that no such consent will be given without the prior written consent
of Lehman Brothers Inc. No prediction can be made as to the effect, if any, that

future sales of shares or the availability of shares for future sale will have
on the market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock in the public market, or the perception that
such sales could occur, could adversely affect prevailing market prices for the
Common Stock and could impair the Company's ability to raise capital through an
offering of its equity securities. See 'Shares Eligible for Future Sale' and
'Underwriting.'

<PAGE>

THE COMPANY

The Company's business was founded in 1992 by David B. Schick, Chairman of
the Board, Chief Executive Officer and President of the Company, Jonathan
Singer, Vice President--Engineering and Daniel Neugroschl, Vice
President--Operations and Advanced Development. Prior to June 4, 1997, the
Company's business was conducted by Schick Technologies, Inc., a New York
corporation. In April 1997, a new corporation, Schick Technologies, Inc., and
its wholly owned subsidiary, STI Acquisition Corp. ('STI'), were formed under
the DGCL for the purpose of forming a holding company and changing the state of
incorporation of the Company. Effective June 4, 1997, the existing New York
corporation merged with STI and was the survivor of such merger. As a result of
such merger, the shareholders, warrantholders and optionees of the existing New
York corporation became stockholders, warrantholders and optionees of the new
Delaware corporation (which is the issuer of the Shares), and the existing New
York corporation became a wholly owned subsidiary of the new Delaware
corporation. In connection with such merger, shareholders of the existing New
York corporation received 2.8 shares of Common Stock of Schick Technologies,
Inc., the new Delaware corporation, for each share of common stock of the
existing New York corporation held by such shareholders immediately prior to the
merger and other adjustments were made so that the Option Plans, Certificate of
Incorporation, By-Laws and Warrants conform to the description thereof contained
herein.

The Company's principal executive offices are located at 31-00 47th Avenue,
Long Island City, New York 11101. Its telephone number is (718) 937-5765 and its
World Wide Web address is http://www.schicktech.com. Information posted on the
Company's Web site does not constitute a part of this Prospectus.

<PAGE>

USE OF PROCEEDS

The net proceeds to be received by the Company from the Offering are
estimated to be approximately $29.4 million ($33.9 million, if the
over-allotment option is exercised in full), after deducting underwriting
discounts and commissions and estimated expenses of the Offering payable by the
Company.

The Company intends to use the net proceeds from the Offering (i) to repay

the principal of the Merck Loan (as defined below) in the amount of $1,512,833
and accrued interest thereon which, at March 31, 1997, totaled $101,654, (ii) to
expand its research and development capabilities in the amount of approximately
$5 million and (iii) to expand its sales and marketing effort in the approximate
amount of $5 million, with the remaining balance of net proceeds to be used for
working capital and general corporate purposes. Pending such uses, the Company
intends to invest the net proceeds in short-term, investment grade, interest
bearing securities.

On August 7, 1996, the Company entered into a secured term loan agreement
with Merck (the 'Merck Agreement') pursuant to which Merck loaned approximately
$1.5 million to the Company (the 'Merck Loan'). Although the maturity date of
the Merck Loan is February 7, 1999, under its terms the Company is required to
prepay the Merck Loan in full upon the effectiveness of the Registration
Statement (as defined in 'Additional Information'). Interest on the Merck Loan
accrues at a rate of two percentage points above the prime rate as reported in
The Wall Street Journal (adjusted annually). At March 31, 1997, the interest
rate on the Merck Loan was 10.25%. The Merck Loan is secured by a pledge of the
Company's inventory and accounts receivable. The proceeds from the Merck Loan
have been used by the Company for the development of accuDEXA(Trademark) and to
obtain any necessary regulatory approvals. See 'Business--Merck Agreement.'

From time to time, the Company evaluates potential acquisitions of
businesses and product lines which would complement or enhance the business of
the Company. Depending on the cash requirements of any such acquisitions, the
Company may finance such acquisitions, in whole or in part, with a portion of
the net proceeds of the Offering. The Company, however, has no present
understanding, commitment or agreement with respect to any acquisition. There
can be no assurance that any such acquisition will occur.

DIVIDEND POLICY

The Company has not declared or paid any cash dividends on the Common Stock
since its formation. The Company currently intends to retain future earnings to
finance the operations and expansion of its business and, accordingly, does not
anticipate paying any cash dividends on the Common Stock in the foreseeable
future. The Company is in preliminary negotiations with various senior lenders
to obtain a credit facility, which may prohibit or restrict the payment of
dividends or other distributions by the Company to its stockholders. In
addition, the Merck Loan contains provisions restricting the Company's ability
to pay cash dividends, which restriction shall no longer apply upon prepayment
by the Company of the Merck Loan. Subject to any such limitations, the payment
of cash dividends on the Common Stock will be within the sole discretion of the
Board of Directors and will depend upon the earnings, capital requirements and
financial position of the Company, applicable requirements of the DGCL, general
economic conditions and other factors considered relevant by the Board of
Directors.

<PAGE>

CAPITALIZATION

The following table sets forth the actual cash and cash equivalents and
capitalization of the Company at March 31, 1997, and as adjusted to give effect
to the sale of the Shares, less underwriting discounts and commissions and
estimated expenses of the Offering payable by the Company, and the initial
application of the estimated net proceeds therefrom as described in 'Use of
Proceeds.' This table should be read in conjunction with 'Management's
Discussion and Analysis of Financial Condition and Results of Operations' and
the financial statements and accompanying notes which appear elsewhere in the
Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------------
ACTUAL AS ADJUSTED(3)
----------- --------------

<S> <C> <C>
Cash and cash equivalents...................... $ 1,710,429 $ 29,489,692
----------- --------------
----------- --------------

Debt (including current portion):
Notes payable................................ $ 1,512,833 $ --
Accrued interest on notes payable............ 101,654 --
Capital lease obligations.................... 109,191 109,191
----------- --------------
Total debt................................ 1,723,678 109,191

Stockholders' equity:
Preferred Stock, $.01 par value; 2,500,000
shares authorized; no shares issued or
outstanding...............................
Common Stock, $.01 par value; 25,000,000
shares authorized; 7,957,231 shares issued
and outstanding; 9,707,231 issued and
outstanding as adjusted(1)(2)............. 79,572 97,072
Additional paid-in capital................... 7,562,766 36,904,016
Accumulated deficit.......................... (1,555,359) (1,555,359)
----------- --------------
Total stockholders' equity................ 6,086,979 35,445,729
----------- --------------
Total capitalization.................... $ 7,810,657 $ 35,554,920
----------- --------------
----------- --------------
</TABLE>

- ------------------------
(1) Excludes (i) 470,400 shares of Common Stock reserved for issuance upon the
exercise of options under the 1996 Employee Stock Option Plan, under which
options covering 74,953 shares at a weighted average exercise price of $7.14
per share are outstanding (see 'Management--1996 Employee Stock Option
Plan'), (ii) 35,000 shares of Common Stock reserved for issuance upon the
exercise of options under the Directors Stock Option Plan, of which none

have been granted (see 'Management--Directors Stock Option Plan'), (iii)
526,470 shares of Common Stock reserved for issuance upon the exercise of
the Warrants at exercise prices ranging from $7.86 to $8.93 per share and
(iv) 56,000 shares reserved for issuance upon the exercise of options, which
were granted prior to the implementation of the 1996 Employee Stock Option
Plan at an exercise price of $1.79 per share. See 'Description of Capital
Stock--Warrants.'

(2) Reflects the restructuring and recapitalization effected on June 4, 1997,
described in Note 15 to the financial statements.

<PAGE>

DILUTION

Dilution is the amount by which the initial public offering price paid by
the purchasers of the Shares will exceed the net tangible book value per share
of Common Stock after the Offering. The net tangible book value per share of
Common Stock is determined by subtracting the total liabilities of the Company
from the total book value of the tangible assets of the Company and dividing the
difference by the number of shares of Common Stock deemed to be outstanding on
the date as of which such book value is determined.

At March 31, 1997, the net tangible book value of the Company was
$6,051,979 and the net tangible book value per share of Common Stock was $0.76.
Assuming that the sale of the Shares had occurred on March 31, 1997 at the
initial public offering price of $18.50 per Share and payment of underwriting
discounts and commissions and estimated expenses of the Offering payable by the
Company, the pro forma net tangible book value of the Company at March 31, 1997
would have been $35,445,729, or $3.65 per share of Common Stock. See
'Capitalization.' This represents an immediate increase in net tangible book
value of $2.89 per share held by existing stockholders and an immediate dilution
in net tangible book value of $14.85 per share to the purchasers of the Shares.
The immediate dilution to the purchasers of the Shares is illustrated in the
following table:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share... $ 18.50
Net tangible book value per share at March 31,
1997......................................... $0.76
Increase attributable to purchase of shares in
the Offering................................. 2.89
-----
Pro forma net tangible book value per share after
the Offering(1)................................. 3.65(2)
-------
Dilution per share to purchasers of the Shares.... $ 14.85(2)

-------
-------
</TABLE>

The following table sets forth, on a pro forma basis at March 31, 1997, the
number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by
existing stockholders and by purchasers of the Shares before deducting the
underwriting discounts and commissions and estimated expenses of the Offering
payable by the Company:

<TABLE>
<CAPTION>
SHARES TOTAL
PURCHASED CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ----------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 7,957,231 82.0% $ 7,284,800 18.4% $ 0.92
Purchasers of the Shares... 1,750,000 18.0 32,375,000 81.6 18.50
--------- ------- ----------- -------
Total.................... 9,707,231 100.0% $39,659,800 100.0% 4.09
--------- ------- ----------- -------
--------- ------- ----------- -------
</TABLE>

The preceding tables do not give effect to the exercise of Warrants, stock
options granted prior to the implementation of the Option Plans or stock options
granted under the Option Plans outstanding on the date hereof. To the extent
that Warrants, stock options granted prior to the implementation of the Option
Plans or stock options granted under the Option Plans outstanding on the date
hereof are exercised, there will be further dilution to purchasers of the
Shares. See 'Management--1996 Employee Stock Option Plan; --Directors Stock
Option Plan' and 'Description of Capital Stock--Warrants.'

- ------------------
(1) Pro forma net tangible book value per share after the Offering gives effect
to (i) the sale of the Shares, net of expenses, and (ii) the repayment of
the Merck Loan in the principal amount of $1,512,833 and accrued but unpaid
interest thereon. See 'Use of Proceeds.'

(2) If the Underwriter's over allotment option is exercised in full, the pro
forma net tangible book value per share would be $4.01 and the dilution per
share to purchasers of the shares would be $14.49. See 'Underwriting.'

<PAGE>

SELECTED FINANCIAL DATA

The selected financial data presented below for, and at the end of, each of
the years in the three year period ended March 31, 1997 are derived from the
financial statements of the Company, which have been audited by Price Waterhouse
LLP, independent accountants and are included elsewhere in this Prospectus. The
selected financial data set forth below as of and for the year ended March 31,
1994 are derived from audited financial statements not included in this
Prospectus. The selected financial data set forth below as of and for the year
ended March 31, 1993 are derived from unaudited financial statements. In the
opinion of management, the unaudited financial statements include all material
adjustments (consisting only of normal, recurring adjustments) necessary for a
fair presentation of the financial position and results of operations for the
period. The data presented below should be read in conjunction with
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and the financial statements and accompanying notes appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------------------------------------
1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue, net......................... $ -- $ 29 $ 2,726 $ 6,804 $ 16,101
Cost of sales........................ -- 14 1,501 3,343 8,021
----------- ----------- ----------- ----------- -----------
Gross profit...................... -- 15 1,225 3,461 8,080
----------- ----------- ----------- ----------- -----------
Operating expenses:
Selling and marketing............. -- 158 517 1,620 4,961
General and administrative........ 166 121 560 1,388 2,088
Research and development.......... 247 393 150 458 1,418
----------- ----------- ----------- ----------- -----------
Total operating expenses........ 413 672 1,227 3,466 8,467
----------- ----------- ----------- ----------- -----------
Loss from operations................. (413) (657) (2) (5) (387)
Total other income (expense)......... 2 1 (22) (108) 35
----------- ----------- ----------- ----------- -----------
Net loss.......................... $ (411) $ (656) $ (24) $ (113) $ (352)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net loss per common share(1)(2)(3)... $ (0.08) $ (0.10) $ -- $ (0.02) $ (0.04)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares
outstanding(1)(2)(3).............. 4,960,069 6,438,380 7,119,083 7,287,670 8,217,180
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------

</TABLE>

<TABLE>
<CAPTION>
MARCH 31,
------------------------------------------------------
1993 1994 1995 1996 1997
----------- ------- ------- ------- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents... $ 153 $ 25 $ 128 $ 525 $1,710
Working capital............. 98 (33) 35 1,240 5,518
Total assets................ 190 321 1,615 4,395 11,060
Total liabilities........... 54 196 1,289 3,026 4,973
Accumulated deficit......... (411) (1,067) (1,091) (1,203) (1,555)
Stockholders' equity........ 136 124 326 1,369 6,087
</TABLE>

- ------------------
(1) For information concerning the computation of net loss per share and
weighted average number of common shares outstanding, see Note 2 to the
financial statements.

(2) Reflects the restructuring and recapitalization effected on June 4, 1997,
described in Note 15 to the financial statements.

(3) Pro forma supplementary earnings per share for the year ended March 31, 1997
amounts to $.04, based upon an assumed 8,313,395 weighted average common
shares outstanding and a net loss of $(294,034). Pro forma supplementary
earnings per share is calculated as if the Company sold on April 1, 1996,
96,215 shares of Common Stock, representing the number of shares of Common
Stock required to be sold at the initial offering price of $18.50 per Share,
net of underwriting discounts and Offering expenses, in order for the
Company to repay the principal of the Merck Loan and accrued but unpaid
interest thereon.

<PAGE>

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

GENERAL

The Company designs, develops and manufactures digital imaging systems and
devices for the dental and medical markets. In the field of dentistry, the
Company has developed, and currently manufactures and markets, an intra-oral
digital radiography system. The Company has also developed a bone mineral
density measurement device to assist in the diagnosis of osteoporosis, which is
scheduled to be introduced in the second half of 1997, pending FDA marketing
clearance. In addition, the Company is developing large-area radiographic
imaging devices for digital mammography.

From its inception in April 1992 through March 1994, the Company was
primarily engaged in product development and product testing, and the
establishment of strategic relationships with vendors. The Company also
undertook a marketing analysis of the dental market and developed its marketing
strategy. The Company incurred cumulative losses during this period of $1.1
million.

In March 1994, after receiving FDA 510(k) marketing clearance, the Company
began marketing and selling its CDR(Trademark) system. The Company's revenues
are primarily derived from sales of its CDR(Trademark) products and, to a lesser
extent, from sales of its CDRCam(Trademark) and extended warranties on the
CDR(Trademark) products. The Company recognizes revenue on its CDR(Trademark)
products at the time of shipment to its customers. Revenues from the sales of
extended warranties are recognized on a straight-line basis over the life of the
extended warranty which is generally a one-year period. The Company utilizes a
direct sales force for sales of its products within the United States.
International sales are made through a network of independent foreign
distributors. In fiscal 1995, fiscal 1996 and fiscal 1997, sales to customers
within the United States were approximately 73%, 69% and 76% of total revenues,
respectively. The Company's international sales are made primarily to
distributors in Western Europe, Russia, Australia and South America. The Company
intends to expand its business in other international markets, including Asia.
All of the Company's sales are denominated in United States dollars.

Cost of sales consists of raw materials and computer components,
manufacturing labor, facilities overhead, product support, warranty costs and
installation costs. The Company procures semiconductor wafers, a significant
component of its products, from a single supplier. The Company believes that
sourcing from a single supplier provides certain competitive advantages to the
Company. However, an interruption of this supply could have a material adverse
effect on the Company's results of operations. See 'Risk Factors--Dependence on
Key Suppliers; Volatility of Semiconductor Market.' The Company believes that
cost of sales as a percentage of revenues in future periods will decrease due to
the introduction of new products and manufacturing technologies, and higher
manufacturing volumes of its existing products. However, as the Company
introduces new products, cost of sales may initially be a higher percentage of
net revenues until certain production efficiencies can be achieved.

Operating expenses include selling and marketing expenses, general and
administrative expenses and research and development expenses. Selling and
marketing expenses consist of salaries, advertising, promotional and sales
events expenses. General and administrative expenses include executive salaries,
professional fees, facilities, overhead, accounting and human resources, and
general office administration expenses. Research and development expenses are
comprised of salaries, facilities overhead and testing materials used for basic
scientific research and the development of new and improved products and their
uses. All research and development costs, including software development costs
associated with new products and product enhancements, have been expensed as
incurred. While the Company continues to expand its selling and marketing
activities, develop new products and enhance existing products, it anticipates
that its operating expenses as a percentage of revenues will decrease.

<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, for the fiscal years indicated, certain
items from the Statement of Operations Data expressed as a percentage of net
revenues:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Revenue, net................... 100.0% 100.0% 100.0%
Cost of sales.................. 55.1 49.1 49.8
----- ----- -----
Gross profit................... 44.9 50.9 50.2
Operating expenses:
Selling and marketing........ 19.0 23.8 30.8
General and administrative... 20.5 20.4 13.0
Research and development..... 5.5 6.7 8.8
</TABLE>

Fiscal Year Ended March 31, 1997 as Compared to Fiscal Year Ended March 31, 1996

Net revenues increased 136.6% to $16.1 million in fiscal 1997 from $6.8
million in fiscal 1996. This increase was attributable principally to an
increase in the number of CDRTM products sold which was positively affected by
the Company's increased expenditures on sales and marketing, personnel
recruiting, selling events and other promotional activities. The Company
believes that net revenues will continue to increase as the Company sells more
CDRTM products and introduces new products.

Cost of sales increased 139.9% to $8.0 million (49.8% of net revenues) in
fiscal 1997 from $3.3 million (49.1% of net revenues) in fiscal 1996. Cost of
sales as a percentage of revenues was relatively stable in fiscal 1997 as
improved manufacturing efficiencies and fixed overhead utilization were
partially offset by increases in the cost of certain computer components of the
CDRTM system as well as increased customer service costs. In addition, in fiscal
1997, the Company recognized a non-recurring charge of approximately $114,000
related to excess inventory of a specific component of its CDRTM system.

Selling and marketing expenses increased 206.3% to $5.0 million (30.8% of
net revenues) in fiscal 1997 from $1.6 million (23.8% of net revenues) in fiscal
1996. This increase was attributable principally to the hiring and training of
new salespeople as the Company completed the establishment of its national sales
force. In addition, the Company significantly increased its promotional
activities to create greater market awareness, and developed market strategies
for new products.

General and administrative expenses increased 50.4% to $2.1 million (13.0%

of net revenues) in fiscal 1997 from $1.4 million (20.4% of net revenues) in
fiscal 1996. This decrease as a percentage of revenues was attributable
principally to increases in sales of the Company's products and partially offset
by growth in administrative expenditures. This decrease was partially offset by
an increase in legal fees associated with certain patent infringement litigation
in the amount of $509,000.

Expenses for research and development in fiscal 1997 increased 209.5% to
$1.4 million (8.8% of net revenues) from $458,000 (6.7% of net revenues) in
fiscal 1996. This increase was attributable principally to increased research
and development expenses associated with the development of a bone mineral
density measurement device and enhancements to the CDR(Trademark) system, as
well as the CDRCam(Trademark), and initial development of a mammography system.
All research and development costs are expensed as incurred.

Interest income increased to $196,000 in fiscal 1997 from $15,000 in fiscal
1996. This increase was due to higher cash balances and investments in
interest-bearing securities which were purchased from the proceeds of the May
1996 equity private placement and from the proceeds of the convertible
promissory notes issued by the Company in connection with a June 1995 private
placement (the '12.5% Notes Payable'). Interest expense increased to $161,000 in
fiscal 1997 from $123,000 in fiscal 1996. Interest expense was attributable
principally to the Merck Loan and the 12.5% Notes Payable prior to their
conversion into Common Stock at various dates in fiscal 1997.

