ENAMELON INC, S-1/A, 1996-10-22

ENAMELON INC
S-1/A, 1996-10-22
MISC HEALTH & ALLIED SERVICES, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1996

REGISTRATION NO. 333-06455
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 3

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

ENAMELON, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 2834 13-3669775
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

15 KIMBALL AVENUE, YONKERS, NY 10704 (914) 237-1308
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

DR. STEVEN R. FOX, CHAIRMAN OF THE BOARD, ENAMELON, INC.
15 KIMBALL AVENUE, YONKERS, NY 10704 (914) 237-1308
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
------------------------

COPIES TO:

<TABLE>
<S> <C>
JACK BECKER, ESQ. STEPHEN H. KAY, ESQ.
SNOW BECKER KRAUSS P.C. SQUADRON, ELLENOFF, PLESENT &
605 THIRD AVENUE SHEINFELD, LLP
NEW YORK, NEW YORK 10158 551 FIFTH AVENUE
TEL: (212) 687-3860 NEW YORK, NEW YORK 10176
FAX: (212) 949-7052 TEL: (212) 661-6500
FAX: (212) 697-6686
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

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, 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. / /
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value....... 2,300,000 Shs. (2) $9.00 $20,700,000 $7,137.94
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Representatives' Warrants(3)........ 200,000 Wts. $10.80 $ 2,160,000 $ 744.83
- -----------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value....... 200,000 Shs. (4)(5) (6) (6) (6)
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TOTAL.......................... $22,860,000 $7,882.77(7)
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- -----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933, as
amended.
(2) Includes 300,000 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.
(3) Issued to the Representatives of the Underwriters.
(4) Issuable upon exercise of the Representatives' Warrants.
(5) Pursuant to Rule 416, this Registration Statement also covers such
indeterminable additional shares as may become issuable as a result of
anti-dilution adjustment in accordance with the terms of the
Representatives' Warrants.
(6) Pursuant to Rule 457(g), no additional registration fee is required for
these shares.
(7) This fee has been previously paid.
------------------------

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 A FURTHER AMENDMENT WHICH 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

ENAMELON, INC.

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
ITEM NO.
CAPTION IN FORM S-1 LOCATION IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus..... Outside Front Cover Page.
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front and Outside Back Cover Pages.
3. Summary Information, Risk Factors and Ratio
of Earnings To Fixed Charges............... Prospectus Summary; Risk Factors.
4. Use of Proceeds............................ Use of Proceeds.
5. Determination of Offering Price............ Underwriting.
6. Dilution................................... Dilution.
7. Selling Security Holders................... *
8. Plan of Distribution....................... Underwriting.
9. Description of Securities to be
Registered................................. Description of Securities.
10. Interest of Named Experts and Counsel...... Legal Matters; Experts.
11. Information with Respect to the
Registrant................................. Business; Business -- Properties;
Business -- Legal Proceedings; Financial
Statements; Selected Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operation; Management;
Management -- Executive Compensation;
Principal Stockholders; Certain
Transactions.
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Management -- Indemnification.
</TABLE>

- ---------------
* Not Applicable
<PAGE> 3

The 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.

SUBJECT TO COMPLETION, DATED SEPTEMBER 18, 1996

2,000,000 SHARES
LOGO

COMMON STOCK

All of the 2,000,000 shares of Common Stock offered hereby are being
offered by Enamelon, Inc. (the "Company").

Prior to this offering, there has been no public market for the Common
Stock of the Company. It is currently anticipated that the initial offering
price will be between $7.00 and $9.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial offering
price. After the offering, the Company's current directors, executive officers
and principal stockholders will beneficially own approximately 52.1% of the
outstanding shares of voting stock of, and will continue to control, the
Company. The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "ENML."

FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING
ON PAGE 6 AND "DILUTION" COMMENCING ON PAGE 16.
------------------------

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

<TABLE>
<S> <C> <C> <C>
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share......................... $ $ $
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Total(3).......................... $ $ $
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</TABLE>

(1) Excludes five-year warrants to purchase a number of shares of Common Stock
equal to 10% of the number of shares of Common Stock purchased and sold by
the Underwriters (excluding over-allotments, if any), at an exercise price
equal to 120% of the initial public offering price. The Company has also
agreed to indemnify the Underwriters against certain liabilities, including
certain liabilities under the Securities Act of 1933, as amended. See
"Underwriting" for a description of the foregoing and certain other
arrangements between the Company and the Underwriters.

(2) Before deducting offering expenses estimated to be approximately
$ , payable by the Company.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
300,000 additional shares of Common Stock solely to cover over-allotments,
if any, on the same terms and conditions as the shares offered hereby. If
such option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."
------------------------

The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of such
shares will be made at the offices of Rodman & Renshaw, Inc., New York, New
York, on or about , 1996.
------------------------

RODMAN & RENSHAW, INC. GKN SECURITIES CORP.

The date of this Prospectus is , 1996
<PAGE> 4

TWO DIAGRAMS OF A TOOTH DESCRIBING THE DEMINERALIZATION PROCESS AND ENHANCED
REMINERALIZATION RESULTING FROM USE OF ENAMELON FLUORIDE TOOTHPASTE.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
------------------------

Enamelon(TM) is a trademark of the Company. Certain other trademarks of the
Company and other companies, including ENAMELINE(TM), Crest(R), Colgate(R),
Aquafresh(R), Mentadent(R), Arm & Hammer Dental Care(R) and Sensodyne(R), are
used in this Prospectus.
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and financial statements and notes thereto appearing
elsewhere in this Prospectus. Unless otherwise indicated, all share, per share
and financial information set forth herein assumes (i) the automatic conversion
of 558,399 shares of Series A Preferred Stock into 558,399 shares of Common
Stock upon completion of this offering, (ii) an initial public offering price of
$8.00 per share, the midpoint of the range set forth on the cover page of this
Prospectus and (iii) no exercise of the Underwriters' over-allotment option.
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such differences include, but are not limited to, those discussed in "Risk
Factors." See the "Glossary" appearing on page 45 of this Prospectus for the
definitions of certain terms used herein.

THE COMPANY

Enamelon, Inc. is focused on developing and marketing over-the-counter oral
care products based on proprietary formulations and technologies. The Company's
products are intended to stop cavities before they begin. Its prototype
formulations have been proven scientifically in animal and in vitro studies
conducted by the Company to strengthen tooth enamel. Enamelon toothpaste will be
based on the active ingredient sodium fluoride in a formulation that enhances
tooth "remineralization," whereby minerals, such as calcium and phosphate, are
reintroduced into tooth enamel. Toothpaste product development and required
testing are expected to be completed by the end of 1996, and the Company plans
to introduce an all-family toothpaste into test markets, consisting of
approximately 5% of United States households, in the early part of 1997. The
Company currently expects to begin a national roll-out of its toothpaste product
in the first half of 1998.

On a daily basis, teeth lose small amounts of calcium and phosphate, the
major structural ingredients of tooth enamel. This "demineralization" process is
caused by plaque acids produced during the bacterial breakdown of sugars in the
mouth. These acids dissolve the enamel, producing lesions. As this process
continues, the mineral structure gradually is destroyed, eventually forming a
dental cavity, which can only be repaired by a dentist.

Enamelon toothpaste will simultaneously supply the active ingredient sodium
fluoride and high concentrations of ions of the inactive ingredients calcium and
phosphate in soluble form during brushing. The Company's in vitro studies have
demonstrated that prototype formulations of Enamelon toothpaste enhance
remineralization with a higher level of fluoride uptake, and were shown to
strengthen and harden tooth structure to a significantly greater degree than
prevailing industry standards. This makes the tooth less soluble and more
resistant to attacks by acids from decay-causing bacteria. Additionally, animal
studies of prototype formulations conducted by the Company have shown that
enhanced remineralization reduced the incidence of lesions to a significantly
greater degree than prevailing industry standards. The Company has begun to
conduct human clinical studies, which are intended to confirm efficacy in humans
and begin to establish additional advertising claims, including comparative
claims.

Based on the Company's studies to date, it believes that with each
application of its proposed products, teeth will become stronger and more
resistant to decay. The Company believes that human clinical studies will show
that its toothpaste enhances the tooth remineralization process to a greater
degree than currently available products and that this will represent one of the
most significant advances in personal dental care since the introduction of
mass-marketed fluoride dental products in the early 1960's.

The worldwide toothpaste market is estimated to exceed $5.0 billion in
annual retail sales. Annual toothpaste sales in the United States are expected
to be $1.7 billion in 1996 and are projected to reach $2.0 billion by the turn
of the century. Over the last five years, the toothpaste market has become
segmented as new, premium-priced products offering benefits such as tartar
control or whitening or containing ingredients such as baking soda have steadily
attracted consumers away from older, mature products.

3
<PAGE> 6

The Company holds licenses from the American Dental Association Health
Foundation (the "ADAHF") to use patented and patent pending technologies (the
"ADAHF Patented Technology") relating to a method for oral use of various
amorphous calcium phosphate compounds that enhance the natural activity of
fluoride to prevent tooth decay. The ADAHF has granted the Company (i) exclusive
worldwide licenses to develop, manufacture and market toothpaste, chewing gum,
food and confectionery products using the ADAHF Patented Technology and (ii) a
non-exclusive international license covering products not covered by the
Company's exclusive licenses (including oral spray, mouth rinse and professional
gel products) using the ADAHF Patented Technology. The Company's international
license is co-extensive with a non-exclusive international license granted to
SmithKline Beecham Corp. ("SmithKline"), which also obtained from the ADAHF an
exclusive United States license covering products not covered by the Company's
exclusive licenses. The Company will be required to pay the ADAHF royalties
under these license agreements of 4% of net domestic sales and 7% of net
international sales (4% if sales are made through a joint venture), subject to a
minimum annual royalty of $7,000 under the domestic license agreement. Provided
that the Company satisfies such minimum royalty and certain sales requirements,
the licenses and any exclusivity thereunder will continue with respect to each
such patent until its expiration.

The Company has developed additional proprietary technologies relating to
prevention of tooth decay before it begins and has five United States patent
applications pending with respect to certain of those technologies (the
"Enamelon Proprietary Technology").

The Company's objective is to become a leading niche marketer of a variety
of oral care, chewing gum, food and confectionery products based on the ADAHF
Patented Technology and/or Enamelon Proprietary Technology. The Company's
strategic plan for accomplishing this objective is to (i) complete development
of and begin to market its proposed toothpaste products with sodium fluoride as
the sole active ingredient in compliance with the Food and Drug Administration
requirements, (ii) conduct further product testing to confirm efficacy in humans
and begin to establish additional advertising claims, including comparative
claims, (iii) collaborate with corporate partners in certain other product areas
and international markets and (iv) capitalize on additional commercial
applications of both the ADAHF Patented Technology and the Enamelon Proprietary
Technology.

