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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 1997
FILE NO. 33-96090
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST EFFECTIVE
AMENDMENT NO. 1 TO
FORM SB-2
FILED AS A
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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ORTEC INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 8099 11-3068704
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification
of incorporation) Code Number) Number)
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3960 BROADWAY, NEW YORK, NEW YORK 10032 (212) 740-6999
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
DR. STEVEN KATZ, PRESIDENT
ORTEC INTERNATIONAL, INC.
3960 BROADWAY, NEW YORK, NEW YORK 10032 (212) 740-6999
(Address, including zip code, and telephone number, including area code, of
agent for service)
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Copies to:
GABRIEL KASZOVITZ, ESQ.
FEDER, KASZOVITZ, ISAACSON,
WEBER, SKALA & BASS LLP
750 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022-1200
(212) 888-8200
FAX: (212) 888-7776
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Approximate date of proposed sale to the public: Not Applicable.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), other then securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH PROPOSED AGGREGATE AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
BEING REGISTERED REGISTERED PER SECURITY PRICE FEE
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Common Stock underlying Class A
Warrants (1)................................ 1,200,000 $10.00 $12,000,000 $3,636.36 (2)
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Common Stock underlying Class B
Warrants (1)................................ 1,200,000 $15.00 $18,000,000 $5,454.54 (2)
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Total Registration Fee........................ $30,000,000 $9,090.90
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(1) Pursuant to Rule 416, this Registration Statement also covers any additional
shares of Common Stock which may become issuable by virtue of the
anti-dilution provisions of the Warrants.
(2) Such registration fee has already been paid by the Company upon the filing
of its Registration Statement on Form SB-2 (File No. 33-96090), declared
effective by the Commission on December 15, 1995.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
AN AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PRELIMINARY PROSPECTUS DATED JUNE 26, 1997
SUBJECT TO COMPLETION
ORTEC INTERNATIONAL, INC.
2,400,000 SHARES
Issuable Upon the Exercise of Class A and Class B
Redeemable Common Stock Purchase Warrants
Ortec International, Inc., a Delaware corporation (the "Company"), hereby
offers 2,400,000 shares of Common Stock, $.001 par value per share, of the
Company (the "Common Stock"). Such shares will be issued by the Company upon the
exercise of Class A and Class B Redeemable Common Stock Purchase Warrants
(collectively, the "Warrants"). The Warrants were purchased in the Company's
December 1995 initial public offering of its securities (the "IPO"),
underwritten by Patterson Travis, Inc. (the "Underwriter"). Pursuant to the
terms of an underwriting agreement (the "Underwriting Agreement") entered into
between the Company and the Underwriter in connection with the IPO, subject to
compliance with certain conditions, the Underwriter shall receive 8% of the
proceeds received by the Company upon the exercise of any Warrants. Each Class A
Warrant entitles the holder to purchase one share of Common Stock at $10.00 per
share until July 19, 1997, unless redeemed by the Company prior to such date.
Each Class B Warrant entitles the holder to purchase one share of Common Stock
at $15.00 per share until January 19, 1999, unless redeemed by the Company prior
to such date. There are 1,200,000 shares underlying the Class A Warrants and
1,200,000 shares underlying the Class B Warrants.
The Warrants are redeemable by the Company for $.01 per Warrant on 30 days'
prior written notice, if the market price of the Common Stock equals or exceeds
$10.00 for any ten consecutive trading days within a period of thirty trading
days ending within five days prior to the date of the notice of redemption.
Other than the proceeds received by the Company from the exercise of the
Warrants, the Company will not receive any proceeds from the sale of the shares
offered hereby.
The Common Stock of the Company is traded on the NASDAQ SmallCap Market
system under the symbol "ORTC." On June 24, 1997, the last reported sale price
of the Common Stock was $9.00.
SEE "RISK FACTORS" AT PAGE 5 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS
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.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
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Per Share Underlying Each Class A Warrant................. $10.00 $0.80 $9.20
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Per Share Underlying Each Class B Warrant................. $15.00 $1.20 $13.80
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Total........................................... $30,000,000 $2,400,000 $27,600,000
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(1) Represents exercise price of the Warrants
(2) Pursuant to the terms of the Underwriting Agreement, the Underwriter is to
receive 8% of the exercise price of all Warrants exercised provided that (i)
at the time of exercise the market price of the Common Stock is greater than
the exercise price; (ii) the Warrants exercised are not held in
discretionary accounts; (iii) disclosure of the compensation arrangements
has been made in documents provided to the holder of the Warrants; (iv) the
exercise of Warrants was solicited by a member of the National Association
of Securities Dealers, Inc., and such member is designated by the warrant
holder in writing; and (v) the solicitation of the Warrants is not in
violation of Rule 10b-6 under the Securities Exchange Act of 1934. See "Plan
of Distribution."
(3) Before deducting expenses of approximately $22,500 (including printing costs
and legal and accounting fees) payable by the Company in connection with
this Offering.
