<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON ____________, 1999
REGISTRATION NO. _________
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
REGISTRATION STATEMENT
FILED ON FORM S-3
UNDER THE SECURITIES ACT OF 1933
----------------
ORTEC INTERNATIONAL, INC.
(NAME OF ISSUER IN ITS CHARTER)
DELAWARE 8099 11-3068704
- --------------- ---------------- ---------------------
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CODE IDENTIFICATION NUMBER)
INCORPORATION) NUMBER)
3960 BROADWAY, NEW YORK, NEW YORK 10032 (212) 740-6999
------------------------------------------------------
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
DR. STEVEN KATZ
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ORTEC INTERNATIONAL, INC.
3960 BROADWAY, NEW YORK, NEW YORK 10032 (212) 740-6999
------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-----------------
COPIES TO:
GABRIEL KASZOVITZ, ESQ.
SAUL M. 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
----------------
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, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
<PAGE> 2
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. / /
ii
<PAGE> 3
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
TITLE OF EACH CLASS OF Amount to be Offering Aggregate Amount of
SECURITIES BEING Registered Price Per Offering Registration
REGISTERED (2) Security (1) Price(1) Fee (1)
------------------------ ----------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Common Stock, par value 1,031,247 Shares $ 7.41875 (3) $7,650,564 $ 2,127
$.001 per share (2)
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457.
(2) 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 any warrants or
options to which the shares of Common Stock being registered
hereby are included.
(3) Represents the average of the high and low sales prices of the
Common Stock for June 14, 1999, as reported by the Nasdaq
SmallCap Market.
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 (THE "COMMISSION"), ACTING PURSUANT TO
SECTION 8(a), MAY DETERMINE.
iii
<PAGE> 4
ORTEC INTERNATIONAL, INC.
1,031,247 SHARES OF COMMON STOCK
This prospectus covers 1,031,247 shares of Common Stock, par value
$.001 per share (the "Common Stock"), of ORTEC INTERNATIONAL, INC., a Delaware
corporation held by our shareholders, including 348,557 shares issuable by us
upon the exercise of certain options (the "Options") and warrants (the
"Warrants") granted by us in the past (collectively, the "Options and
Warrants"). Other than the proceeds received by us from the exercise of the
Options and/or Warrants, if any, we will not receive any proceeds from the sale
of those shares. The holders of those shares intend to sell them from time to
time for their own respective accounts in the open market at the prices then
available or in individually negotiated transactions at such prices as may be
agreed upon. Each such holder will bear all expenses with respect to the
offering of the shares by it, him or her, except the costs associated with
preparing and printing this prospectus. Our Common Stock is traded on the NASDAQ
SmallCap Market System under the symbol "ORTC." On June 14, 1999, the last
reported sale price of the Common Stock was $7-3/16
--------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 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.
THE DATE OF THIS PROSPECTUS IS ___________, 1999
<PAGE> 5
In this prospectus, references to the "Company", "Ortec" , "we", "us" and "our"
refer to Ortec International, Inc.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Disclosure Regarding Forward-Looking Statements .................. 2
Prospectus Summary ............................................... 3
Risk Factors ..................................................... 6
Use of Proceeds .................................................. 9
Selling Shareholders ............................................. 10
Description of Securities ........................................ 12
Plan of Distribution ............................................. 14
Incorporation of Certain Information by Reference ................ 14
Legal Matters .................................................... 14
Experts .......................................................... 15
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities .................................... 15
Where You Can Find More Information .............................. 16
</TABLE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. For example, statements included in this prospectus
regarding the future clinical trials for our one product, approvals by the
United States Food and Drug Administration and other plans and objectives for
the future and assumptions and predictions about future supply, manufacturing,
costs and marketing are all forward-looking statements. When we use words like
"intend, "anticipate", "believe", "estimate", "plan" or "expect", we are making
forward-looking statements. We believe that the assumptions and expectations
reflected in such forward-looking statements are reasonable, based on
information available to us on the date hereof, but we cannot assure you that
these assumptions and expectations will prove to have been correct or that we
will take any action that we may presently be planning. We have disclosed
certain important factors that could cause our actual results to differ
materially from our current expectations under "Risk Factors" elsewhere in this
prospectus. You should understand that forward-looking statements made in
connection with this offering are necessarily qualified by these factors. We are
not undertaking to publicly update or revise any forward-looking statement if we
obtain new information or upon the occurrence of future events or otherwise.