The Company was incorporated in Delaware in June 1992. The Company's
executive offices are located at 15 Kimball Avenue, Yonkers, New York, 10704,
and its telephone number is (914) 237-1308.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company................. 2,000,000 shares
Common Stock to be Outstanding After the Offering...
7,200,378 shares (1)
Use of Proceeds.....................................
For marketing, research and
development, purchase of manufacturing
equipment, working capital and general
corporate purposes.
Risk Factors and Dilution...........................
Prospective investors should carefully
consider the matters set forth under
the captions "Risk Factors" and
"Dilution." An investment in the shares
of Common Stock offered hereby involves
a high degree of risk and immediate and
substantial dilution.
Nasdaq National Market Symbol.......................
"ENML"
</TABLE>

- ---------------
(1) Excludes an aggregate of 2,510,652 shares of Common Stock reserved for
future issuance under the Company's 1993 Stock Option Plan (the "Plan") and
reserved for issuance pursuant to outstanding options and warrants. See
"Shares Eligible for Future Sale" and "Underwriting."

4
<PAGE> 7

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

<TABLE>
<CAPTION>
JUNE 9, 1992 SIX MONTHS
(INCEPTION) TO YEAR ENDED DECEMBER 31, ENDED JUNE 30,
DECEMBER 31, ------------------------- ----------------
1992 1993 1994 1995 1995 1996
-------------- ----- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF OPERATIONS
DATA:
Total expenses..................... $ 37 $ 311 $ 536 $ 1,081 $ 463 $ 1,085
Other income (charges)............. -- 14 (263) 20 1 68
----- ------ ------ -------- ------ ------
Net loss........................... $(37) $(297) $(799) $(1,061) $(462) $(1,017)
===== ====== ====== ======== ====== ======
SELECTED PER SHARE DATA:
Net loss per share(1).............. $ (0.20) $ (0.18)
------- -------
------- -------
Weighted average shares
outstanding..................... 5,328 5,511
</TABLE>

<TABLE>
<CAPTION>
AT JUNE 30, 1996
-----------------------
AT DECEMBER 31, PRO FORMA AS
1995 ACTUAL ADJUSTED(2)
--------------- ------ ------------
<S> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Working capital...................................... $ 1,628 $2,132 $ 16,412
Total assets......................................... 2,041 3,123 17,403
Redeemable preferred stock........................... -- 1,904 --
Stockholders' equity................................. 1,867 877 17,061
</TABLE>

- ---------------
(1) Earnings per share are presented for 1995 and the six months ended June 30,
1996 on a pro forma basis to reflect the automatic conversion of 558,399
shares of Series A Preferred Stock as if it occurred on January 1, 1995.
Earnings per share are not presented for prior periods since the Company
does not believe historical earnings per share are meaningful as a result of
changes in the Company's capital structure following the completion of this
offering. See "Financial Statements."

(2) As adjusted to reflect the pro forma effect of (i) the automatic conversion
of 558,399 shares of Series A Preferred Stock and (ii) the consummation of
this offering and the application of the estimated net proceeds thereof. See
"Use of Proceeds" and "Capitalization."

5
<PAGE> 8

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk and immediate and substantial dilution and should only be made by
persons who can afford a loss of their entire investment. In evaluating an
investment in the Common Stock being offered hereby, investors should consider
carefully, among other matters, the following risk factors, as well as the other
information contained in this Prospectus.

Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
projected in the forward-looking statements discussed herein. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed in this section, as well as in the sections entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."

HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY

The Company has a limited history of operations, and has accumulated net
losses from inception in June 1992 through June 30, 1996, of approximately $3.2
million. Losses have resulted principally from costs incurred in research and
development in connection with the ADAHF Patented Technology and/or the Enamelon
Proprietary Technology (together, the "Enamelon Technologies") and from general
and administrative costs. To date, the Company has neither commenced any product
commercialization nor realized any operating revenues. The Company expects to
continue to incur operating losses at least through 1998, principally as a
result of expenses of ongoing clinical testing and anticipated marketing and
manufacturing expenses associated with the introduction of Enamelon toothpaste.
There can be no assurance that the Company will ever generate revenues or
achieve profitability. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

DEPENDENCE ON SUCCESSFUL DEVELOPMENT OF INITIAL PRODUCT

The Company is dependent to a large extent on the success of its proposed
toothpaste, which is being tested at a number of sites as well as at the
Company's laboratory. Results of in vitro and animal studies are not necessarily
indicative of results that will be obtained in human clinical trials. Adverse or
inconclusive clinical trial results concerning any of the Company's product
formulations could significantly delay the marketing of such products or result
in the limitation of the Company's potential product claims. In such event,
further studies may have to be conducted by the Company. There can be no
assurance that safe and effective commercially viable products can ever be
developed by the Company, or that if they are developed, they can be produced in
a timely manner, can be manufactured economically on a large scale, can be free
from governmental and competitive challenges, and can achieve and sustain market
acceptance. See "Use of Proceeds" and "Business -- Products."

UNCERTAINTY OF CONSUMER ACCEPTANCE OF ENAMELON PRODUCTS

The Company will be dependent upon consumer acceptance of the Enamelon
toothpaste as an alternative to current well known brand name toothpastes.
Market acceptance will depend, in part, on the Company's ability to demonstrate
to consumers the effectiveness of its products. There can be no assurance that
clinical studies will support the Company's anticipated advertising claims, that
the Company will be able to market its toothpaste successfully or that future
products, if any, will be accepted in the marketplace. See "Business --
Marketing."

UNCERTAINTIES RELATED TO DEVELOPMENT OF ADDITIONAL PRODUCTS

The Company has focused its product development efforts to date on
toothpaste using the Enamelon Technologies. Accordingly, the Company will
require significant additional efforts to develop other products utilizing the
Enamelon Technologies. Any such future product development efforts are subject
to certain risks and may not succeed. These risks include, but are not limited
to, the possibility that (i) new products will be

6
<PAGE> 9

found ineffective or unsafe, (ii) even if safe and effective, they will be
difficult to develop into commercially viable products or to manufacture
economically on a large scale, free of governmental or competitive challenges
and (iii) any such products will fail to achieve and sustain market acceptance.
Therefore, there is substantial risk that the Company's product development
efforts will not be successful. See "Business -- Strategy" and "-- Products."

COMPETITION

Competition in toothpaste products, as well as in chewing gum, food and
confectionery products, is intense. The Company's primary competitors include
companies with substantially greater financial, technological, marketing,
personnel and research and development resources than those of the Company.
There can be no assurance that the Company will be able to compete successfully
in these markets. The Company's toothpaste products will compete with other
brand name toothpastes including Crest, Colgate, Aquafresh, Mentadent, Arm &
Hammer Dental Care and Sensodyne. Further, new products or future developments
by others may provide therapeutic or cost advantages over the Company's proposed
products. There can be no assurance that developments by others of similar or
more effective products will not render the Company's products or technologies
noncompetitive or obsolete or that competitors will not challenge the validity
of the Company's patent rights. Since the Company's proposed products will be
new to the market and sold in competition with the products of companies with
greater financial and other resources, there can be no assurance that a market
for the Company's proposed products will develop.

The Company's non-exclusive license to market products not covered by its
exclusive licenses (including oral sprays, mouth rinses, and professional gels)
outside of the United States is co-extensive with a license granted to
SmithKline, which has financial and other resources that are substantially
greater than those of the Company. Therefore, it is likely that the Company will
not be able to compete with SmithKline for the sale of those products outside of
the United States unless the Company enters into strategic alliances with other
companies having financial and other resources comparable to those of
SmithKline. However, there can be no assurance that the Company will be able to
successfully market products covered by its non-exclusive license, even if it is
able to form such alliances. See "Risk Factors -- Uncertain Ability to Protect
Patents," "Business -- Competition" and "-- ADAHF Patents and Licenses."

COMPLIANCE WITH THE MONOGRAPH

The Company's products are subject to regulation by the Food and Drug
Administration (the "FDA"). The FDA has published a final monograph, Anticaries
Drug Products for Over-the-Counter Human Use (the "Monograph"), for
over-the-counter anticaries drug products, the category of non-prescription drug
products that includes the Company's proposed oral care products. The Monograph
establishes conditions under which over-the-counter drug products that aid in
the prevention of tooth decay generally are recognized as being safe and
effective and not misbranded. The Company's products may be lawfully marketed
without being required to file a New Drug Application (an "NDA") with the FDA if
they use as their sole active ingredient one of the active ingredients permitted
in the Monograph and only make labeling claims permitted in the Monograph. The
Company's proposed products are being developed with the sole active ingredient
being sodium fluoride, an active ingredient permitted under the Monograph, and
the Company intends to comply with the Monograph in all other respects. However,
there can be no assurance that the FDA will determine that the Company's
proposed products meet all of the conditions of the Monograph. The Company will
be limited in the claims it can make with respect to its products in order to
remain in compliance with the Monograph. The Company's inability to market its
proposed toothpaste products under the Monograph would have a material adverse
effect on the Company. See "Business -- Government Regulation."

In order to market its proposed products other than in compliance with the
Monograph, the Company would be required to file an NDA. An NDA would require
substantial testing procedures which are costly and time consuming. Accordingly,
the Company's ability to sell its proposed products in the United States could
be delayed for an indefinite period of time. Further, the Company may not have
sufficient financial or other resources available to complete the NDA process
and assuming such financial and other resources are

7
<PAGE> 10

available, there is no assurance that the FDA would approve the Company's NDA,
if one were necessary. See "Business -- Government Regulation."

COMPLETION OF TOOTHPASTE DEVELOPMENT

The Company is presently in the final phase of development of Enamelon
toothpaste to comply with the Monograph, including finalizing the product's
flavor and texture and confirming its stability. In order to market Enamelon
toothpaste under the Monograph, the Company will be required to conduct an
"animal caries" study and either a "fluoride uptake" study or an "enamel
solubility reduction" study. The Company expects to complete development of
Enamelon toothpaste and the studies required to market it under the Monograph by
the end of 1996 so that it can begin initial test marketing in the early part of
1997. There can be no assurance, however, that completion of product development
and required studies will occur when scheduled or that the results of the
required studies will satisfy the requirements of the Monograph.

SUBSTANTIATION OF ADDITIONAL ADVERTISING CLAIMS

The Company intends to continue to conduct human clinical studies, which
are intended to confirm efficacy in humans and begin to establish additional
advertising claims. The Company believes that these advertising claims will
distinguish Enamelon toothpaste from competitors and give the Company a
competitive advantage. However, there can be no assurance that the results of
the human clinical studies will substantiate the anticipated advertising claims.
In that event, the Company may be required to conduct additional human clinical
studies, delay the national roll-out of Enamelon toothpaste, or change its
marketing strategy.