The date of this Prospectus is , 1997
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AVAILABLE INFORMATION
Since January 20, 1996, the Company has been subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In accordance with the Exchange Act, the Company has and will continue to
file reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports and other information filed by
the Company may be inspected and copied at the public reference facilities of
the Commission in Washington, D.C. Copies of such materials can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549, at
prescribed rates. In addition, the Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The Company's Common Stock is listed on the NASDAQ SmallCap Market
and reports and information concerning the Company can also be inspected through
such exchange. The Company intends to furnish its shareholders with annual
reports containing audited financial statements and such other periodic reports
as the Company deems appropriate or as may be required by law.
The Company will provide without charge to each person who receives this
Prospectus, upon written or oral request of such person, a copy of any of the
information that is incorporated by reference unless the exhibits are themselves
specifically incorporated by reference. Such requests should be directed by mail
to Mr. Ron Lipstein, Secretary, Ortec International, Inc., 3960 Broadway, New
York, NY 10032, or by telephone at (212) 740-6999.
The Company has filed with the Commission a Registration Statement on Form
SB-2 and all schedules and exhibits thereto under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Common Stock offered by this
Prospectus. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and this Offering, reference is made to such Registration
Statement, including the exhibits filed therewith, which may be inspected
without charge at the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of the Registration Statement may be obtained
from the Commission at its principal office upon payment of prescribed fees.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete and, where the contract or other
document has been filed as an exhibit to the Registration Statement, each such
statement is qualified in all respects by reference to the applicable document
filed with the Commission.
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PROSPECTUS SUMMARY
All the information in this summary is qualified in its entirety by the
more detailed information included elsewhere in this Prospectus. For definition
of certain terms and abbreviations used in this Prospectus, see the "Glossary"
on Page A-1.
THE COMPANY
ORTEC INTERNATIONAL, INC. (the "Company") has developed a proprietary
technology which consists of a biologically active dressing to stimulate the
repair and regeneration of human skin. The Company's product is intended to be
utilized for the treatment of severe burn patients as well as for other types of
wound healing and for reconstructive and cosmetic surgery. The Company believes
that the successful regeneration of human skin creates the potential for wide
commercial application.
The Company is a development stage company and to date has not sold any
products. Its activities have been limited to human clinical tests of its
product and research and development under an exclusive license relating to the
Company's biological dressing. From March 12, 1991 (inception) to March 31,
1997, the Company has spent an aggregate of $3,627,109 for research and
development, of which $964,864, $573,392 and $272,693 were spent during the
fiscal years ended December 31, 1996 and 1995 and during the first three months
of 1997, respectively.
In order to create a clinically useful biological dressing, the Company has
duplicated the two major layers that form the human skin, the epidermis and the
dermis. Dr. Mark Eisenberg, of Sydney, Australia, an officer and director of the
Company and its largest shareholder, has been involved in biochemical and
clinical research at the University of New South Wales in Australia for over
twenty years, focusing primarily 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. In 1987, through
his work on EB, Dr. Eisenberg first succeeded in growing epidermal layers of
human skin, which were successfully applied as an allograft on an EB patient.
Dr. Eisenberg has since developed a biologically active dressing known as
"Composite Cultured Skin", consisting of both the dermal and epidermal layers.
In March 1994, the Company commenced human clinical trials on burn patients
under protocols approved by the Food and Drug Administration ("FDA"), which
require testing of 120 patients. As of June 24, 1997, eight patients have been
treated under this program. More trials will be necessary to test the safety and
efficacy of the Company's product. From 1988 to 1996, the Company's product was
used in skin replacement operations on 29 patients (of which 5 operations were
skin replacement for burn patients) in Sydney, Australia. None of the Australian
procedures were performed in accordance with the FDA approved protocols.
In 1996, the FDA approved the protocols of Rockefeller University Hospital
in New York City for the use of the Company's Composite Cultured Skin for the
treatment of non-healing skin ulcers of patients with EB. Under this FDA
approved clinical trial protocol, ten to fifteen patients are required to be
treated under this program. Rockefeller University is, as of the date of this
Prospectus, conducting the human clinical trials on EB patients under this
program.
The executive offices of the Company are located at 3960 Broadway, New
York, New York 10032. Its telephone number is (212) 740-6999.
3
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THE OFFERING
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Securities Included in this Prospectus....... 2,400,000 shares of Common Stock, 1,200,000 of
which are to be issued upon the exercise of
the Class A Warrants and 1,200,000 of which
are to be issued upon the exercise of the
Class B Warrants.
Common Stock outstanding as of the date
hereof (including the 2,400,000 shares
included in this Prospectus) (1)........... 7,040,544 Shares
Use of Proceeds.............................. Other than the proceeds received upon the
exercise of the Warrants, the Company will not
receive any proceeds upon the issuance of the
securities included herein. See "Use of
Proceeds."
Risk Factors................................. An investment in the shares being registered
hereby involves a high degree of risk. See
"Risk Factors."
NASDAQ Trading Symbol for Common Stock....... "ORTC"
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(1) Unless otherwise indicated, no effect is given in this Prospectus to (i)
307,575 shares reserved for issuance upon exercise of warrants expiring
January 19, 2000 exercisable at $1.00 per share; (ii) 360,000 shares
reserved for issuance upon the exercise of the options granted to the
Underwriter in the IPO and the warrants included therein, exercisable at per
share prices of $8.75 for 120,000 shares expiring December 15, 2000, $16.50
for 120,000 shares expiring July 19, 1997, and $24.75 for the remaining
120,000 shares expiring on January 19, 1999; (iii) 350,000 shares reserved
for issuance upon the exercise of stock options included in the Company's
1996 Stock Option Plan, of which options to purchase 161,000 shares at
prices of $6 and $7 have already been granted; and (iv) 241,601 shares
reserved for issuance upon the exercise of other outstanding warrants at
prices ranging from $6 to $12 and expiring at various times from July 1997
to 2001.