Fiscal Year Ended March 31, 1996 Compared to Fiscal Year Ended March 31, 1995

Net revenues increased 149.6% to $6.8 million in fiscal 1996 from $2.7
million in fiscal 1995. This increase was due primarily to an increase in the
number of CDRTM systems sold which was positively affected by the Company's
increased expenditures for sales and marketing personnel, selling events and
other promotional activities. Furthermore, during the second half of fiscal
1995, the Company established relationships with

<PAGE>

additional international distributors. As a result, foreign revenues as a
percentage of net revenues increased to 31.5% in fiscal 1996 from 27.0% in
fiscal 1995.

Cost of sales increased 122.8% to $3.3 million (49.1% of net revenues) in
fiscal 1996 from $1.5 million (55.1% of net revenues) in fiscal 1995. This
decrease as a percentage of net revenues was primarily due to increased
manufacturing efficiencies, and increased production yields and economies of
scale generated by an increase in the number of CDR(Trademark) products sold,
which was partially offset by an increase in the price of semiconductor wafers.

Selling and marketing expenses increased 213.3% to $1.6 million (23.8% of
net revenues) in fiscal 1996 from $517,000 (19.0% of net revenues) in fiscal
1995. This increase was attributable principally to the hiring of additional
personnel and support staff in connection with the Company's establishment of
its national sales force.

General and administrative expenses increased 147.9% to $1.4 million (20.4%
of net revenues) in fiscal 1996 from $560,000 (20.5% of net revenues) in fiscal
1995. Such increase was principally attributable to the hiring of additional
administrative personnel and legal fees associated with certain patent
infringement litigation.

Research and development expenses increased 206.2% to $458,000 (6.7% of net
revenues) in fiscal 1996 from $150,000 (5.5% of net revenues) in fiscal 1995.
This increase was primarily due to efforts to enhance existing products and
early-stage research in connection with products under development.

Interest expense increased to $123,000 in fiscal 1996 from $22,000 in
fiscal 1995, primarily due to the 12.5% Notes Payable.

The following table sets forth certain unaudited quarterly financial
information for each of the eight quarters in the period ended March 31, 1997.
This information has been presented on the same basis as the audited financial
statements appearing elsewhere in this Prospectus and in the opinion of the
Company, includes all adjustments (consisting only of normal, recurring
adjustments) necessary to present fairly the unaudited quarterly results. The
quarterly results should be read in conjunction with the audited financial
statements of the Company and related notes thereto included elsewhere in the
Prospectus. The operating results for any quarter are not necessarily indicative
of the operating results for any future period. In addition, the Company's
CDR(Trademark) products are subject to seasonal variations. Historically, the
Company has experienced higher sales growth rates in its first and third fiscal
quarters than its second and fourth fiscal quarters.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1995 1995 1995 1996 1996 1996 1996 1997
-------- --------- -------- -------- -------- --------- -------- --------
(IN THOUSANDS, UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue, net.................... $1,267 $ 1,290 $2,016 $2,231 $2,627 $ 3,160 $4,954 $5,360
Cost of sales................... 588 627 990 1,139 1,440 1,631 2,360 2,590
-------- --------- -------- -------- -------- --------- -------- --------

Gross profit.................... 679 663 1,026 1,092 1,187 1,529 2,594 2,770

Gross profit margin............. 53.6% 51.4% 50.9% 49.0% 45.2% 48.4% 52.4% 51.7%

Operating expenses.............. 564 586 918 1,398 1,483 1,827 2,592 2,565
-------- --------- -------- -------- -------- --------- -------- --------

Income (loss) from operations... 115 77 108 (306) (297) (297) 3 205

Net (loss) income............... 103 57 59 (332) (317) (294) 20 239
</TABLE>

<PAGE>

The Company may in the future experience significant quarter-to-quarter
fluctuations in its results of operations, which may result in volatility in the
price of the Company's Common Stock. Quarterly results of operations may
fluctuate as a result of a variety of factors, including the demand for the
Company's products, the introduction of new or enhanced products by the Company
or its competitors, market acceptance of new products, the timing of significant
marketing programs, the commencement of new product development programs, the
extent and timing of the hiring of additional personnel, competitive conditions
in the industry and general economic conditions. Due to the foregoing factors,
it is likely that in one or more future quarters the Company's operating results
will be below the expectations of public market analysts and investors. Such an
event could have a material adverse effect on the price of the Common Stock.

LIQUIDITY AND CAPITAL RESOURCES

The Company had an accumulated deficit of $1.6 million at March 31, 1997
and has not yet generated positive cash flow from operations in any fiscal year.
The Company has financed its operations to date primarily through five private
placements of debt and equity securities and cash generated from product sales.
At March 31, 1997, the Company had $1.7 million in cash and cash equivalents,
$2.3 million in short-term investments and $5.5 million in working capital. The
Company undertook financing activities which provided it with $5.3 million in
fiscal 1997, comprised of $4.3 million from the Company's May 1996 equity
private placement and $1 million of proceeds from the issuance of a long-term
note to Merck. Cash utilized in operations amounted to $273,000 in fiscal 1997
and $737,000 in fiscal 1996. Cash used for capital expenditures amounted to $1.1
million for fiscal 1997 and $570,000 for fiscal 1996. The increase was due
primarily to the purchase of upgraded production equipment, leasehold
improvements and the acquisition of additional office equipment due to increased
staffing levels. As the Company introduces new products, it expects to invest in
additional production equipment and leasehold improvements. At March 31, 1997,
the Company had no material commitments for capital expenditures.

The Company's funds are currently invested in money market instruments and
United States Treasury and government agency interest-bearing obligations. Such
investments reflect the Company's current policy regarding the investment of
liquid assets, which is to seek a reasonable rate of return while emphasizing
safety, liquidity and preservation of capital.

The Company believes that its existing capital resources are adequate to
meet its current cash requirements for a period of approximately 24 months.
There can be no assurance, however, that changes in the Company's plans or other
events affecting the Company's operations will not result in accelerated or
unexpected cash requirements. The Company's future capital requirements will
depend on numerous factors, including (i) the progress of its research and
product development programs, including clinical studies, (ii) the effectiveness
of product commercialization activities and marketing agreements, including the
development and progress of sales and marketing efforts and manufacturing
operations, (iii) the ability of the Company to maintain existing distributor

agreements and establish and maintain new distributor agreements, (iv) the costs
involved in preparing, filing, prosecuting, defending and enforcing intellectual
property rights, including lawsuits involving Trophy S.A. and Radworks, and
complying with regulatory requirements, (v) the effect of competing
technological and market developments and (vi) general economic conditions. If
the net proceeds of the Offering, together with the Company's currently
available funds and internally generated cash flow, are not sufficient to
satisfy its financing needs, the Company will be required to seek additional
funding through bank borrowings and additional public or private sales of its
securities, including equity securities, or through other arrangements with
marketing partners. Although the Company has no credit facility or other
committed sources of capital, it is engaged in preliminary discussions with
various senior lenders regarding a line of credit. There can be no assurance
that additional funds, if required, will be available to the Company on
favorable terms, if at all. See 'Risk Factors--Need For Additional Financing'
and 'Use of Proceeds.'

The Company does not anticipate a material cash requirement for income
taxes in fiscal 1997. At March 31, 1997, the Company's net operating loss
carryforward was $560,000, portions of which begin to expire in 2008.

The relatively moderate rate of inflation over the past several years has
not had a material impact on the Company's revenues or profitability.

<PAGE>

RECENTLY ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 123, 'Accounting for
Stock-Based Compensation Plans' ('SFAS 123'), was issued in October 1995. SFAS
123 was adopted by the Company in fiscal 1997. As permitted by SFAS 123, the
Company plans to continue to use Accounting Principles Board Opinion No. 25,
'Accounting for Stock Issued to Employees,' in accounting for its stock options.
Certain pro forma and other information is disclosed in the annual financial
statements as if the Company had measured compensation costs in a manner
consistent with SFAS 123.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, 'Earnings per Share' ('SFAS 128'),
which requires presentation of basic earnings per share ('Basic EPS') and
diluted earnings per share ('Diluted EPS') by all entities that have publicly
traded common stock or potential common stock (options, warrants, convertible
securities or contingent stock arrangements). SFAS 128 also requires a
presentation of earnings per share by an entity that has made a filing or is in
the process of filing with a regulatory agency in preparation for the sale of
those securities in a public market. Basic EPS is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period. The computation of
Diluted EPS does not assume conversion, exercise or contingent exercise of
securities that would have an antidilutive effect on earning. SFAS 128 is
effective for both interim and annual periods ending after December 15, 1997.

The Company does not believe that the effect on the Company's earnings per share
resulting from the adoption of SFAS 128 will be material.

<PAGE>

BUSINESS

Schick Technologies, Inc. designs, develops and manufactures innovative
digital radiographic imaging systems and devices for the dental and medical
markets. The Company's products, which are based on proprietary digital imaging
technologies, create instant high resolution radiographs with reduced levels of
radiation. In the field of dentistry, the Company has developed, and currently
manufactures and markets, the leading intra-oral digital radiography system. The
Company has also developed an inexpensive and easy to operate bone mineral
density ('BMD') measurement device to assist in the diagnosis of osteoporosis.
This device is scheduled for introduction in the second half of 1997, pending
FDA marketing clearance, and will be sold for use in primary care physicians'
offices. In addition, the Company is developing large-area radiographic imaging
products for digital mammography, additional medical applications and selected
industrial markets using its proprietary technology.

The Company's CDR(Trademark) computed dental radiography imaging system was
introduced in March 1994 and has become the leading product in its field. As of
March 31, 1997, the Company had sold over 3,200 CDR(Trademark) systems for use
in dental offices, hospitals and universities. The CDR(Trademark) system
produces instant, full size, high resolution dental x-ray images on a color
computer monitor, without film or the need for chemical development, and with a
radiation dose that is approximately 10% of that required for conventional x-ray
film. The CDR(Trademark) system uses an intra-oral sensor to capture the x-ray
image. Once captured, the x-ray image is transmitted to a computer where it is
permanently stored as part of the patient's x-ray records and can be analyzed
using diagnostic software developed by the Company. The Company's
CDRCam(Trademark), an intra-oral camera which fully integrates with the
CDR(Trademark) system, was introduced in early 1997. The Company believes that
the potential market for dental digital radiography products exceeds $4 billion.

The Company believes that its accuDEXA(Trademark) device measures BMD more
quickly, accurately and easily than any comparable BMD measurement device
currently on the market with a minimal radiation dosage. The device is a highly
precise point-of-treatment diagnostic tool for use in the primary care
physician's office as part of a patient's regular physical examination. In
connection with the development of accuDEXA(Trademark), the Company entered into
an agreement with Merck pursuant to which Merck agreed to provide the Company
with financing and to develop certain clinical protocols. See '--Merck
Agreement.' The Company filed its 510(k) application with the FDA in May 1997
and, pending FDA marketing clearance, the Company plans to introduce this
product in the second half of 1997. The Company believes that the potential
market for the accuDEXA(Trademark) exceeds $2 billion in the United States.

mammography sensor prototype by the end of 1997, and, subsequently, a 24 x 30 cm
'full field' sensor. The Company is also developing digital imaging products for
additional medical and industrial applications.

The Company's CDR(Trademark) dental products are sold in the United States,
via its direct sales force, and abroad, via independent regional distributors.
The Company has also entered into an OEM sales agreement with HSI, pursuant to
which HSI will sell the CDR(Trademark) system under its own trade name. The
Company intends to sell accuDEXA(Trademark) through a direct sales force and
established independent distributors and manufacturers of medical and
radiological equipment. The Company has entered into an OEM sales agreement with
Norland, by which Norland will sell accuDEXA(Trademark) under its own trade
name. The Company intends to sell its mammography devices through established
manufacturers in the mammography market. See '--Sales and Marketing.'

The Company's products are based on its proprietary enhanced CCD and APS
imaging technologies. The Company's CDR(Trademark) system is made using an
enhanced, low-cost, large-area, high resolution CCD device. APS allows the
fabrication of large-area imaging devices with high resolution at a fraction of
the cost of traditional technologies. APS technology was originally developed by
Cal Tech and is licensed to the Company for a broad range of health care
applications. See '--Patents, Trade Secrets and Proprietary Rights.'

The Company's objective is to be the leading provider of high resolution,
low-cost digital radiography products. The Company plans to leverage its
technological advantage in the digital imaging field to penetrate a broad range
of diagnostic imaging markets. The Company believes that its proprietary
technologies and expertise

<PAGE>

in electronics, imaging software and advanced packaging will enable it to
compete successfully in these markets. Key elements of the Company's strategy
include (i) expanding market leadership in dental digital radiography through
expanded sales channels, further product enhancements, and increased direct
sales, OEM and marketing activities; (ii) introducing accuDEXA(Trademark) to the
bone densitometry market to aid in the diagnosis of osteoporosis through a
combination of direct sales and other distribution channels; (iii) introducing
new products based on patented and proprietary APS technology for digital
mammography, other medical applications and industrial markets; and (iv)
expanding international marketing channels for existing and new products.

INDUSTRY OVERVIEW

Conventional Radiography

X-ray imaging, or radiography, is widely used as a basic diagnostic
technique in a broad range of medical applications. To produce a conventional
radiograph, a film cassette is placed behind the anatomy to be imaged. A
generator, which produces high energy photons known as x-rays, is positioned
opposite the film cassette. The transmitted x-rays pass through soft tissue,
such as skin and muscle, and are absorbed by harder substances, such as bone.

These x-rays then form a latent image upon the film. After exposure, the film is
passed through a series of chemicals and then dried.

Film, however, has certain inherent limitations, including the substantial
time, operating expense, inconvenience and uncertainty associated with film
processing, as well as the cost of disposal of waste chemicals and the need for
compliance with environmental regulations. Furthermore, the radiation dosage
levels required to assure adequate image quality in conventional film raise
concerns regarding the health risks associated with exposure to radiation. Also,
conventional film images cannot be electronically retrieved from patient records
or transmitted to health care providers or insurance carriers at remote
locations, a capability which has become increasingly important in today's
managed care environment. While x-ray scanning systems convert x-rays into
digital form, they add to the substantial time and expense associated with the
use of conventional film and do not eliminate the drawbacks of film processing.

Digital radiography products have been developed to overcome the
limitations of conventional film. These systems replace the conventional film
cassette with an electronic receptor which directly converts the incident x-rays
to digital images. The first system to employ certain aspects of this technique
was Computed Radiography(Trademark) ('CR'), a 'near real time' system, in which
a laser scanner reads the x-ray image from a specially designed cassette. While
CR allows the images to be electronically displayed and stored, it does not
achieve instant results, and employs a large, costly scanning system. Other
technologies which allow for instant acquisition of digital x-rays have been
developed, including CCD arrays and amorphous silicon panels, neither of which
is well suited for imaging large areas due, respectively, to high cost and
limited resolution.

Dental Industry

Dentists, who generally perform their own radiology work, represent the
single largest group of radiologists in the world and the dental industry is, in
terms of unit volume, the largest consumer of radiographic products and
equipment.

The Company believes that there is a potential market for approximately 1.1
million digital dental radiography devices worldwide. According to the American
Dental Association, there are approximately 150,000 practicing dentists in the
United States. The Company believes that each of them, on average, operates 2.5
radiological units, creating a potential market of 375,000 digital dental
radiography devices in the United States. In addition, the Company believes that
there are approximately 600,000 practicing dentists in the world's major
healthcare markets outside of the United States and, the Company believes that
each of them, on average, operates 1.25 radiological units, creating a potential
market of 750,000 additional devices.

Dentists have a particularly strong motivation to adopt digital
radiography. Radiographic examinations are an integral part of routine dental
checkups and the dentist is directly involved in the film development process.
The use of digital radiography eliminates delays in film processing, thus
increasing the dentist's potential revenue stream and efficiency, and reduces
overhead expenses. The use of digital radiography also allows dentists to more
effectively communicate diagnosis and treatment plans to patients, which the

Company believes has the potential

<PAGE>

to increase the rate of patients' treatment acceptance and resulting revenues.
Finally, the dosage required to produce an intra-oral dental x-ray, which is
high when compared with other medical radiographs, can be reduced by up to 90%
through the use of digital radiography.

Osteoporosis Diagnosis

Measurement of BMD is an essential component in the diagnosis and
monitoring of osteoporosis. Osteoporosis is a disease that causes progressive
loss of bone mass which, in serious cases, results in bone fractures and even
death. Osteoporosis can develop over the course of many years without apparent
symptoms, until bone is sufficiently degenerated and fractures occur. The
National Osteoporosis Foundation estimates that approximately 200 million people
suffer from the disease worldwide, which affects one out of three post-
menopausal women and one out of ten men over the age of 70. In the United
States, an estimated twenty-five million people suffer from the disease. The
total estimated health care cost of osteoporosis in the United States, including
indirect costs, is approximately $9.8 billion annually.

Until recently, osteoporosis was considered neither treatable nor
preventable. Prior to 1995, only two drugs were marketed as treatments for
osteoporosis in the United States, hormonal replacement therapy and calcitonin,
which was only available in an injectable form. Although these therapies have
been shown to slow the loss of bone mass, they have not been proven effective in
restoring bone mass. In September 1995, the FDA granted Merck clearance to
market the drug Fosamax(Registered) for the treatment of osteoporosis in
post-menopausal women. Clinical studies have shown that, over a three-year
period, Fosamax(Registered) causes an increase in bone mass of up to 8.8% versus
placebo and reduces the number of new fractures by approximately 48%. Additional
osteoporosis drugs are currently in clinical trials being conducted by companies
such as Procter & Gamble, Boehringer-Mannheim, Sanofi, Eli Lilly and Pfizer, and
are expected to receive marketing clearance from the FDA within the next several
years.

Because effective treatments are now available and because osteoporosis may
be preventable if detected in its early stages, the demand for BMD diagnostic
equipment has significantly increased. In the United States, there are
approximately 28 million women who are at high-risk for developing osteoporosis.
Because of the large population segment which could benefit from BMD testing,
the Company believes that there is great demand for a practical, instant, cost
effective, precise, compact and easy-to-use BMD testing device for the primary
care physician. Primary care physicians consist of internal medicine, family,
geriatric and OB/GYN practices. These practices represent approximately 172,000
potential screening sites in the United States alone. Traditional BMD measuring
devices have been large, costly and difficult to operate, and are mainly found
in large hospitals and diagnostic imaging centers. In 1995, there were fewer
than 1,200 such BMD measurement devices in use in the United States.

The most commonly used technique for assessing BMD is dual energy x-ray
absorptiometry ('densitometry' or 'DEXA'). Traditional densitometry machines are
large, table-sized units which measure bone density at a number of axial
skeletal sites, most commonly the hip and spine. The theoretical precision of
DEXA technology is high, creating the ability to monitor slight changes in bone
density. Results are available in approximately one hour. Axial sites, however,
require complicated positioning and scan times in excess of 15 minutes,
resulting in greater variability of densities and increased radiation.
Densitometry machines that are capable of axial scans cost approximately $50,000
to $150,000 and require operation by a trained technician. Due to their cost,
the Company believes that axial devices are not practical for use in the primary
care market.

Peripheral densitometry devices, which have recently been introduced into
the primary care market, measure BMD of the wrist, forearm, hand and heel, yield
results in four to six minutes and cost between $19,000 and $39,000. These
devices are based on accepted DEXA methodology and may be placed on a
countertop. However, a number of drawbacks have limited their widespread
acceptance. These include the necessity of specialized training and high cost
relative to the reimbursement rate. In November 1996, the Health Care Finance
Administration ('HCFA') changed the reimbursement codes for densitometry,
separating them into two categories: axial densitometry, for which the
reimbursement amount is currently $121.16 per test, and peripheral densitometry,
for which the reimbursement amount is currently $37.57 per test. A number of
alternative techniques have been developed which have attempted to address the
needs of the primary care market, each of which also has significant drawbacks.
These include radiographic absorptiometry ('RA'), which does not

<PAGE>

provide instant test results; ultrasound, which has limited accuracy and has not
been approved for use in the United States; and biochemical markers, which do
not reveal absolute bone mass.

Mammography

Breast cancer is the leading cause of cancer death among women in the
United States between the ages of 40 and 55, and the second leading cause of
cancer death among all women in the United States. According to the American
Cancer Society, approximately 184,000 new cases of breast cancer were diagnosed
and approximately 44,000 women died from the disease in 1996. The annual cost of
breast cancer screening and diagnosis in the United States alone is estimated at
$6 billion. Successful treatment of breast cancer depends in large part on the
early detection of malignant lesions in the breast. According to the National
Cancer Institute, the five year survival rate decreases from more than 90% to
72% after the cancer has spread to the lymph nodes, and to 18% after it has
spread to other organs such as the lungs, liver or brain.