2
<PAGE> 6
PROSPECTUS SUMMARY
All of the information in this summary is qualified in its entirety by
the more detailed information appearing elsewhere in this prospectus, including
information under "Risk Factors."
THE COMPANY
We are a development stage biomaterial and cell culture biotechnology
company that has developed a patented technology, Composite Cultured Skin
("CCS"). CCS acts as a biologically active dressing that stimulates the repair,
replacement and regeneration of human skin. Our product is intended to be
utilized for the treatment of numerous skin wounds, including partial thickness
burns, venous stasis ulcers, diabetic ulcers, damage from Epidermolysis Bullosa
disease ("EB"), as well as the treatment of autograft donor sites (which are
areas of a patient's body from which the patient's skin is taken to cover a
wound at another part of such patient's body).
CCS's permeable, bi-layer structure utilizing a collagen-based
scaffolding (framework) containing immature dermal and epidermal cells (which
comprise the two major layers that form the human skin) stimulates rapid
regeneration and remodeling of human skin. When CCS is applied to the wound
site, it produces a mix of growth factors that stimulate wound closure.
With the approval of the United States Food and Drug Administration
("FDA") we are currently conducting clinical trials of the use of CCS in the
treatment of autograft donor site wounds, venous stasis ulcers and partial
thickness burns. We are proceeding to secure FDA approval to conduct a clinical
trial of the use of CCS in the treatment of diabetic foot ulcers. We have
already completed an FDA approved clinical trial of the use of CCS in the
treatment of chronic ulcers in patients with EB and we expect to file an
application with the FDA for a Humanitarian Device Exemption which, if approved,
will allow us to make commercial sales of CCS for the treatment of EB patients.
We hope to begin making commercial sales of CCS for the treatment of EB patients
by the end of 1999. See "Disclosure Regarding Forward Looking Information".
We are also currently focusing on the treatment of donor site wounds. We
conducted a donor site pilot study which was completed in the fourth quarter of
1998. During the second quarter of 1999, we initiated patient enrollment for a
pivotal donor site trial (which requires a significantly larger patient
population than a pilot study) which, if successful, will enable us to secure
FDA approval for commercial sale of CCS for the treatment of donor site wounds.
See "Disclosure Regarding Forward Looking Information."
Our FDA approved human clinical trial program for the treatment of
partial thickness burn patients was conducted on 29 patients at a number of
hospitals, after which patient enrollment was closed. We are currently
completing the follow up on the patients and will then evaluate the results of
those operations.
The technology for CCS was developed by Dr. Mark Eisenberg, a physician
in Sydney, Australia. Dr. Eisenberg, an officer and director of Ortec and one of
its largest shareholders, 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 EB. In 1987, through his work
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<PAGE> 7
on EB, Dr. Eisenberg first succeeded in growing epidermal layers of human skin,
which were successfully applied as an allograft (a transplant other than with
the patient's own skin) on an EB patient. Dr. Eisenberg continued his research
which eventually led to the development of CCS -- a biologically active dressing
which consists of both the dermal and epidermal layers.
Dr. Eisenberg received a U.S. patent for CCS in February 1994, which was
reissued in December 1996, claiming a composite living skin having an epidermal
layer of non-porous collagen and a dermal layer of porous cross-linked collagen
sponge matrix, each layer containing appropriate cells. Dr. Eisenberg assigned
his patent for the CCS technology to us in April 1998. We have also been granted
a European patent for most of Europe, as well as patents in Australia and New
Zealand, Israel, Japan, Thailand and South Africa. We are prosecuting patent
claims in Russia, China and Canada. One of our competitors recently filed an
Opposition with the European Patent Office challenging the validity of our
patent in Europe. Our patent counsel is now preparing our response. The
Opposition in Europe may not be resolved for at least two years. While the
result in Europe will not affect the validity of our patent in the United
States, we cannot give you any assurance that our United States patent will not
be successfully challenged in court or in further U.S. Patent Office
proceedings. Nor can we give you any assurance that any of our United States or
foreign patents will provide any commercial benefits to us.
Our immediate focus is to use CCS to treat acute and chronic skin wounds
and associated diseases. However, we believe that there is an opportunity to
apply our core technologies to repair selected structural tissues such as
tendon, ligament, cartilage, bone and blood vessels. In order to achieve our
objectives, we have identified five strategic initiatives: (i) developing a
commercial manufacturing operation; (ii) seeking a corporate sales and
distribution partner; (iii) implementing a plan to operate in a managed
care/reimbursement environment; (iv) continuing our human clinical trials; and
(v) continuing our research and development. See "Disclosure Regarding Forward
Looking Information."