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RISK FACTORS
The purchase of the shares offered hereby involves a high degree of risk,
including, but not necessarily limited to, the risks described below. Before
subscribing for the shares, each prospective investor should consider carefully
the general investment risks enumerated elsewhere in this Prospectus and the
following risk factors, as well as the other information contained in this
Prospectus.
NEED FOR FUTURE FINANCING. The Company anticipates that its cash on hand
is sufficient to meet its cash requirements through approximately February 1999.
However, there can be no assurance that unexpected costs will not be incurred.
At the end of that period the Company may be required to raise additional funds
to complete its human clinical trials (if not completed by then) and produce and
market its Composite Cultured Skin. The Company may then seek additional funds
through sale of its securities to the public and through private markets, debt
financing or short term loans. There can be no assurance that the Company will
be able to obtain additional financing on terms acceptable to it, if at all. The
failure of the Company to obtain acceptable additional financing would have a
material adverse effect on the operations of the Company. The Company has no
current plans, understandings or commitments to raise any additional financing.
Additional financing may result in dilution for then current shareholders. See
"Forward Looking Information May Prove Inaccurate."
DEVELOPMENT STAGE COMPANY; LIMITED OPERATING HISTORY. The Company is a
development stage company organized in March 1991. It has no products approved
for commercial sale and has not realized any operating revenues. The Company is
likely to continue to encounter difficulties which are common to development
stage companies, including unanticipated costs relating to development, delays
in the testing of products, regulatory approval and compliance and competition.
The Company will not, in all likelihood, generate any revenues until it obtains
FDA approval to sell its skin replacement product in commercial quantities for
human application. There can be no assurance that such approval will be
obtained, or if obtained, that sales of the Company's product can be made on a
profitable basis.
UNCERTAINTY OF CLINICAL TRIALS; NEED TO OBTAIN FDA PREMARKETING APPROVAL;
GOVERNMENT REGULATION. Pursuant to the Federal Food Drug and Cosmetic Act and
regulations promulgated thereunder, the FDA regulates the manufacture,
distribution and promotion of medical devices in the United States. The
Company's Composite Cultured Skin is subject to regulation as a medical device.
Prior to commercial release of the Company's product, premarket approval ("PMA")
by the FDA will be required. PMA entails proof of nontoxicity, safety and
efficacy in human clinical trials. Premarket approval is a lengthy and expensive
process and there can be no assurance that FDA approval will be obtained. In
February 1994, the Company received FDA approval to commence human clinical
trials. The human clinical trials and the PMA are lengthy and costly processes,
the successful completion of which cannot be assured. Moreover, even if the
Company obtains FDA approval, the Composite Cultured Skin and any manufacturing
facilities used to manufacture it will continue to be subject to review,
periodic inspections and specific recordkeeping, reporting, product testing,
design, safety and labeling requirements. Accordingly, the Company's business,
financial condition and emergence from the development stage are dependent on
timely FDA approval for its product.
UNCERTAINTY OF MARKET ACCEPTANCE; RELIANCE ON ONE PRODUCT. Acceptance of
the Company's product is difficult to predict and will require substantial
marketing efforts and the expenditure of significant funds. There can be no
assurance that the Company's product will be successful in providing viable skin
replacement on a commercial basis or that it will be accepted by the medical
community. In addition, the Company's only product is its Composite Cultured
Skin. The Company does not expect its product to be available for commercial
sale for at least three years. The Company expects that its Composite Cultured
Skin will likely be, if and when commercially available, its sole product for an
indefinite period of time. Failure of the Company's product to achieve market
acceptance will have a material adverse impact on the Company's financial
condition.
TECHNOLOGICAL CHANGE; HIGHLY COMPETITIVE INDUSTRY. The biomedical field is
undergoing rapid and significant technological change. The Company's success
will depend on its ability to establish and maintain a competitive position in
this marketplace. Many companies and academic institutions have developed, or
are capable of developing products based on other technologies that are or may
be competitive with the
5
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Company's product. The Company's competitors include Organogenesis, Inc.,
Genzyme Tissue Repair, Inc., Advanced Tissue Sciences, Inc., Life Cell
Corporation and Integra Life Sciences. Many of those and other potential
competitors are well established, are much larger than the Company and have
substantially greater financial and other resources than the Company and have
established reputations for success in the development, sale and service of
their products. Such companies and academic institutions may succeed in
developing products that are more effective than the Company's Composite
Cultured Skin or that will receive FDA approval more quickly than the Company's
product.
ANTICIPATED DEPENDENCE ON THIRD PARTIES FOR MARKETING; LIMITED MARKETING
EXPERIENCE. The Company intends to sell its product primarily through its own
efforts and may use third party distributors on a limited basis. The Company has
no marketing experience and has limited financial and other resources to
undertake extensive independent marketing activities. There can be no assurance
that the Company will be able to market its Composite Cultured Skin successfully
or enter into agreements with third parties on acceptable terms for such
services.