Radiographic screening mammography is the standard of care for detecting
breast cancer. The American Cancer Society recently issued a policy statement
recommending that all women over the age of 40 be tested by mammogram yearly. As

a result of increased awareness of the importance of regular screening, the
number of women having regular mammograms is rising. Over the past five years,
the number of mammograms performed in the United States has increased from 15
million to over 25 million annually, according to American Cancer Society
statistics.

Mammography techniques have not changed significantly over the past 20
years, although slight improvements have been made in x-ray film quality. One
major drawback to the use of current mammography systems is their limited
ability to image dense breast tissue, typically found in women under the age of
50, resulting in an unduly high rate of 'false positive' test results and the
concomitant consequences: unwarranted surgical biopsies, significant cost and
great anxiety and concern to the patient. As reported by the American Cancer
Society, women under age 50 experience significant incidence of breast cancer,
with 23% of breast cancer cases detected in women under age 50.

Another limitation of conventional mammography is the time and cost
required to develop the film. Time is particularly problematic in the case of
stereotactic needle biopsies, in which a hollow needle is inserted into the
breast to obtain a tissue sample of a suspected lesion. Multiple mammograms must
be obtained during the procedure in order to properly position the needle. In
1995, approximately 1,000,000 breast biopsies were performed in the United
States, of which approximately 200,000 were stereotactic needle biopsies, up
from fewer than 500 in 1990.

Digital mammography is diagnostically superior to current film-based
systems, yielding higher contrast, improved resolution and lower dosage. Digital
mammography may be especially useful in screening women under the age of 50
because of its enhanced ability to image the denser breast tissue typically
found in younger women. Clinical testing has shown that digital mammography, as
compared with non-digital devices, can increase accurate diagnosis by 20%.
Digital mammography also provides instant images allowing for real time
stereotactic needle biopsies.

The only digital formats for mammography currently on the market are 'spot'
mammography devices, which can depict a 6 x 6 cm region of the breast. These
devices are fabricated with CCDs, are limited in size, and cost in excess of
$90,000. Because of their limited size, these 'spot' mammography devices are
useful for specific operative procedures, such as needle biopsies, but not for
general screening and diagnosis. A number of companies have developed prototypes
of large area digital systems, using either amorphous silicon or tiled CCD
technology. The anticipated price for these units is expected to fall in the
$250,000 to $500,000 range, or approximately four to eight times the current
cost of standard mammography equipment.

According to the American College of Radiology, in 1996 there were
approximately 14,000 screening mammography machines in the United States, and
the Company believes that there were approximately 15,000 additional screening
mammography machines in other major health care markets. The market for
mammography machines is driven by increased awareness of breast cancer risk, the
emphasis on early detection, the growing number of stereotactic needle biopsies
and the advancement of digital technology.

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PRODUCTS

Dental Imaging

The Company's principal revenue-generating product is its CDR(Trademark)
computed dental radiography imaging system. The CDR(Trademark) system produces
full size, high resolution dental x-ray images instantly on a color computer
monitor, without film or the need for chemical development, and with a radiation
dose that is approximately 10% of that required for conventional x-ray film. The
CDR(Trademark) system uses an intra-oral sensor to capture the x-ray image. Once
captured, the x-ray image is transmitted to a computer where it is permanently
stored as part of the patient's x-ray records and can be analyzed using powerful
diagnostic software developed by the Company.

The Company's CDR(Trademark) system is easy to operate and can be used with
any dental x-ray generator. To produce a digital x-ray image using
CDR(Trademark), the dentist selects a sensor of suitable size and places it in
the patient's mouth. The sensor converts the x-rays into a digital image which
is displayed on the computer monitor within five seconds and automatically
stored as part of the patient's clinical records. CDR(Trademark) system software
allows the dentist to perform a variety of advanced diagnostic operations on the
image. The sensor can then be repositioned for the next x-ray. As the x-ray dose
is significantly lower than that required for conventional x-ray film, concern
over the potential health risk posed by multiple x-rays is greatly diminished.
The process is easy and intuitive, enabling nearly any member of the dental
staff to operate the CDR(Trademark) system with minimal training.

The use of the CDR(Trademark) system offers significant benefits to
dentists. The use of digital radiography eliminates delays in, and cost of, film
processing, thus increasing the dentist's potential revenue stream and
efficiency, and reduces overhead expenses. The use of digital radiography also
allows dentists to more effectively communicate diagnosis and treatment plans to
patients, which the Company believes has the potential to increase the rate of
patients' treatment acceptance and resulting revenues. Finally, the dosage
required to produce an intra-oral dental x-ray, which is high when compared with
other medical radiographs, can be reduced by up to 90% through the use of the
Company's product.

The Company manufactures image sensors in three sizes which correspond to
the three standard size conventional x-ray films. Size 0 measures 27 x 19 x 6 mm
and is designed for pediatric use; size 1 measures 42 x 25 x 5 mm and is
designed for taking anterior dental images; and size 2 measures 44 x 31 x 5 mm
and is designed to take bitewing images. All of the Company's CDR(Trademark)
sensors may easily be sterilized using cold solutions or gas.

In November 1996, the Company received FDA approval to market its
innovative new intra-oral camera, the CDRCam(Trademark), and began shipping the
product in early 1997. Since then, over 250 orders have been received for the
Company's CDRCam(Trademark). CDRCam(Trademark), which the Company believes to be
the smallest and most portable intra-oral camera on the market, features a
1/4-inch CCD video camera in a miniature handpiece, includes four focal

settings, provides what the Company believes to be the closest macro focus view
available and is the first such camera to offer a detachable handpiece without
the need for a docking station. CDRCam(Trademark) fully integrates with the
CDR(Trademark) system to provide color video images of the structures of the
mouth. Since their introduction in 1991, intra-oral cameras have become widely
accepted as a dental communication and presentation tool.

The typical CDR(Trademark) configuration includes a computer, display
monitor and size 2 digital sensor, and has a list price of $10,995 in the United
States. CDR(Trademark) is also sold in a kit form which includes a digital
sensor and an interface board. The Company sells the CDRCam(Trademark) for
$3,995 when it is purchased together with the CDR(Trademark) system. Optional
accessories, such as a printer and computer network capabilities, increase the
list price of the average CDR(Trademark) system sale to approximately $16,500.

The Company anticipates generating a stream of recurring revenue from its
installed base of CDR(Trademark) systems through its line of disposable
accessories for the CDR(Trademark) system, including sterile barrier covers and
positioning devices.

Osteoporosis Diagnosis

The Company has developed an innovative device to measure BMD to assist
doctors in the diagnosis of osteoporosis. This low-cost and highly precise
diagnostic tool, to be marketed under the trade name accuDEXA(Trademark),
measures BMD more quickly, accurately and easily than any comparable product
currently on the

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market, while using a minimal radiation dosage. It is a point-of-treatment tool,
designed for use by primary care physicians as an integral part of a patient's
regular physical examination. In connection with the development of
accuDEXA(Trademark), the Company has entered into an agreement with Merck
pursuant to which Merck agreed to provide the Company with financing and to
develop certain clinical protocols. See '--Merck Agreement.' The Company has
filed a 510(k) application with the FDA in order to gain approval for the
general use and marketing of the device and, pending FDA marketing clearance,
plans to introduce the product in the second half of 1997.

Based on APS technology, accuDEXA(Trademark) is a small self-contained unit
capable of instantly measuring the BMD of a specific portion of the patient's
hand, a site which has a high correlation to fracture risk. This device is the
first BMD measurement instrument which is virtually automatic, requiring no
operator intervention, calibration or interfacing of any kind other than the
entry of relevant patient data into a built-in touch sensitive video screen. The
device requires no external x-ray generator or computer and it exposes the
patient to less than 2% of the radiation of a single conventional dental x-ray
dose. To use accuDEXA(Trademark), the patient places his or her hand into a
positioner and the device automatically produces two low-dosage instant
radiographs. The patient's bone density information is displayed on the screen
in less than 25 seconds. The target price for this device is approximately

$12,000, making it approximately 50% to 60% less expensive than other peripheral
BMD measurement devices on the market. The Company believes that
accuDEXA(Trademark)'s turnkey operation, low-cost, small size and instant
results make it an attractive product for the primary care physician. In
contrast to accuDEXA(Trademark), currently available densitometry machines,
including other peripheral densitometry systems, require that a trained operator
perform the bone scans. This adds additional expense to the cost of the test and
may decrease the test's precision due to possible operator error in positioning
and scanning.

In an independent clinical test conducted at Beth Israel Hospital in
Boston, Massachusetts in conjunction with Harvard Medical School, a prototype of
accuDEXA(Trademark) has been shown to have an accuracy rate of 99.6%. Testing
has also shown that the device has a precision error rate of only 0.5%. The
Company anticipates that accuDEXA(Trademark) will qualify for the $37.57 per
procedure reimbursement established by HCFA for peripheral measurement devices.

Mammography Device

The Company has developed a method of producing high quality digital
mammography sensors at a cost which, it believes, will be substantially lower
than its competitors' existing and proposed systems. The Company believes that
its digital mammography sensors will yield higher contrast, improved resolution
and lower radiation dosage than current film based systems, will be especially
useful in screening the denser breast tissue typically found in women under the
age of 50 and will allow for real time stereotactic needle biopsies. Clinical
testing has shown that, in comparison with non-digital devices, digital
mammography can increase accurate diagnosis by 20%.

The Company's proprietary APS technology allows the fabrication of high
resolution, large-area devices at low cost. The Company plans to manufacture an
8 x 8 cm sensor by the end of 1997, with a larger full field sensor to follow.
The small 'spot' mammography 6 x 6 cm sensors currently available from other
companies retail for over $90,000. The prototype full sized sensors which are
being developed by these companies are projected to cost $250,000 to $500,000.
The Company believes that its mammography sensors will cost substantially less
than these products and provide superior image quality.

SALES AND MARKETING

Dental Products

Approximately 76% of the Company's sales in fiscal 1997 were made by the
Company's direct sales force to the dental industry in the United States. The
remaining 24% were export sales to foreign independent distributors. In the
United States, the Company utilizes a direct sales system which incorporates
dental trade shows and professional seminars, advertisements in dental
periodicals, journals and other publications, direct mail and product
announcements. The Company employs approximately 40 sales representatives who
are located throughout the United States and are organized into six territories.
A staff of ten marketing specialists based at the Company's offices in New York
supports the direct sales force by planning events and developing

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promotional and marketing materials. In addition, the Company has an in-house
sales program which focuses on universities and continuing education programs.
As of April 1, 1997, CDR(Trademark) has been sold to more than 30% of dental
schools in the United States. The Company also employs a government sales
program to sell directly to the Armed Services, Veterans Administration
hospitals, United States Public Health Service and other government-sponsored
health institutions.

In the international market, the Company sells the CDR(Trademark) system
via independent regional distributors. There are currently approximately 30
independent CDR(Trademark) dealers, covering over 50 countries. These dealers
are recruited based upon relevant experience, reputation and resources.
Typically, dealers have contracts of 6 to 12 months, under which they must meet
certain predetermined sales levels. A specialized in-house staff provides the
foreign distributors with materials, technical assistance and training, both in
New York and abroad.

The Company has recently begun to broaden its sales strategy by negotiating
distribution and private-label 'OEM' agreements, both domestically and
internationally. The Company has entered into an OEM sales agreement with HSI,
pursuant to which HSI will sell the CDR(Trademark) system under its own trade
name. The Company's goal is to utilize its leading position in the industry to
secure as many productive sales channels as possible and to rapidly penetrate
additional segments of the international market. The Company is currently
negotiating agreements with a number of major dental practice management
vendors, dental dealers and dental equipment manufacturers.

Osteoporosis Diagnosis

The Company's strategy is to sell accuDEXA(Trademark) through a direct
sales force and established independent distributors and manufacturers of
medical and radiological equipment. The Company has entered into an OEM sales
agreement with Norland, pursuant to which Norland will sell accuDEXA(Trademark)
under its own trade name. The primary end-users for accuDEXA(Trademark) are
expected to be primary care physicians, including OB/GYN practices, and
osteopathic and geriatric specialists.

Pharmaceutical companies are currently involved in wide-scale osteoporosis
education and awareness programs targeted at physicians. A number of such
companies currently have FDA-approved therapies for the treatment of
osteoporosis, including Novartis, Wyeth-Ayerst Laboratories and Merck. Several
other companies have additional products which are currently in clinical trials,
including Procter & Gamble, Boehringer-Mannheim, Sanofi, Eli Lilly and Pfizer.

The Company expects that the efforts of pharmaceutical companies to develop
medicines and treatment programs will result in the expansion of doctors'
involvement in initial screening and routine management of osteoporosis, thereby
increasing the market for BMD measurement devices. The Company intends to
capitalize on these efforts both in the United States and abroad. Pharmaceutical
companies already have devoted significant resources to educating doctors about
osteoporosis and BMD measurement devices. The Company intends to pursue

arrangements with these companies in order to generate leads for the Company's
direct sales force, supplementing the Company's various other direct marketing
strategies.

Mammography Devices

The Company's sales strategy will be to sell its mammography devices
through established manufacturers in the mammography market, typically on an
'OEM' basis. The Company plans to develop customized versions of its 'spot' and
'full-field' sensors which OEM buyers can incorporate into a wide variety of
mammography machines. The Company believes that this strategy will allow it to
optimize its penetration of the mammography market through utilization of
existing distribution channels.

MERCK AGREEMENT

On August 7, 1996, the Company entered into a secured term loan agreement
with Merck (the 'Merck Agreement') pursuant to which Merck loaned the Company
approximately $1.5 million to be used for the development, manufacture and
marketing of accuDEXA(Trademark). The loan is secured by all of the Company's
accounts receivable and inventory. Pursuant to the Merck Agreement, Merck has
agreed to reimburse the Company in an amount equal to 50% of certain specified
clinical and regulatory fees and expenses incurred by the Company in

30
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connection with the development of accuDEXA(Trademark). The Company anticipates
that this will result in payments by Merck of approximately $175,000 to the
Company. Under the terms of the Merck Agreement, upon the effectiveness of the
Registration Statement, the Company is required to prepay to Merck all amounts
due under the Merck Loan. See 'Use of Proceeds.'

OVERVIEW OF COMPANY TECHNOLOGY

Digital Radiography Systems

Digital radiography systems are based upon electronic devices which convert
x-ray energy into a machine readable digital format. At the heart of these
systems are semiconductor devices, all of which have a number of common
characteristics: they are made up of a matrix of picture elements, or pixels;
they convert the incident radiation into electrons, which are stored in the
pixels; and they have a mechanism for determining how many electrons are present
within each pixel after the exposure. The number of electrons in each pixel
corresponds to the amount of radiation which entered that pixel. By assigning an
intensity value to each pixel based upon the number of electrons collected, an
image can be reconstructed for display and storage.

Because semiconductors are more sensitive to visible light than to x-rays,
a 'conversion layer' is typically placed in front of the semiconductor to
convert the x-rays into visible light so that they can be more efficiently
imaged. This conversion layer is called a scintillator, and is typically a thin
coating which is optically coupled to the semiconductor. The resolution of a
digital radiography system is determined by a combination of the size of the

pixels (the smaller the pixel, the better the resolution), and the quality of
the scintillator and its optical coupling to the semiconductor.

CCDs

A number of different types of semiconductor sensors exist, the most common
of which is the CCD. CCDs have been available since the early 1970s, and are
used in a wide range of imaging applications, from low cost consumer products
such as camcorders, to sophisticated space based surveillance systems. CCDs are
made using microlithographic techniques to create circuit patterns in silicon
wafers, and can therefore be designed with very small pixels, resulting in high
resolution sensors. However, CCDs require very exacting custom manufacturing
standards, and are very sensitive to minute processing fluctuations. As CCDs are
made larger, the manufacturing yield typically drops dramatically, due to the
sensitive nature of the devices and the presence of random defects in the
silicon material. As a result, the price of CCDs is exponentially related to
their size, with a doubling of image area resulting in a quadrupling of cost.

The Company's CDR(Trademark) system is made using an enhanced, low-cost,
large-area, high resolution CCD device. This is achieved by combining a
simplified manufacturing process with a novel yield-enhancement technique. Using
these techniques, the Company has made the only dental sensor large enough to
replace conventional intra-oral dental film.

APS Technology

In 1992, Cal Tech developed an experimental method of producing high
resolution electronic APS using much less expensive CMOS manufacturing
techniques. CMOS, which stands for 'complementary metal-oxide-semiconductor,' is
an inexpensive and highly refined semiconductor process which is used to make
almost all of the world's integrated circuits, such as microprocessors, memories
and graphics chips. Unlike CCD processes, which are unique to each manufacturer,
CMOS technology is uniform throughout the semiconductor industry. Typical CMOS
wafer processing is a fraction of the cost of CCD processing, and CMOS
manufacturing yield is much higher.

In 1994, the Company entered into a cooperative development program with
Cal Tech pursuant to which the Company undertook to adapt APS devices for
radiographic use. Over a three year period, the Company developed a method to
utilize APS technology to produce a CMOS x-ray sensor with image quality equal
to that of CCDs. In June 1996, the Company obtained the license to use APS
devices for a broad range of health care applications. See '--Patents, Trade
Secrets and Proprietary Rights.' APS technology will be used in the Company's
BMD measurement device when it is introduced.

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Large Area Sensors

Because CCDs are made from silicon wafers, the maximum size of CCDs is
limited by available wafer sizes, typically to about six centimeters square. A
number of methods have been developed to overcome this problem and create large
area x-ray sensors. One such technique 'tiles' a number of CCD devices together

to form a large sensor. However, since CCDs must have an inactive border around
the pixels, the resulting sensor has large inactive 'seams' around each CCD. To
minimize the border size, the CCDs can be attached to a special optical
component, called a reducing fiber optic plate, which expands the active region
to beyond the inactive border. While this technique greatly reduces the size of
the inactive border, it adds significantly to the cost of the already expensive
CCD elements. In addition, the reducing fiber optic plates introduce undesirable
image distortion and limit the sensitivity of the device.

Amorphous silicon detectors provide one alternative to these tiled CCD
arrays. These semiconductor devices are made on glass plates rather than on
silicon wafers. Detector sizes of up to 20 inches have been achieved using
amorphous silicon. However, amorphous silicon cannot utilize the advanced
microlithography methods used to produce high resolution CCD devices, and so the
pixel sizes are undesirably large and resolution is limited. Also, amorphous
silicon sensors are susceptible to readout noise which further reduces image
quality.

In March 1997, the PTO allowed the Company's patent application for a
'Large Area Image Array'. This patent describes a novel method of producing
large-area APS sensors without the need for reducing fiber optic plates. APS
devices cost a fraction of the cost of CCD devices. The Company is currently
developing a number of products based on this patent, including 'spot' and 'full
field' mammography sensors.

MANUFACTURING

The Company's products are manufactured at its facility in Long Island
City, New York, which includes a 2,300 square foot clean room facility. This
facility is subject to periodic inspection by the FDA. The Company has invested
in automated and semi-automated equipment for the fabrication and machining of
parts and assemblies incorporated in its products. The Company's quality
assurance program includes various quality control measures from inspection of
raw materials, purchased parts and assemblies through online inspection. See
'Risk Factors--Potential for Product Recall and Product Liability Claims.'

The Company manufactures most of its custom components itself in order to
minimize dependence on suppliers and for quality control purposes. While the
Company does procure certain components from outside sources which, because of
the quality of their products, are sole suppliers, it believes that those
components could be obtained from additional sources without substantial
difficulty, although the need to change suppliers or to alternate between
suppliers might cause material delays in delivery or significantly increase the
Company's costs. The Company's manufacturing processes are, for the most part,
vertically integrated, although selective outsourcing is employed to take
advantage of economies of scale at outside manufacturing facilities and to
alleviate manufacturing bottlenecks. Certain components used in existing
products of the Company, as well as products under development, may be purchased
from single sources. See 'Risk Factors--Dependence on Key Suppliers; Volatility
of Semiconductor Market.'