We are currently engaged in the process of exploring the viability of
establishing strategic alliances to enhance our competitive position in the
marketplace and to provide us with substantially greater economic resources and
production and distribution capabilities than those currently available to us.
However, we cannot give you any assurance as to if or when we can form any
strategic alliance, or that if we succeed in forming an alliance, that such
alliance will result in the production and/or commercial sale of our CCS on a
profitable basis.
As a development stage company we have not yet sold any products. Our
activities have been limited to human clinical tests of CCS and research and
development. From the creation of Ortec in March 1991 through March 31, 1999, we
have spent an aggregate of $7,243,819 for human clinical trials and research and
development, which figure does not include employee salaries. From inception in
March 1991 through March 31, 1999 we have sustained a net loss of $23,347,584.
Ortec was organized in 1991 under the laws of the State of Delaware for
the purpose of acquiring our skin replacement product from Dr. Eisenberg and to
develop, test and market it. Our executive offices are located at 3960 Broadway,
New York, New York, and our telephone number is (212) 740-6999.
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<PAGE> 8
THE OFFERING
<TABLE>
<CAPTION>
<S> <C>
Securities Offered 1,031,247 shares of Common Stock
Common Stock to be outstanding
after the Offering(1) 6,912,310 shares
Use of Proceeds Other than the proceeds from the
exercise of the Options and
Warrants, we will not receive any
proceeds from the sale of the
shares.
Risk Factors An investment in the shares
involves a high degree of risk. See
"Risk Factors."
Nasdaq SmallCap System
Trading Symbol "ORTC"
</TABLE>
- -----------
(1) Includes 348,557 shares offered by this prospectus issuable upon
exercise of all the Options and Warrants. Does not include (i) 161,011
shares reserved by us for issuance upon exercise of warrants granted by
us expiring January 19, 2000 exercisable at $1.00 per share; (ii)
1,188,600 shares reserved by us for issuance upon the exercise of our
publicly traded Class B Warrants at $15 per share and expiring November
30, 1999; (iii) 1,543,250 shares reserved by us for issuance upon the
exercise of stock options included in our 1996 Stock Option Plan, of
which options to purchase 939,750 shares at prices ranging from $6.00
to $21-3/8 have already been granted by us ; and (iv) 401,709 shares
reserved by us for issuance upon the exercise of other outstanding
warrants granted by us, at prices ranging from $6.00 to $14.25 and
expiring at various times from June 20, 1999 to December 1, 2002.
5
<PAGE> 9
RISK FACTORS
The purchase of the shares involves a high degree of risk, including, but
not necessarily limited to, the risks described below. Before purchasing the
shares, you 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. We anticipate that our cash on hand is
sufficient to meet our cash requirements through approximately July 2000.
However, we cannot give you any assurance that we will not incur unexpected
costs. Before the end of that period we may be required to raise additional
funds to complete our human clinical trials (if not completed by then) and
produce and market our Composite Cultured Skin. We may then seek additional
funds through sale of our securities to the public and through private
placements, debt financing or short term loans. We cannot give you any assurance
that we will be able to obtain additional financing on terms acceptable to us,
if at all. Our failure to obtain acceptable additional financing would have a
material adverse effect on our operations. We have no current understandings or
commitments from any persons that they will provide any additional financing.
Additional financing may result in dilution for then current shareholders. See
"Disclosure Regarding Forward Looking Statements."
DEVELOPMENT STAGE COMPANY; LIMITED OPERATING HISTORY. We are a
development stage company organized in March 1991. We have no products approved
for commercial sale and we have not realized any operating revenues. We are
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.
We will not, in all likelihood, generate any revenues until we obtain FDA
approval to sell our skin replacement product in commercial quantities for human
application. We cannot give you any assurance that such approval will be
obtained, or if obtained, that sales of our 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. Our
Composite Cultured Skin is subject to regulation as a medical device. Prior to
commercial release of our product, premarket approval by the FDA will be
required. Before receiving such approval we must provide proof in human clinical
trials of the nontoxicity, safety and efficacy of our Composite Cultured Skin.
Premarket approval is a lengthy and expensive process and we cannot give you any
assurance that we will obtain FDA approval for any commercial sale of our
product. The human clinical trials are lengthy and expensive processes and we
cannot give you any assurance of the successful completion of any of the
clinical trials we are now conducting or will undertake. Even if we obtain FDA
approval, our 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, our business, financial condition and emergence from
the development stage are dependent on timely FDA approval for our product.