LIMITED SUPPLIES OF MATERIALS. The Company is currently purchasing bovine
collagen sponges, a key component of its product, from one supplier who produces
the sponges to the Company's specifications. The Company has no written
agreement with that supplier obligating the supplier to supply sponges to the
Company. If the Company were required to secure another source for its bovine
collagen sponges, the Company would encounter considerable additional delay and
expense in continuing its human clinical trials and, consequently, in marketing
its Composite Cultured Skin.
The Company will continue to rely on a limited number of outside suppliers
to supply other materials that it uses in producing and testing its Composite
Cultured Skin. No assurance can be given that the Company or its suppliers will
continue to have access to a sufficient supply of these materials.
LIMITATIONS OF PATENT PROTECTION. The Company has been granted, and relies
on, an exclusive license from Dr. Mark Eisenberg, a major shareholder, officer
and director of the Company, who developed the Company's Composite Cultured
Skin, for worldwide rights to market the technology and any products developed
from it.
Dr. Eisenberg has been granted patents for the Company's Composite Cultured
Skin in the United States and in several foreign countries and is prosecuting
patent claims for it in others. The United States Patent was initially granted
to Dr. Eisenberg on February 1, 1994 and bears U.S. Patent 5,282,589. On
December 10, 1996, after an unsuccessful challenge by a competitor of the
Company, the U.S. Patent Office re-issued the Company's Composite Cultured Skin
patent (No. RE-35399).
There can be no assurance that the United States patent will not be
successfully challenged in court proceedings. Nor can there be any assurance
that any United States or foreign patents will provide any commercial benefits
to the Company.
Several of the Company's competitors, including Organogenesis, Inc.,
Advanced Tissue Sciences, Inc., Genzyme Tissue Repair Inc., Integra Life
Sciences and LifeCell Corporation have been granted patents relating to their
particular artificial skin technologies.
PRODUCT LIABILITY. The Company is exposed to the risk of product liability
claims in the event that its product causes injury or otherwise results in
adverse effects. Although the Company has obtained product liability insurance
coverage in the amount of $1,000,000, there can be no assurance that such
insurance coverage will be adequate to protect the Company against future
product liability claims or that product liability insurance will be available
to the Company in the future on terms acceptable to the Company, if at all.
DEPENDENCE ON KEY PERSONNEL. The Company is dependent on Dr. Steven Katz,
the Company's President, for managing the affairs of the Company. The loss of
Dr.Katz' services could adversely effect the Company.
FUTURE SALE OF UNREGISTERED SECURITIES; REGISTRATION RIGHTS. 1,537,190
shares of the Company's presently outstanding shares of Common Stock are
"restricted securities," as that term is defined under Rule 144 ("Rule 144")
promulgated under the Securities Act. In general, under Rule 144 a person who
owns any
6
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restricted shares of Common Stock for at least one year may sell in the public
securities markets, within any three month period, such number of those
restricted shares that does not exceed the greater of one percent of the total
number of outstanding shares of the same class or the average weekly trading
volume during the four calendar weeks preceding the sale. A person who has not
been an affiliate of the Company for at least three months immediately preceding
the sale and who owns shares of Common Stock that have been held for a period of
at least two years is entitled to sell such shares under Rule 144 without regard
to any volume limitations. Drs. Eisenberg and Katz and Messrs. Lipstein and
Klapholz and members of their families have agreed with the Underwriter not to
sell shares owned by them (1,493,720 shares, all except 22,000 of which are
restricted shares), prior to January 19, 1998 without the Underwriter's written
consent. If the Underwriter consents to release all the 1,493,720 locked up
shares, they would be eligible for immediate sale (subject to the volume
limitations of Rule 144). Additional shares that are issuable upon exercise of
outstanding warrants and options which will be eligible for immediate sale into
the public securities markets after such warrants and options are exercised as
follows: 1,200,000 shares being offered hereby, for which the exercise price is
$10; 1,200,000 shares being offered hereby, for which the exercise price is $15;
120,000 shares for which the exercise price is $8.25; 120,000 shares for which
the exercise price is $16.50 and 120,000 shares for which the exercise price is
$24.75. These are shares issuable upon exercise of the Class A and Class B
Warrants being offered hereby, and options granted to the Underwriter in
connection with the IPO. In addition, 710,145 shares that are issuable upon
exercise of other outstanding warrants and options exercisable at prices ranging
from $1.00 (for 307,544 shares) to $12.00, are eligible for sale in the public
securities markets one or two years after such warrants and options are
exercised.
Up to 350,000 shares issuable upon exercise of stock options granted
(161,000) and that may be granted (189,000) under the Company's 1996 Stock
Option Plan may be registered under the Securities Act only after July 18, 1997,
but earlier with the consent of the Underwriter.
No prediction can be made as to the effect, if any, that sales of those
shares of Common Stock, or the availability of those shares for sale, will have
on the market prices of the Common Stock prevailing from time to time.
EFFECT OF OUTSTANDING OPTIONS AND WARRANTS. Sales of the Company's Common
Stock upon exercise of options and warrants may have a depressive effect on the
market price of the Common Stock, and issuance of additional shares of Common
Stock upon the exercise of options and warrants may also dilute the
proportionate ownership of the then current stockholders of the Company. The
Company has agreed with the Underwriter that prior to July 20, 1997 the Company
will not sell shares for less than $5.00 per share (except upon exercise of
warrants and options outstanding prior to December 15, 1995).
