<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 10-QSB
-------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-27368
ORTEC INTERNATIONAL, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-3068704
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3690 BROADWAY
NEW YORK, NEW YORK 10032
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(212) 740-6999
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE
----------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of the issuer's common stock is
4,644,510 (as of August 7, 1997).
-------------------------
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<PAGE> 2
ORTEC INTERNATIONAL, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
QUARTER ENDED JUNE 30, 1997
ITEMS IN FORM 10-QSB
Facing page Page
Part I
Item 1. Financial Statements. 1
Item 2. Plan of Operation. 11
Part II
Item 1. Legal Proceedings and Claims. None
Item 2. Changes in Securities. 13
Item 3. Default Upon Senior Securities. None
Item 4. Submission of Matters to None
a Vote of Security Holders.
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K. 14
Signatures
<PAGE> 3
PART I
Item 1. FINANCIAL STATEMENTS
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $5,535,349 $7,453,229
Prepaid expenses 6,020 7,616
Other current assets 1,803 1,958
---------- ----------
Total current assets 5,543,172 7,462,803
---------- ----------
Property and equipment, at cost:
Laboratory equipment 584,647 578,530
Office furniture and equipment 302,873 170,830
Leasehold improvements 601,224 462,995
---------- ----------
1,488,744 1,212,355
Accumulated depreciation and
amortization 456,616 321,646
---------- ----------
1,032,128 890,709
---------- ----------
Other assets:
Patent application costs net of
accumulated amortization of $16,006
at June 30, 1997 and $1,210 at
December 31, 1996 407,440 409,147
Deposits 30,057 29,266
---------- ----------
Total other assets 437,497 438,413
---------- ----------
Total Assets $7,012,797 $8,791,925
========== ==========
</TABLE>
See notes to condensed unaudited financial statements.
1
<PAGE> 4
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 489,867 $ 570,397
Capital lease obligations - current 41,845 5,738
Loan payable - current 36,637 38,018
----------- -----------
Total current liabilities 568,349 614,153
----------- -----------
Long-term liabilities:
Capital lease obligations - noncurrent 56,031 9,846
Loan payable - noncurrent 432,245 450,928
----------- -----------
Total long-term liabilities 488,276 460,774
----------- -----------
Total liabilities 1,056,625 1,074,927
----------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value;
authorized, 10,000,000 shares;
issued and outstanding shares -
4,642,527 at June 30, 1997 and
4,601,963 at December 31, 1996 4,642 4,602
Additional paid-in capital 15,613,707 15,573,183
Deficit accumulated during the
development stage (9,662,177) (7,860,787)
----------- -----------
Total stockholders' equity 5,956,172 7,716,998
----------- -----------
Total Liabilities and
Stockholders' Equity $ 7,012,797 $ 8,791,925
=========== ===========
</TABLE>
See notes to condensed unaudited financial statements.
2
<PAGE> 5
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative from
March 12, 1991
Quarter ended June 30, Six months ended June 30, (inception) to
---------------------- ------------------------- June 30, 1997
1997 1996 1997 1996 ---------------
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue
Interest income $ 73,918 $ 37,314 $ 157,779 $ 71,785 $ 395,994
---------- ---------- ----------- ----------- -----------
Expenses
Research and development 240,861 166,397 513,554 387,852 3,867,970
Rent 53,431 8,195 104,796 14,638 267,745
Consulting 54,098 154,510 116,241 195,443 873,637
Personnel 316,216 125,473 609,667 265,489 2,485,065
General and administrative 320,445 135,044 591,355 261,888 2,425,727
Other expense, net 11,376 27,150 23,556 28,177 138,027
---------- ---------- ----------- ----------- -----------
996,427 616,769 1,959,169 1,153,487 10,058,171
--------- --------- --------- --------- ---------
Net loss $ (922,509) $ (579,455) $(1,801,390) $(1,081,702) $(9,662,177)
========== ========== =========== =========== ===========
Net loss per share $ (.19) $ (.15) $ (.37) $ (.28) $ (3.22)
--------- --------- --------- --------- ---------
Weighted average common and
common equivalent shares
outstanding 4,946,121 3,941,686 4,930,948 3,809,433 3,003,450
========== ========== =========== =========== ===========
</TABLE>
See notes to condensed unaudited financial statements.