UNCERTAINTY OF MARKET ACCEPTANCE; RELIANCE ON ONE PRODUCT. Acceptance of
our product is difficult to predict and will require substantial marketing
efforts and the expenditure of significant funds. We cannot give you any
assurance that our product will be successful in providing viable skin
6
<PAGE> 10
replacement on a commercial basis or that it will be accepted by the medical
community. In addition, our only product is our Composite Cultured Skin. We do
not expect it to be available for commercial sale until the end of 1999 and then
only for the very small EB patient population. We expect that our Composite
Cultured Skin will likely be our only product for an indefinite period of time.
The failure of our product to achieve market acceptance will have a material
adverse impact on our financial condition.
TECHNOLOGICAL CHANGE; HIGHLY COMPETITIVE INDUSTRY. The biomedical field
is undergoing rapid and significant technological change. Our success will
depend on our 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 our Composite Cultured Skin. Our 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 we are and have
substantially greater financial and other resources than we have and have skin
replacement products that are being commercially sold or are available for
commercial sale. Such companies and academic institutions may succeed in
developing other products that are more effective than our Composite Cultured
Skin.
ANTICIPATED DEPENDENCE ON THIRD PARTIES FOR MARKETING; LIMITED MARKETING
EXPERIENCE. We intend to sell our Composite Cultured Skin primarily through
third party distributors although we may sell directly on a limited basis. We
have no marketing experience and only limited financial and other resources to
undertake extensive independent marketing activities. We cannot give you any
assurance that we will be able to enter into marketing agreements with third
parties on acceptable terms or market our Composite Cultured Skin successfully
by ourselves.
LIMITED SUPPLIES OF MATERIALS. We are currently purchasing bovine
collagen sponges, a key component of our Composite Cultured Skin, from one
supplier who produces the sponges to our specifications. We have no written
agreement with that supplier obligating the supplier to supply sponges to us. If
we were required to secure another source for bovine collagen sponges, we would
encounter additional delay and expense in continuing our human clinical trials
and, consequently, in marketing our Composite Cultured Skin.
We will continue to rely on a limited number of outside suppliers to
supply other materials that we use in producing and testing our Composite
Cultured Skin. We cannot give you any assurance that we or our suppliers will
continue to have access to a sufficient supply of these materials.
LIMITATIONS OF PATENT PROTECTION. In April 1998, Dr. Eisenberg, the
original developer of our Composite Cultured Skin, assigned his patent for the
technology to us. Dr. Eisenberg received a U.S. patent for our Composite
Cultured Skin in February 1994, which was reissued in December 1996 after an
unsuccessful challenge by Organogenesis, Inc. The U.S. patent expires in 2011.
We have also been granted a European patent for most of Europe, as well as
patents in Australia and New Zealand, Israel, Japan, Thailand and South Africa.
We are prosecuting patent claims in Canada, Russia and China. One of our
competitors recently filed an Opposition with the European Patent Office
challenging the validity of our patent in Europe. Our patent counsel is now
preparing our response. The Opposition in Europe may not be resolved for at
least two years. While the result in
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<PAGE> 11
Europe will not affect the validity of our patent in the United States, we
cannot give you any assurance that our patent may not be successfully challenged
in court proceedings. Nor can we give you any assurance that any United States
or foreign patents will provide us with any commercial benefits.
Several of our 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. We are exposed to the risk of product liability claims
in the event that our Composite Cultured Skin causes injury or otherwise results
in adverse effects. Although we have obtained product liability insurance
coverage in the amount of $2,000,000, there can be no assurance that such
insurance coverage will be adequate to protect us against future product
liability claims or that product liability insurance will be available to us in
the future on terms acceptable to us, if at all.
DEPENDENCE ON KEY PERSONNEL. We are dependent on Dr. Steven Katz, the
Company's President, for managing our affairs. The loss of Dr. Katz' services
could adversely affect us.
EFFECT OF OUTSTANDING OPTIONS AND WARRANTS. 2,722,664 shares, including
348,557 shares covered by this prospectus, that are issuable upon exercise of
outstanding warrants and options (at prices ranging from $1.00 per share for
156,807 shares to $21-3/8 per share) will be eligible for immediate sale into
the public securities markets after such warrants and options are exercised. In
addition, 273,413 shares that are issuable upon exercise of other outstanding
warrants and options exercisable at prices ranging from $1.00 (for 4,204
shares) to $14.25 are eligible for sale in the public securities markets one or
two years after such warrants and options are exercised. We cannot make any
prediction as to the effect, if any, that sales of those shares, or the
availability of those shares for sale, will have on the market prices of our
Common Stock prevailing from time to time.