POSSIBLE VOLATILITY OF SECURITIES PRICES. The market price of the
Company's Common Stock may be highly volatile, as has been the case with the
securities of other development stage biotechnology companies. Factors such as
announcements by the Company or its competitors concerning technological
innovations, new commercial products or procedures, proposed government
regulations and developments or disputes relating to patents or proprietary
rights may have a significant impact on the market price of the Company's Common
Stock.
STATE BLUE SKY REGISTRATIONS. The shares offered hereby may be sold in
certain states and the purchaser of such shares may then resell such shares in
the public securities markets (or otherwise) in such states only if such Common
Stock is then qualified for sale or exempt from qualification under applicable
state securities laws of the jurisdictions in which such purchasers reside.
Although the Company's Common Stock is qualified for sale or exempt from
qualification in a number of states, there can be no assurance that the shares
purchased in this Offering can be sold in every state. The failure of the
Company to meet the state securities law requirements of a state in which a
purchaser in this Offering seeks to resell the shares purchased in this
Offering, will cause the resale or disposition of the Common Stock purchased in
this Offering to become unlawful in that state.
NO DIVIDENDS. The Company has not paid any dividends on its shares and
does not intend to do so in the foreseeable future. It is the present intention
of the Company's Board of Directors to retain all earnings, if any, for use in
the Company's business operations.
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CONCENTRATION OF OWNERSHIP; DELAWARE CORPORATE LAW PROVISIONS. The
Company's officers, directors, founders and affiliated persons beneficially own
1,856,350 shares of the Common Stock representing approximately 40% of the total
outstanding shares before the exercise of any outstanding warrants and options.
Accordingly, such persons will be able to exercise substantial control in the
election of the directors of the Company, increases in the authorized capital or
the dissolution, merger, or sale of the assets of the Company and otherwise
influence the control of the Company's affairs. Such substantial control of the
Company by these persons could serve to impede or prevent a change of control of
the Company. As a result, potential purchasers may not seek to acquire control
of the Company through the purchase of Common Stock which may tend to reduce the
market price of the Common Stock. In addition, the Company is subject to
provisions of the General Corporation Law of the State of Delaware respecting
business combinations which could, under certain circumstances, also hinder or
delay a change in control. In the event all the Class A and Class B Warrants are
exercised by the holders thereof, the Company's officers, directors, founders
and affiliated persons will beneficially own 1,929,250 shares of Common Stock,
representing approximately 27% of the total outstanding shares of Common Stock.
USE OF PROCEEDS
Other than the proceeds received by the Company from the exercise of the
Warrants, the Company will not receive any proceeds from the sale of shares
covered by this Prospectus.
In the event all of the Warrants are exercised, the Company will receive
gross proceeds of $30,000,000. Pursuant to the terms of the Underwriting
Agreement, the Underwriter is to receive 8% of the exercise price of all
Warrants exercised provided that (i) at the time of exercise the market price of
the Common Stock is greater than the exercise price; (ii) the Warrants exercised
are not held in discretionary accounts; (iii) disclosure of the compensation
arrangements has been made in documents provided to the holder of the Warrants;
(iv) the exercise of Warrants was solicited by a member of the National
Association of Securities Dealers, Inc., and such member is designated by the
warrant holder in writing; and (v) the solicitation of the Warrants is not in
violation of Rule 10b-6 under the Securities Exchange Act of 1934. See "Plan of
Distribution." In the event all of the Warrants are exercised, the Underwriter
may receive commissions not exceeding $2,400,000 in aggregate. Any net proceeds
to the Company resulting from the exercise of any or all of the Warrants may be
used for general working capital purposes, acquisitions, research and
development and/or human clinical trials. The Company has not specifically
allocated the proceeds among these uses, and actual expenditures will depend on
a number of factors. The use of any proceeds from the exercise of the Warrants,
of which there is no assurance, and the timing of such use, will also depend on
the availability of cash from other sources. Proceeds not immediately required
for the purposes described above will be invested principally in United States
government securities, short term certificates of deposit, money market funds or
other short term, interest bearing investments. The Company does not have any
current intentions with respect to material acquisitions of any businesses or
products.
PLAN OF DISTRIBUTION
The Underwriter will receive a commission of eight (8%) percent of the
exercise price of all Warrants that are exercised provided that (i) at the time
of exercise the market price of the Common Stock is greater than the exercise
price; (ii) the Warrants exercised are not held in discretionary accounts; (iii)
disclosure of the compensation arrangements has been made in documents provided
to the holder of the Warrants; (iv) the exercise of Warrants was solicited by a
member of the National Association of Securities Dealers, Inc. and such member
is designated by the warrant holder in writing; and (v) the solicitation of the
Warrants is not in violation of Rule 10B-6 under the Securities Exchange Act of
1934. The warrant agent, Jersey Transfer and Trust Company, will notify the
Underwriter of any exercise of Warrants and on a weekly basis will remit to the
Underwriter its 8% commission.