COMPLIANCE WITH OTHER GOVERNMENT REGULATION

In addition to regulation by the FDA under the Monograph, the Company is
subject to additional FDA regulation as well as regulation under various other
federal and state laws and agencies. Each domestic drug product manufacturing
facility must be registered with the FDA, and each manufacturer must inform the
FDA of every drug product it has in commercial distribution and keep such list
updated. Domestic manufacturing facilities are also subject to at least biannual
inspection by the FDA for compliance with Good Manufacturing Practice ("GMP")
regulations promulgated by the FDA. Compliance with GMP regulations is required
at all times during the manufacture and processing of drug products.
Accordingly, to the extent that the Company utilizes contract manufacturers,
such manufacturers must be in compliance with all FDA requirements. If such
manufacturer is not in compliance with GMP, the FDA could bring an action to
enforce its regulations which could lead to closing such manufacturing facility.
In that instance, the Company would be required to contract with another
manufacturer on terms less favorable to the Company and the sales and marketing
of its products could be disrupted. See "Business -- Manufacturing," "--
Government Regulation" and "Risk Factors -- Dependence on Others to
Manufacture."

Both the Company's products and its product claims may be challenged by the
Company's competitors or by the Federal Trade Commission (the "FTC") or other
governmental or private agencies. Such challenges may include an assertion that
the data obtained by the Company to substantiate the Company's advertising
claims may be inadequate or that such claims are inaccurate. There can be no
assurance that the Company will successfully defend any challenge in this area,
or be able to modify its products or the claims with respect thereto to such an
extent that the products remain commercially viable. If the Company is unable to
defend such claims, it may become subject to an FTC cease and desist order,
which could impair its ability to market its products.

The laws and regulations administered by governmental agencies are subject
to change and varying interpretations. While the Company intends to use its best
efforts to comply with relevant laws and regulations, no assurance can be given
that an agency might not assert a claim of noncompliance against the Company in
the future. Unanticipated changes in laws or adverse interpretations of
regulations could materially jeopardize the Company's ability to distribute its
products or engage in its contemplated business activities.

8
<PAGE> 11

The marketing of the Company's proposed products abroad will be subject to
significant regulation by foreign cosmetic and/or drug regulatory agencies. No
assurance can be given that the Company will be granted approval to market its
proposed products in foreign countries, and the failure to obtain such required
approvals would have a material adverse effect on the Company's ability to
market its products internationally. See "Business -- Government Regulation."

DEPENDENCE ON LICENSING AGREEMENTS

Since the Company considers the ADAHF Patented Technology to be a key
element in its product development, the Company's license agreements with the
ADAHF are material to the Company's business. If sales of the Company's products
do not generate royalties of at least $17,000 during the last year of any
exclusivity period under the Company's exclusive licenses, then the Company will
not be entitled to renew the period of exclusivity and the ADAHF will be
entitled to license the ADAHF Patented Technology to the Company's competitors.
Furthermore, if the Company fails to pay the minimum royalties required under
the license agreements or otherwise breaches such agreements, then the ADAHF
will be entitled to terminate the agreements. In that event, the Company would
be unable to use the ADAHF Patented Technology, which would have a material
adverse effect on the ability of the Company to develop, manufacture and sell
its products, or even to continue in business. See "Business -- ADAHF Patents
and Licenses."

UNCERTAIN ABILITY TO PROTECT PATENTS

The Company's ability to compete effectively depends on its success in
protecting its proprietary technology, both in the United States and abroad. No
assurance can be given that the Company's patent protection within and/or
outside of the United States is sufficient to deter others, legally or
otherwise, from developing or marketing competitive products utilizing the
Enamelon Technologies.

The United States patents and the pending United States and foreign patent
applications covering the ADAHF Patented Technology (the "ADAHF Patent Rights")
and the Company's pending patent applications (the "Enamelon Patent Rights")
(collectively with the ADAHF Patent Rights, the "Patent Rights") are material to
the Company's business. No assurance can be given that any further patents will
be issued from the United States or foreign patent offices for the Patent Rights
or that the Company will receive any patents in the future based on its
continued development efforts. The Company believes that the protection afforded
by the Patent Rights is material to its future revenues and earnings. There can
be no assurance that any of the Patent Rights will be found to be valid or that
any of the Patent Rights will be enforceable or prevent others from developing
and marketing competitive products or methods. A successful challenge to the
validity of the Patent Rights would have a material adverse effect on the
Company, and could jeopardize its ability to engage in its contemplated
business. An infringement action on behalf of the Company may require the
diversion of substantial funds from the Company's operations and may require
management to expend efforts that might otherwise be devoted to the Company's
operations. Furthermore, there can be no assurance that the Company will be
successful in enforcing the Patent Rights. See "Risk Factors -- Competition."

There can be no assurance that patent infringement claims in the United
States or in other countries will not be asserted against the Company by a
competitor or others, and if asserted, that the Company will be successful in
defending against such claims. In the event one of the Company's proposed
products is adjudged to infringe patents of others with the likely consequence
of a damage award, the Company or any sublicensee may be enjoined from using and
selling such product or be required to obtain a royalty-bearing license, if
available on acceptable terms. Alternatively, in the event a license is not
offered, the Company might be required to redesign those aspects of the product
held to infringe so as to avoid infringement. In such case, any redesign efforts
undertaken by the Company could require significant expense, necessitate an FDA
review, delay the introduction or the re-introduction of the Company's products
into certain markets, or be so significant as to be impractical. See
"Business -- ADAHF Patents and Licenses."

9
<PAGE> 12

PROTECTION OF PROPRIETARY TECHNOLOGY AND INFORMATION

The Company also intends to rely on trade secrets, know-how and continuing
technological advancement to establish and maintain a competitive position in
the market for its products. Although the Company has entered into
confidentiality and invention agreements with its employees and consultants, no
assurance can be given that such agreements will be honored or that the Company
will be able to effectively protect its rights to its unpatented trade secrets
and know-how. Moreover, no assurance can be given that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets and know-how.

EVOLVING PRODUCT FORMULATIONS

The Company expects that its toothpaste and other product formulations will
be modified from time to time as a result of the Company's ongoing research and
product testing programs. As a result of such modifications, products that the
Company produces in the future may differ from those that were the subject of
earlier research and testing. Therefore, the research studies conducted to date
and relied upon by the Company for efficacy and claims substantiation, as well
as the Patent Rights obtained at this time, might not necessarily be applicable
to the Company's future product formulations. In that event, the Company may be
required to make significant additional expenditures on development and testing
of these new formulations. Furthermore, there can be no assurance that future
product formulations will comply with the Monograph, that the Company will not
be required to file an NDA, or that any products using such formulations will be
commercially viable. See "Business -- Research and Development" and "-- ADAHF
Patents and Licenses."

LIMITED MARKETING CAPABILITY

The Company has limited marketing capabilities and resources. Achieving
market penetration will require significant efforts by the Company to create
awareness of, and demand for, its proposed products. Accordingly, the Company's
ability to build its customer base will be dependent on its marketing efforts,
including its ability to establish an effective internal sales organization or
establish strategic marketing arrangements with other companies. The failure by
the Company to develop successfully its marketing capabilities, both internally
and through wholesalers and brokers, would have a material adverse effect on the
Company's business. Further, there can be no assurance that the development of
such marketing capabilities will lead to sales of the Company's proposed
products. The Company will be limited in the claims it can make with respect to
its products in order to remain in compliance with the Monograph. See "Use of
Proceeds," "Business -- Marketing" and "Risk Factors -- Compliance with the
Monograph."

DEPENDENCE ON OTHERS TO MANUFACTURE

The Company currently has limited manufacturing capability. The Company
does not intend to manufacture its toothpaste products for the United States
market at the outset, but will instead utilize contract manufacturers. The
Company currently does not have a written contract with a production
manufacturer, although it is negotiating with an FDA-approved manufacturer and
intends to enter into a written agreement with such manufacturer prior to
commencement of pilot manufacturing. Nevertheless, there can be no assurance
that if the initial manufacturer becomes unavailable, the Company will be able
to retain another qualified manufacturer on terms favorable to the Company. For
the balance of the worldwide toothpaste markets, as well as for the Company's
other proposed products, the Company may seek to sublicense or enter into joint
ventures or strategic partnerships with major consumer product companies or
other entities on either an exclusive or non-exclusive basis. Manufacturing
arrangements in these markets are likely to be encompassed in any agreements
establishing such relationships and may place primary manufacturing
responsibility on others. The Company has no plan, agreement, understanding or
arrangement with respect to such relationships, and no assurance can be given
that any will be entered into.

The Company's dependence upon others for the manufacture of its products
may adversely affect its future profit margins, if any, and may affect the
Company's ability to sell its proposed products on a timely and

10
<PAGE> 13

competitive basis. See "Risk Factors -- Compliance with Other Government
Regulation" and "Business -- Manufacturing."

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING

The Company's cash requirements may vary materially from those now planned
depending on numerous factors, including the status of the Company's marketing
efforts, the Company's business development activities, the results of clinical
trials, the regulatory process and competition. The Company currently estimates
that the net proceeds of this offering, together with its projected cash flow
from operations, if any, will be sufficient to finance its working capital and
other requirements for a period of approximately 18 months from the date of this
Prospectus. Thereafter, or sooner if conditions make it necessary, the Company
may need to raise additional funds through public or private financings,
including equity financings which may be dilutive to stockholders. There can be
no assurance that the Company will be able to raise additional funds if its
capital resources are exhausted, or that funds will be available on terms
attractive to the Company or at all. If adequate funds are not available, the
Company may be required to delay, reduce the scope of, or eliminate the
commercial introduction of Enamelon toothpaste and otherwise reduce materially
its proposed operations. See "Use of Proceeds" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

PRODUCT LIABILITY

The sale of any over-the-counter consumer product may result in claims of
adverse reactions by users. Although the Company has no intention of marketing
any product without reasonable belief in its safety and efficacy when used in
accordance with its instructions, misuse of the Company's products may result in
consumer injury. In addition, future developments, including possible adverse
medical studies and associated negative publicity, could have a material adverse
impact on the market for the Company's products and on its results of
operations. Further, the Company may be subject to certain consumer claims and
informal complaints relating to its products which are incidental and routine to
its business and for which the Company intends to maintain insurance coverage.