POSSIBLE VOLATILITY OF SECURITIES PRICES. The market price of our Common
Stock may be highly volatile, as has been the case with the securities of other
development stage biotechnology companies. Factors such as our or our
competitors' announcements 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 our Common Stock.
STATE BLUE SKY REGISTRATIONS. The shares covered by this prospectus 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
our Common Stock is then qualified for sale or exempt from qualification under
applicable state securities laws of the jurisdictions in which the purchasers of
such shares reside. Although our Common Stock is qualified for sale or exempt
from qualification in a number of states, we can give you no assurance that our
shares can be sold in every state. Our failure 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.
8
<PAGE> 12
NO DIVIDENDS. We have not paid any dividends on our Common Stock and do
not intend to do so in the foreseeable future. Our Board of Directors intends to
retain all earnings, if any, for use in our business operations.
CONCENTRATION OF OWNERSHIP; DELAWARE CORPORATE LAW PROVISIONS. Our
executive officers, directors, founders and affiliated persons beneficially own
2,084,256 shares of our outstanding Common Stock representing approximately
31.8% of the total of our 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 our authorized capital or the dissolution or merger of the Company,
or sale of our assets, and otherwise influence the control of our affairs. Such
substantial control by these persons could serve to impede or prevent a change
of control of our Company. As a result, potential purchasers may not seek to
acquire control of our Company through the purchase of Common Stock which may
tend to reduce the market price of the Common Stock. In addition, our 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.
USE OF PROCEEDS
Other than the proceeds received by us from the exercise of the Options
and Warrants, we will not receive any proceeds from the sale of shares covered
by this prospectus.
Any proceeds received by us from the exercise of any or all of the
Options and Warrants may be used for our general working capital purposes,
including research and development and human clinical trials. We have 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 Options and Warrants, and the timing of such use, will depend on the
availability to us of cash from other sources. Proceeds not immediately required
for the purposes described above will be invested by us principally in United
States government obligations, short term certificates of deposit, money market
funds or other short term, interest bearing investments.
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<PAGE> 13
SELLING SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our Common Stock as of May 31, 1998 by each Selling Shareholder.
Except as indicated in the footnotes to this table, we believe that the persons
named in this table have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF SHARES BENEFICIALLY
NAME OF BENEFICIAL REGISTERED OWNED
BENEFICIAL OWNER OWNERSHIP* FOR SALE AFTER SALE*
- ---------------- ---------- -------- -----------
<S> <C> <C> <C>
Pequot Capital Management, Inc. 834,179(1) 281,153(1) 553,026(1)
Joseph Stechler 955,166(2) 117,430(2) 827,736(2)
Cygni S.A. 34,285(3) 34,285(3) -
Abraham Berliner 6,857(3) 6,857(3) -
Joseph H. Berliner Defined
Benefit Pension Plan 6,857(3) 6,857(3) -
TLG Realty, LLC 20,572(3) 20,572(3) -
Veron International Limited 54,857(3) 54,857(3) -
Dennis Choy 7,200(3) 7,200(3) -
Biotechnology Development Fund LP 27,428(3) 27,428(3) -
Clarion Capital Corporation 13,713(3) 13,713(3) -
Victor S. Lee 27,360(3) 27,360(3) -
Joseph Owadeyah 13,715(3) 13,715(3) -
Paradigm Group LLC 72,321(4) 72,321(4) -
PGP Investors 1, LLC 68,571(3) 68,571(3) -
Interfiducia Trust Reg TTEE
The Vas Family Trust 27,600(3) 27,600(3) -
Roisen Mark Sater & Amanda J. Sater 16,200(3) 16,200(3) -
James O. & Janice M. York 12,000(3) 12,000(3) -
Michael Shina 27,600(3) 27,600(3) -
</TABLE>
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<PAGE> 14
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Charles Chambers 13,200(3) 13,200(3) -
William Lurie 6,000(3) 6,000(3) -
Robert C. Hastings, Jr. 7,200(3) 7,200(3) -
Frank R. Kuhn 7,200(3) 7,200(3) -
Teena Lerner 30,769(5) 30,769(5) -
Oscar Gruss & Son, Incorporated 31,109(5) 31,109(5) -
Michael Feintuch 3,456(5) 3,456(5) -
Reid Howard Drescher 600(5) 600(5) -
Alan Nisselson as trustee in
bankruptcy for Rodman & Renshaw 30,000(5) 30,000(5) -
Julia Heckman 2,250(5) 2,250(5) -
John J. Borer, III 4,500(5) 4,500(5) -
Karl Schmidt 5,708 5,708 -
Andrew Swartz 496 496 -
Anthony Viscogliosi 15,000(5) 15,000(5) -
Dian Griesel 25,000(5) 25,000(5) -
Henry Orlinsky 38,183(6) 10,000(6) 28,183(6)
Menachem Genack 15,022(6) 3,039(6) 11,583(6)
</TABLE>
- -------
* The number of Shares of Common Stock beneficially owned by each person or
entity is determined under rules promulgated by the United States
Securities and Exchange Commission. Under such rules, beneficial ownership
includes any shares as to which the person or entity has sole or shared
voting power or investment power. Included among the shares owned by such
person are any shares which such person or entity has the right to acquire
within 60 days after June 11, 1999. The inclusion herein of any shares
deemed beneficially owned does not constitute an admission of beneficial
ownership of such shares.