COMPETITION

The health care industry in general, and the market for imaging products in

particular, is highly competitive. The Company faces competition and potential
competition from a number of companies, many of which have substantially greater
financial, marketing and other resources than the Company. The specific
competitors are distinct within each of the Company's markets, as described
below. The Company competes primarily on the basis of technology, pricing,
product features and performance, and believes that its products compete
favorably in all such areas. There can be no assurance that the Company will
maintain its competitive position against current and potential competitors,
especially those with greater resources than the Company.

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Dental Products

A number of companies currently sell intra-oral digital dental sensors.
These include Trophy S.A., Siemens Dental Systems, Regam Medical Systems and
Dentsply. None of the competing devices currently on the market is able to
produce full size dental images. In addition, Sorodex Corporation sells a
storage-phosphor based intra-oral dental system. The CDR(Trademark) system has
thus far competed successfully against other products. If other companies enter
the digital radiography field, it may result in a significantly more competitive
market in the future. Several companies are involved in the manufacture and sale
of intra-oral cameras, including Dentsply, Welch-Allyn Co., Henry Schein Co.,
Ultra-Cam, Air Technics and DMD.

Osteoporosis Diagnosis

Norland is currently marketing two peripheral BMD devices which scan the
patient's distal forearm and calcaneus (heel), respectively, and Lunar recently
announced the introduction of a peripheral densitometry device which scans the
heel. A number of companies, including Hologic and Metra Biosystems, are
developing ultrasound machines for BMD monitoring. Two companies, Ostex and
Metra Biosystems, are developing biochemical markers which indicate the rate at
which the body is resorbing (i.e., breaking down) bone. One other potential
competitor of the Company's accuDEXA(Trademark) is the Osteogram test,
manufactured by CompuMed Inc., a peripheral screening test employing RA
technology, conventional hand x-rays and computer analysis.

Mammography Devices

The companies in the digital mammography market include the following
manufacturers of traditional mammography devices: GE Medical Systems, Fischer
Imaging, Trex Medical, Instrumentarium Imaging, Philips and Siemens.

DEPENDENCE ON CUSTOMERS

The Company's business is not dependent on any single customer, and the
Company does not believe that the loss of any single customer would have a
material adverse impact on the Company. Except for Dental Computer/Dental
Technologies, which accounted for 18.0% and 8.3% of the Company's sales,
respectively, in 1996 and 1997, and Oral Vision, Inc., which accounted for 21.3%
of the Company's sales in 1995, no single customer has accounted for more than

five percent of the Company's annual sales in either of the Company's two most
recent fiscal years. During fiscal 1995, 1996 and 1997, respectively, sales of
approximately $735,000, $2.1 million and $3.9 million were made to foreign
customers. The majority of such sales to foreign customers were made in Europe.

PATENTS, TRADE SECRETS AND PROPRIETARY RIGHTS

The Company seeks to protect its intellectual property through a
combination of patent, trademark and trade secret protection. The Company's
future success will depend in part on its ability to obtain and enforce patents
for its products and processes, preserve its trade secrets and operate without
infringing the proprietary rights of others.

Patents

The Company has an active corporate patent program, the goal of which is to
secure patent protection for its technology. The Company currently has an issued
United States patent for an 'Intra-Oral Sensor for Computer Aided Radiography,'
which patent expires on October 16, 2012, and an allowed United States patent
application for a 'Large Area Image Detector' which will expire on November 20,
2016. The Company also has five additional patent applications currently pending
before the PTO. In addition, the Company is the exclusive licensee of a United
States patent for an 'Intraoral Fluoroscope,' which patent expired on July 10,
1996, and is the licensee of certain patents, patent applications and other
know-how related to CMOS active pixel sensors, the technology for which was
developed by Cal Tech and licensed to Photobit LLC, from which the Company
obtained the license for a broad range of healthcare applications.

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Trademarks

The Company currently has pending in the PTO trademark applications on the
mark 'CDR' for its digital dental radiography product, 'CDRCAM' (both textual
and stylized) for its intra-oral camera, 'QUICKZOOM' (both textual and stylized)
for a viewing feature in its digital dental radiography product and 'ACCUDEXA'
for its BMD measurement product. The 'CDR' mark was allowed pursuant to an April
22, 1997 Notice of Allowance issued by the PTO.

Trade Secrets

In addition to patent protection, the Company owns trade secrets and
proprietary know-how which it seeks to protect, in part, through appropriate
non-disclosure, confidentiality, non-solicitation, non-competition and employee
agreements with appropriate individuals, including employees, consultants,
vendors and independent contractors. These agreements generally provide that all
confidential information developed by or made known to the individual by the
Company during the course of the individual's relationship with the Company is
the property of the Company, and is to be kept confidential and not disclosed to
third parties, except in specific limited circumstances. The agreements also
generally provide that all inventions conceived by the individual in the course
of rendering services to the Company shall be the exclusive property of the
Company. However, there can be no assurances that these agreements will not be

breached, that the Company would have adequate remedies available to it for any
breach or that the Company's trade secrets will not otherwise become known to,
or independently developed by, its competitors.

GOVERNMENT REGULATION

Products that the Company is currently developing or may develop in the
future are likely to require certain forms of governmental clearance, including
FDA marketing clearance. The FDA review process typically requires extended
proceedings pertaining to product safety and efficacy. The Company believes that
its future success will depend to a large degree upon commercial sales of
improved versions of its current products and sales of new products; the Company
will not be able to market such products in the United States without FDA market
clearance. There can be no assurance that accuDEXA(Trademark), or any other
products to be developed by the Company, will be given clearance by applicable
governmental authorities or that additional regulations will not be adopted or
current regulations amended in such a manner as to adversely affect the Company.
See 'Risk Factors--Regulatory and Legislative Risks.'

Pursuant to the Federal Food, Drug and Cosmetic Act, as amended (the 'FD&C
Act'), the FDA classifies medical devices intended for human use into three
classes: Class I, Class II, and Class III. In general, Class I devices are
products for which the FDA determines that safety and effectiveness can be
reasonably assured by general controls under the FD&C Act relating to such
matters as adulteration, misbranding, registration, notification, records and
reports. The CDRCam(Trademark) is a Class I device.

Class II devices are products for which the FDA determines that general
controls are insufficient to provide a reasonable assurance of safety and
effectiveness, and that require special controls such as promulgation of
performance standards, post-market surveillance, patient registries or such
other actions as the FDA deems necessary. The CDR(Trademark) system has been
classified as a Class II device.

Class III devices are devices for which the FDA has insufficient
information to conclude that either general controls or special controls would
be sufficient to assure safety and effectiveness, and which are life-supporting,
life-sustaining, of substantial importance in preventing impairment of human
health, or present a potential unreasonable risk of illness or injury. Devices
in this case require pre-marketing approval, as described below. None of the
Company's existing products are in the Class III category.

The FD&C Act further provides that, unless exempted by regulation, medical
devices may not be commercially distributed in the United States unless they
have been cleared by the FDA. There are two review procedures by which medical
devices can receive such clearance. Some products may qualify for clearance
under a Section 510(k) procedure, in which the manufacturer submits to the FDA a
pre-market notification that it intends to begin marketing the product, and
shows that the product is substantially equivalent to another legally marketed
product (i.e., that it has the same intended use and that it is as safe and
effective as a legally marketed device,

product (i.e., that it has the same intended use and that it is as safe and
effective as a legally marketed device,

<PAGE>

and does not raise different questions of safety and effectiveness than does a
legally marketed device). In some cases, the 510(k) notification must include
data from human clinical studies.

Marketing may commence once the FDA issues a clearance letter finding such
substantial equivalence. According to FDA regulations, the agency has 90 days in
which to respond to a 510(k) notification. There can be no assurance, however,
that the FDA will provide a response within that time, or reach a finding of
substantial equivalence.

If a product does not qualify for the 510(k) procedure (either because it
is not substantially equivalent to a legally marketed device or because it is a
Class III device), the FDA must approve a PMA application before marketing can
begin. PMA applications must demonstrate, among other things, that the medical
device is safe and effective. A PMA application is typically a complex
submission that includes the results of clinical studies. Preparation of such an
application is a detailed and time-consuming process. Once a PMA application has
been submitted, the FDA's review process may be lengthy and include requests for
additional data. By statute and regulation, the FDA may take 180 days to review
a PMA application, although such time may be extended. Furthermore, there can be
no assurance that a PMA application will be approved by the FDA.

In February 1994, the FDA approved the Company's 510(k) application for
general use and marketing of the CDR(Trademark) system. In November 1996, the
FDA approved the Company's 510(k) application for general use and marketing of
the CDRCam(Trademark).

In May 1997, following the completion of a study performed at Beth Israel
Hospital in Boston, Massachusetts in conjunction with Harvard Medical School,
the Company filed a 510(k) application with the FDA, seeking marketing clearance
for accuDEXA(Trademark). The Company believes that accuDEXA(Trademark) will be
classified as a Class II device, and that this product will not require a PMA
application but will be eligible for marketing clearance through the 510(k)
notification procedure based upon its substantial equivalence to a previously
marketed device or devices. Although the 510(k) pre-market clearance process is
ordinarily simpler and faster than the PMA application process, there can be no
assurance that the Company will obtain 510(k) pre-market clearance for
accuDEXA(Trademark) or that it will be classified as a Class II device or that,
in order to obtain 510(k) clearance, the Company will not be required to submit
additional data or meet additional FDA requirements that may substantially delay
the 510(k) process and add expense to the process. Moreover, such 510(k)
pre-market clearance, if obtained, may be subject to conditions on the marketing
or manufacturing of accuDEXA(Trademark) which may impede the Company's ability
to market and/or manufacture the product.

In addition to the requirements described above, the FD&C Act requires that
all medical device manufacturers and distributors register with the FDA annually
and provide the FDA with a list of those medical devices which they distribute
commercially. The FD&C Act also requires that all manufacturers of medical

devices comply with labeling requirements and manufacture their products and
maintain their documents in a prescribed manner with respect to manufacturing,
testing, and quality control activities. The FDA's Medical Device Reporting
regulation subjects medical devices to postmarket reporting requirements for
death or serious injury, and for certain malfunctions that would be likely to
cause or contribute to a death or serious injury if malfunction were to recur.
In addition, the FDA prohibits a device which has received marketing clearance
from being marketed for applications for which marketing clearance has not been
obtained. The FDA further requires that certain medical devices not cleared for
marketing in the United States receive FDA marketing clearance before they are
exported.

FDA guidelines entitled 'Good Manufacturing Practices of Medical Devices'
set forth standards for the Company's manufacturing process, requires the
maintenance of certain records and provide for unscheduled inspections of the
Company's facilities. Certain requirements of state, local and foreign
governments must also be complied with in the manufacture and marketing of the
Company's products. The Company believes that its manufacturing and quality
control procedures meet the requirements of these regulations.

Failure to comply with applicable regulatory requirements can, among other
consequences, result in fines, injunctions, civil penalties, suspensions or loss
of regulatory approvals, product recalls, seizure of products, operating
restrictions and criminal prosecution. In addition, governmental regulations may
be established that could prevent or delay regulatory clearance of the Company's
products. Delays in receipt of clearance, failure to

<PAGE>

receive clearance or the loss of previously received clearance would have a
material adverse effect on the Company's business, financial condition and
results of operations.

In addition to laws and regulations enforced by the FDA, the Company is
subject to government regulations applicable to all businesses, including, among
others, regulations related to occupational health and safety, workers' benefits
and environmental protection. The extent of government regulation that might
result from any future legislation or administrative action cannot be accurately
predicted. Failure to comply with regulatory requirements could have a material
adverse effect on the Company's business, financial condition and results of
operations.

Distribution of the Company's products in countries other than the United
States may be subject to regulations in those countries. The Company typically
relies on its independent distributors in such foreign countries to obtain the
requisite regulatory approvals. There can be no assurance that the Company will
be able to obtain the approvals or clearances necessary to market its
accuDEXA(Trademark) or any other product outside of the United States.

LITIGATION

The Company is a named defendant in two lawsuits instituted by Trophy S.A.

One lawsuit was instituted in France and the other in the United States. The
Company is also a named defendant in a lawsuit instituted by Radworks and the
University of Texas.

The French lawsuit instituted by Trophy S.A. was filed in November 1995, in
the tribunal de Grande Instance de Bobigny, the French patent court, and
originally alleged that the Company's CDR(Trademark) system infringes French
Patent No. 2,547,495, European Patent No. 129,451 and French Certificate of
Addition No. 2,578,737. These patents, all of which are related, are directed to
a CCD based intra-oral sensor. Since filing its lawsuit, Trophy S.A. has
withdrawn its allegation of infringement with respect to the Certificate of
Addition. Trophy S.A. is seeking a permanent injunction and damages, including
damages for its purported lost profits. The Company believes that the lawsuit is
without merit, and is vigorously defending it. The Company is represented by the
French law firm of Pierre Cousin and French patent counsel Cabinet beau de
lomenie.

The lawsuit in the United States was filed in March 1996 by Trophy S.A.,
Trophy Inc. and the named inventor on the patent in suit, Francis Mouyen, a
French citizen. The suit was brought in the United States District Court for the
Eastern District of New York, and alleges that the Company's CDR(Trademark)
system infringes the '400 patent, which is related to the patents in the French
lawsuit. Trophy S.A., Trophy Inc. and Mouyen are seeking a permanent injunction
and unspecified damages, including damages for purported lost profits, enhanced
damages for the Company's purported willful infringement and an award of
attorney fees. The Company believes that the lawsuit is without merit, and is
vigorously defending it. The Company is represented by Fitzpatrick, Cella,
Harper and Scinto, which has issued a formal opinion that the CDR(Trademark)
system does not infringe the '400 patent.

The Company has also been sued by Radworks and the University of Texas.
That suit, filed in December 1996 in the United States District Court for the
Western District of Texas, alleges that the Company's CDR(Trademark) system
infringes the '579 patent. The '579 patent is directed to a display system for
digital dental radiographs. Radworks and the University of Texas are seeking a
permanent injunction and unspecified damages, including enhanced damages for the
Company's purported willful infringement and an award of attorney fees. The
Company believes that the lawsuit is without merit, and is vigorously defending
it. The Company is represented by Darby and Darby, which has issued a formal
opinion that the CDR(Trademark) system does not infringe the '579 patent, and
Texas local counsel, Soules and Wallace.

There can be no assurance that the Company will be successful in its
defense of any of these actions, or in its counter-suits. If the Company is
unsuccessful in its defense of any of these actions, it could have a material

<PAGE>

adverse effect upon the Company. Moreover, regardless of their outcome, the
Company may be forced to expend significant amounts of money in legal fees in
connection with these lawsuits.

INSURANCE

The Company is subject to the risk of product liability and other liability
claims in the event that the use of its products results in personal injury or
other claims. Although the Company has not experienced any product liability
claims to date, any such claims could have an adverse impact on the Company. The
Company maintains insurance coverage related to product liability claims in the
amount of $1 million per occurrence, annual aggregate maximum coverage in the
amount of $2 million, and umbrella coverage in the amount of $10 million. There
can be no assurance that product liability or other claims will not exceed such
insurance coverage limits, or that such insurance will continue to be available
on commercially acceptable terms, or at all. See 'Risk Factors--Potential for
Product Recall and Product Liability Claims.'

EMPLOYEES

At March 31, 1997, the Company had 173 full-time employees, engaged in the
following capacities: production (47); direct sales (40); management,
accounting, legal and administrative (35); research and development and quality
control engineers (26); product support engineers (15); and marketing (10). The
Company believes that its relations with its employees are good. No Company
employees are represented by a labor union or are subject to a collective
bargaining agreement, nor has the Company experienced any work stoppages due to
labor disputes.

FACILITIES

The Company presently occupies 30,800 square feet of space in Long Island
City, New York pursuant to a lease with Falchi Building Co., LP, which expires
in February 2001. This space houses the Company's executive offices, sales and
marketing headquarters, research and development laboratories and production and
shipping facilities. The Company anticipates expanding its facilities over the
next 12 months to meet increased staffing and manufacturing needs. The Company
expects that adequate space will be available at a reasonable cost.

RESEARCH AND DEVELOPMENT

During fiscal 1995, 1996 and 1997, research and development expenses were
$150,000, $458,000 and $1.4 million, respectively.

BACKLOG

The Company does not maintain any significant backlog of its products due
to its ability to process orders in a timely manner.

<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE* POSITION
- ------------------------------ ---- --------------------------------------------
<S> <C> <C>
David B. Schick............... 36 Chairman of the Board, Chief Executive
Officer and President
Jonathan Singer............... 32 Vice President--Engineering and Director
David B. Spector, C.P.A. ..... 37 Chief Financial Officer and Treasurer
Zvi N. Raskin, Esq. .......... 34 Secretary and General Counsel
Daniel Neugroschl............. 30 Vice President--Operations and Advanced
Development
Fred Levine................... 34 Director of Sales and Marketing
Mark I. Bane, Esq. ........... 36 Director
Euval S. Barrekette, Ph.D. ... 66 Director
Allen Schick, Ph.D. .......... 62 Director
Howard Wasserman, D.D.S....... 40 Director
</TABLE>

- ------------------
* At April 1, 1997

The business experience of each of the directors and executive officers is
set forth below.

DAVID B. SCHICK is a founder of the Company and, since its inception in
April 1992, has served as the Company's President, Chief Executive Officer and
Chairman of the Board of Directors. From September 1991 to April 1992 Mr. Schick
was employed by Philips N.V. Laboratories, where he served as a consulting
engineer designing high-definition television equipment. From February 1987 to
August 1991, Mr. Schick was employed as a senior engineer at Cox and Company, an
engineering firm in New York City ('Cox and Company'). From January 1985 to
January 1987, Mr. Schick was employed as an electrical engineer at Grumman
Aerospace Co. Mr. Schick holds a B.S. degree in electrical engineering from the
University of Pennsylvania's Moore School of Engineering. Mr. Schick is the son
of Dr. Allen Schick and the nephew of Dr. Euval S. Barrekette. In 1996, Mr.
Schick was awarded the New York City Region Entrepreneur of the Year Award.

JONATHAN SINGER is a founder of the Company and, from its inception in
April 1992 to December 1996, was the Company's Director of Engineering and,
since December 1996, has served as the Company's Vice President of Engineering.
Since January 1995, Mr. Singer has also served as a Director of the Company.
From February 1991 to July 1992, Mr. Singer was employed as a mechanical
engineer by Cox and Company. He holds a B.S. degree in Mechanical Engineering
from the Massachusetts Institute of Technology and an M.S. degree from the

University of Pennsylvania.

DAVID B. SPECTOR has been the Company's Chief Financial Officer since
January 1996 and has served as Treasurer since May 1997. Mr. Spector joined the
Company in 1992 as its part-time controller. From September 1992 to December
1995, Mr. Spector was a self-employed certified public accountant. From January
1988 to September 1992, Mr. Spector was an accountant with Kranz & Co., a
certified public accounting firm. Mr. Spector holds a B.S. degree in business
from Adelphi University.

ZVI N. RASKIN, Esq., has served as Secretary of the Company since April
1992 and as General Counsel of the Company since September 1995. From April 1992
to May 1996, Mr. Raskin was a Director of the Company. Mr. Raskin is admitted to
practice law before the Bars of the State of New York, the United States
District Courts for the Southern and Eastern Districts of New York and the
United States Court of Appeals for the Second Circuit. From 1992 to 1995, Mr.
Raskin was a senior associate at the New York law firm of Townley & Updike. From
1990 to 1992, Mr. Raskin was an associate at the New York law firm of Dornbush
Mandelstam & Silverman. Mr. Raskin holds a J.D. degree from Yale Law School.

DANIEL NEUGROSCHL is a founder of the Company and, from its inception in
April 1992 to December 1996, was the Company's Director of Operations and, since
December 1996, has served as the Company's Vice President of Operations and
Advanced Development. From January 1995 to May 1996, Mr. Neugroschl was a
Director of the Company. From November 1990 to September 1992, Mr. Neugroschl
was a researcher at IBM's T.J. Watson Research Center. Mr. Neugroschl holds an
M.S. degree in Materials Science from Columbia University.

<PAGE>

FRED LEVINE has served as the Company's Director of Sales and Marketing
since August 1995. From May 1987 to August 1995, Mr. Levine was employed at
American Express Travel Services, where he served in various positions,
including Director of Product Development and Sales from September 1993 to
August 1995. Mr. Levine holds a B.S. degree in Computer Science from Brooklyn
College.