3
<PAGE> 6
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Common Stock accumulated
Additional in the
Paid-in development
Shares Amount Capital stage Total
------ ------ ---------- ------------ -----
<S> <C> <C> <C> <C> <C>
Issuance of stock:
Founders 1,553,820 $ 1,554 $ (684) $ 870
First private placement 217,440 217 64,783 65,000
The Director 149,020 149 249,851 250,000
Second private placement 53,020 53 499,947 500,000
Share issuance expenses (21,118) (21,118)
Net loss for the period from
March 12, 1991 (inception) to
December 31, 1991 $ (281,644) (281,644)
--------- -------- ---------- ----------- -----------
Balance - December 31, 1991 1,973,300 1,973 792,779 (281,644) 513,108
Issuance of stock:
Second private placement 49,320 49 465,424 465,473
Stock purchase agreement with
The Director 31,820 32 299,966 299,998
Share issuance expenses (35,477) (35,477)
Net loss for the year ended
December 31, 1992 (785,941) (785,941)
--------- -------- ---------- ----------- -----------
Balance - December 31, 1992 2,054,440 2,054 1,522,692 (1,067,585) 457,161
Issuance of stock:
Third private placement 132,150 132 1,321,368 1,321,500
Stock purchase agreement with
Home Insurance Company 111,111 111 999,888 999,999
Stock purchase agreement with
The Director 21,220 21 199,979 200,000
Shares issued in exchange
for commissions earned 600 1 5,999 6,000
Share issuance expenses (230,207) (230,207)
Net loss for the year ended
December 31, 1993 (1,445,624) (1,445,624)
--------- -------- ---------- ----------- -----------
Balance - December 31, 1993 2,319,521 $ 2,319 $3,819,719 $(2,513,209) $ 1,308,829
--------- -------- ---------- ----------- -----------
</TABLE>
See notes to condensed unaudited financial statements.
4
<PAGE> 7
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Deficit
accumulated
Common Stock Additional in the
------------------ Paid-in development
Shares Amount Capital stage Total
------ ------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C>
(brought forward) 2,319,521 $2,319 $ 3,819,719 $(2,513,209) $ 1,308,829
Issuance of stock:
Fourth private placement 39,451 40 397,672 397,712
Stock purchase agreement with
Home Insurance Company 50,000 50 499,950 500,000
Share issuance expenses (8,697) (8,697)
Net loss for the year ended
December 31, 1994 (1,675,087) (1,675,087)
--------- ------ ----------- ----------- -----------
Balance - December 31, 1994 2,408,972 2,409 4,708,644 (4,188,296) 522,757
Rent forgiveness 40,740 40,740
Net loss for the year ended
December 31, 1995 (1,022,723) (1,022,723)
--------- ------ ----------- ----------- -----------
Balance - December 31, 1995 2,408,972 2,409 4,749,384 (5,211,019) (459,226)
Issuance of stock:
Initial public offering 1,200,000 1,200 5,998,800 6,000,000
Exercise of warrants 33,885 34 33,851 33,885
Fifth private placement 959,106 959 6,219,838 6,220,797
Share issuance expenses (1,580,690) (1,580,690)
Non-cash stock compensation
and interest 152,000 152,000
Net loss for the year ended
December 31, 1996 (2,649,768) (2,649,768)
--------- ------ ----------- ----------- -----------
Balance - December 31, 1996 4,601,963 $4,602 $15,573,183 $(7,860,787) $7,716,998
--------- ------ ------------ ----------- ----------
</TABLE>
See notes to condensed unaudited financial statements.
5
<PAGE> 8
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Deficit
accumulated
Common Stock Additional in the
----------------- Paid-in development
Shares Amount Capital stage Total
------ ------ ------------ ------------ -----
<S> <C> <C> <C> <C> <C>
(brought forward) 4,601,963 $4,602 $ 15,573,183 $(7,860,787) $ 7,716,998
Issuance of stock:
Exercise of warrants 40,564 40 40,524 40,564
Net loss for the six months
ended June 30, 1997 (1,801,390) (1,801,390)
--------- ------ ------------ ----------- -----------
Balance - June 30, 1997 4,642,527 $4,642 $ 15,613,707 $(9,662,177) $5,956,172
--------- ------ ------------ ----------- -----------
</TABLE>
See notes to condensed unaudited financial statements.