The Company has granted to the Underwriter the right to designate a member
of the Company's Board of Directors until January 19, 1999 or, in the
alternative, to designate a person to attend all Board of Directors' meetings
and to receive all notices and communications to directors during such period,
all at the expense of
8
<PAGE> 10
the Company. When the Underwriter designates a member of the Company's Board of
Directors, Mr. Alain Klapholz, a current director, will resign. To date, the
Underwriter has not designated a member of the Company's Board of Directors nor
designated a person to attend Board of Directors' meetings. If, at any time
until January 19, 1998, the number of directors is increased to more than five,
any nominee in that period to fill the newly-created vacancy must receive the
Underwriter's prior written approval, which approval may not be unreasonably
withheld. The Company's management has no present intention to increase the
number of directors above five.
The Company and the Underwriter have agreed in the Underwriting Agreement
to indemnify each other against certain liabilities, including liabilities under
the Securities Act. Insofar as indemnification for liabilities arising under the
Securities Act may be provided to officers, directors or controlling persons of
the Company, such indemnification, in the opinion of the Commission, is against
public policy and therefore unenforceable.
FORWARD LOOKING INFORMATION MAY PROVE INACCURATE
This Prospectus 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 Prospectus.
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.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Company's Certificate of Incorporation provides that the personal
liability of the directors of the Company shall be limited to the fullest extent
permitted by the provisions of Section 102(b)(7) of the General Corporation Law
of the State of Delaware (the "DGCL"). Section 102(b)(7) of the DGCL generally
provides that no director shall be liable personally to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that the Certificate of Incorporation does not eliminate the liability
of a director for (i) any breach of the director's duty of loyalty to the
Company or its stockholders; (ii) acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law; (iii) acts or
omissions in respect of certain unlawful dividend payments or stock redemptions
or repurchases; or (iv) any transaction from which such director derives
improper personal benefit. The effect of this provision is to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of her or his fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) through (iv) above. The limitations
summarized above, however, do not affect the ability of the Company or its
stockholders to seek nonmonetary remedies, such as an injunction or rescission,
against a director for breach of her or his fiduciary duty. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers, or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
In addition, the Certificate of Incorporation provides that the Company
shall, to the fullest extent permitted by Section 145 of the DGCL, indemnify all
persons whom it may indemnify pursuant to Section 145 of the DGCL. Section 145
of the DGCL permits a company to indemnify an officer or director who was or is
a party or is threatened to be made a party to any proceeding because of his or
her position, if the officer or director acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to
9
<PAGE> 11
the best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The Company maintains a directors' and officers' liability insurance policy
covering certain liabilities that may be incurred by directors and officers in
connection with the performance of their duties. The entire premium for such
insurance is paid by the Company.
SHARES ELIGIBLE FOR FUTURE SALE
1,537,190 shares of the Company's presently outstanding shares of Common
Stock are "restricted securities," as that term is defined under Rule 144 ("Rule
144") promulgated under the Securities Act. In general, under Rule 144 a person
who owns any restricted shares of Common Stock for at least one year may sell in
the public securities markets, within any three month period, such number of
those restricted shares that does not exceed the greater of one percent of the
total number of outstanding shares of the same class or the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of the Company for at least three months immediately
preceding the sale and who owns shares of Common Stock that have been held for a
period of at least two years is entitled to sell such shares under Rule 144
without regard to any volume limitations. Drs. Eisenberg and Katz and Messrs.
Lipstein and Klapholz and members of their families have agreed with the
Underwriter not to sell shares owned by them (1,493,720 shares, all except
22,000 of which are restricted shares), prior to January 19, 1998 without the
Underwriter's written consent. If the Underwriter consents to release all the
1,493,720 locked up shares, they would be eligible for immediate sale (subject
to the volume limitations of Rule 144). Additional shares that are issuable upon
exercise of outstanding warrants and options which will be eligible for
immediate sale into the public securities markets after such warrants and
options are exercised as follows: 1,200,000 shares being offered hereby, for
which the exercise price is $10; 1,200,000 shares being offered hereby, for
which the exercise price is $15; 120,000 shares for which the exercise price is
$8.25; 120,000 shares for which the exercise price is $16.50 and 120,000 shares
for which the exercise price is $24.75. These are shares issuable upon exercise
of the Class A and Class B Warrants being offered hereby, and options granted to
the Underwriter in connection with the IPO. In addition, 710,145 shares that are
issuable upon exercise of other outstanding warrants and options exercisable at
prices ranging from $1.00 (for 307,544 shares) to $12.00, are eligible for sale
in the public securities markets one or two years after such warrants and
options are exercised.
Up to 350,000 shares issuable upon exercise of stock options granted
(161,000) and that may be granted (189,000) under the Company's 1996 Stock
Option Plan may be registered under the Securities Act only after July 18, 1997,
but earlier with the consent of the Underwriter.
No prediction can be made as to the effect, if any, that sales of those
shares of Common Stock, or the availability of those shares for sale, will have
on the market prices of the Common Stock prevailing from time to time.