MARK I. BANE, Esq., has served as a Director of the Company since January
1995. From July 1993 to the present, Mr. Bane has been a partner at the New York
City law firm of Kelley Drye & Warren LLP. From April 1989 to July 1993, Mr.
Bane was an associate at Kelley Drye & Warren LLP. Mr. Bane is admitted to
practice law before the Bars of the State of New York, the United States
District Courts for the Southern and Eastern Districts of New York and the
District of Connecticut. Mr. Bane holds a J.D. degree from New York University
School of Law.

EUVAL S. BARREKETTE, Ph.D., has served as a Director of the Company since
April 1992. Dr. Barrekette is a licensed Professional Engineer in New York
State. Since 1986 Dr. Barrekette has been a consulting engineer and physicist.
From 1984 to 1986 Dr. Barrekette was Group Director of Optical Technologies of
the IBM Large Systems Group. From 1960 to 1984 Dr. Barrekette was employed at
IBM's T.J. Watson Research Center in various capacities, including Assistant

Director of Applied Research, Assistant Director of Computer Science, Manager of
Input/Output Technologies and Manager of Optics and Electrooptics. Dr.
Barrekette holds an A.B. degree from Columbia College, a B.S. degree from the
Columbia University School of Engineering, an M.S. degree from its Institute of
Flight Structures and a Ph.D. from the Columbia University Graduate Faculties.
Dr. Barrekette is a fellow of the American Society of Civil Engineers and a
Senior Member of the Institute of Electronic & Electrical Engineers. Dr.
Barrekette is a member of The National Society of Professional Engineers, The
New York State Society of Professional Engineers, The Optical Society of America
and The New York Academy of Science. Dr. Barrekette is the uncle of Mr. David
Schick and the brother-in-law of Dr. Allen Schick.

ALLEN SCHICK, Ph.D., has served as a Director of the Company since April
1992. Since 1981, Dr. Schick has been a professor at the University of Maryland
and since 1988 has been a Visiting Fellow at the Brookings Institution. Dr.
Schick holds a Ph.D. degree from Yale University. Dr. Schick is Mr. David
Schick's father and the brother-in-law of Dr. Barrekette.

HOWARD WASSERMAN, D.D.S., has served as a Director of the Company since May
1996 and has been a medical advisor to the Company since 1992. Since 1983, Dr.
Wasserman has been a practicing dentist in New York City. Dr. Wasserman has been
a member of the American Academy of Periodontology since 1981, and a member of
the American Dental Association since 1977. Dr. Wasserman has served as a
Director of Live Wire Enterprises, a manufacturer of electroluminescent wire
systems, since 1996. Dr. Wasserman holds a D.D.S. degree from Columbia
University School of Dentistry.

Pursuant to the Certificate of Incorporation and By-Laws, the Board of
Directors consists of six directors or such greater or lesser number (not less
than five or greater than twelve) as may be fixed from time to time by a
majority of the total number of directors which the Company would have if there
were no vacancies on the Board of Directors (the 'Whole Board').

The directors are divided into three classes, each class consisting of as
nearly equal a number of Directors as possible, having terms expiring at the
respective annual meetings of stockholders in 1998 (comprised of Messrs. Singer
and Wasserman), 1999 (comprised of Messrs. Bane and Barrekette) and 2000
(comprised of Messrs. David Schick and Allen Schick). At each annual meeting of
stockholders, successors to directors of the class whose term expires at such
meeting will be elected to serve for three-year terms and until their successors
are elected and qualified.

The term in office of each executive officer ends when his successor has
been elected and qualified or upon his removal or resignation. The By-Laws
provide that officers of the Company can be removed or replaced only by the
affirmative vote of a majority of the Whole Board (excluding, if such officer is
also a director, such director).

<PAGE>

The Board of Directors has established an Executive Compensation Committee
and an Audit Committee. The responsibilities and membership requirements of each

of these Committees are described below.

The Audit Committee consists of at least two directors, none of whom may be
an employee of the Company. The Audit Committee has oversight responsibility
relating to the Company's accounting practices, internal financial controls and
financial reporting, including the engagement of independent auditors and the
planning, scope, timing and cost of any audit as well as review of the
independent accountant's report on the financial statements following completion
of each such audit. In addition, the Audit Committee is responsible for the
development and implementation of policies, procedures and other matters
relating to business integrity, ethics and conflicts of interest. The members of
the Audit Committee are Messrs. Bane and Barrekette.

The Executive Compensation Committee consists of at least two directors, a
majority of whom may not be employees of the Company. The Executive Compensation
Committee has oversight responsibility relating to the Company's employee
benefit and compensation plans, including compensation of the executive officers
and administering and making awards under the 1996 Employee Stock Option Plan.
The Executive Compensation Committee is also responsible for the development and
implementation of policies, procedures and other matters relating to the hiring
and retention of management and for reviewing, monitoring and recommending (for
approval by the Board of Directors) plans with respect to succession of the
chief executive officer. The members of the Executive Compensation Committee are
Messrs. Bane and Wasserman.

Prior to the Offering, directors served without compensation. Following the
Offering, directors who are not employees of the Company will be entitled to an
annual retainer of $2,000, a fee of $500 for each meeting of the Board of
Directors attended in person and a fee of $300 for each committee meeting
attended. At the option of the Board of Directors, such retainers and fees may
be paid in shares of Common Stock. In addition, non-employee directors are
entitled to receive annual grants of stock options as described under
'--Directors Stock Option Plan.' Since January 1, 1997, all directors have been
entitled to reimbursement of reasonable travel expenses incurred in connection
with the Company's business.

Certain provisions of the Certificate of Incorporation and By-Laws and the
DGCL may limit the ultimate liability of directors and executive officers of the
Company for breaches of certain of their duties to the Company and its
stockholders. See 'Description of Capital Stock--Certain Charter and Statutory
Provisions.'

EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mark I. Bane, Esq., a partner of Kelley Drye & Warren LLP, outside counsel
to the Company, has been a member of the Executive Compensation Committee since
January 1996.

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning compensation
received by the Company's chief executive officer and each of the executive
officers of the Company whose total salary and bonus compensation exceeded
$100,000 (the 'Named Executives') for services rendered in all capacities

(including service as a director of the Company) during the year ended March 31,
1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION/AWARDS
ANNUAL COMPENSATION -------------------
-------------------------------------- SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- --------------------------- ------ --------- -------- --------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David B. Schick
Chairman of the Board,
Chief Executive Officer
and President............ 1997 $ 140,308 $ 5,890 -- 5,715(1) $ 2,000(2)

Fred Levine
Director of Sales and
Marketing................ 1997 105,846 42,353(3) -- -- 1,500(2)

David B. Spector
Chief Financial Officer.. 1997 102,769 6,386 -- -- 1,331(2)
</TABLE>

(Footnotes on next page)

<PAGE>

- ------------------
(1) Represents options to purchase shares of Common Stock granted in fiscal 1997
pursuant to the Company's 1996 Employee Stock Option Plan. See '--1996
Employee Stock Option Plan.'
(2) Reflects amounts contributed by the Company in the form of matching
contributions to the Named Executive's Savings Plan account in fiscal 1997.
See '--Savings Plan.'
(3) Includes a commission of $36,579 received by Mr. Levine in fiscal 1997 in
connection with certain sales targets that were met or exceeded.

STOCK OPTION GRANTS

The following table sets forth information regarding grants of options to
purchase Common Stock made by the Company during the year ended March 31, 1997
to each of the Named Executives.

OPTION GRANTS IN FISCAL 1997

INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OR OPTION TERM(2)
OPTIONS FISCAL BASE PRICE EXPIRATION -------------------------------
NAME GRANTED(#) 1997(1) ($/SHARE) DATE (0%) (5%) (10%)
- --------------------- ---------- ------------- ------------ ---------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
David B. Schick(3)... 5,715 7.20% $ 7.14 7/22/06 $64,922 $131,414 $233,425
</TABLE>

- ------------------
(1) The Company granted options to purchase a total of 79,338 shares of Common
Stock in fiscal 1997.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (0%, 5% and 10%) on
the Common Stock over the term of the options. These assumptions are based
on rules promulgated by the Securities and Exchange Commission (the
'Commission') and do not reflect the Company's estimate of future stock
price appreciation. Actual gains, if any, on the stock option exercises and
Common Stock holdings are dependent on the timing of such exercises and the
future performance of the Common Stock. There can be no assurance that the
rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the option holder.
(3) The fiscal 1997 stock option grant to Mr. Schick is a time-vesting option.
25% of such option vests on July 22, 1997 and an additional 25% vests on
July 22 of each of 1998, 1999 and 2000. The stock option was exercisable
upon grant.

OPTION EXERCISES AND YEAR-END VALUE TABLE

The following table sets forth information regarding the exercise of stock
options during fiscal 1997 and the number and value of unexercised options held
at March 31, 1997 by each Named Executive.

AGGREGATED OPTION EXERCISES IN FISCAL 1997
AND FISCAL 1997 YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED 'IN-THE-MONEY'
SHARES VALUE OPTIONS AT OPTIONS AT
ACQUIRED ON REALIZED MARCH 31, 1997 MARCH 31, 1997
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ------------------ ----------- -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
David B. Schick... -- -- 5,715/0 64,922/0
Fred Levine....... -- -- 28,000/28,000(2) 467,880/467,880
</TABLE>

- ------------------
(1) Options are 'in-the-money' if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set forth
represent the difference between $18.50 per share, the initial public
offering price per share and the exercise price of the option, multiplied by
the applicable number of options.
(2) Reflects options to purchase shares of Common Stock at an exercise price of
$1.79 a share granted to Mr. Levine in fiscal 1996 in connection with Mr.
Levine's commencement of employment with the Company. Currently unvested
options to purchase an additional 14,000 shares will vest and become
exercisable on December 31 of each of 1997 and 1998. All of the options
expire on December 31, 2000.

1996 EMPLOYEE STOCK OPTION PLAN

In April 1996, the Board of Directors adopted and the shareholders of the
Company approved the 1996 Employee Stock Option Plan, which provides for the
grant to officers, directors and employees of the Company and consultants,
advisors and independent contractors of the Company of both 'incentive stock
options' within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the 'Code'), and stock options that are non-qualified for federal
income tax purposes. The total number of shares of Common Stock for which

<PAGE>

options may be granted pursuant to the 1996 Employee Stock Option Plan is
470,400, subject to certain adjustments reflecting changes in the Company's
capitalization, of which 74,953 were granted and outstanding as of March 31,
1997. The 1996 Employee Stock Option Plan must be administered by the Board of
Directors of the Company and/or by a duly appointed committee of the Board of
Directors. The 1996 Employee Stock Option Plan is currently administered by the
Executive Compensation Committee. The Executive Compensation Committee
determines, among other things, which officers, employees, directors,
consultants, advisors and contractors will receive options under the plan, the
type of option (incentive stock options or non-qualified stock options, or both)
to be granted, vesting, the number of shares subject to each option, and,
subject to certain conditions discussed below, the exercise price of the option
and duration of the options. Members of the Executive Compensation Committee are
not eligible to receive options under the plan.

The exercise price of incentive stock options is determined by the
Executive Compensation Committee, but may not be less than the fair market value
of the Common Stock on the date of grant and the term of any such option may not
exceed ten years from the date of grant. With respect to any participant in the
1996 Employee Stock Option Plan who owns stock representing more than 10% of the
voting power of the outstanding capital stock of the Company, the exercise price
of any incentive stock option may not be less than 110% of the fair market value
of the Common Stock on the date of grant and the term of such option may not
exceed five years from the date of grant.

The exercise price of non-qualified stock options is determined by the
Executive Compensation Committee on the date of grant, but may not be less than

85% of the fair market value of the Common Stock on the date of grant, and the
term of such option may not exceed ten years from the date of grant.

Payment of the exercise price may be made by cash, check or cash
equivalent, by tender of shares of Common Stock then owned by the optionee, by a
recourse promissory note in a form approved by the Company, by the assignment of
the proceeds of the sale of some or all of the shares of Common Stock being
acquired upon the exercise of an option or by any combination of the foregoing.
Options may be granted which do not permit all of the foregoing forms of
payment. Options granted pursuant to the 1996 Employee Stock Option Plan are not
transferable, except by will or the laws of descent and distribution in the
event of death. During an optionee's lifetime, the option is exercisable only by
the optionee. Options granted through May 1, 1997 under the 1996 Employee Stock
Option Plan vest at an annual rate of 25%.

The Board of Directors has the right at any time and from time to time to
terminate or amend the 1996 Employee Stock Option Plan or any option without the
consent of the Company's shareholder or optionees; provided, that no such action
may adversely affect options previously granted without the optionee's consent,
and provided further that no such action, without the approval of the
stockholders of the Company, may increase the total number of shares of Common
Stock which may be purchased pursuant to options under the 1996 Employee Stock
Option Plan and expand the class of persons eligible to receive grants of
options under the plan. The expiration date of the 1996 Employee Stock Option
Plan, after which no option may be granted thereunder, is April 22, 2006.

SAVINGS PLAN

The Company maintains a savings program for employees (the 'Savings Plan'),
which is qualified under Section 401(a) and 401(k) of the Code. All employees of
the Company who have attained the age of 18 and have completed one half year of
service with the Company are eligible to participate in the Savings Plan. The
Savings Plan provides that each participant may make elective contributions from
1% to 15% of his or her compensation, subject to statutory limits. For each
eligible employee who elects to participate in the Savings Plan and makes a
contribution thereto, the Company makes a matching contribution. The matching
contribution is 50% of the first 5% of compensation contributed by the employee
to the Savings Plan. Contributions to the Savings Plan are invested, as the
employee directs, in a choice of mutual funds administered by Merrill Lynch &
Co. All contributions made by participants are fully vested when made. Matching
contributions made by the Company to the Savings Plan vest at a rate of 20%
after the second anniversary of the employee's date of hire by the Company and
at a rate of an additional 20% on each anniversary date of hire thereafter.
Distributions from the Savings Plan generally will be made only upon retirement
or other termination of employment, unless deferred by the participant.

<PAGE>

DIRECTORS STOCK OPTION PLAN

The Board of Directors adopted the Directors Stock Option Plan in May 1997.
A total of 35,000 shares of Common Stock have been authorized for issuance under

the Directors Stock Option Plan, of which no shares are subject to the
outstanding options.

All directors serving as such on or after the closing of the Offering who
are not employees of the Company ('Director Participants') are eligible to
receive options under the Directors Stock Option Plan. The Directors Stock
Option Plan is administered by the Board of Directors (or a committee designated
by the Board of Directors) which determines the time when options will be
granted, the terms of the options, the initial exercise date of the options and
the number of shares of Common Stock subject to the options. The term of such
options may not exceed ten years from the date of grant.

The exercise price of each option is 100% of the fair market value of the
Common Stock on the date of grant. Options provided under the Directors Stock
Option Plan fully vest on the second anniversary of the date of grant and are
subject to certain other restrictions at the Board of Directors' sole
discretion. Options will also generally vest immediately by the holder thereof
prior to the effective date of a change of control of the Company. Effective
upon the completion of the Offering, the Board of Directors adopted a resolution
providing for the grant to each Director Participant upon each anniversary of
such Director Participant's joining the Board of Directors options to purchase
500 shares of Common Stock. No options have been granted to date under the
Directors Stock Option Plan.

<PAGE>

CERTAIN TRANSACTIONS

On November 12, 1996, Waring Investments, Inc. ('Waring'), a company in
which David B. Spector, the Company's Chief Financial Officer and Treasurer, is
a principal shareholder, borrowed $200,000 from the Company, at an interest rate
of 8.75%. The loan, together with accrued interest, was repaid on February 25,
1997.

From July 1995 through October 1995, Waring borrowed $150,000 from the
Company at an interest rate of 12.0%. The loan was repaid from January 1996
through March 1996.

On January 8, 1995, Dr. Allen Schick loaned the Company $150,000. The loan
was convertible into shares of Common Stock, valued at $1.52 per share. Dr.
Schick converted the loan into 98,823 shares of Common Stock in December 1995.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of outstanding shares of Common Stock, as of the date of this
Prospectus, by (i) each person known to the Company to be the beneficial owner
of more than 5% of the outstanding shares of Common Stock, (ii) each director of
the Company, (iii) each executive officer of the Company (including the Named
Executives) and (iv) all executive officers and directors of the Company, as a
group. All information with respect to beneficial ownership has been furnished
to the Company by the respective stockholders.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------------------
PERCENTAGE OF
OUTSTANDING
SHARES
---------------------
NAME AND ADDRESS OF NUMBER BEFORE AFTER
BENEFICIAL OWNER OF SHARES OFFERING OFFERING
- ------------------------------------ --------- -------- --------
<S> <C> <C> <C>
David B. Schick(1).................. 2,276,515(2) 28.59% 23.44%
Fred Levine(1)...................... 84,784(3) 1.06% *
Daniel Neugroschl(1)................ 343,191(4) 4.31% 3.53%
Zvi N. Raskin(1).................... 44,800(5) * *
Jonathan Singer(1).................. 328,373(6) 4.12% 3.38%
David B. Spector, C.P.A.(1)......... 28,000(7) * *
Mark I. Bane(8)..................... 296,800(9) 3.73% 3.06%
Euval S. Barrekette(10)............. 117,040 1.47% 1.21%
Allen Schick(11).................... 518,824(12) 6.52% 5.34%
Howard Wasserman(13)................ 140,000(14) 1.76% 1.44%
All executive officers and directors
as a group (10 persons)........... 4,178,326 52.21% 42.84%
</TABLE>

- ------------------
*Represents less than 1%.

(1) Such person's business address is c/o Schick Technologies, Inc., 31-00 47th
Avenue, Long Island City, New York 11101.

(2) Consists of 2,270,800 shares held jointly by Mr. Schick and his wife and
5,715 shares issuable upon the exercise of stock options granted to Mr.
Schick under the 1996 Employee Stock Option Plan.

(3) Includes 392 shares issuable upon the exercise of Warrants and includes
28,000 shares issuable upon the exercise of options granted to Mr. Levine
in January 1996.

(4) Includes 5,791 shares issuable upon the exercise of stock options granted
to Mr. Neugroschl under the 1996 Employee Stock Option Plan.

(5) Consists of 44,800 shares held jointly by Mr. Raskin and his wife.

(6) Consists of 322,000 shares held jointly by Mr. Singer and his wife and
6,373 shares issuable upon the exercise of stock options granted to Mr.
Singer under the 1996 Employee Stock Option Plan.

(7) Consists of 28,000 shares held jointly by Mr. Spector and his wife.

(Footnotes continued on next page)

<PAGE>

(Footnotes continued from previous page)

(8) Mr. Bane's address is c/o Kelley Drye & Warren LLP, 101 Park Avenue, New
York, New York 10178.

(9) Consists of 296,800 shares owned by Mr. Bane's wife. Mr. Bane disclaims
beneficial ownership of such shares.

(10) Dr. Barrekette's address is 90 Riverside Drive, New York, New York 10024.

(11) Dr. Schick's address is 1222 Woodside Parkway, Silver Spring, Maryland
20910.

(12) Consists of 474,024 shares held jointly by Dr. Schick and his wife and
44,800 shares held by Dr. Schick as custodian for the minor children of
David Schick. Dr. Schick disclaims beneficial ownership of such 44,800
shares.

(13) Dr. Wasserman's address is 141-19 73rd Avenue, Flushing, New York 11367.

(14) Consists of 112,000 shares owned by Mr. Wasserman's wife and 28,000 shares
held by Mr. Wasserman as custodian for his minor children. Mr. Wasserman
disclaims beneficial ownership of all such shares.

DESCRIPTION OF CAPITAL STOCK

The description set forth below describes the Certificate of Incorporation
and the By-Laws, which became effective on June 4, 1997, and the Warrants. See
'The Company.' The description set forth below does not purport to be complete
and is qualified by reference to the Certificate of Incorporation, the By-Laws
and the Warrants, which have been filed as exhibits to this Registration
Statement.

GENERAL

The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $.01 per share, and 2,500,000 shares of Preferred
Stock, par value $0.01 per share (the 'Preferred Stock'). As of the date of this
Prospectus, there are 7,957,231 shares of Common Stock outstanding and 1,087,870
shares of Common Stock reserved for issuance upon the exercise of the Warrants,
options under the Option Plans and options granted prior to the implementation
of the Option Plans. After giving effect to the Offering, there will be
9,707,231 shares of Common Stock outstanding and 1,087,870 shares of Common
Stock so reserved. As of the date of this Prospectus, there are no shares of
Preferred Stock outstanding or reserved for issuance.