Product liability insurance coverage is expensive and subject to many
exclusions, and there can be no assurance that the Company will be able to
obtain such insurance coverage in sufficient amounts or on favorable terms.
Exclusions or damage limitations may render any insurance coverage obtained
insufficient to protect the Company adequately from the successful assertion of
a product liability claim. The Company currently maintains product liability
insurance of $6.0 million per claim and $7.0 million in the aggregate on a "per
occurrence" basis. There can be no assurance that the Company's present or
future insurance coverage will be sufficient to satisfy product liability
claims, if any, made against the Company with respect to injuries arising from
the use of such products. In the event of a successful product liability claim
against the Company, the insufficiency of insurance coverage and the negative
publicity from such a suit could have a material adverse effect on the Company
and jeopardize its ability to engage in its contemplated business activities.
There also can be no assurance that the Company will be able to increase such
insurance coverage or to maintain such coverage on acceptable terms. If the
Company's insurance coverage were to lapse or be terminated, then the Company
would have no insurance coverage for claims arising subsequent to the lapse or
termination of the policy. Product liability claims successfully asserted for
claims arising after the lapse or termination of the policy could have a
materially adverse effect on the Company. See "Business -- Liability Insurance."

DEPENDENCE ON KEY PERSONNEL

The success of the Company will be largely dependent upon the personal
efforts of Dr. Steven R. Fox, D. Brooks Cole, Norman Usen, and Anthony E.
Winston. The loss of the services of any of such persons could have a material
adverse effect on the Company's business and prospects. The Company has entered
into a five-year employment agreement with Dr. Fox as Chairman of the Board and
Chief Executive Officer. Notwithstanding, Dr. Fox currently continues to
practice dentistry on a part-time basis. The Company has entered into an
employment agreement with Mr. Cole as President and Chief Operating Officer
pursuant to

11
<PAGE> 14

which Mr. Cole serves at the pleasure of the Board of Directors. Although the
Company has entered into employment agreements with each of the aforementioned
individuals, there can be no assurance that the Company will be able to retain
their services. The success of the Company will also be dependent upon its
ability to hire and retain additional qualified management, marketing and
financial personnel. The Company will compete with other companies with greater
financial and other resources for such personnel. See "Management -- Employment
and Consulting Agreements."

CONTROL BY PRINCIPAL STOCKHOLDERS

After this offering, the Company's directors, executive officers and
principal stockholders will beneficially own approximately 52.1% of the
Company's Common Stock (approximately 50.3% if the Underwriters' over-allotment
option is exercised in full). Consequently, they will have the ability to elect
all of the Company's directors and to control the outcome of all other issues
submitted to the Company's stockholders and direction of the day-to-day affairs
of the Company. See "Principal Stockholders."

ABSENCE OF PRIOR PUBLIC MARKET; DETERMINATION OF OFFERING PRICE

Prior to this offering, there has been no public trading market for the
Common Stock, and there can be no assurance that an active public market for the
Common Stock will develop or continue following the offering. The initial public
offering price of the Common Stock will be determined by negotiation between the
Company and the Representatives (as defined herein) of the Underwriters and may
not necessarily bear any relationship to the Company's assets, book value,
revenues or other established criteria of value, and should not be considered
indicative of the price at which the Common Stock will trade after completion of
the offering. There can be no assurance that the market price of the Common
Stock will not decline below the initial public offering price. See
"Underwriting."

POSSIBLE VOLATILITY OF STOCK PRICE

Trading volume and prices for the Common Stock could be subject to wide
fluctuations in response to quarterly variations in operations, financial
results, announcements with respect to sales and earnings, technological
innovations, new product developments, the sale or attempted sale of a large
amount of securities in the public market, and other events or factors which
cannot be foreseen or predicted by the Company. In addition, various factors
affecting consumer products companies, as well as price and volume volatility
affecting small and emerging growth companies generally, but not necessarily
related to their particular operating performance, may have a significant impact
on the market price of the Common Stock.

IMMEDIATE SUBSTANTIAL DILUTION

The Company's present stockholders acquired their shares of the Company's
Common Stock at costs substantially below the anticipated offering price of the
Common Stock to be sold in this offering. Therefore, investors purchasing Common
Stock in this offering will incur an immediate and substantial dilution in net
tangible book value per share of $5.66. See "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of shares of Common Stock by existing stockholders pursuant to
Rule 144 ("Rule 144") promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), or otherwise, could have an adverse effect on the price
of the shares of Common Stock. Upon completion of this offering, the Company
will have 7,200,378 shares of Common Stock outstanding (7,500,378 shares if the
Underwriters' over-allotment option is exercised in full). In addition, the
Company has reserved for issuance (i) 1,233,806 shares upon exercise of options
granted under the Plan, (ii) 266,194 shares upon exercise of options to be
granted under the Plan and (iii) 1,010,652 shares upon exercise of outstanding
warrants, including up to 200,000 shares issuable upon exercise of the warrants
to be issued to the Representatives.

12
<PAGE> 15

The 2,000,000 shares of Common Stock offered hereby (2,300,000 if the
Underwriters' over-allotment option is exercised in full) will be freely
transferable without restriction or further registration under the Securities
Act except for any shares purchased by an "affiliate" of the Company within the
meaning of Rule 144. The remaining 5,200,378 outstanding shares of Common Stock
will be "restricted securities," as that term is defined in Rule 144, and may
only be sold pursuant to a registration statement under the Securities Act or an
applicable exemption from registration thereunder, including exemptions provided
by Rule 144. Approximately 3,785,000 of such shares will be eligible for resale
under Rule 144 commencing no later than 90 days following the completion of this
offering. The remaining shares will become eligible for resale under Rule 144
between May 1997 through January 1998. In addition, holders of 211,875 shares of
Common Stock and warrants to purchase 152,814 shares of Common Stock at $1.33
per share have piggyback registration rights exercisable until June 30, 1997,
and holders of Series A Preferred Stock convertible into 558,399 shares of
Common Stock and warrants to purchase an additional 506,250 shares of Common
Stock at $5.75 per share (the "Series A Preferred Stockholders") have three
demand registration rights commencing six months from the date of this
Prospectus exercisable for a period of five years after the date of this
Prospectus, and unlimited piggyback registration rights exercisable until
January 23, 2003 (subject to certain limitations). Such piggyback registration
rights have been waived in connection with this offering. No prediction can be
made as to the effect that future sales of Common Stock, or the availability of
shares of Common Stock for future sales, will have on the market price of the
Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock, or the perception that such sales could occur, could adversely
affect prevailing market prices for the Common Stock and could impair the
Company's ability to raise capital through the future sale of its equity
securities. The Company, its officers, directors, stockholders beneficially
owning 5% or more of the Common Stock and certain Series A Preferred
Stockholders holding an aggregate of 3,518,536 shares have agreed, for a period
of 180 days from the date of this Prospectus, not to offer, pledge, sell,
contract to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any securities of the Company, without the prior written
consent of the Representatives. In addition, such individuals having the right
to acquire an aggregate of 1,342,402 shares issuable upon the exercise of
options or warrants have agreed to the same restrictions on disposition. See
"Principal Stockholders," "Shares Eligible for Future Sale" and "Underwriting."

ISSUANCE OF PREFERRED STOCK; ANTITAKEOVER PROVISIONS OF DELAWARE LAW

The Company's Amended Certificate of Incorporation authorizes the issuance
of 5,000,000 shares of Preferred Stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without obtaining stockholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other
rights of the holders of the Common Stock. In the event of issuance, the
Preferred Stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in the control of the Company.
Certain provisions of Delaware law may also discourage third party attempts to
acquire control of the Company. See "Description of Securities."

13
<PAGE> 16

USE OF PROCEEDS

The net proceeds to the Company from the sale of 2,000,000 shares of Common
Stock offered hereby are estimated to be approximately $14.3 million ($16.5
million if the Underwriters' over-allotment option is exercised in full) after
deducting underwriting discounts and commissions and estimated expenses of the
offering payable by the Company.

The Company intends to use approximately $4.0 million of the net proceeds
for the anticipated initial marketing costs of its proposed toothpaste products
and approximately $4.0 million to fund additional research and development to
improve the efficacy of, and provide claims substantiation for, the Company's
proposed products. An additional $2.0 million of the net proceeds will be used
to purchase manufacturing equipment for the production of the Company's patent
pending, split system toothpaste tube and for high speed tube filling equipment.
The balance of the net proceeds will be used for working capital and other
general corporate purposes, which may include the acquisition of products or
businesses that are compatible with the Company's existing business or the
financing of joint ventures or license agreements to market its products. If the
Underwriters exercise the over-allotment option in full, the Company will
realize additional net proceeds, which will be added to the Company's working
capital.

The foregoing represents the Company's best estimate of its allocation of
the net proceeds from the sale of the Common Stock offered hereby based upon the
current state of its business operations, its current plans and current economic
and industry conditions and is subject to reallocation among the categories
listed above. The amounts and timing of actual expenditures will depend on
numerous factors, including the status of the Company's marketing efforts, the
availability of alternative financing for the acquisition of manufacturing
equipment, the Company's business development activities, the results of
clinical trials, the regulatory process and competition. If the Company's
initial marketing efforts do not achieve their anticipated results, then test
marketing activities would be extended and the planned national expansion would
be delayed, requiring additional proceeds to be allocated to marketing. If the
Company is able to procure lease or debt financing for its equipment purchases,
then additional proceeds will become available for marketing and research and
development. The Company intends to review, from time to time, potential
opportunities to enter into joint ventures or licensing relationships with
respect to products using the Enamelon Technologies. The Company may, therefore,
use a portion of the net proceeds to finance joint ventures or enter into
license arrangements, although the Company has no agreements or understandings
and is not involved in any negotiation with respect to any such transactions.

The Company believes that the net proceeds of this offering together with
its projected cash flow from operations, if any, will be sufficient to finance
its working capital and other requirements for a period of approximately 18
months from the date of this Prospectus. Pending the aforementioned uses, the
net proceeds from this offering will be invested in interest-bearing government
securities or short-term, investment grade securities.

DIVIDEND POLICY

The Company has not paid any dividends on its Common Stock since its
inception and for the foreseeable future intends to follow a policy of retaining
all of its earnings, if any, to finance the development and continued expansion
of its business. There can be no assurance that dividends will ever be paid by
the Company. Any future determination as to payment of dividends will depend
upon the Company's financial condition, results of operations and such other
factors as the Board of Directors deems relevant.