LEGAL MATTERS
The legality of the Common Stock included in this Prospectus has been
passed upon for the Company by Feder, Kaszovitz, Isaacson, Weber, Skala & Bass
LLP, New York, New York. Gabriel Kaszovitz, a member of the firm of Feder,
Kaszovitz, Isaacson, Weber, Skala & Bass, LLP, and members of his family, own an
aggregate of 12,540 shares of the Company's Common Stock. Mr. Kaszovitz has been
granted a warrant expiring April 1, 2000 to purchase 10,000 shares of Common
Stock at $6.00 per share.
EXPERTS
The financial statements of the Company at December 31, 1996 and for each
of the two years then ended and the period from March 12, 1991 (inception)
through December 31, 1996, have been audited by Grant Thornton LLP, Independent
Certified Public Accountants, as set forth in their report, and are incorporated
herein
10
<PAGE> 12
by reference in reliance upon such report (also incorporated herein by
reference), given on the authority of the firm as experts in accounting and
auditing.
The financial statements of the Company are incorporated by reference in
this prospectus at December 31, 1996 and for each of the two years then ended
and the period from March 12, 1991 inception through December 31, 1996 have been
audited by Grant Thornton LLP, Independent Certified Public Accountants, as set
forth in their report appearing elsewhere herein and are included in reliance
upon such report, given on the authority of the firm as experts in accounting
and auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by the Company, pursuant
to the Exchange Act and the Securities Act, are incorporated by reference in
this Registration Statement:
(a) The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
(b) The Company's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1997.
(c) The description of the Common Stock set forth in the Company's
Registration Statement on Form SB-2 (File No. 33-96090), which was declared
effective by the Commission on December 15, 1995, and any amendment or
report filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicate that all shares of Common Stock offered hereby have
been sold or which deregisters all then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
11
<PAGE> 13
GLOSSARY
The following Glossary defines certain technical terms and abbreviations
used in this Prospectus.
ALLOGRAFT -- replacement of damaged skin with materials, synthetic or
natural, other than a patient's own skin.
AUTOGRAFT -- transplant of skin from one site of a patient's body onto a
wound site that no longer has the capacity to heal spontaneously.
COLLAGEN -- an insoluble fibrous protein that occurs in vertebrates as the
chief constituent of connective tissue fibrils and in bones.
COMPOSITE CULTURED SKIN -- The Company's product. Produced from cells
derived from human infant foreskins obtained during routine infant circumcisions
which are separated into dermal and epidermal cells, reproduced and the dermal
cells are then grown onto a cross linked bovine collagen sponge and the
epidermal cells are grown on top of that sponge to form the composite cultured
skin.
DERMIS -- The lower layer of human skin, beneath the epidermis. A thick
fibroelastic layer that consists of cells that generate such fibroelastic
material and provide a framework for the support of blood vessels that flow
through such layer.
EB -- EPIDERMOLYSIS BULLOSA -- A congenitally inherited disorder
characterized by fragile skin that breaks down easily, leading to infections,
ulcerations and contracture that cause deformities of the limbs.
EPIDERMIS -- The upper layer of human skin. A thin multi-layered cellular
sheet of cells approximately 0.5 mm in thickness that is constantly being
regenerated through cell division.
FIBROELASTIC -- Composed of collagen and elastic fibers.
GOOD MANUFACTURING PRACTICES -- Set of documentation and procedural
standards required by the FDA to insure that medical devices are produced
according to their specifications.
IDE APPLICATION -- INVESTIGATIONAL DEVICE EXEMPTION APPLICATION -- an
application to the FDA for permission to use a medical device in human clinical
tests.
PATHOGEN -- Any virus, microorganism, or other substance causing disease.
PMA APPLICATION -- Premarket approval application submitted to the FDA for
the sale of a new proposed medical device that is not substantially equivalent
to an already cleared device.
A-1
<PAGE> 14
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST BE
RELIED ON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE COMMON STOCK OFFERED
BY THIS PROSPECTUS, OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY, BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION
IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 8
Plan of Distribution.................. 8
Forward Looking Information May Prove
Inaccurate.......................... 9
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities......................... 9
Shares Eligible for Future Sale....... 10
Legal Matters......................... 10
Experts............................... 10
Incorporation of Certain Information
by Reference........................ 11
Glossary.............................. A-1
Index to Financial Statements......... F-1
</TABLE>
======================================================
======================================================
ORTEC
INTERNATIONAL, INC.