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote per share
held on all matters submitted to a vote at a meeting of stockholders. Each

stockholder may exercise such vote either in person or by proxy. Stockholders
are not entitled to cumulate their votes for the election of directors, which
means that, subject to such rights as may be granted to the holders of shares of
Preferred Stock issued after this offering, the holders of more than 50% of the
outstanding shares of Common Stock are able to elect all of the directors to be
elected by holders of shares of Common Stock and the holders of the remaining
shares of Common Stock will not be able to elect any director. Subject to such
preferences to which holders of shares of Preferred Stock, if any, issued after
this offering may be entitled, the holders of outstanding shares of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board of Directors out of funds legally available therefor.
See 'Dividend Policy.' In the event of a liquidation, dissolution or winding up
of the Company, the holders of outstanding shares of Common Stock are entitled
to share ratably in all assets of the Company which are legally available for
distribution to stockholders, subject to the prior rights on liquidation of
creditors and to preferences, if any, to which holders of shares of Preferred
Stock, if any, issued after the Offering may be entitled. The holders of
outstanding shares of Common Stock do not have any preemptive, subscription,
redemption or sinking fund rights. The outstanding shares of Common Stock are,
and the Shares will upon issuance and sale as contemplated hereby be, duly
authorized, validly issued, fully paid and nonassessable.

WARRANTS

From May 1996 to August 1996, the Company privately issued and sold 520,315
shares of Common Stock and non-redeemable Warrants to purchase up to 520,315
shares of Common Stock for aggregate net proceeds of $4,311,800. In conjunction
with such offering, the Company issued 6,155 units, consisting of 6,155 shares
of Common Stock and 6,155 non-redeemable Warrants to purchase shares of Common
Stock, as a placement fee to

<PAGE>

certain individuals who assisted the Company in selling the units. All of the
Warrants are outstanding as of the date of this Prospectus. Each Warrant
entitles the holder thereof to purchase one share of Common Stock at prices
ranging from $7.86 to 8.93 per share on or prior to the earlier of (i) 5:00 p.m.
New York City time on May 3, 1999 or (ii) the merger or consolidation of the
Company or the sale of all or substantially all of the Company's assets (the
'Expiration Date'). The Company is required to give each holder of a Warrant at
least twenty days prior written notice of any such merger, consolidation or
sale. The exercise price of the Warrants is payable in cash or outstanding
shares of Common Stock. In lieu of the exercise of a Warrant, the holder of a
Warrant may elect prior to the Expiration Date to receive that number of shares
of Common Stock equal to the value of the Warrant determined by multiplying the
number of shares of Common Stock that could be purchased upon exercise of the
Warrant by the difference between the fair market value of one share of Common
Stock and the exercise price and dividing this result by the fair market value
of one share of Common Stock on the date of such election.

The holders of Warrants are entitled to anti-dilution protection for stock
dividends, stock splits and similar events. Prior to the exercise of Warrants,

such holders of Warrants do not have any rights of a stockholder, including the
right to vote or to receive dividends or other distributions.

PREFERRED STOCK

The Board of Directors has the authority to issue shares of Preferred Stock
in one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption (including sinking fund provisions),
redemption prices and liquidation preferences, and the number of shares
constituting and the designation of any such series, without approval by the
stockholders.

CERTAIN EFFECTS OF AUTHORIZED AND UNISSUED STOCK

The unissued and unreserved shares of capital stock may be issued for a
variety of proper corporate purposes, including future public or private
offerings to raise additional capital or facilitate acquisitions. The Board of
Directors currently does not have any plans to issue additional shares of Common
Stock or shares of Preferred Stock (other than in connection with the Warrants,
the Option Plans and options granted prior to the implementation of the Option
Plans).

One of the effects of the existence of such unissued and unreserved shares
may be to enable the Board of Directors to discourage an attempt to change
control of the Company (by means of a tender offer, proxy contest or otherwise)
and thereby to protect the continuity of the Company's management. The issuance
of shares of Preferred Stock, whether or not related to any attempt to effect
change in control, may adversely affect the rights of the holders of shares of
Common Stock.

CERTAIN CHARTER AND STATUTORY PROVISIONS

Certain provisions of the Certificate of Incorporation, the By-Laws and
Delaware law may (i) discourage an attempt to change control of the Company (by
means of a proxy contest, tender offer or otherwise) and consideration of
stockholder proposals (such as proposals regarding the reorganization,
restructuring or liquidation of the Company or the sale of all or a substantial
part of the Company's assets) and (ii) limit the ultimate liability of directors
and executive officers of the Company for breaches of certain of their duties to
the Company and its stockholders.

Elimination of Director Liability. Under Delaware law, directors of a
Delaware corporation can generally be held liable for certain acts and omissions
in connection with the performance of their duties to the corporation and its
stockholders. As permitted by Delaware law, however, the Certificate of
Incorporation contains a provision eliminating the liability of directors for
monetary damages for breaches of their duties to the Company and its
stockholders. Such provision does not, however, eliminate liability for (i)
breaches of duty of loyalty to the Company and its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) transactions from which improper personal benefit is
derived and (iv) unlawful declaration of dividends or repurchases or redemptions
of shares of capital stock. Such provision applies to officers only if they are

directors and are acting in their capacity as directors and may have no effect
on claims arising under federal securities laws. Such provision does not
eliminate the duty of care, but only eliminates liability for monetary damages
for breaches of such duty under various circumstances. Accordingly,

<PAGE>

such provision has no effect on the availability of equitable remedies, such as
an injunction or rescission, based upon a breach of the duty of care. Equitable
remedies may not, however, be wholly effective to remedy the injury caused by
any such breach.

Statutory Provisions Regarding Business Combinations. The Company is
subject to Section 203 of the DGCL. In general, Section 203 prohibits an
'interested stockholder' of a Delaware corporation from engaging in a 'business
combination' with such Delaware corporation for three years following the time
such person became an interested stockholder, unless: (i) prior to the time 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; (ii) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding stock held by directors who are also officers
of the corporation and stock held by certain employee stock plans; or (iii) at
or subsequent to the time of 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.

Section 203 defines a 'business combination' to include: (i) any merger or
consolidation involving the corporation and an interested stockholder; (ii) any
sale, transfer, pledge or other disposition involving an interested stockholder
of 10% or more of the assets of the corporation; (iii) subject to certain
exceptions, any transaction which results in the issuance or transfer by the
corporation of any stock of the corporation to an interested stockholder; (iv)
any transaction involving the corporation which has the effect of increasing the
proportionate share of any class or series of stock of the corporation
beneficially owned by the interested stockholder; or (v) the receipt by an
interested stockholder of any loans, guarantees, pledges or other financial
benefits provided by or through the corporation. In addition, Section 203
generally defines an 'interested stockholder' as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.

Indemnification of Officers and Directors. The By-Laws provide that the
Company shall (i) indemnify each person who is or was involved in any legal
proceeding because he is or was a director or officer of the Company or any of
its subsidiaries (or is or was serving at the request of the Company as a
director, officer, partner, member, employee, agent or trustee of another

entity) against all expenses, liabilities and losses (including attorneys' fees,
judgments, fines, excise taxes, penalties and amounts paid in settlement)
reasonably incurred or suffered by him in connection therewith and (ii) pay the
expenses incurred in defending such proceeding in advance of its final
disposition, in each case, to the fullest extent authorized by Delaware law (as
currently in effect or, to the extent that the provisions of Delaware law so
authorizing are broadened, as it may be amended). The By-Laws further provide
that (i) persons entitled to indemnification may bring suit against the Company
to recover unpaid indemnification or payment claimed to be due thereunder, (ii)
if the suit is successful, the expense of bringing the suit will be paid by the
Company, (iii) while it is a defense to the suit that the claimant has not met
the standards of conduct making indemnification or payment permissible under
Delaware law, the burden of proving the defense will be on the Company and (iv)
neither the failure of the Board of Directors to have made a determination that
indemnification is proper nor its affirmative determination that the claimant
has not met such standards of conduct will be a defense to the suit or create a
presumption that the claimant has not met such standards of conduct. In
addition, the By-Laws provide that (i) the rights to indemnification and payment
of expenses so provided are not exclusive of any other similar right that any
person may have or acquire under any statute or otherwise, (ii) the Company has
the right to enter into indemnification contracts or otherwise arrange for
indemnification of directors and officers that may be broader than the
indemnification so provided and (iii) the Company may maintain, at its expense,
insurance to protect itself and its directors and officers against any expense,
liability or loss, whether or not it would have the power to indemnify such
directors and officers against such expense, liability or loss under the By-Laws
or Delaware law. The Company currently maintains a policy providing insurance to
its directors and officers against certain losses and expenses arising out of
certain claims, including claims arising in connection with the Offering.

Other Provisions. The By-Laws provide that the number of directors shall
be between five and twelve or such greater or lesser number as may be fixed from
time to time by the Board of Directors and that, except as

<PAGE>

otherwise required by Delaware law, directors (other than those elected by the
holders of shares of Preferred Stock, if any) can be removed only for cause and
only by the affirmative vote of holders of at least 75% of the voting power of
all then outstanding shares of capital stock of the Company entitled to vote
generally for the election of directors (the 'Voting Stock') and that a vacancy
on the Board of Directors, including a vacancy created by an increase in the
authorized number of directors, may be filled only by a majority vote of the
directors then in office (and not by the stockholders unless no directors are
then in office). Under the DGCL, if at the time of filling any such vacancy the
directors then in office constitute less than a majority of the Whole Board, the
Delaware Court of Chancery may order, upon the application of the holders of at
least 10% of the outstanding shares of capital stock of the Company entitled to
vote for the election of the directors filling such vacancies, that a meeting of
stockholders be held for the purpose of electing directors to fill such
vacancies or to replace directors filling such vacancies elected by the Board of
Directors.

In addition, the Certificate of Incorporation and the By-Laws provide that
(i) stockholders are not permitted to call a special meeting of stockholders or
to require the Board of Directors or officers to call such a special meeting;
(ii) only a majority of the Board of Directors, certain committees of the Board
of Directors, or the president or chief executive officer will be able to call
such a special meeting; and (iii) stockholder action may be taken only at an
annual or a special meeting of stockholders and may not be taken by written
consent. These provisions, taken together, prevent stockholders from forcing
consideration by the stockholders of stockholder proposals over the opposition
of the Board of Directors, except at an annual meeting.

The By-Laws provide that notice of nominations for the election of
directors to be made at, and business to be brought before, an annual or a
special meeting of stockholders by a stockholder must be received by the
Secretary of the Company not later than 90 days before the meeting (except that,
if notice or public disclosure of the meeting is given or made less than 90 days
before the meeting, the notice need only be received within 10 days following
such notice or public disclosure). A notice regarding any nomination must
contain detailed information regarding the stockholder making the nomination and
each nominee. A notice regarding any business to be brought before the meeting
must contain detailed information regarding the business to be so brought, the
reasons for conducting such business at the meeting, the stockholder proposing
such business and any material interest of such stockholder in such business.
Although such provisions do not give the Board of Directors any power to approve
or disapprove stockholder nominations or proposals, they have the effect of
precluding a contest for the election of directors or the consideration of
stockholder proposals if the procedures established by the By-Laws are not
complied with and may have the effect of discouraging a stockholder from
conducting such a contest.

The By-Laws provide that none of the shares of Common Stock held
immediately prior to the date of this Prospectus may be, directly or indirectly,
offered for sale, sold or otherwise disposed of without the prior written
consent of the Company for a period of 180 days after the date of this
Prospectus. In addition, the Warrants provide and the options granted under the
Option Plans provide that no shares of Common Stock issued upon exercise thereof
can be resold to the public for a period of 180 days after the date of this
Prospectus without the prior written consent of the Board of Directors. The
Company has agreed that no such consent will be given without the prior written
consent of Lehman Brothers Inc.

The Certificate of Incorporation authorizes the Board of Directors, in
connection with taking any action, to consider factors other than the economic
benefit of such action to the stockholders. Such factors include the long-term
and short-term interests of the Company's employees, suppliers, creditors and
customers and of the communities in which the Company engages in business.

The Certificate of Incorporation provides that the affirmative vote of the
holders of 75% of the outstanding shares of Common Stock will be required to
amend, modify or repeal any provision of the By-Laws or the provisions of the
Certificate of Incorporation discussed under 'Management--Directors and
Executive Officers' and 'Certain Charter and Statutory Provisions.' The
Certificate of Incorporation provides that the Board of Directors, pursuant to

(but only pursuant to) a resolution adopted by a majority of the Whole Board,
will be able to amend, modify or repeal the By-laws.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is The American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005.

<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

In general, under Rule 144, a person (or persons whose shares are
aggregated), including persons deemed to be affiliates of the Company, who owns
restricted shares of Common Stock where one year has elapsed from the date of
acquisition of such restricted shares from the Company or an affiliate of the
Company, is entitled to sell in brokers' transactions within any three-month
period that number of restricted shares that does not exceed the greater of one
percent of the then outstanding shares of Common Stock (99,697 shares based on
the number of shares to be outstanding immediately after the Offering, assuming
the over-allotment option is exercised in full) or the average weekly trading
volume in the Common Stock during the four calendar weeks immediately preceding
such sale, subject to the filing of a Form 144 with respect to the sale and
availability of current public information about the Company. After two years
have elapsed from the date of such acquisition, such a person, other than
persons who are deemed to be or are deemed to have been within the preceding
three months affiliates of the Company, is entitled to sell such restricted
shares without regard to the manner-of-sale, volume and current public
information requirements of Rule 144.

Subject to the restrictions described in the following paragraph, the
one-year holding period for 7,384,516 of such remaining shares of Common Stock
has expired and such shares are immediately available for resale pursuant to

Rule 144. The one-year holding period under Rule 144 for 438,671, 65,493 and the
remaining 68,551 shares will expire on July 30, 1997, August 29, 1997 and
February 18, 1997, respectively. In addition, the Company intends to register
for resale to the public the shares of Common Stock reserved for issuance under
the Option Plans. Furthermore, holders of Warrants who pay the exercise price of
their Warrants with shares of Common Stock purchased at the same time would be
able to use the holding period of such shares in determining whether such one
year period has elapsed.

The Company and each of its directors and executive officers has agreed not
to, directly or indirectly, offer for sale, sell or otherwise dispose of (or
enter into any transaction or device which is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock, or sell or grant options, rights or warrants with
respect to any shares of Common Stock, for a period of 180 days after the date
of this Prospectus without the prior written consent of Lehman Brothers Inc., on
behalf of the Representatives, except, in the case of the Company, upon exercise
of the Warrants or outstanding stock options granted under the Option Plans and
for the grant of stock options under the Option Plans. In addition, pursuant to
the terms of the By-Laws, no shares of the Company's Common Stock held
immediately prior to the date of this Prospectus may be, directly or indirectly,
offered for sale, sold or otherwise disposed of for a period of 180 days after
the date of this Prospectus without the prior written consent of the Company.
The Company has agreed that no such consent will be given without the prior
written consent of Lehman Brothers Inc. In addition, pursuant to the terms of
the Option Plans and the Warrants, any shares of Common Stock issuable upon the
exercise of Options or Warrants will not be transferable for a period of 180
days after the date of this Prospectus without the prior written consent of the
Company. The Company has agreed that no such consent will be given without the
prior written consent of Lehman Brothers Inc.

Prior to the Offering, there has been no public market for the Common
Stock, and no assurance can be given that such a market will develop or, if it
develops, will be sustained after the Offering or that the purchasers of the
Shares will be able to resell Shares at a price higher than the intial public
offering price or otherwise. If such a

<PAGE>

market develops, no prediction can be made as to the effect, if any, that future
sales of shares of Common Stock, or the availability of shares of Common Stock
for future sale, to the public will have on the market price of the Common Stock
prevailing from time to time. Sales of substantial amounts of Common Stock in
the public market, whether such shares are presently outstanding for
subsequently issued, or the perception that such sales could occur, could
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital in the future through an offering of its
equity securities. The Company cannot predict when or how many of such
additional shares of Common Stock may be offered for sale or sold to the public
in the future.

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date of this Prospectus (the 'Underwriting Agreement'), the
Underwriters named below (the 'Underwriters'), for whom Lehman Brothers Inc.,
J.P. Morgan Securities Inc. and Pacific Growth Equities, Inc. are acting as
representatives (the 'Representatives'), have severally agreed to purchase, and
the Company has agreed to sell, the respective number of Shares set forth
opposite the name of each such Underwriter below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ---------------------------------------------------------------- ---------
<S> <C>
Lehman Brothers Inc............................................. 520,000
J.P. Morgan Securities Inc...................................... 355,000
Pacific Growth Equities, Inc.................................... 220,000
ABN AMRO Chicago Corporation.................................... 45,000
Alex. Brown & Sons Incorporated................................. 45,000
Credit Suisse First Boston Corporation.......................... 45,000
Donaldson, Lufkin & Jenrette Securities Corporation............. 45,000
EVEREN Securities, Inc.......................................... 45,000
Hambrecht & Quist LLC........................................... 45,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............. 45,000
Oppenheimer & Co., Inc.......................................... 45,000
Robertson, Stephens & Company LLC............................... 45,000
Cleary Gull Reiland & McDevitt Inc.............................. 25,000
Cowen & Company................................................. 25,000
Fahnestock & Co. Inc............................................ 25,000
Furman Selz LLC................................................. 25,000
Legg Mason Wood Walker, Incorporated............................ 25,000
Mesirow Financial, Inc.......................................... 25,000
Needham & Company, Inc.......................................... 25,000
Tucker Anthony Incorporated..................................... 25,000
Unterberg Harris................................................ 25,000
Vector Securities International, Inc............................ 25,000
---------
Total.................................................... 1,750,000
---------
---------
</TABLE>

The Company has been advised that the Underwriters propose to offer part of
the Shares directly to the public at the initial public offering price set forth
on the cover page hereof and part to certain dealers at a price which represents
a concession not in excess of $0.74 per Share under the initial public offering
price. Any Underwriter may allow, and such dealers may reallow, a concession not
in excess of $0.10 per Share to other Underwriters and certain other dealers.
After the initial public offering, the offering price and other selling terms
may from time to time be changed by the Underwriters.

The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the Shares are subject to the

approval of certain matters by their counsel and to certain other conditions,
including the conditions that no stop order suspending the effectiveness of the
Registration Statement is in effect, that no proceedings for such purpose have
been initiated or threatened by the Commission and that there has been no
material adverse change or any development involving a prospective material
adverse change in the business, financial condition or results of operations of
the Company from that set forth in the Registration Statement, and that certain
certificates, opinions and letters have been received from the Company and its
counsel

<PAGE>

and independent auditors. The Underwriters are obligated to take and pay for all
of the Shares (other than those covered by the over-allotment option described
below) if any such Shares are taken.

The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.

Pursuant to the Underwriting Agreement, the Company has granted the
Underwriters an option, exercisable at any time until 30 days after the date of
this Prospectus, to purchase up to 262,500 additional Shares at the initial
public offering price set forth on the cover page hereof, less underwriting
discounts and commissions. The Underwriters may exercise such option solely for
the purpose of covering over-allotments, if any, incurred in connection with the
sale of the Shares. To the extent such option is exercised, each Underwriter
will be committed, subject to certain conditions, to purchase a number of
additional shares of Common Stock proportionate to such Underwriter's Shares set
forth opposite such Underwriter's name in the preceding table.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

Prior to the Offering, there has been no public market for the Common

Stock. The initial public offering price for the Shares will be determined by
negotiations between the Company and the Representatives. Among the factors
which will be considered in determining the initial public offering price
include the information set forth in this Prospectus and otherwise available to
the Representatives, the history of and the prospects for the industry in which
the Company operates, the assessment of the Company's management, the past and
present operations of the Company, the historical results of operations, the
prospects for future earnings of the Company, the present state of the Company's
development, the general condition of the securities markets at the time of the
Offering and the recent market prices of and the demand for publicly traded
common stock of generally comparable companies.

Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase shares of Common Stock. As an exception to these
rules, the Representatives are permitted to engage in certain transactions that
stabilize the price of the Common Stock. Such transactions may consist of bids
or purchases for the purpose of pegging, fixing or maintaining the price of the
Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with the Offering (i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus), the Representatives
may reduce that short position by purchasing Common Stock in the open market.
The Representatives also may elect to reduce any short position by exercising
all or part of the over-allotment options described herein.

The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that, if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the Offering.

<PAGE>

In connection with the Offering, certain Underwriters (and selling group
members) may engage in passive market making transactions in the Common Stock on
the Nasdaq National Market in accordance with Rule 103 of Regulation M under the
Securities Act and the Securities Exchange Act of 1934, as amended.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the

Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

LEGAL MATTERS

The validity of the Shares will be passed upon for the Company by Kelley
Drye & Warren LLP, New York, New York. Mark I. Bane, a director and stockholder
of the Company, is a partner of Kelley Drye & Warren LLP. See 'Management' and
'Principal Stockholders.' Certain legal matters in connection with the Offering
will be passed upon for the Underwriters by Chadbourne & Parke LLP, New York,
New York.

EXPERTS

The financial statements of the Company as of March 31, 1996 and 1997, and
for each of the three years in the period ended March 31, 1997 included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, exhibits, schedules and supplements thereto,
the 'Registration Statement') under the Securities Act with respect to the
Shares and the Company. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement. For further information with respect to the Company and the Shares,
reference is made to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete and, where such contract or other document is filed as an
exhibit to the Registration Statement, each such statement is qualified in all
respects by the provisions in such exhibit, to which reference is hereby made.
Copies of the Registration Statement may be examined without charge at the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and the Commission's Regional Offices located at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or
any portion of the Registration Statement can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of certain fees prescribed by the Commission. The Commission
maintains a Web site that contains registration statements, reports, proxy and
information statements and other information regarding registrants (including
the Company) that file electronically with the Commission. The address of such
Web site is http://www.sec.gov.

The Company intends to furnish its stockholders with annual reports
containing financial statements for each fiscal year audited by independent
accountants and quarterly reports for the first three quarters of each fiscal
year containing unaudited financial information.

<PAGE>

SCHICK TECHNOLOGIES, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----

<S> <C>
Report of Independent Accountants........................................ F-2

Balance Sheet as of March 31, 1996 and 1997.............................. F-3

Statement of Operations for the years ended March 31, 1995, 1996 and
1997.................................................................. F-4

Statement of Changes in Stockholders' Equity for the years ended March
31, 1995, 1996 and 1997............................................... F-5

Statement of Cash Flows for the years ended March 31, 1995, 1996 and
1997.................................................................. F-6

Notes to Financial Statements............................................ F-7
</TABLE>

F-1

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Shareholders of Schick Technologies, Inc.

In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in stockholders' equity and of cash flows present fairly,
in all material respects, the financial position of Schick Technologies, Inc. at
March 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended March 31, 1997 in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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 esitmates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

Price Waterhouse LLP
New York, New York
May 9, 1997, except as
to Note 15 which is
as of June 4, 1997

F-2

<PAGE>

SCHICK TECHNOLOGIES, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
MARCH 31,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents (Note 2).............. $ 524,917 $ 1,710,429
Short-term investments (Notes 2 and 5).......... -- 2,313,226
Accounts receivable, net of allowance for
doubtful accounts of $35,000 in 1996 and
$50,000 in 1997.............................. 944,912 1,927,993
Inventories (Notes 2 and 3)..................... 1,958,213 2,510,959
Prepayments and other current assets (including
amounts from related parties of $33,456 in
1997) (Note 13).............................. 160,708 327,220
----------- -----------
Total current assets......................... 3,588,750 8,789,827

Equipment, net (Notes 2 and 4).................... 748,894 1,644,528
Investments (Notes 2 and 5)....................... -- 490,000
Other assets...................................... 57,512 135,727
----------- -----------
Total assets................................. $ 4,395,156 $11,060,082
----------- -----------
----------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses........... $ 1,482,352 $ 2,102,293
Accrued salaries and commissions................ 147,201 540,061
Provision for warranty obligations.............. 130,055 329,426
Deferred revenue................................ -- 141,017
Deposits from customers......................... 84,137 136,628
Capital lease obligations, current (Note 9)..... 4,865 22,200
Short-term debt (Note 6)........................ 500,000 --
----------- -----------
Total current liabilities.................... 2,348,610 3,271,625
----------- -----------
Notes payable (Note 6)............................ 647,500 1,512,833
Accrued interest on notes payable................. -- 101,654
Capital lease obligations, long term (Note 9)..... 30,128 86,991

Commitments (Note 9).............................. -- --

Stockholders' equity (Notes 1 and 15)

Preferred stock ($.01 par value; 2,500,000
shares authorized,
none issued and outstanding)................. -- --
Common stock ($.01 par value; 25,000,000 shares
authorized; 7,052,870 shares issued and
outstanding in 1996, 7,957,231 shares issued
and outstanding in 1997)..................... 70,529 79,572
Additional paid-in capital...................... 2,501,771 7,562,766
Accumulated deficit............................. (1,203,382) (1,555,359)
----------- -----------
Total stockholders' equity................... 1,368,918 6,086,979
----------- -----------
Total liabilities and stockholders' equity... $ 4,395,156 $11,060,082
----------- -----------
----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3

<PAGE>

SCHICK TECHNOLOGIES, INC.

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------
1995 1996 1997
---------- ---------- -----------
<S> <C> <C> <C>
Revenue, net......................... $2,725,689 $6,803,723 $16,100,914
Cost of sales........................ 1,500,719 3,343,195 8,021,396
---------- ---------- -----------
Gross profit.................... 1,224,970 3,460,528 8,079,518
---------- ---------- -----------
Operating expenses
Selling and marketing.............. 516,893 1,619,444 4,961,071
General and administrative......... 560,017 1,388,215 2,087,615
Research and development........... 149,595 458,123 1,417,735
---------- ---------- -----------
Total operating expenses........ 1,226,505 3,465,782 8,466,421
---------- ---------- -----------
Loss from operations............ (1,535) (5,254) (386,903)
---------- ---------- -----------
Other income (expense)
Interest income.................... -- 15,132 195,895
Interest expense................... (22,003) (122,661) (160,969)
---------- ---------- -----------
Total other income (expense).... (22,003) (107,529) 34,926
---------- ---------- -----------
Net loss........................ $ (23,538) $ (112,783) $ (351,977)
---------- ---------- -----------
---------- ---------- -----------
Net loss per common share....... -- $ (0.02) $ (0.04)
---------- ---------- -----------
---------- ---------- -----------
Weighted average shares
outstanding................... 7,119,083 7,287,670 8,217,180
---------- ---------- -----------
---------- ---------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4

<PAGE>

SCHICK TECHNOLOGIES, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
-------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
--------- ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1994................. 6,224,683 $62,247 $1,129,253 $(1,067,061) $ 124,439
Issuance and sale of common stock....... 143,780 1,438 223,562 -- 225,000
Net loss................................ -- -- -- (23,538) (23,538)
--------- ------- ---------- ----------- -------------
Balance at March 31, 1995................. 6,368,463 63,685 1,352,815 (1,090,599) 325,901
Issuance of compensatory common stock to
employees, director and others....... 73,184 732 129,953 -- 130,685
Issuance of common stock upon conversion
of stockholder loans................. 126,823 1,268 198,732 -- 200,000
Issuance of common stock upon conversion
of notes payable..................... 484,400 4,844 820,271 -- 825,115
Net loss................................ -- -- -- (112,783) (112,783)
--------- ------- ---------- ----------- -------------
Balance at March 31, 1996................. 7,052,870 70,529 2,501,771 (1,203,382) 1,368,918
Issuance of common stock upon conversion
of notes payable..................... 376,446 3,764 729,226 -- 732,990
Issuance and sale of common stock and
warrants............................. 526,470 5,265 4,306,535 -- 4,311,800
Issuance of compensatory stock options
to employees......................... -- -- 13,457 -- 13,457
Issuance of compensatory common stock to
an employee.......................... 1,445 14 11,777 -- 11,791
Net loss................................ -- -- -- (351,977) (351,977)
--------- ------- ---------- ----------- -------------
Balance at March 31, 1997................. 7,957,231 $79,572 $7,562,766 $(1,555,359) $ 6,086,979
--------- ------- ---------- ----------- -------------
--------- ------- ---------- ----------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5

<PAGE>

SCHICK TECHNOLOGIES, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
---------------------------------------
1995 1996 1997
--------- ----------- -----------
<S> <C> <C> <C>
Net cash flows from operating activities
Net loss........................................ $ (23,538) $ (112,783) $ (351,977)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation................................. 23,737 136,363 281,762
Amortization................................. -- 73,333 36,667
Stock and option grant compensation.......... -- 130,685 25,248
Accrued interest on investments.............. -- -- (53,606)
Non-cash interest expense.................... -- 51,080 98,323
Changes in assets and liabilities
Accounts receivable.......................... (436,520) (495,383) (983,081)
Inventories.................................. (600,531) (1,232,800) (552,746)
Prepayments and other current assets......... (20,258) (140,050) (166,512)
Other assets................................. (1,663) (114,985) (114,882)
Accounts payable and accrued expenses........ 788,107 899,677 1,212,172
Deferred revenue............................. -- -- 141,017
Deposits from customers...................... (8,859) 68,327 52,491
Accrued interest on notes payable............ -- -- 101,654
--------- ----------- -----------
Net cash used in operating activities...... (279,525) (736,536) (273,470)
--------- ----------- -----------
Cash flows from investing activities
Purchases of held-to-maturity investments....... -- -- (6,618,783)
Purchases of available-for-sale investments..... -- -- (990,000)
Proceeds from maturities of held-to-maturity
investments.................................. -- -- 4,359,163
Proceeds from redemption of available-for-sale
investments.................................. -- -- 500,000
Capital expenditures............................ (155,902) (569,614) (1,082,461)
--------- ----------- -----------
Net cash used in investing activities...... (155,902) (569,614) (3,832,081)
--------- ----------- -----------
Cash flows from financing activities
Net proceeds from issuance and sale of common
stock and warrants........................... -- -- 4,311,800
Net proceeds from issuance and sale of common
stock........................................ 225,000 -- --
Proceeds from issuance of long-term notes....... -- 1,457,500 1,000,000
Proceeds from issuance of short-term notes...... 300,000 500,000 --
Repayments of short-term debt................... (136,824) (163,176) --
Repayments of loan payable to stockholder....... -- (50,000) --

Other........................................... -- (35,965) --
Principal payments on capital lease
obligations.................................. -- (5,159) (20,737)
Borrowing under loan agreements with
stockholders................................. 150,000 -- --
--------- ----------- -----------
Net cash provided by financing
activities.............................. 538,176 1,703,200 5,291,063
--------- ----------- -----------
Net increase in cash and cash equivalents......... 102,749 397,050 1,185,512
Cash and cash equivalents at beginning of
period.......................................... 25,118 127,867 524,917
--------- ----------- -----------
Cash and cash equivalents at end of period........ $ 127,867 $ 524,917 $ 1,710,429
--------- ----------- -----------
--------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Schick Technologies, Inc. ('Schick') was incorporated in June 1995 under
the laws of the State of New York as DBS Technologies Inc., whose sole purpose
was to merge with Schick Technologies, Inc., incorporated in 1992 under the laws
of the State of New York (the 'Predecessor Corporation'). The stockholders of
the Predecessor Corporation exchanged their shares of the Predecessor for an
equivalent number of shares of Schick. The merger of Schick and the Predecessor
was effected September 25, 1995 and pursuant to the merger agreement, Schick was
the surviving entity and assumed the name Schick Technologies, Inc. The merger
has been accounted for similar to a pooling of interests. References herein to
the operations and historical financial information of the 'Company' prior to
the date of the merger refer to the operations and historical financial
information of the Predecessor Corporation. Unless the context otherwise
requires, all other references herein to the 'Company' refer to Schick.

The Company is engaged in the design, development, manufacturing and
marketing of digital imaging systems and devices that utilize low dosage
radiation to produce instant computer generated high resolution electronic x-ray
images. The Company has initially targeted the dental industry and is a supplier
of an intra-oral computer dental X-ray imaging system to that industry. The
Company's products are sold worldwide.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash equivalents

Cash equivalents consist of short-term, highly liquid investments, with
original maturities of less than three months when purchased and are stated at
cost. Interest is accrued as earned. At March 31, 1997, approximately $700,000
of cash is restricted for use in development of a bone density measurement
device pursuant to a secured term loan agreement (see Note 6).

Investments

Investments with original maturities greater than three months and less
than one year when purchased are classified as short-term investments.
Investments with maturities of greater than one year when purchased are
classified as long-term investments. Investments are further categorized as
being available for sale or are expected to be held-to-maturity. Investments
categorized as available for sale are recorded at fair value based on
fluctuations of the market value of the securities, with the resulting
adjustments, net of deferred taxes, reported as a component of stockholder's
equity until realized. Investments categorized as held-to-maturity are carried
at amortized cost, without recognition of gains or losses that are deemed to be
temporary, because the Company has both the intent and the ability to hold these
investments until they mature (see Note 5).

Inventories

Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market value.

Equipment

Equipment is stated at cost. Depreciation is provided on the straight-line
method over the estimated useful lives of the respective assets, none of which
exceeds seven years.

Initial public offering and deferred offering costs

On March 21, 1997 the Board of Directors of the Company authorized
management to pursue an underwritten sale of shares of the Company's common
stock in an initial public offering (the 'IPO') pursuant to the Securities Act
of 1933. In connection with the Company's proposed IPO, the Company has incurred
certain costs, in the aggregate amount of $35,000, which have been deferred at
March 31, 1997. In the event the proposed IPO is not consummated the deferred
offering costs will be expensed.

F-7

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Revenue recognition

Revenue from sales of the Company's hardware and software products is
recognized at the time of shipment to customers. Amounts received from customers
in advance of product shipment are classified as deposits from customers.
Revenues from the sale of extended warranties on the Company's products are
recognized on a straight-line basis over the life of the extended warranty,
which is generally for a one year period. Deferred revenues relate to extended
warranty fees which have been paid by customers prior to the performance of
extended warranty services.

Advertising costs

Advertising costs included in selling and marketing expenses are expensed
as incurred and approximated $151,000, $349,000 and $906,268 for the years ended
March 31, 1995, 1996 and 1997, respectively.

Warranties

The Company provides its customers with a limited product warranty for a
period of one year subsequent to the sale of its products. The Company
recognizes estimated costs associated with the limited warranty at the time of
sale of its products.

Research and development

Research and development costs consist of expenditures covering basic
scientific research and the application of scientific advances to the
development of new and improved products and their uses. Research and
development costs are expensed as incurred.

Software development costs incurred after the establishment of
technological feasibility are capitalized and amortized to cost of revenues on a
straight line basis over the expected useful life of the software. Software
development costs incurred prior to the attainment of technological feasibility
are considered research and development and are expensed as incurred. As of
March 31, 1997 the Company had no capitalized software development costs.

Income taxes

Income taxes are accounted for under the asset and liability method.
Deferred income taxes are recorded for temporary differences between financial
statement carrying amounts and the tax basis of assets and liabilities. Deferred
tax assets and liabilities reflect the tax rates expected to be in effect for
the years in which the differences are expected to reverse. A valuation
allowance is provided if it is more likely than not that some or all of the
deferred tax asset will not be realized.

Net loss per common share

Net loss per common share is computed using the weighted average number of
common shares and common share equivalents assumed to be outstanding during the
period. Common share equivalents consist of the Company's common shares issuable
upon conversion of stock options and outstanding warrants and are reflected when
dilutive. Pursuant to the requirements of the Securities and Exchange
Commission, stock options granted and warrants and shares issued by the Company
within one year of the date of the initial public offering at prices below the
proposed offering price have been included in the calculation of weighted
average shares outstanding as if they were outstanding for all periods presented
using the treasury stock method.

Accounting estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-8

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Reclassification

Certain prior year amounts have been reclassified to conform with their
1997 presentation.

Fair value of financial instruments

The carrying value of cash and cash equivalents, accounts receivable,
accounts payable and accrued expenses, approximates fair value due to the
relatively short maturity of these instruments.

New accounting pronouncement

In February 1997, the Financial Accounting Standards Board issued statement
of Financial Accounting Standards No. 128, 'Earnings per Share' ('FAS 128')
which requires presentation of basic earnings per share ('Basic EPS') and
diluted earnings per share ('Diluted EPS') by all entities that have publicly
traded common stock or potential common stock (options, warrants, convertible
securities or contingent stock arrangements). FAS 128 also requires presentation
of earnings per share by an entity that has made a filing or is in the process
of filing with a regulatory agency in preparation for the sale of those
securities in a public market. Basic EPS is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period. The computation of
Diluted EPS does not assume conversion, exercise or contingent exercise of
securities that would have an antidilutive effect on earnings. The statement is
effective for both interim and annual periods ending after December 15, 1997.
The effect on the Company's earnings per share resulting from the adoption of
FAS 128 in not expected to be significant.

3. INVENTORIES

Inventories at March 31, 1996 and 1997 are comprised of the following:

<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Raw materials................. $1,459,773 $1,671,010
Work-in-process............... 429,785 421,863
Finished goods................ 68,655 418,086
---------- ----------
Total inventories...... $1,958,213 $2,510,959
---------- ----------
---------- ----------
</TABLE>

4. EQUIPMENT

Equipment at March 31, 1996 and 1997 is comprised of the following:

<TABLE>
<CAPTION>
1996 1997
--------- ----------
<S> <C> <C>
Production equipment.................... $ 333,171 $ 964,921
Computer and communications equipment... 235,468 411,270
Demonstration equipment................. 204,663 312,578
Leasehold improvements.................. 83,865 191,761
Other equipment......................... 65,368 201,900
--------- ----------
Total equipment.................. 922,535 2,082,430
Less--accumulated depreciation.......... (173,641) (437,902)
--------- ----------
Equipment, net................... $ 748,894 $1,644,528
--------- ----------
--------- ----------
</TABLE>

At March 31, 1996 and 1997, production equipment includes approximately
$40,000 and $135,000, respectively, of equipment acquired under capital leases.
Accumulated depreciation related to such equipment approximated $3,000 and
$21,515 at March 31, 1996 and 1997, respectively.

F-9

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. INVESTMENTS IN DEBT SECURITIES

Held-to-maturity securities at March 31, 1997 consist of short term U.S.
Treasury and government agency debt securities of approximately $2,313,000, on
an amortized cost basis, with maturity dates of less than one year. Available
for sale securities of $490,000, at March 31, 1997, consist of long term U.S.
government agency debt securities and are recorded at fair value. Available for
sale securities in the amount of $150,000 mature in 1999 and $340,000 of such
securities mature in 2007. The gross unrealized gains and losses by type of
security were insignificant.

6. SHORT-TERM DEBT AND NOTES PAYABLE

Short-term debt

In January 1996 and March 1996, the Company issued secured short-term
promissory notes to a third party. The notes, each in the principal amount of
$250,000, bore interest at a rate of 5.5% per annum. Principal and interest on
the notes were payable upon demand at any time subsequent to the first
anniversary of the issuance of each note. The proceeds of the notes were

restricted for use by the Company solely for the purpose of developing a bone
density measurement device. The Notes were secured by accounts receivable and
inventories of the Company in an amount equal to twice the principal amount of
the notes. In August of 1996 the aggregate principal of the notes, $500,000 plus
accrued but unpaid interest in the amount of $12,833 were consolidated into a
long term note payable pursuant to a secured term loan agreement with the third
party.

Secured note

Under the provisions of the secured term loan agreement the Company
received additional proceeds of $1,000,000 upon execution in August 1996, of the
loan agreement. The note bears interest at a rate of prime plus two percent,
subject to annual adjustment on the anniversary date of the note, and is due and
payable together with accrued but unpaid interest, upon the earlier of (a)
February 7, 1999, or (b) the declaration of the effectiveness of a registration
statement filed pursuant to the Securities Act of 1933 in connection with an
initial public offering of the Company's common stock. The note is subject to
full or partial mandatory prepayment in the event of a private placement or
placements of the Company's common stock in which the aggregate net proceeds (as
defined in the agreement) exceed $2,000,000. Such prepayment will be in an
amount equal to $250,000 plus 25% of the net proceeds which exceed $2,000,000.
The note is also subject to mandatory prepayment in any fiscal year in which net
income, as defined in the agreement, on a year to date basis exceeds $1,250,000.
The Company will be required to prepay an amount equal to 25% of the amount of
net income in excess of $1,250,000.