Except for information in our records and reports filed by them with us, we
have no knowledge of whether any of the Selling Shareholders own any other
shares of our Common Stock or options or warrants to purchase shares of our
Common Stock. We believe that none of the Selling Shareholders will own 1%
or more of our outstanding shares if they sell all of their shares
11
<PAGE> 15
registered for sale, except Pequot Capital Management, Inc., who will own
8.3%, and Joseph Stechler who will own 12.3%.
(1) Shares held by three investment funds. The Company believes that Pequot
Capital Management, Inc. has sole or shared investment and/or voting
power for these shares. Includes 81,153 shares issuable upon exercise
of outstanding warrants.
(2) Includes the shares owned by Stechler & Company and 30,000 shares owned
by a charitable foundation of which Mr. Stechler and another member of
his family are the trustees and the following: (a) before sale of the
registered shares, 210,500 shares to be issued by the Company to Mr.
Stechler or Stechler & Company upon their exercise of outstanding
options or warrants; (b) among the shares registered for sale 30,500
shares to be issued by the Company to Mr. Stechler upon his exercise of
outstanding warrants; (c) after sale of the registered shares, 180,000
shares to be issued by the Company to Mr. Stechler or Stechler &
Company upon their exercise of outstanding options and warrants. Does
not include 1,314,900 shares held in investment accounts for clients of
Stechler & Company. Stechler & Co.'s investment power over such
investment accounts may be terminated at any time by such clients.
(3) One of every six shares included in this total is a share issuable upon
exercise of an outstanding warrant held by such person.
(4) Includes 15,178 shares issuable upon the exercise of outstanding
warrants.
(5) All of these shares are issuable upon exercise of outstanding warrants
or options.
(6) The shares shown as owned by Mr. Henry Orlinsky include shares owned by
his wife. Mr. Orlinsky disclaims any beneficial interest in such
shares. Also includes the following: (a) before the sale of the
registered shares, 28,043 shares and 12,639 shares issuable upon the
exercise of outstanding warrants owned by Mr. Orlinsky and Mr. Genack,
respectively; (b) except for 400 shares owned by Mr. Genack the shares
registered for sale consists of shares to be issued by the Company upon
the exercise of outstanding options and warrants owned by Messrs.
Orlinsky and Genack; (c) after the sale of the registered shares,
18,043 shares to be issued to Mr. Orlinsky (and his wife) and 10,000
shares to be issued to Mr. Genack by the Company upon their exercise of
outstanding options and warrants.
DESCRIPTION OF SECURITIES
COMMON STOCK
We are currently authorized to issue 25,000,000 shares of Common Stock,
par value $.001 per share, of which 6,563,753 shares were issued and outstanding
as of June 15, 1999.
The holders of our Common Stock are entitled to one vote per share for
the election of directors and with respect to all other matters to be voted on
by shareholders. Shares of Common Stock do not
12
<PAGE> 16
have cumulative voting rights. Therefore, the holders of more than 50% of the
shares voting for the election of directors can elect all of the directors if
they choose to do so and, in that event, the holders of the remaining shares
will not be able to elect any directors. The holders of Common Stock are
entitled to receive dividends when, as and if declared by our Board of Directors
out of legally available funds. In the event of liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of liabilities and after provision has been made for each class of stock, if
any, having preference over the Common Stock. Holders of shares of Common Stock,
as such, have no conversion, preemptive or other subscription rights, and there
are no redemption provisions applicable to the Common Stock.