14
<PAGE> 17

CAPITALIZATION

The following table sets forth the capitalization of the Company at June
30, 1996, and the pro forma effects of adjustments to reflect transactions
contemplated by this offering. This table should be read in conjunction with the
Financial Statements and the related Notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
AT JUNE 30, 1996
----------------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(3) AS ADJUSTED(4)
-------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Redeemable preferred stock:
$0.01 par value, 827,250 shares authorized;
and 268,851 pro forma and pro forma as
adjusted; 558,399 issued and outstanding;
and no shares pro forma and pro forma as
adjusted(1)................................ $ 1,904 $ -- $ --
Stockholders' equity:
Preferred stock, $0.01 par value, 4,172,750
shares authorized; no shares issued and
outstanding; and no shares pro forma and pro
forma as adjusted............................ -- -- --
Common stock, $0.001 par value, 20,000,000
shares authorized; 4,641,979 issued and
outstanding; 5,200,378 pro forma; and
7,200,378 pro forma as adjusted(2)........... 5 5 7
Additional paid-in capital...................... 4,083 5,986 20,264
Accumulated deficit............................. (3,210) (3,210) (3,210)
---------- -------- -- -------- --
Total stockholders' equity........................ 877 2,781 17,061
---------- -------- -- -------- --
Total capitalization......................... $ 2,781 $ 2,781 $ 17,061
========== ========== ==========
</TABLE>

- ---------------
Note: Numbers may not add due to rounding.

(1) See "Description of Securities."

(2) Excludes an aggregate of 2,510,652 shares, consisting of (i) 1,233,806
shares of Common Stock reserved for issuance upon exercise of outstanding
options under the Plan, (ii) 266,194 shares of Common Stock reserved for
future issuance under the Plan, (iii) 810,652 shares of Common Stock
reserved for issuance upon exercise of outstanding warrants and (iv) 200,000
shares of Common Stock reserved for issuance upon exercise of warrants to be
issued to the Representatives of the Underwriters upon completion of this
offering. See "Shares Eligible for Future Sale" and "Underwriting."

(3) As adjusted to reflect the automatic conversion of 558,399 shares of Series
A Preferred Stock into the equivalent number of shares of common stock.

(4) As adjusted to reflect the consummation of this offering and the application
of the net proceeds in the manner set forth under the caption "Use of
Proceeds."

15
<PAGE> 18

DILUTION

The pro forma net tangible book value of the Company's Common Stock at June
30, 1996, after giving effect to the conversion of 558,399 shares of Series A
Preferred Stock, was approximately $2.3 million, or $0.44 per share of Common
Stock. Net tangible book value per share is equal to the total tangible assets
of the Company less total liabilities divided by the number of shares of Common
Stock outstanding. After giving effect to the sale of 2,000,000 shares of Common
Stock offered hereby (after deducting underwriting discounts and commissions and
estimated offering expenses, excluding deferred offering costs of approximately
$0.3 million at June 30, 1996), the adjusted pro forma net tangible book value
of the Company at June 30, 1996 would have been approximately $16.9 million, or
$2.34 per share, representing an immediate increase in net tangible book value
of $1.90 per share to existing stockholders and an immediate dilution in net
tangible book value of $5.66 per share, or 70.8% to investors purchasing shares
at the assumed initial public offering price ("New Investors"). The following
table illustrates the per share dilution to New Investors:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share...................... $8.00
Pro forma net tangible book value per share before this offering..... $0.44
Increase in net tangible book value per share attributable to New
Investors.......................................................... 1.90
-----
As adjusted, net tangible book value per share as of June 30, 1996,
after this offering................................................ 2.34
-----
Dilution in net tangible book value to New Investors................. $5.66
=====
</TABLE>

If the Underwriters' over-allotment option is exercised in full, the net
tangible book value per share of Common Stock after this offering would be $2.54
per share, which would result in dilution to New Investors of $5.46 (or 68.3%)
per share of Common Stock.

The following table summarizes at June 30, 1996, the total consideration
paid and the average price paid per share of Common Stock by existing
stockholders and New Investors (before deducting the underwriting discount and
the other offering expenses payable by the Company):

<TABLE>
<CAPTION>
COMMON STOCK
ACQUIRED TOTAL CONSIDERATION
--------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders....... 5,200,378 72.2% $ 5,991,384 27.2% $1.15
New Investors............... 2,000,000 27.8 16,000,000 72.8 8.00
--------- ------ ----------- ------
Total..................... 7,200,378 100.0% $21,991,384 100.0%
========= ====== =========== ======
</TABLE>

The foregoing table excludes the exercise of all outstanding warrants and
stock options. To the extent that any existing warrants or options granted or to
be granted are exercised in the future below the offering price, there will be
further dilution to New Investors. See "Management -- Employee Benefit Plans."

16
<PAGE> 19

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Set forth below is selected financial data with respect to the statements
of operations of the Company for the period from June 9, 1992 (Inception) to
December 31, 1992, and for the twelve months ended December 31, 1993, 1994 and
1995, and the balance sheets of the Company at December 31, 1992, 1993, 1994 and
1995. Such data was derived from the Company's financial statements audited by
BDO Seidman, LLP, independent certified public accountants, certain of which are
included elsewhere in this Prospectus. Also set forth below is selected
financial data for the six months ended June 30, 1995 and 1996 and at June 30,
1996, which was derived from the unaudited financial statements of the Company
and includes, in the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the financial position
and results of operations of the Company for such periods. The results of
operations for the six months ended June 30, 1995 and 1996 are not necessarily
indicative of results for a full fiscal year. The data should be read in
conjunction with the Financial Statements (including the Notes thereto) and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 9, 1992 SIX MONTHS
(INCEPTION) TO YEAR ENDED DECEMBER 31, ENDED JUNE 30,
DECEMBER 31, ------------------------- ----------------
1992 1993 1994 1995 1995 1996
-------------- ----- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF OPERATIONS DATA:
Total expenses...................... $ 37 $ 311 $ 536 $ 1,081 $ 463 $ 1,085
Other income (charges).............. -- 14 (263) 20 1 68
--------
--
--------- ------ ------ -------- ------
---- ---- ---- ----
Net loss............................ $(37) $(297) $(799) $(1,061) $(462) $(1,017)
========= ========== ========== ============ ========== ==========
SELECTED PER SHARE DATA:
Net loss per share(1)............... $ (0.20) $ (0.18)
============ ==========
Weighted average shares
outstanding...................... 5,328 5,511
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------ AT JUNE 30,
1992 1993 1994 1995 1996
----- ----- ----- ------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Working capital (deficit)........... $ 55 $474 $(58) $1,628 $2,132
Total assets........................ 112 795 265 2,041 3,123
Redeemable preferred stock.......... -- -- -- -- 1,904
Stockholders' equity................ 108 744 151 1,867 877
</TABLE>

17
<PAGE> 20

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

The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this
Prospectus. Except for the historical information contained herein, the
following discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
projected in the forward-looking statements discussed herein. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed in this section, as well as in the sections entitled "Risk Factors"
and "Business."

GENERAL

The Company (a development stage company) was founded in June 1992 to
develop and market over-the-counter oral care products that prevent tooth decay
at its earliest stage and are based on proprietary formulations and
technologies. To date, the Company has not commenced any product
commercialization or realized any operating revenues.

The Company expects that it will be able to complete formulation of its
all-family toothpaste and the testing required by the Monograph by the end of
1996. After formulation of the product and assuming successful completion of
such studies, the Company intends to begin in the early part of 1997 to test
market Enamelon toothpaste in several representative markets comprising
approximately 5% of all United States households. Test marketing and additional
clinical human studies to substantiate expected marketing claims including
comparative advertising claims are expected to continue throughout 1997, with a
national roll-out of Enamelon toothpaste in the first half of 1998. The Company
expects to continue to incur operating losses throughout this period and may
require additional financing to continue its operations thereafter.

RESULTS OF OPERATIONS

Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995

Total expenses were approximately $1,085,000 for the six months ended June
30, 1996, compared with total expenses of $463,000 for the same period in the
prior year, an increase of $622,000, or 134.3%. This increase was primarily the
result of higher payroll and benefits expenses of $270,000, higher research and
testing expenses of $251,000, and higher administrative and other expenses of
$101,000. Additionally, the Company anticipates that total expenses will
increase over the next few years as the Company increases its product
development, manufacturing and marketing activities. Such increased business
activities will require additional personnel and payments to third parties.

The increase in the payroll and benefits expenses of 190.1%, from $142,000
to $412,000, primarily resulted from increased annual compensation for the
Company's Chief Executive Officer and its Vice-President of Product
Development/Operations, and the hiring of a new President and Chief Operating
Officer.

The increase in research and testing expenses of 334.7%, from $75,000 to
$326,000, resulted from the expansion of the Company's research and development
program at its laboratory facility and the initiation of clinical testing at
various independent oral care research facilities in the United States. During
the six months ended June 30, 1996, four in vitro studies, comparing
approximately 50 potential formulations, were performed at Indiana University to
aid the Company in its efforts to define and optimize the levels of ingredients
for its toothpaste. Also during this period in 1996, an animal study was
performed at the University of Connecticut that demonstrated the ability of the
Enamelon Technologies to enhance remineralization.

The increase in administrative and other expenses of 41.1% from $246,000 to
$347,000 is primarily attributed to increased consulting and administrative
office expenses.

These increases were offset in part by $68,000 of additional interest and
dividend income earned on the proceeds of stock issued subsequent to June 30,
1995.

18
<PAGE> 21

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Total expenses were approximately $1,081,000 in 1995, compared with total
expenses of $536,000 in 1994, an increase of $545,000, or 101.7%. The increase
was primarily attributable to a $234,000 increase in payroll and benefits
expenses as well as a $128,000 increase in research and testing expenses and a
$183,000 increase in administrative expenses.

The increase in payroll and benefits expenses of 174.6%, from $134,000 to
$368,000, was attributable to increased compensation for the Company's Chief
Executive Officer, Vice-President of Product Development/Operations and
Vice-President of Technology and Clinical Research.

The increase in research and testing expenses of 87.1%, from $147,000 to
$275,000, was the result of the expansion of the Company's research and
development program at its laboratory facility, additional laboratory supplies,
expansion of the in vitro studies and the initiation of in vivo studies at the
University of Connecticut.

During 1995, ten in vitro studies, comparing approximately 120 potential
formulations, were performed at Indiana University. Based on the data and the
results of in-house laboratory studies, the Company successfully transitioned
the science from a concept to a practical technology, which can be incorporated
into toothpaste. Results from animal studies at the University of Connecticut
provided the Company with the initial indication that the technology
successfully enhanced remineralization.

The increase in administrative and other expenses of 71.8%, from $255,000
to $438,000, was primarily attributable to increased legal and accounting fees
incurred in connection with the Company's efforts to secure additional
investment capital and the preparation of interim financial statements.

The net loss in 1994 was increased by approximately $270,000 as a result of
the Company expensing deferred offering costs related to a proposed private
placement transaction that was not consummated. See "Financial Statements."

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

Total expenses were approximately $536,000 in 1994 compared with total
expenses of $310,000 in 1993, an increase of $226,000, or 72.9%. The increase
was attributable to a $35,000 increase in payroll expenses, a $55,000 increase
in research and testing expenses and $135,000 increase administrative expenses.