The proceeds of the note are restricted for use by the Company solely for
the purposes of developing, obtaining regulatory approval, conducting clinical
studies, establishing manufacturing operations and selling and marketing a bone
density measurement device. The note is secured by the accounts receivable and
inventories of the Company. As long as any amounts are outstanding under the
loan agreement the Company may not purchase or acquire any equity securities,
make loans, advances or capital contributions to any other entity, pay cash
dividends or purchase any shares of its common stock. The Company received a
waiver from the third party regarding the November 1996 loan to a related party
described in Note 13.

Upon issuance of a 510(k) registration for the bone density measurement
device by the United States Food and Drug Administration the Company will be
eligible to borrow an additional $500,000 under the secured term loan agreement.
The agreement also provides that the lender will reimburse the Company for fifty
percent (50%) of the costs incurred by the Company in performing certain
specified clinical studies associated with the device. As of March 31, 1997 the
Company had not incurred any costs which were eligible for reimbursement.

At March 31, 1997, the outstanding principal balance of the note was
$1,512,833 and accrued but unpaid interest on the note amounted to $101,654. The
Company believes the carrying value of the note at March 31, 1997 approximates
fair value due to its unique features and the terms currently available to the
Company for similar debt transactions.

F-10

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. SHORT-TERM DEBT AND NOTES PAYABLE--(CONTINUED)

12.5% Notes

On various dates during 1996, the Company issued promissory notes (the
'12.5% Notes'), in the cumulative principal amount of $1,457,500, which bore
interest at a rate of 12.5% per annum and matured two years from the date of
issuance. Principal repayment was required upon maturity and interest was
payable by the Company on the six-month anniversary of the date of issuance and
monthly thereafter.

In February of 1996, the Company offered holders of the 12.5% Notes who are
Accredited Investors, as defined by Regulation D of the Securities and Exchange
Act of 1933, the opportunity to convert the principal amount of such notes into
shares of common stock, $0.01 par value, of the Company at conversion prices
ranging from approximately $1.52 to $1.79 per share. At March 31, 1996, holders
of the 12.5% Notes in the principal amount of $810,000, with accrued but unpaid
interest in the amount of $51,080 thereon, had converted such notes into 484,400
shares of common stock.

In July, 1996 the Company offered holders of the 12.5% Notes who are
Non-accredited Investors, the opportunity to convert the principal amount of
their notes into shares of the Company's common stock on the same terms and
conditions as the February offer to Accredited Investors. At March 31, 1997 all
of the holders of the 12.5% Notes had converted such notes into shares of common
stock. During 1997 holders of 12.5% Notes in the principal amount of $647,500,
with accrued but unpaid interest in the amount of $85,686 thereon converted such
notes into 376,446 shares of Common stock. Payment of accrued but unpaid
interest thereon was waived and such amounts have been contributed to paid-in
capital. As the Company's intention from the date of issuance of the 12.5% Notes
was to convert such notes to equity upon completion of the merger described in
Note 1, the notes have been treated as if they were convertible since issuance.
Interest expense on the 12.5% Notes amounted to $107,000 and $30,000 in 1996 and
1997, respectively.

7. INCOME TAXES

The Company has incurred losses since inception which have generated net
operating loss carryforwards of approximately $560,000 for federal and state
income tax purposes. These carryforwards are available to offset future taxable
income and expire in 2008 through 2012 for federal income tax purposes. At March
31, 1997, the Company also had research and development tax credits in the
amount of $122,000 which expire in 2002. These losses and credits are subject to
limitation on future years utilization should certain ownership changes occur.

The net operating loss carryforwards and temporary differences between
carrying amounts of assets and liabilities for financial reporting and income
tax purposes result in a noncurrent deferred tax benefit at March 31, 1996 and

1997 of $490,000 and $623,000, respectively. The Company's operating plans
anticipate taxable income in future periods; however, such plans make
significant assumptions which cannot be reasonably assured including regulatory
approval of the Company's new products and continued market acceptance of the
Company's products by customers. Therefore, in consideration of the Company's
accumulated losses and the uncertainty of its ability to utilize this deferred
tax benefit in the future, the Company has recorded a valuation allowance of an
equal amount on such dates to fully offset the deferred tax benefit amount.

Significant components of the noncurrent deferred tax asset at March 31,
1996 and 1997 are as follows:

<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Net operating loss carryforwards.................... $ 300,000 $ 241,000
Reserves and allowances for inventory, accounts
receivable and warranties......................... 78,000 212,000
Other accrued expenses not currently deductible..... 112,000 48,000
Research and development tax credit carryforward.... -- 122,000
--------- ---------
Net deferred tax asset.............................. 490,000 623,000
Deferred tax asset valuation allowance.............. (490,000) (623,000)
--------- ---------
$ -- $ --
--------- ---------
--------- ---------
</TABLE>

F-11

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

7. INCOME TAXES--(CONTINUED)

The financial statement income tax provision differs from income taxes
determined by applying the statutory Federal income tax rate to the financial
statement net loss for the years ended March 31, 1996 and 1997 as a result of
the following:

<TABLE>
<CAPTION>
1996 1997
----- -----

<S> <C> <C>
Tax benefit at Federal statutory rate........ (34.0)% (34.0)%

State income tax benefit, net of
Federal tax charge......................... (9.0) (9.0)

Non-deductible expenses...................... 18.1 10.3

Research and development tax credit.......... -- (20.6)

Valuation allowance on deferred tax assets... 24.9 53.3
----- -----

-- --
----- -----
----- -----
</TABLE>

8. CONCENTRATION OF RISKS AND CUSTOMER INFORMATION

Substantially all of the Company's sales are to domestic and foreign
dentists, distributors of dental supplies and equipment, and third-party
financing companies. Financial instruments which potentially subject the Company
to concentrations of credit risk are primarily accounts receivable, cash
equivalents and short and long-term investments. The Company generally does not
require collateral and the majority of its trade receivables are unsecured. The
Company is directly affected by the financial well-being of the dental industry;
however, the Company does not believe significant credit risk exists at March
31, 1997. The Company places its cash equivalents in short-term money market
instruments. Short-term and long-term investments consist of U.S. Treasury and
government agency debt obligations (see Note 5).

The Company currently relies on a single vendor to supply its primary raw
material, semiconductor wafer. Although there are a number of manufacturers
capable of supplying this material, which the Company believes could provide for
its semiconductor requirements on comparable terms, any abrupt change in the
supply flow could cause a delay in manufacturing and a possible loss of sales,
which would affect operating results adversely.

Approximately $735,000, $2,142,000 and $3,867,000 of the Company's sales in
1995, 1996 and 1997, respectively, were to foreign customers. The majority of
such foreign sales were to customers in Europe. During 1995, sales of $579,680
were to a distributor. During 1996, sales of $1,227,347 were to a second
distributor. In 1997, no customer accounted for 10% or more of sales.

9. COMMITMENTS AND CONTINGENCIES

Operating and capital leases

The Company leases its facilities under an operating lease agreement
expiring in February 2001. Rent expense for the years ended March 31, 1995, 1996
and 1997 was $38,000, $68,000 and $193,218 respectively. In addition, the
Company leases certain production equipment under capital leases expiring
through 2002.

F-12

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

9. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

Future minimum payments on a fiscal year basis under operating and capital
leases are as follows:

<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
--------- --------
<S> <C> <C>
1998............................................. $ 162,900 $ 38,426
1999............................................. 179,100 38,426
2000............................................. 190,100 38,426
2001............................................. 174,100 30,746
2002............................................. -- 1,609
Thereafter....................................... -- --
--------- --------
Total minimum lease payments.............. $ 706,200 147,633
---------
---------
Less--Amounts representing interest....... 38,442
--------
Present value of future minimum lease payments... 109,191
Less--Current maturities.................. (22,200)
--------
Total..................................... $ 86,991
--------
--------
</TABLE>

LITIGATION

During 1996, the Company was named as defendant in patent infringement
litigation commenced by a competitor in the United States and France. The
Company is vigorously defending itself against such allegations and believes the
claims to be without merit. The Company has filed a countersuit against the
competitor for infringement of a U.S. Patent which has been exclusively licensed
to the Company. The Company has obtained a formal opinion of intellectual
property counsel that its products do not infringe on the competitor's U.S.
patent. As these actions are in their preliminary stages, the Company is unable
to predict the ultimate outcome of these claims. The outcome, if unfavorable,
could have a material adverse effect on the financial position and results of
operations of the Company. No provision has been made for any potential losses
at March 31, 1996 and 1997 as the range of potential loss, if any, cannot be
reasonably estimated.

During 1997, the Company was named as a defendant in patent litigation

involving a patent directed to a display system for digital dental radiographs.
The Company is vigorously defending itself against such allegations and believes
the claim to be without merit. The Company has obtained a formal opinion of
intellectual property counsel that its products do not infringe on the patent.
As this action is in its preliminary state, the Company is unable to predict the
ultimate outcome of this claim. The outcome, if unfavorable, could have a
material adverse affect on the financial position and results of operations of
the Company. No provision has been made for any potential loss at March 31, 1997
as the range of potential loss, if any, cannot be reasonably estimated.

10. STOCK OPTION PLAN, STOCK GRANTS AND DEFINED CONTRIBUTION PLAN

Stock option plan and stock grants

In April 1996 the Company implemented its 1996 Stock Option Plan (the
'Plan') whereby incentive and non-qualified options to purchase up to 470,400
shares of the Company's common stock may be granted to key employees, directors
and consultants. The exercise and vesting periods and the exercise price for
options granted under the Plan is determined by a committee of the Board of
Directors. The Plan stipulates that the exercise price of non-qualified options
granted under the Plan must have a exercise price equal to or exceeding 85% of
the fair market value of the Company's common stock as of the date of grant of
the option and no option may be exercisable after ten years from the date of
grant. The fair market value of the Company's common stock is determined by the
Board of Directors. Options granted under the plan are generally exercisable
immediately but vest over a period of four years.

F-13

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

10. STOCK OPTION PLAN, STOCK GRANTS AND DEFINED CONTRIBUTION PLAN--(CONTINUED)

During the year ended March 31, 1997, the Company granted options under the
Plan, to employees, to purchase 79,338 shares of its common stock, at an
exercise price of $7.14 per share. The options vest on a pro-rata basis on the
first, second, third and fourth anniversaries of the date of grant. There were
no grants to consultants or directors during the year ended March 31, 1997.

During fiscal 1996, prior to implementation of the Plan, an employee of the
Company was granted an option to purchase 56,000 shares of the Company's common
stock at $1.79 per share, determined by the Company's Board of Director's to be
the fair market value of the Company's common stock at the date of the option
grant. As of March 31, 1997, 28,000 shares are exercisable under such option.
The remaining options become exercisable in equal annual amounts on December 31,
1997 and 1998.

The Company applies Accounting Principles Board Opinion No. 25, 'Accounting
for Stock Issued to Employees,' and related interpretations in accounting for
its Plan and other stock-based compensation issued to employees and directors.

During the year ended March 31, 1996, the Company did not recognize compensation
expense for options granted to employees. During 1997, the Company has
recognized compensation expense in the amount of $13,457 for options granted to
employees. Had compensation cost for option grants to employees been determined
based upon the fair value at the grant date for awards under the Plan consistent
with the methodology prescribed under Statement of Financial Accounting
Standards No. 123, 'Accounting for Stock-Based Compensation,' ('FAS 123') the
Company's net loss in 1996 and 1997 would have been increased by approximately
$6,609 (less than $.01 per share) and $45,480 ($.01 per share), respectively.

The fair value of options granted to employees during 1996 and 1997 has
been determined on the date of the respective grant using the Black-Scholes
option-pricing model based on the following weighted average assumptions.

<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Dividend yield............................. None None
Risk free interest rate on date of grant... 5.36% 6.27%
Forfeitures................................ None None
Expected life.............................. 5 years 5 years
</TABLE>

The following table summarizes information regarding stock options for 1996
and 1997:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTIONS EXERCISE PRICE
------- ----------------
<S> <C> <C>
Options outstanding, March 31, 1995........... -- --
Option grants................................. 56,000 $ 1.79
-------
Options outstanding, March 31, 1996........... 56,000 1.79
Option grants................................. 79,338 7.14
Options forfeited............................. (4,385) 7.14
-------
Options outstanding, March 31, 1997........... 130,953 4.85
-------
</TABLE>

<TABLE>
<S> <C>
Options available for grant, March 31, 1997... 395,447
Weighted average remaining contractual life... 9 years
Options exercisable, March 31, 1997........... 102,953
Weighted average exercise price of
exercisable options, March 31, 1997......... $ 5.68
</TABLE>

The Company also issued 1,445 shares of its common stock to an employee
during the year ended March 31, 1997 for services rendered by the employee to
the Company. The employee was immediately vested in the shares. The Board of
Directors of the Company has determined the fair market value of such shares to
be $8.16 per share. The Company recognized expense of $11,791 for the year ended
March 31, 1997 related to the grant.

F-14

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

10. STOCK OPTION PLAN, STOCK GRANTS AND DEFINED CONTRIBUTION PLAN--(CONTINUED)

During 1996 the Company issued 73,184 shares of its common stock to certain
employees, directors and consultants. The shares vested upon issuance and the
fair market value of such shares at the date of grant was determined by the
Board of Director's to be $1.79 per share. The Company recognized expense of
$130,685 for the year ended March 31, 1996 related to the stock grants.

Defined Contribution Plan

Effective October 1996, the Company implemented a defined contribution
savings plan, which qualifies under Section 401(k) of the Internal Revenue Code,
for employees meeting certain service requirements. Participants may contribute
up to 15% of their gross wages not to exceed, in any given year, a limitation
set by the Internal Revenue Service regulations. The plan provides for mandatory
matching contributions to be made by the Company to a maximum amount of 2.5% of
a plan participant's compensation. Company contributions to the plan amounted to
$38,096 in 1997.

11. PATENT LICENSE AGREEMENT

During the year ended March 31, 1996, the Company entered into a license
agreement with the owner of a U.S. Patent, which expired in July 1996, for a
period of one year commencing July 1, 1995. The Company was obligated to pay the
owner a royalty equal to 3% of the sales price of each licensed product, as
defined by the agreement, that is leased, sold or transferred to an unaffiliated
third party in the United States during the license period. The license provided
for a minimum royalty amount of $100,000, of which $73,333 and $26,667 have been
expensed in 1996 and 1997, respectively.

12. SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest amounted to $17,373, $17,366 and $56,223 in
1995, 1996 and 1997, respectively. There were no payments for income taxes in
1995 and 1996. In 1997, the Company paid $6,800 for income taxes.

During fiscal 1996 and 1997, the Company acquired $40,152 and $94,935,
respectively of production equipment under capital leases. No production
equipment was acquired by capital lease in 1995.

13. RELATED PARTIES

In July 1996, the Company loaned its President, who is a principal
stockholder, $32,200. Such loan bears interest at a rate of 8%, commencing
October 14, 1996, and is due and payable September 1, 1997. The loan along with
accrued but unpaid interest in the amount of $1,256, was repaid in April 1997.

In November 1996, the Company received an interest bearing demand note in
return for a loan of $200,000 to a related party in which the Company's Chief
Financial Officer is a principal stockholder. The loan, which bore interest at a
rate of 8.75% per annum, was repaid with accrued interest in the amount of
$4,135 in February 1997.

During 1996, the Company received interest bearing demand notes in return
for aggregate loans of $150,000 to a related party in which the Company's Chief
Financial Officer is a principal stockholder. Such loans, which bore interest at
a rate of 12% per annum, were repaid with accrued interest in the aggregate of
$1,794 as of March 31, 1996.

14. STOCKHOLDERS' EQUITY

During 1997, the Company completed a private offering of 520,315 units, as
defined in such offering, at a price per unit ranging from $7.86 to $8.93 based
on the quantity of units purchased. Each unit consists of one share of the
Company's common stock, $.01 par value, and a warrant to purchase one additional
share of the Company's common stock at a price per share equal to the purchase
price of the unit, on or before May 3, 1999. The offering provided net proceeds
of $4,311,800. In conjunction with the offering the Company issued 6,155 units,
as a placement fee, to certain individuals who assisted the Company in selling
the units. The fair value of

F-15

<PAGE>

SCHICK TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

14. STOCKHOLDERS' EQUITY--(CONTINUED)

such units, in the amount of $54,950, or $8.93 per unit has been reflected as a
reduction of paid in capital. At March 31, 1997 the Company has reserved 526,470
shares of its common stock for issuance upon the exercise of the warrants.

During 1996, a 10% interest bearing convertible demand note, held by a
stockholder of the Company, in the principal amount of $50,000 was converted
into 28,000 shares of the Company's common stock. During 1996, a non-interest
bearing convertible loan in the principal amount of $150,000, held by a second
stockholder, was converted into 98,823 shares of common stock.

15. RESTRUCTURING AND RECAPITALIZATION

In connection with the Company's proposed initial public offering under the
Securities Act of 1933, as amended, the Company has restructured. In April 1997,
Schick Technologies, Inc. ('Schick Delaware') and its wholly owned subsidiary,
STI Acquisition Corporation ('STI') were formed under the General Corporation
Law of the State of Delaware for the purpose of forming a holding company and
changing the state of incorporation of the Company. Effective June 4, 1997
(pursuant to a merger agreement among the Company, Schick Delaware and STI),
Schick Delaware issued 7,957,231 shares of its common stock for all the
outstanding common stock of the Company. STI and the Company merged and the
Company was the survivor of the merger and became a wholly-owned subsidiary of
Schick Delaware. In connection with the restructuring and merger, the holders of
the Company's outstanding warrants and options converted such warrants and
options to similar warrants and options of Schick Delaware (based on the same
ratio of exchange, 2.8 shares for 1 share, applicable to the common stock
exchange). Schick Delaware's articles of incorporation also authorize 2,500,000
shares of preferred stock, $.01 par value.

The 1996 Stock Option Plan of the Company was amended by Schick Delaware
and the shares available for issuance pursuant to the Plan were adjusted to
470,400. Schick Delaware also implemented its 1997 Stock Option Plan for
Non-Employee Directors ('the Director Plan') whereby nonqualified options to
purchase up to 35,000 shares of the Company's common stock may be granted to
non-employee directors. Each option granted under the Director Plan becomes
exercisable on the second anniversary date of its grant and must have an
exercise price equal to the fair market value of the Company's common stock on
the date of grant.

All common shares, stock options, warrants and related per share data
reflected in the accompanying financial statements and notes thereto, have been
presented as if the recapitalization had occurred on April 1, 1994.

F-16

<PAGE>

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<PAGE>

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<PAGE>

INSIDE BACK COVER 5

[Graphics depicting the Company's manufacturing facilities.]

[Caption: Schick Technologies, Inc.]

<PAGE>

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

No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company or any Underwriter. This Prospectus does
not constitute an offer of any securities other than those to which it relates
or an offer to sell, or a solicitation of an offer to buy, to any person in any
jurisdiction where such an offer or solicitation would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................................. 3
Risk Factors....................................... 7
The Company........................................ 14
Use of Proceeds.................................... 15
Dividend Policy.................................... 15
Capitalization..................................... 16
Dilution........................................... 17
Selected Financial Data............................ 18
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 19
Business........................................... 24
Management......................................... 38
Certain Transactions............................... 44
Principal Stockholders............................. 44
Description of Capital Stock....................... 45
Shares Eligible for Future Sale.................... 49
Underwriting....................................... 50
Legal Matters...................................... 51
Experts............................................ 52
Additional Information............................. 52
Index to Financial Statements...................... F-1
</TABLE>

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

Until July 25, 1997, all dealers effecting transactions in the Common
Stock, whether or not participating in this distribution, may be required to
deliver a Prospectus. This delivery requirement is in addition to the obligation

of dealers to deliver a Prospectus when acting as Underwriters and with respect
to their unsold allotments or subscriptions.

---------------------------------------------------------
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1,750,000 SHARES

[LOGO]

SCHICK TECHNOLOGIES, INC.

COMMON STOCK

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

PROSPECTUS

JULY 1, 1997

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

LEHMAN BROTHERS

J.P. MORGAN & CO.

PACIFIC GROWTH EQUITIES, INC.

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