OPTIONS AND WARRANTS
The following options and warrants to purchase shares of our Common Stock
which we have granted are presently outstanding.
CLASS B WARRANTS. These warrants are publicly traded, are exercisable at
a price of $15.00 per share and expire on November 30, 1999. There are 1,188,600
Class B Warrants outstanding.
LOCK UP WARRANTS. These warrants are exercisable at a price of $1.00 per
share and expire January 19, 2000. There are 161,011 Lock Up Warrants
outstanding.
STOCK OPTION PLAN. We have reserved 1,543,250 shares for issuance upon
the exercise of stock options included in our 1996 Stock Option Plan. Options to
purchase 939,750 shares at prices ranging from $6.00 to $21 3/8 have been
granted by us and are currently outstanding.
OTHER WARRANTS. We have reserved 750,266 shares for issuance upon the
exercise of other warrants granted by us. Such warrants are exercisable at
prices ranging from $6.00 to $14.25 per share and expire at various times from
June 20, 1999 to March 26, 2004.
GENERAL CORPORATION LAW PROVISIONS
A Delaware statute prevents an "interested stockholder" (defined
generally as a person owning 15% or more of a corporation's voting stock) from
engaging in a "business combination" with the Delaware corporation for three
years following the date the person became an interested stockholder unless,
generally speaking, the transaction is approved by Ortec's Board of Directors
and the vote of two thirds of the outstanding shares not owned by such
interested stockholder. This statute could have the effect of discouraging,
delaying or preventing hostile takeovers, including those that might result in
the payment for our shares of a premium over market price or changes in control
or management of the Company.
TRANSFER AND WARRANT AGENT
The transfer agent for our Common Stock and the warrant agent for our
publicly traded Class B Warrants, is Jersey Transfer and Trust Co., whose
address is 201 Bloomfield Avenue, P.O. Box 36, Verona, New Jersey 07044.
13
<PAGE> 17
PLAN OF DISTRIBUTION
All of the shares of Common Stock offered pursuant to this prospectus are
being offered by the holders thereof (collectively, the "Holders"), and,
therefore, we will not receive any proceeds resulting from the sale of any of
such shares, except for any proceeds from the exercise, if any, of the Options
and Warrants.
The shares of Common Stock covered by this prospectus may be sold from
time to time to purchasers directly by the Holders. Alternatively, the Holders
of any such shares may from time to time offer the shares of Common Stock
through underwriters, dealers or agents, who may receive compensation in the
form of underwriting discounts, concessions or commissions from the Holders and
any underwriters, dealers or agents who participate in the distribution of such
shares may be deemed to be "underwriters" under the Securities Act, and any
discounts, commissions or concessions received by any such persons might be
deemed to be underwriting discounts and commissions under the Securities Act.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by us with the Securities and Exchange
Commission (the "Commission") are incorporated by reference in this prospectus:
(a) Our Annual Report on Form 10-K for the year ended December 31,
1998.
(b) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999.
(c) The description of the Common Stock set forth in our Registration
Statement on Form 8-A filed December 5, 1995, including any
amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by us pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), prior to
the termination of this offering, shall be deemed to be incorporated by
reference in this prospectus and to be a part of this prospectus from the date
of filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this prospectus 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
prospectus.
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
14
<PAGE> 18
Kaszovitz, a member of such firm, is a shareholder of the Company and is the
owner of an option expiring April 1, 2001 for the purchase of 10,000 shares of
Common Stock at $6.00 per share.
EXPERTS
The financial statements of the Company, incorporated by reference in
this prospectus, from the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, have been incorporated herein in reliance on the
report of Grant Thornton LLP, Independent Certified Public Accountants, given on
the authority of that firm as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our Certificate of Incorporation provides that the personal liability of
our directors 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 us or our shareholders for monetary damages for
breach of fiduciary duty as a director, provided that our Certificate of
Incorporation does not eliminate the liability of a director for (i) any breach
of the director's duty of loyalty to us or our shareholders; (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 our rights and the rights of our shareholders (through
stockholders' derivative suits on our behalf) 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 our or our shareholders
ability to seek nonmonetary remedies, such as an injunction or rescission,
against a director for breach of her or his fiduciary duty.
In addition, our 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.