2,400,000 SHARES
OF COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
, 1997
======================================================
<PAGE> 15
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
It is expected that the following expenses will be incurred in connection
with the issuance and distribution of the Common Stock being registered:
<TABLE>
<S> <C>
SEC Registration fee............................................................. $ 9,090.90(1)
*Printing........................................................................ 10,000.00
*Accountants' fees and expenses.................................................. 1,000.00
*Attorneys' fees and expenses.................................................... 10,000.00
*Miscellaneous................................................................... 1,500.00
---------
*TOTAL........................................................................... $31,590.90
=========
</TABLE>
- ---------------
* Estimated
(1) Such registration fee has already been paid with the filing of the Company's
Registration Statement on Form SB-2 (File #33-96090), declared effective by
the Commission on December 15, 1995.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that the personal
liability of the directors of the Company shall be limited to the fullest extent
permitted by the provisions of Section 102(b)(7) of the General Corporation Law
of the State of Delaware (the "DGCL"). Section 102(b)(7) of the DGCL generally
provides that no director shall be liable personally to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that the Certificate of Incorporation does not eliminate the liability
of a director for (i) any breach of the director's duty of loyalty to the
Company or its stockholders; (ii) acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law; (iii) acts or
omissions in respect of certain unlawful dividend payments or stock redemptions
or repurchases; or (iv) any transaction from which such director derives
improper personal benefit. The effect of this provision is to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a director
for breach of her or his fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) through (iv) above. The limitations
summarized above, however, do not affect the ability of the Company or its
stockholders to seek non-monetary remedies, such as an injunction or rescission,
against a director for breach of her or his fiduciary duty. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers, or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
In addition, the Certificate of Incorporation provides that the Company
shall, to the fullest extent permitted by Section 145 of the DGCL, indemnify all
persons whom it may indemnify pursuant to Section 145 of the DGCL. Section 145
of the DGCL permits a company to indemnify an officer or director who was or is
a party or is threatened to be made a party to any proceeding because of his or
her position, if the officer or director acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
II-1
<PAGE> 16
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------
<C> <S>
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)
4.1 Form of certificate evidencing shares of Common Stock(1)
5.1 Opinion of Feder, Kaszovitz, Isaacson, Weber, Skala & Bass LLP, counsel for the
Registrant*
23.1 Consent of Grant Thornton LLP*
23.2 Consent of Feder, Kaszovitz, Isaacson, Weber, Skala & Bass LLP (included in
Exhibit 5.1)*
</TABLE>
- ---------------
* 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) FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted because the information required to be set
forth therein is not applicable or is shown in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes:
(1) That for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(2) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement including
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement.
(4) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
II-2
<PAGE> 17
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the Registrant's Certificate of
Incorporation, indemnification agreement, insurance or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 18
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly authorized this
Registration Statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on June 26, 1997.
ORTEC INTERNATIONAL, INC.
By: /s/ STEVEN KATZ
------------------------------------
Dr. Steven Katz
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ --------------------------------- --------------
<C> <S> <C>
/s/ STEVEN KATZ President and Chief Executive June 26, 1997
- ------------------------------------------ Officer and Chairman (Principal
Dr. Steven Katz Executive Officer)
/s/ RON LIPSTEIN Chief Financial Officer, June 26, 1997
- ------------------------------------------ Secretary, Treasurer and
Ron Lipstein Director (Principal Financial
and Accounting Officer)
/s/ ALAIN M. KLAPHOLZ Vice President, Operations and June 26, 1997
- ------------------------------------------ Director
Alain M. Klapholz
</TABLE>
II-4
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- ------------------------------------------------------------------------------------
<C> <S>
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)
4.1 Form of certificate evidencing shares of Common Stock(1)
5.1 Opinion of Feder, Kaszovitz, Isaacson, Weber, Skala & Bass LLP, counsel for the
Registrant*
23.1 Consent of Grant Thornton LLP*
23.2 Consent of Feder, Kaszovitz, Isaacson, Weber, Skala & Bass LLP (included in Exhibit
5.1)*
</TABLE>
- ---------------
* 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.
<PAGE> 1
EXHIBIT 5.1
June 26, 1997
Ortec International, Inc.
3960 Broadway
New York, New York 10032
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel for Ortec International, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company of a registration statement (the "Registration Statement") on Form
S-3, under the Securities Act of 1933, relating to the offering of 2,400,000
shares of the Company's Common Stock, par value $.001 per share (the "Common
Stock"), with such shares underlying the Company's publicly traded Class A and
Class B Redeemable Common Stock Purchase Warrants (collectively, the
"Warrants"). Such 2,400,000 shares may be sold by certain selling stockholders
of the Company from time to time for their own accounts.
We have examined the Certificate of Incorporation and the By-Laws of the
Company, the minutes of the various meetings and consents of the Board of
Directors of the Company, a representative form of the certificate representing
the Common Stock, originals or copies of such records of the Company,
agreements, certificates of public officials, certificates of officers and
representatives of the Company and others, and such other documents,
certificates, records, authorizations, proceedings, statutes and judicial
decisions, as we have deemed necessary to render the opinions expressed below.
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
originals of all documents submitted to us as copies thereof.
Based on the foregoing, we are of the opinion that the 2,400,000 shares of
its Common Stock included in the Registration Statement and to be sold by
certain selling stockholders of the Company from time to time for their own
accounts, have been duly authorized and reserved for issuance and, when paid for
upon the exercise of the Warrants, will be validly issued, fully paid and
non-assessable.
We hereby consent to be named in the Registration Statement and the
prospectus which is a part of the Registration Statement as attorneys who have
passed upon legal matters in connection with the offering of the securities
offered thereby under the caption "Legal Matters."
We further consent to your filing a copy of this opinion as an exhibit to
the Registration Statement or any amendment thereto.
FEDER, KASZOVITZ, ISAACSON, WEBER,
SKALA & BASS LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report, dated March 18, 1997, accompanying the consolidated
financial statements and schedule included in the Annual Report of Ortec
International, Inc. (a development stage enterprise) on Form 10-KSB for the year
ended December 31, 1996. We hereby consent to the incorporation by reference of
said report in the Registration Statement of Ortec International, Inc. on Form
S-3 (Registration No. 33-96090).
GRANT THORNTON LLP
New York, New York
June 24, 1997