The increase in payroll and benefits expenses of 35.4%, from $99,000 to
$134,000, was primarily attributable to additional office and clerical salaries.

The increase in research and testing expenses of 59.8%, from $92,000 to
$147,000, corresponds with the expansion of the Company's research and
development program at its laboratory facility and research performed pursuant
to a consultant agreement.

The increase in administrative and other expenses of 112.5%, from $120,000
to $255,000, is primarily attributable to the consulting fees paid to the
Company's current Chief Operating Officer commencing July 1994 though December
1995, legal fees and rent expense related to the Company's laboratory facility
pursuant to a lease commencing January 1, 1994.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception in June 1992, the Company has financed its operations
primarily through private placements of Series A Preferred Stock and Common
Stock totaling approximately $5.5 million, net of expenses. At June 30, 1996,
the Company had cash and cash equivalents of approximately $2.4 million and
working capital of $2.1 million. The Company has no outstanding debt (other than
accounts payable and accrued expenses) or available lines of credit as of June
30, 1996.

19
<PAGE> 22

Since its inception and through June 30, 1996, the Company has incurred
losses aggregating approximately $3.2 million and had available net operating
loss carryforwards as of December 31, 1995 of approximately $2.2 million. The
net operating loss carryforwards will expire if not used by the period from 2007
through 2010 and may be limited by United States federal tax law as a result of
future changes in ownership. The Company expects to continue to incur operating
losses at least through 1998 while it continues its clinical testing and its
initial toothpaste marketing efforts. The Company expects to introduce an
all-family toothpaste to test markets in the early part of 1997. Assuming the
successful completion of test marketing, the Company intends to begin a national
roll-out of this product in the first half of 1998.

Since its inception and through June 30, 1996, the Company has paid
$179,000 for the purchase of equipment and approximately $193,000 for costs
associated with obtaining patents, trademarks and license rights. The Company
intends to use approximately $2.0 million of the net proceeds of this offering
to purchase additional manufacturing equipment for the production of the
Company's patent pending, split system toothpaste tube and for high-speed tube
filling equipment.

The Company's cash requirements may vary materially from those now planned
depending on numerous factors, including the status of the Company's marketing
efforts, the Company's business development activities, the availability of
alternative financing for the acquisition of manufacturing equipment, the
results of clinical trials, the regulatory process and competition. The Company
currently estimates that the net proceeds of this offering, together with its
projected cash flow from operations, if any, will be sufficient to finance its
working capital and other requirements for a period of approximately 18 months
from the date of this Prospectus which includes the test marketing period.
Thereafter, or sooner if conditions necessitate, the Company may need to raise
additional funds through public or private financings. If adequate funds are not
available, then the Company may be required to delay, reduce the scope of, or
eliminate the commercial introduction of its toothpaste product and otherwise
reduce the proposed operations. See "Use of Proceeds."

Recently issued accounting standards may affect the Company's Financial
Statements in the future. See "Financial Statements."

20
<PAGE> 23

BUSINESS

OVERVIEW

The Company is focused on developing and marketing over-the-counter oral
care products based on proprietary formulations and technologies. The Company's
products are intended to stop cavities before they begin. Its prototype
formulations have been proven scientifically in animal and in vitro studies to
strengthen tooth enamel. Enamelon toothpaste will be based on the active
ingredient, sodium fluoride, in a formulation that enhances tooth
"remineralization," whereby minerals, such as calcium and phosphate, are
reintroduced into tooth enamel.

The significant events in the Company's progress to date include the
following:

- In 1992, the Company was organized and received from the ADAHF
exclusive worldwide licenses to use the ADAHF Patented Technology in
toothpaste, chewing gum, food and confectionery products, and a
non-exclusive international license to use the ADAHF Patented
Technology in products not covered by the exclusive licenses
(including oral spray, mouth rinse and professional gel products). The
Company's non-exclusive international license is co-extensive with a
non-exclusive international license granted to SmithKline.

- In January 1995, the Company conducted successful in vitro testing of
a prototype formulation utilizing the Enamelon Technologies at the
Oral Health Research Institute of the Indiana University School of
Dentistry.

- In October 1995 and January 1996, the Company conducted successful
animal studies of a prototype formulation utilizing the Enamelon
Technologies at the University of Connecticut Health Center, School of
Dental Medicine.

- In June 1996, the Company commenced preliminary human clinical studies
of its toothpaste intended to confirm efficacy in humans and begin to
establish additional advertising claims, including comparative claims.

The Company expects that it will be able to complete formulation of its
all-family toothpaste and studies required by the Monograph by the end of 1996.
After formulation of the product and assuming successful completion of such
studies, the Company intends to begin in the early part of 1997 to test market
Enamelon toothpaste in several representative markets comprising approximately
5% of all United States households. The Company currently is conducting human
clinical studies intended to confirm efficacy in humans and begin to establish
additional advertising claims, including comparative claims. Such marketing and
studies are expected to continue throughout 1997, with a national roll-out of
Enamelon toothpaste in the first half of 1998. The Company expects to continue
to incur operating losses throughout this period and expects to require
additional financing to continue its operations thereafter.

TECHNOLOGY

On a daily basis, teeth lose small amounts of calcium and phosphate, the
major structural ingredients of tooth enamel. This "demineralization" process is
caused by plaque acids produced from the bacterial breakdown of sugars from food
residues. These acids dissolve the tooth enamel, producing lesions. As this
process continues, the mineral structure gradually is destroyed, eventually
forming a dental cavity which can only be repaired by a dentist.

21
<PAGE> 24

In the 1950's, scientists at Indiana University discovered that the
inclusion of fluoride in toothpaste reduces the incidence of tooth decay. When
teeth are brushed with a fluoride-containing toothpaste, the fluoride diffuses
into the tooth along with minerals existing in saliva, including calcium and
phosphate. With currently available fluoride toothpastes, this process is
limited by the low levels of calcium and phosphate ions found in saliva as well
as by the small amounts of fluoride absorbed into the tooth as a result of
brushing. This slow remineralization process can be overcome by demineralization
cycles resulting in the gradual destruction of the mineral structure of teeth.

In contrast, the Company's studies have demonstrated that Enamelon
toothpaste will simultaneously supply the active ingredient, sodium fluoride,
and high concentrations of ions of the inactive ingredients calcium and
phosphate in soluble form during brushing. The Company's in vitro studies have
demonstrated that prototype formulations of Enamelon toothpaste enhance
remineralization with a higher level of fluoride uptake, and the tooth structure
was shown to be strengthened and hardened to a significantly greater degree than
prevailing industry standards. This makes the tooth less soluble and more
resistant to attacks by acids from decay-causing bacteria. Additionally, animal
studies conducted by the Company have shown that enhanced remineralization
reduced the incidence of lesions to a significantly greater degree than
prevailing industry standards. The Company currently is conducting human
clinical studies intended to confirm efficacy in humans and begin to establish
additional advertising claims, including comparative claims. See
"Business -- Research and Development."

STRATEGY

The Company's objective is to develop a variety of oral care, chewing gum,
food and confectionery products that prevent tooth decay at its earliest stage
and are based on the Enamelon Technologies. The Company has developed a
strategic plan to accomplish this goal. The Company's primary strategies are to:

- Focus Initially on Toothpaste. The Company is focusing on completing
the development of its toothpaste products and packaging, along with
the necessary manufacturing processes required to achieve desired
production speeds while controlling manufacturing costs. The Company
will seek to establish distinctive brand identity emphasizing the
enhanced remineralization benefits of its products, which will be
communicated to both consumers and dental professionals.

- Conduct Further Testing. The Company believes that a heightened
understanding of the chemistry required for effective remineralization
of tooth enamel will lead to stronger protection from competition.
Further clinical testing is being conducted to establish efficacy and
marketing claims.

- Collaborate with Corporate Partners in Certain Product Areas and
International Markets. The Company intends to seek domestic and
international strategic alliances with consumer product companies that
will assist in the marketing and manufacturing of oral care products
outside of the United States.

- Capitalize on Additional Commercial Applications. The Company
believes that products such as gum, lozenges and mints may provide
benefits similar to those of its toothpaste and represent large
potential markets for the application of the Enamelon Technologies.

PRODUCTS

The Company plans to introduce toothpaste as its initial product line. The
Company also is exploring application of the Enamelon Technologies to oral
spray, mouth rinse, professional gel, chewing gum and food and confectionery
products, which it intends to develop after the successful commercialization of
its toothpaste. See "Risk Factors -- Dependence on Successful Development of
Initial Products," "-- Uncertainties Related to Development of Additional
Products" and "Business -- ADAHF Patents and Licenses."

Toothpastes

The Company's introductory product will be an all-family toothpaste
intended to enhance remineralization of tooth enamel and stop cavities before
they begin by providing a source of fluoride in a formulation of soluble calcium
and phosphate. Full scale product development activities for the Company's
all-family toothpaste are expected to be completed by the end of 1996. The
Company plans to introduce its toothpaste

22
<PAGE> 25

into test markets consisting of approximately 5% of United States households in
the early part of 1997. Assuming the successful completion of test marketing,
the Company intends to begin a national roll-out of this product in the first
half of 1998.

The Company is planning to follow-up this introduction with a toothpaste
for sensitive teeth containing as active ingredients sodium fluoride and
potassium nitrate, the FDA-approved desensitizing agent. This toothpaste will
enhance remineralization of exposed dentin caused by receding gums and provide
cavity protection and pain relieving properties. Other entries such as tartar
control and gum care toothpastes also are anticipated as future product line
extensions. See "Risk Factors -- Uncertainties Related to Development of
Additional Products."

In order to dispense its toothpaste products, the Company also has
developed a patent pending, split system toothpaste tube that simultaneously
dispenses two formulations. The split system tube has dual chambers, maintaining
separation between two-component formulations until they are dispensed onto a
toothbrush. Unlike presently used split system toothpaste dispensing systems,
which employ expensive pumps, the Company's tube was designed to be filled with
conventional high-speed tube filling equipment, thus making the cost lower than
other dual chamber toothpaste dispensing systems. See "Business --
Manufacturing."

Additional Potential Products

Chewing Gum. Chewing gum stimulates saliva which helps neutralize some of
the acids remaining in the mouth after eating. The Company believes that
providing greater levels of calcium and phosphate in chewing gum can have the
two-fold benefit of reducing demineralization through the increased stimulation
of saliva while increasing remineralization through the utilization of the
Enamelon Technologies. Accordingly, the Company believes that its proposed
chewing gum will be a beneficial supplement to brushing. Currently, the Company
does not have plans to develop and market independently a chewing gum.
Therefore, it may seek to sublicense or enter into joint ventures or strategic
partnerships with major chewing gum manufacturers or other entities that have
appropriate sales and marketing expertise to develop and market these products.