6
<PAGE> 9
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative from
March 12, 1991
Quarter ended June 30, Six months ended June 30, (inception) to
---------------------- ------------------------- June 30, 1997
1997 1996 1997 1996 ----------------
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(922,509) $(579,455) $(1,801,390) $(1,081,702) $(9,662,177)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Deferred occupancy costs (1,327)
Depreciation and amortization 77,639 15,529 149,766 30,208 482,860
Unrealized loss on marketable
securities 67,204
Realized loss on marketable
securities 5,250
Non cash stock compensation and
interest 152,000 152,000 152,000
Rent forgiveness 40,740
Changes in operating assets and
liabilities
Prepaid expenses (2,270) 1,596 (6,020)
Other current assets 156 1 155 (13) (1,803)
Accounts payable and accrued
liabilities (100,070) (173,984) (80,530) (453,874) 489,867
--------- --------- ----------- ----------- -----------
Net cash used in operating
activities (947,054) (585,909) (1,730,403) (1,354,708) (8,432,079)
--------- --------- ----------- ----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (120,844) (150,586) (276,389) (367,035) (1,488,744)
Payments for patent application (3,303) (21,222) (13,089) (25,002) (423,446)
Organization costs ( 10,238)
Deposits 816 (1,734) (791) (2,065) ( 30,057)
Purchases of marketable securities (594,986)
Sale of marketable securities 522,532
--------- --------- ----------- ----------- -----------
Net cash (used in) provided by
investing activities (123,331) (173,542) (290,269) ( 394,102) (2,024,939)
--------- --------- ----------- ----------- -----------
</TABLE>
See notes to condensed unaudited financial statements.
7
<PAGE> 10
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
March 12, 1991
Quarter ended June 30, Six months ended June 30, (inception) to
---------------------- ------------------------- June 30, 1997
1997 1996 1997 1996 --------------
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of notes
payable $ 197,118 $ 197,118 $ 515,500
Repayment of notes payable (515,500) (515,500)
Proceeds from issuance of common
stock $ 36,487 2,094 $ 40,564 6,014,960 17,301,798
Share issuance expenses 120 (825,977) ( 1,876,189)
Proceeds from loan payable 500,000
Repayment of loan payable (8,713) (20,064) (31,118)
Proceeds from capital lease
obligations 75,036 31,815 100,367 31,815 118,903
Repayment of capital lease
obligations (16,944) (18,075) (21,027)
----------- ----------- ----------- ----------- ------------
Net cash provided by financing
activities 85,866 231,147 102,792 4,902,416 15,992,367
----------- ----------- ----------- ----------- ------------
Net increase (decrease) in cash (984,519) (528,304) (1,917,880) 3,153,606 5,535,349
Cash at beginning of period 6,519,868 3,684,274 7,453,229 2,364
----------- ----------- ----------- ----------- ------------
Cash at end of period $ 5,535,349 $ 3,155,970 $ 5,535,349 $ 3,155,970 $ 5,535,349
----------- ----------- ----------- ----------- ------------
</TABLE>
See notes to condensed unaudited financial statements.
8
<PAGE> 11
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1997
NOTE 1 - FINANCIAL STATEMENTS
The condensed balance sheet as of June 30, 1997 and the statements of
operations, shareholders' equity and cash flows for the three and six month
periods ended June 30, 1997 and 1996 and for the period from March 12, 1991
(inception) to June 30, 1997 have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include only normal recurring
accrual adjustments) necessary to present fairly the financial position, results
of operations and cash flows at June 30, 1997 and for all periods presented have
been made. Certain information and footnote disclosure normally included in the
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
notes thereto in the Company's December 31, 1996 annual report on Form 10-KSB
filed with the Securities and Exchange Commission. The results of operations for
the quarter and six months ended June 30, 1997 are not necessarily indicative of
the operating results for the full year.
NOTE 2 - FORMATION OF THE COMPANY AND BASIS OF PRESENTATION
Formation of the Company
Ortec International, Inc. ("Ortec" or the "Company") was incorporated
in March 1991 as a Delaware corporation to secure and provide funds for the
further development of the technology developed by Dr. Mark Eisenberg of Sydney,
Australia, to replicate in the laboratory, composite cultured skin for use in
skin replacement procedures (the "Technology"). Pursuant to a license agreement
dated September 7, 1991, Dr. Eisenberg has granted Ortec a license for a term of
ten years, which may be automatically renewed by Ortec for two additional
ten-year periods, to commercially use and exploit the Technology for the
development of products, subject to certain limitations. At the expiration or
earlier termination of the agreement, Dr. Eisenberg is entitled to the exclusive
rights in the Technology, and Ortec is entitled to the exclusive rights to all
improvements to the Technology developed during the license period.
9
<PAGE> 12
Basis of Presentation
The Company is a development stage enterprise, and has neither realized
any operating revenue nor has any assurance of realizing any future operating
revenue. Successful future operations depend upon the successful development and
marketing of the composite cultured skin to be used in skin replacement
procedures.