We maintain a directors' and officers' liability insurance policy
covering certain liabilities that may be incurred by our directors and officers
in connection with the performance of their duties. The entire premium for such
insurance is paid by us.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors and officers, and to persons controlling
the Company pursuant to the foregoing provisions,
15
<PAGE> 19
we have 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.
WHERE YOU CAN FIND MORE INFORMATION
Since January 20, 1996, we have been subject to the reporting
requirements of the Exchange Act. In accordance with the Exchange Act, we have
and will continue to file reports, proxy statements and other information with
the Commission. Reports and other information filed by us 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. Our Common Stock is listed on the
NASDAQ SmallCap Market and reports and information concerning the Company can
also be inspected through such exchange. We intend to furnish our shareholders
with annual reports containing audited financial statements and such other
periodic reports as we deem appropriate or as may be required by law.
We 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.
We have filed with the Commission a Registration Statement on Form S-3
and all schedules and exhibits thereto under 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.
16
<PAGE> 20
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. All
such expenses are being paid by the Company.
<TABLE>
<S> <C>
SEC Registration fee ............................. $ 2,127
*Printing and Edgarization ...................... 4,500
*Accountants' fees and expenses .................. 3,000
*Attorneys' fees and expenses .................... 15,000
*Miscellaneous ................................... 373
-------
*Total ........................................... $25,000
=======
</TABLE>
- -------
*Estimated
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 nonmonetary remedies, such as an injunction or rescission,
against a director for breach of her or his fiduciary duty.
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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (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 Securities
and
II - 1
<PAGE> 21
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
ITEM 16. EXHIBITS
Exhibit Number Description
- -------------- -----------
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)*
- -----
* 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.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed in
this Registration Statement or any material change to such information in this
Registration Statement.
2. That for the purpose of determining any liability under the Securities
Act, each such post-effective amendment 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 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.
4. 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 Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the shares of Common Stock offered herein,
and the offering of such shares of Common Stock at that time shall be deemed to
be the initial bona fide offering thereof.
II - 2
<PAGE> 22
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 Securities Act and will be governed by the final
adjudication of such issue.
II - 3
<PAGE> 23
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 15, 1999.
ORTEC INTERNATIONAL, INC.
By: /s/ Steven Katz
----------------------
Steven Katz, PhD
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
--------- ----- ----
<S> <C> <C>
/s/ Steven Katz President, Chief Executive Officer June 15, 1999
- --------------- and Chairman (Principal Executive
Steven Katz, PhD Officer)
/s/ Mark Eisenberg Senior Vice President, Research and June 15, 1999
- ------------------ Development, and Director
Dr. Mark Eisenberg
/s/ Ron Lipstein Chief Financial Officer, Secretary, June 15, 1999
- ---------------- Treasurer and Director (Principal
Ron Lipstein Financial and Accounting Officer)
/s/ Alain M. Klapholz Vice President, Operations, and June 15, 1999
- --------------------- Director
Alain M. Klapholz
Director
- ---------------------
Joseph Stechler
/s/ Steven Lilien Director June 14, 1999
- ---------------------
Steven Lilien, PhD
</TABLE>
<PAGE> 24
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
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)*
- -----
* 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 17, 1999
Ortec International, Inc.
3960 Broadway
New York, NY 10032
RE: REGISTRATION STATEMENT ON FORM S-3
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 on Form S-3 filed on or about the date
hereof with the Securities and Exchange Commission relating to the offering of
shares of Common Stock. The 1,031,247 shares included in the Registration
Statement may be sold by certain selling shareholders 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 682,690 of the
1,031,247 shares of the Common Stock included in the Registration Statement
which may be sold by certain selling shareholders of the Company from time to
time for their own accounts, have been duly authorized, validly issued and
outstanding, and are fully paid and non-assessable, and the remaining 348,557
shares of such 1,031,247 shares have been duly authorized and reserved for
issuance and, when paid for upon the exercise of outstanding warrants and
options, 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.
Very truly yours,
FEDER, KASZOVITZ, ISAACSON,
WEBER, SKALA & BASS LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report, dated February 19, 1999, accompanying the
financial statements of Ortec International, Inc. (a development stage
enterprise) appearing in the 1998 Annual Report of the Company to its
shareholders and accompanying the schedules included in the Annual Report on
Form 10-K for the year ended December 31, 1998 which are incorporated by
reference in this Registration Statement. We consent to the incorporation by
reference in the Registration Statement of the aforementioned reports and to the
use of our name as it appears under the caption "Experts".
GRANT THORNTON LLP
New York, New York
June 16, 1999