Oral Spray, Mouth Rinse and Professional Gels. The Company is pursuing the
development of other oral care products including oral sprays, mouthwash and
professional dental gels to be marketed outside of the United States.

Food and Confectionery. The Company believes that the addition of the
Enamelon Technologies to food and confectionery products, such as lozenges or
mints, can provide therapeutic effects similar to the Company's other proposed
products. The Company has not yet begun to evaluate the possible uses of the
Enamelon Technologies in these areas and intends to explore such applications
following the commercialization of its toothpastes.

To date, the Company has concentrated development efforts on its proposed
toothpaste products. Expansion of the Company's product development activities
with respect to other potential applications of the Enamelon Technologies will
require significant efforts. See "Risk Factors -- Uncertainties Related to
Development of Additional Products."

RESEARCH AND DEVELOPMENT

The Company initially conducted in vitro studies under a contract with the
Oral Health Research Institute of the Indiana University School of Dentistry
(the "Indiana Institute") under the direction of Bruce R. Schemehorn, M.S., the
Indiana Institute's Director of Contract Research. Mr. Schemehorn is also a
member of the International Association for Dental Research, the American
Association for Dental Research (the "AADR"), the Indiana Section of the AADR,
of which he has served as president, and several committees of the American
Dental Association. The Indiana Institute conducted approximately 30 separate
studies involving about 300 different test toothpaste and mouthwash formulations
to assess the Enamelon Technologies' potential to enhance remineralization.
Incipient lesions were initially formed in human and bovine tooth enamel chips
using solutions that replicated conditions in the human mouth after eating
sugary

23
<PAGE> 26

foods. The chips were then cycled through treatments consisting of salivary
soaking and demineralization challenges that mimicked typical conditions in the
mouth during brushing, resting between meals, and acid production due to eating
sugary foods. Enamel surface hardness at the point of the lesions, fluoride
uptake of the tooth and changes in enamel density were measured before and after
treatment. Increases in surface hardness, fluoride uptake and enamel density are
generally recognized measures of a formulation's ability to remineralize and
strengthen teeth.

The results of these in vitro studies generally demonstrated that the
prototype toothpaste formulations using the Enamelon Technologies resulted in
increased hardness and fluoride uptake over that obtained by the prevailing
industry standard. The test of a prototype formulation that resembles the
expected final formulation demonstrated that the prototype formulation resulted
in fluoride uptake of 5,984 parts per million ("PPM") as distinguished from a
fluoride uptake of 3,971 PPM for the prevailing industry standard, or an
increase of approximately 50%. That test also indicated that the prototype
formulation increased hardness by approximately 11.5 Vickers Hardness Units
("VHUs") as distinguished from 2.7 VHUs for the prevailing industry standard, or
an increase of approximately 400%. These results are statistically significant.
In addition to demonstrating enhancement of remineralization, these studies were
utilized to assist the Company in optimizing the efficacy of its product
formulations.

Subsequently, the Company conducted animal studies under a contract with
the University of Connecticut Health Center, School of Dental Medicine under the
direction of Dr. Jason Michael Tanzer, head of the University's Division of Oral
Medicine and a member of the Company's Scientific Advisory Board. The University
of Connecticut Health Center conducted two animal studies comparing the ability
of prototype formulations using the Enamelon Technologies to repair carious
white spot lesions in the teeth of rats. The tooth lesions were produced by
provision of sugar in the animals' drinking water. After removing the sugar from
the drinking water, the number of lesions in one group of rats was determined.
Separate groups of animals were then treated once daily with the prototype
formulation, the positive control with fluoride or the non-fluoride placebo
formulation.

The results of these animal studies generally demonstrated that
interproximal lesions were reduced compared with lesions existing prior to a
two-week daily treatment with prototype formulations. Results of one such study
demonstrated that one prototype formulation using the Enamelon Technologies
reduced the number of interproximal lesions by approximately 80% as compared to
the number of interproximal lesions prior to treatment. Neither the positive
control with fluoride nor the non-fluoride placebo had any significant effect in
reducing interproximal lesions.

While the formulations used in the foregoing tests differ from the final
formulation that is expected to be marketed, similar ingredients will be used in
the final formulation, and the Company believes that the results of similar in
vitro and animal tests with the final formulation would not differ significantly
from those described above. Notwithstanding, the results of the Company's in
vitro and animal tests are not necessarily indicative of the results that will
be obtained in human clinical studies. The human studies will be conducted under
substantially different conditions from those of the laboratory tests, and there
can be no assurance that the human studies will confirm efficacy in humans or
that they will support additional advertising claims, including comparative
claims. See "Risk Factors -- Dependence on Successful Development of Initial
Product" and "-- Substantiation of Additional Advertising Claims."

The Company currently is conducting the studies required by the Monograph
in order to sell its initial toothpaste product to the public, which are
expected to be completed by the end of 1996. The Company also has begun to
conduct small scale human clinical studies at leading independent oral care
research facilities in the United States, which are intended to confirm efficacy
in humans and begin to establish additional advertising claims, including
comparative claims. See "Risk Factors -- Completion of Toothpaste Development"
and "-- Substantiation of Additional Advertising Claims."

The current focus of the Company's toothpaste development program is on
optimizing the dispensing characteristics and product aesthetics of an
all-family toothpaste, which include flavor, texture and overall mouth feel.
This will be followed by routine confirmatory stability and safety testing. The
formulations of the Company's proposed products constantly change as dictated by
consumer testing and research and development. See "Risk Factors -- Evolving
Product Formulations."

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<PAGE> 27

Since January 1994, the Company has centralized its internal research and
development activities at its research laboratory. The laboratory is responsible
for all technology, formulation, flavor, packaging and process development,
efficacy and stability testing, and quality control.

To date, the Company has expended approximately $840,000 on its research
and development activities, including $92,000 for the year ended December 31,
1993, $147,000 for the year ended December 31, 1994, $275,000 for the year ended
December 31, 1995 and $326,000 for the six months ended June 30, 1996. The
Company expects the level of its research and development expense to increase in
the future. The Company has allocated approximately $4.0 million of the net
proceeds for research and development activities. See "Use of Proceeds."

MANUFACTURING

The Company does not intend to manufacture its toothpaste products for the
United States market at the outset, but will instead utilize contract
manufacturers. For the balance of the worldwide toothpaste markets, as well as
for the Company's other proposed products, the Company may seek to sublicense or
enter into joint ventures or strategic partnerships with major consumer product
companies or other third parties on either an exclusive or non-exclusive basis.
Manufacturing arrangements in these markets are likely to be reflected in any
agreements establishing such relationships and may place primary manufacturing
responsibilities on others.

The Company possesses laboratory size batching and tube filling
capabilities, enabling it to produce small quantities of its proposed products
at Enamelon's laboratory facility. In connection with the commencement of a
pilot manufacturing program, the Company is negotiating with an FDA-approved
manufacturer with facilities capable of providing proper batching and high-speed
filling and packaging, according to the Company's specifications. The Company
expects that it will purchase all packaging and raw materials and that the
manufacturer will be responsible for quality control. The Company intends to
enter into a written manufacturing contract prior to commencement of pilot
manufacturing which will cover manufacturing costs according to an agreed upon
price schedule. The Company intends to use a portion of the net proceeds of this
offering to purchase manufacturing equipment for the production of its patent
pending, split system toothpaste tube and for high-speed tube filling. Such
equipment will be owned by the Company for use by the contract manufacturer. The
Company believes that this will provide greater long-term flexibility,
permitting it to change manufacturers or even to commence its own manufacturing
operations. As demand for the Company's products increases, it will be necessary
to utilize other contract manufacturers. See "Business -- Government
Regulation," "Use of Proceeds," and "Risk Factors -- Dependence on Others to
Manufacture" and "-- Compliance with Other Government Regulation."

MARKETING

The Company will focus its initial marketing activities on entering the
toothpaste market. The toothpaste market is highly competitive and constantly
changing as consumers continue to be receptive to product improvements, taste
enhancements and innovative packaging changes. The Company believes that cavity
prevention remains one of the most important product attributes to attract
consumers, and it intends to emphasize these qualities of its proposed
toothpaste product.

The Company anticipates that its evaluation and screening of consumer
acceptance of the final formula and packaging design for its all-family
toothpaste will be complete by the end of 1996. The Company currently estimates
that an additional three months will be needed to scale-up for manufacturing.
Introduction of a toothpaste product into several representative test markets,
consisting of approximately 5% of United States households, is expected to
commence in the early part of 1997. This test market introduction will allow the
Company to assess carefully all elements of the marketing mix and make desired
changes prior to launching its toothpaste nationally. Upon successful completion
of test marketing, the Company intends to initiate introduction of its
all-family toothpaste nationally in the first half of 1998. See "Risk
Factors -- Dependence on Successful Development of Initial Product" and
"-- Uncertainty of Consumer Acceptance of Enamelon Products."

The Company recognizes that the highly competitive nature of the toothpaste
market will require significant expenditures during the introductory phase of
marketing. However, the Company believes, based

25
<PAGE> 28

on management's experience in the over-the-counter consumer products industry,
that the efficacy claims of its proposed toothpastes may permit development of
unique product advertising, thus enabling it to gain market share. Achieving and
maintaining market penetration will require significant efforts by the Company
to create awareness of and demand for the Company's proposed products.

The Company's ability to build its customer base will be dependent on its
developing a successful marketing program. To the extent the Company sublicenses
or enters into joint ventures or strategic partnerships with a well-established
company in international markets, its domestic marketing capabilities may
thereby be complemented and enhanced. See "Risk Factors -- Limited Marketing
Capability."

Professional Marketing

The Company presently anticipates establishing relationships with dental
professionals to create awareness and endorsements for its technology and
products. The Company's professional marketing activities are expected to
include placing advertisements and technical articles in professional journals
as well as attending professional conventions and distributing samples.

Consumer and Trade Marketing

The Company plans to build retail distribution and obtain retail shelf
space in food, drug and mass merchandisers through recruiting and supervising
experienced food and drug brokers who have strong regional ties with major
retailers. These efforts will be supported by competitive trade allowances,
television advertising and introductory trial promotions including sampling and
couponing.

Foreign Marketing

The Company will initially focus its marketing activities in the United
States. Accordingly, the Company has only preliminarily formulated plans for its
foreign marketing activities. However, the Company's role in marketing its
products in foreign countries will depend on the type of strategic relationships
it can develop with third parties.