Initial Public Offering
On January 19, 1996, the Company completed an initial public offering
("IPO") of 1,200,000 units. Each unit consists of (i) one share of the Company's
common stock, (ii) one Class A warrant to purchase one share of common stock at
$10, originally scheduled to expire in July 1997 but extended to November 3,
1997 by the unanimous written consent of the Board of Directors of the Company
(see Part II, Item 2, hereof, "Changes in Securities") and (iii) one Class B
warrant to purchase one share of common stock at $15, expiring January 1999. The
Class A and B warrants will be redeemable by the Company at $.01 per warrant, if
the market price of the Company's common stock equals or exceeds $10 for 10
consecutive trading days during a specified period, as defined.
The IPO raised gross proceeds of $6,000,000, of which $800,000,
$515,500 and approximately $341,000 were used to pay underwriting commissions,
notes payable and deferred offering costs, respectively, thereby providing the
Company with net proceeds of approximately $4,343,500. The Company has used and
intends to use the proceeds for continued research and development of composite
cultured skin, performing human clinical trials and general corporate purposes.
1996 Private Placement
In November 1996, the Company completed a private placement of its
securities from which it received gross proceeds of $6,220,797 and net proceeds
of approximately $5,733,000 (after deducting approximately $487,000 in placement
fees and other expenses of such private placement). The Company sold 959,106
shares of Common Stock in such private placement at an average
price of $6.49 per share. In addition, the Company granted five-year warrants to
placement agents to purchase such number of shares equal to 10% of the number of
shares of common stock sold by such placement agent, exercisable at prices equal
to 120% of the prices paid for such shares. Pursuant to the purchasers' demand,
the Company has registered all of such 959,106 shares.
The Company intends to use the net proceeds it has received in such
private placement offering for continued research and development of its
composite cultured skin, performing human clinical trials and for general
corporate purposes.
10
<PAGE> 13
NOTE 3 - NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE, which
is effective for financial statements for both interim and annual periods ending
after December 15, 1997. Early adoption of the new standard is not permitted.
The new standard eliminates primary and fully diluted earnings per share and
requires presentation of basic and diluted earnings per share together with
disclosure of how the per share amounts were computed. Basic earnings per share
excludes dilution and is computed by dividing income available to common
shareholders by the weighted-average common shares outstanding for the period.
Diluted earnings per share reflects the weighted-average common shares
outstanding plus the potential dilutive effect of securities or contracts which
are convertible to common shares, such as options, warrants, and convertible
preferred stock. The adoption of this new standard is not expected to have a
material impact on the disclosure of earnings per share in the Company's
financial statements.
ITEM 2. PLAN OF OPERATION
OPERATIONS FOR THE NEXT TWELVE MONTHS
For the next twelve months the Company will continue to conduct human
clinical trials. To that end, the Company has recruited and intends to continue
to recruit hospital burn centers which will provide the necessary patients. In
addition, human clinical trials are presently being conducted at a research
hospital in New York City for the application of the Company's Composite
Cultured Skin in treating the symptoms of a unique disease called Epidermolysis
Bullosa ("EB"). The wounds resulting from EB are very similar to those caused by
burns and require similar treatment.
The Company estimates that the cost to it of each human clinical trial
for burn patients and EB patients will be approximately $8,000. Such amounts
include testing for pathogens and payments to the hospital, but do not include
any allocation to the cost of such trials of salaries, rent or other overhead
expenses of the Company.
CASH REQUIREMENTS
The Company estimates that it has sufficient funds necessary to operate
through approximately January 1999. The Company may have to secure additional
funds prior thereto or thereafter to complete its human clinical trials, if not
then already completed, to secure FDA pre-market approval for commercial sales
and thereafter to produce and market its Composite Cultured Skin
11
<PAGE> 14
in commercial quantities. See "Forward Looking Information May Prove
Inaccurate."
CLINICAL TRIALS AND PRODUCT RESEARCH AND DEVELOPMENT
The Company has spent an aggregate of approximately $3,867,970 from its
inception through June 30, 1997 for the human clinical trials and for research
and development. That amount includes the salaries of its employees involved in
producing the Composite Cultured Skin, performing quality control, securing
hospital burn centers to participate in the human clinical trials, monitoring
the progress of the patients thereafter and to prepare reports to be filed with
the FDA. The Company anticipates that it will be required to continue to spend
additional funds for such purposes in the twelve months ending June 30, 1998 in
order to continue its human clinical trials, continue its efforts to secure FDA
pre-market approval for commercial sales and thereafter to produce and market
its Composite Cultured Skin in commercial quantities. See "Forward Looking
Information May Prove Inaccurate."
FORWARD LOOKING INFORMATION MAY PROVE INACCURATE
This Quarterly Report on Form 10-QSB contains certain forward-looking
statements and information relating to the Company that are based on the beliefs
of Management, as well as assumptions made by and information currently
available to the Company. When used in this document, the words "anticipate,"
"believe," "estimate," and "expect" and similar expressions, as they relate to
the Company, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions,
including those described in this Quarterly Report on Form 10-QSB. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated or expected. The Company
does not intend to update these forward-looking statements.
12
<PAGE> 15
PART II
ITEM 2. CHANGES IN SECURITIES
(a) Class A Warrants.
The Company has outstanding 1,200,000 publicly traded Class A Warrants
(the "Class A Warrants"), each Class A Warrant entitling the holder thereof to
purchase one (1) share of Common Stock of the Company at an exercise price of
$10.00 per share. The Class A Warrants, pursuant to their original terms, were
scheduled to expire on July 19, 1997.
On July 1, 1997, the Board of Directors of the Company resolved by
unanimous written consent to extend the term of the Class A Warrants so that the
Class A Warrants will expire at 5:00 p.m., Eastern Standard Time, on November 3,
1997. Other then the extension of the expiration date, such resolution did not
change the exercise price, the redemption provisions or any other provisions of
the Class A Warrants.
(b) Recent Sales of Unregistered Securities.
During the second quarter of 1997 the Company granted one employee an
option under its Employee Stock Option Plan to purchase 5,000 shares of Common
Stock, exercisable at $7.00 per share, and expiring on April 8, 2002. Such grant
was in consideration for services rendered to the Company.
On January 20, 1996, the Company granted "lock-up warrants" to 63
persons, entitling them to purchase an aggregate of 389,045 shares of the
Company's Common Stock at a price of $1.00 per share. The issuance of such
lock-up warrants was in consideration for such 63 persons' signing lock-up
agreements agreeing not to sell or transfer shares of the Company's Common Stock
purchased at prices of $9.00 or more per share until January 20, 1997. All such
warrants expire on January 18, 2000. At different times during the second
quarter of 1997, seven persons exercised such warrants and purchased 34,504
shares of Common Stock at the $1.00 per share exercise price. During the first
quarter of 1997 an additional two persons exercised such warrants and purchased
4,077 shares of Common Stock at the $1.00 per share exercise price. There were
no underwriting discounts or commissions given or paid in connection with any of
the foregoing warrant exercises.
The grant, offer and sale of all of the securities listed above were
sold without registration under the Securities Act of 1933, as amended (the
"Act"), as they did not involve any public offering, pursuant to the provisions
of Section 4(2) of the Act.
13
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
3.1 Agreement of Merger of the Skin Group, Ltd. and the
Company dated July 9, 1992 (1)
3.2 Original Certificate of Incorporation (1)
3.3 By-Laws (1)
27.1 Financial Data Schedule *
- --------------
* Filed herewith.
(1) Filed as an Exhibit to the Company's Registration Statement on Form
SB-2 (File No. 33-96090), or Amendment 1 thereto, and incorporated
herein by reference.
(b) Reports on Form 8-K
On July 10, 1997, the Company filed a report on Form 8-K announcing the
extension of the term of the Class A Warrants. See Item 2 hereof, "Changes in
Securities." No other reports on Form 8-K were filed during the second quarter
of 1997.
14
<PAGE> 17
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.
Registrant:
ORTEC INTERNATIONAL, INC.
Date: August 12, 1997 By: /s/ Steven Katz
-----------------------------
Dr. Steven Katz
President and Chief
Executive Officer
(Principal Executive Officer)
Date: August 12, 1997 By: /s/ Ron Lipstein
-----------------------------
Ron Lipstein
Chief Financial Officer
(Principal Financial Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,535,349
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,543,172
<PP&E> 1,488,744
<DEPRECIATION> 456,616
<TOTAL-ASSETS> 7,012,797
<CURRENT-LIABILITIES> 568,349
<BONDS> 0
0
0
<COMMON> 4,642
<OTHER-SE> 5,951,530
<TOTAL-LIABILITY-AND-EQUITY> 7,012,797
<SALES> 0
<TOTAL-REVENUES> 157,779
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,959,169
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,801,390)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,801,390)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,801,390)
<EPS-PRIMARY> (.37)
<EPS-DILUTED> 0
</TABLE>