COMPETITION

The United States toothpaste industry is dominated by Procter & Gamble
Co.'s Crest, Colgate-Palmolive Company's Colgate, SmithKline's Aquafresh,
Chesebrough-Pond's USA Co.'s Mentadent, Church & Dwight Co., Inc.'s Arm & Hammer
Dental Care and Block Drug Co., Inc.'s Sensodyne. The industry is led by Procter
& Gamble Co. and its leading brand, Crest, which established its position as a
market leader when it received the seal of the American Dental Association's
Council on Dental Therapeutics for its use of fluoride in the early 1960's.

Although the toothpaste market is mature, in recent years new products have
captured market share from established brands. Market share gains have been
achieved by higher priced, more therapeutically oriented new products with
unique marketing positions. Consequently, the Company believes that its proposed
toothpaste will capture consumer and professional interest because of its
ability to enhance remineralization of tooth enamel. See "Risk
Factors -- Dependence on Successful Development of Initial Products" and
"-- Competition."

If the Company attempts to develop a chewing gum using the Enamelon
Technologies, then it will be entering a highly competitive industry. The
chewing gum market in the United States is dominated by major competitors
including Wm. Wrigley Jr. Co., Warner-Lambert Company and RJR Nabisco, Inc. The
Company also intends to compete in the food and confectionery industries. To the
extent that the Company will sublicense or enter into joint ventures or
strategic partnerships with major consumer products companies, of which no
assurance can be given, it may be aligning itself with one or more of its major
competitors instead of competing with them.

Additionally, the Company is pursuing the development of its rights to
manufacture and market oral sprays, mouth rinses and professional gels outside
of the United States, in addition to its proposed toothpaste, chewing gum, food
and confectionery products. The international markets for these products are in
many ways similar to the United States markets in that consumers are becoming
increasingly aware of the importance of oral hygiene. Product innovation with
emphasis on therapeutic benefits is continuous. The Company's

26
<PAGE> 29

competition in markets outside the United States will vary by product and from
country to country. However, in general, such markets tend to be highly
competitive and dominated by large multinational and domestic corporations. The
Company presently does not have the resources that are necessary to compete on a
global scale and intends to seek corporate partners and/or negotiate license
agreements with companies that have the resources to compete effectively in
foreign markets. Although the Company will attempt to form strategic alliances
with global companies, it may also seek to negotiate on a country-by-country
basis with major regional companies, as necessary or appropriate.

ADAHF PATENTS AND LICENSES

The ADAHF Patent Rights licensed to the Company relate to four issued
patents and one United States pending patent application. Three of the issued
patents cover formulations, including toothpastes, chewing gums, mouth rinses
and professional gels, containing or capable of producing Amorphous Calcium
Phosphate, Amorphous Calcium Carbonate Phosphate and Amorphous Calcium Phosphate
Fluoride, as well as the application of these formulations to teeth. The fourth
patent and the United States pending patent application cover advanced
technology, including Amorphous Calcium Phosphate Carbonate Fluoride, Amorphous
Calcium Fluoride compounds and other technology not covered in the first three
United States patents. Foreign patent applications are pending with respect to
one of the United States pending applications in approximately 28 countries. The
ADAHF patents may claim the effectiveness of ingredients that do not fall under
the Monograph. The Company's products currently under development do not rely on
those ingredients as active ingredients, but rely only on sodium fluoride as the
sole active ingredient. See "Risk Factors -- Compliance with the Monograph" and
" -- Compliance with Other Government Regulation."

In June 1992, the Company entered into a License Agreement (the "License
Agreement") with the ADAHF. This License Agreement, as restated and amended,
grants the Company the exclusive United States license to manufacture and sell
toothpastes, chewing gum, food and confectionery products utilizing the ADAHF
Patented Technology. The License Agreement extends until three years after the
Company determines and thereafter notifies the ADAHF that the following two
conditions have been met: (i) the material claimed in the ADAHF patents and
patent application has been stabilized in the form to be used in toothpastes,
chewing gums, confections and foods to enable it to be stored and marketed in a
manner similar to other such products and (ii) a licensed product has received
the first FDA approval necessary, if any, for marketing to professionals or the
general public. Although neither of those conditions has been satisfied, they
will have to be satisfied before the Company can market any of its products. The
exclusive license under the License Agreement may be extended by the Company in
additional four-year increments as to each of the product categories or as to
all such product categories, provided that the Company has complied with its
royalty and other obligations under the License Agreement and has, as to each
relevant product category or categories, sold products generating more than
$17,000 in royalties in the last year of the preceding exclusivity period.
Unless the License Agreement is otherwise terminated as provided therein, it
will extend for the term of the last to expire of any patent licensed under the
License Agreement in the United States, including patents of improvements
licensed as described below. If the period of exclusivity under the License
Agreement is not renewed, then the license becomes non-exclusive for the
remaining term of the agreement. The Company paid $5,000 as an initial license
fee under the License Agreement.

The License Agreement may not be assigned, transferred or sublicensed by
the Company without the prior written consent of the ADAHF, which consent may
not be unreasonably withheld. However, the License Agreement may be assigned to
another company in which the Company owns more than 50% of the voting stock
without the prior written consent of the ADAHF.

The License Agreement provides that improvements that are used with or that
require use of toothpastes, chewing gums, foods or confections that embody
material claimed in the ADAHF Patent Rights, as well as any improvements and
inventions that are made jointly by the Company and the ADAHF that do not relate
to remineralization or commercialization of such products or of the subject
matter of the ADAHF Patent Rights, will be owned by the ADAHF and licensed to
the Company. The Company has the right to veto the granting of licenses relating
to such improvements and inventions that are developed in part by the Company.

27
<PAGE> 30

In November 1992, the Company entered into a Foreign License Agreement (the
"Foreign License Agreement"), which was subsequently restated and amended with
the ADAHF and grants the Company an exclusive license to manufacture and sell
toothpastes, chewing gum, food and confections using the inventions that are the
subject matter of foreign patent applications filed by the ADAHF in
approximately 28 countries. In addition, the Foreign License Agreement grants
the Company the non-exclusive right to manufacture and sell other products in
such countries using inventions that are the subject of such foreign patent
applications, including oral sprays, mouth rinses and professional gels. The
Foreign License Agreement expires upon the earlier of the termination of the
License Agreement, except as to those countries for which the royalty paid per
country in the preceding year exceeded $7,000, or the expiration of the last to
expire of any foreign patent licensed under the Foreign License Agreement or the
abandonment or lapse of all foreign patents and applications.

The Company was notified in July 1995 that the ADAHF entered into a license
agreement with SmithKline for exclusive rights in the United States for the
fields of use other than toothpastes, chewing gum, food and confections
(including oral sprays, mouth rinses and professional gels) utilizing the ADAHF
Patented Technology. The Company's non-exclusive rights for these additional
applications outside of the United States are co-extensive with the
non-exclusive rights granted to SmithKline for these products outside of the
United States. Since SmithKline has substantially greater financial and other
resources than those of the Company, the Company may be limited in its ability
to compete effectively with SmithKline outside of the United States, unless the
Company enters into a strategic alliance with another company having financial
and other resources comparable to those of SmithKline. See "Risk
Factors -- Competition."

The License Agreement and Foreign License Agreement are both subject to (i)
licenses granted to the United States, which are not transferable by the
government and (ii) rights retained by the ADAHF to make and use its inventions
for research and testing, but not to sell or use them commercially in fields
licensed exclusively to the Company.

Under the Foreign License Agreement, as restated, the Company was also
granted an option and right of first refusal during the term of the Foreign
License Agreement, for a limited license under future patents and patent
applications for inventions and material covered by and claimed in the ADAHF's
foreign patent rights, for all territories not included within the United States
or licensed territories under the licenses, with respect to toothpastes, chewing
gum, food and confectionery products. Before granting such a license for a
territory to third-parties, the ADAHF must first notify the Company, which will
then have the right to obtain a license for that territory on terms consistent
with the Foreign License Agreement. To the extent the ADAHF has not granted a
license to a third-party notwithstanding the Company's failure to exercise its
right of first refusal, the Company has the additional option to receive a
license in any of such territories on terms consistent with the Foreign License
Agreement.

Under the License Agreement, the Company is required to make royalty
payments of 4% of net sales, subject to minimum royalty payments of $3,000 in
1992, $5,000 in 1993 and $7,000 in each subsequent year. Under the Foreign
License Agreement, the Company is required to pay 7% of net sales (4% if such
sales are made by an entity that joint ventures with the Company) and bear the
costs of prosecution of foreign patent applications. If the Company sublicenses
a foreign patent, it is required to pay to the ADAHF 25% of the gross income
resulting from such sublicense actually received by the Company.

The ADAHF has made no representation or warranty, express or implied, with
respect to the efficacy or possible commercial exploitation of the Company's
proposed products.

GOVERNMENT REGULATION

Under the federal Food, Drug, and Cosmetic Act, as amended, and the
implementing regulations promulgated by the FDA, a non-prescription
(over-the-counter) drug may be marketed in one of two ways. The FDA has
established a program to promulgate "monographs" determining the conditions
under which most non-prescription drugs may be marketed without the requirement
of an NDA. The monographs establish those active ingredients that are safe and
effective at specified levels and all aspects of the labeling that are permitted
for these products. The monographs establish all of the conditions for marketing
a non-prescription drug without the need for an NDA. Any non-prescription drug
that does not comply with the final monograph

28
<PAGE> 31

may lawfully be marketed only if it has an approved NDA. Because it is time
consuming and costly to obtain FDA approval of an NDA, most non-prescription
drugs (except those that have recently been switched from prescription to
non-prescription status) are marketed pursuant to an FDA over-the-counter drug
monograph.

The FDA has published the Monograph for over-the-counter anticaries drug
products, the category of over-the-counter drug products covering the Company's
proposed oral care products. The Monograph establishes conditions under which
non-prescription drug products that aid in the prevention of dental caries or
cavities are generally recognized as being safe and effective and not
misbranded. The Company intends to rely on the advice of FDA counsel to satisfy
formulation and labeling requirements of the Monograph as they apply to the
Company's products. See "Risk Factors -- Compliance with the Monograph."

Although the Company intends to make only such packaging claims as are
permitted by the Monograph in order to avoid the substantial expense and time
required to receive FDA approval under an NDA, it may seek to file an NDA with
the FDA in order to make further claims not covered by the Monograph. If the
Company decides to or is required to make such additional claims, it may seek
strategic partners to assist in the financing of the NDA process. Further, the
Company may not have sufficient financing or other resources available to
complete the NDA process and assuming such financing and resources are
available, there is no assurance that the FDA will approve the NDA.

Each domestic drug product manufacturing facility must be registered with
the FDA. Each manufacturer must inform the FDA of every drug product it has in
commercial distribution and keep such list updated. Domestic manufacturing
facilities are also subject to at least biannual inspection by the FDA for
compliance with GMP regulations promulgated by the FDA. Compliance with GMP
regulations is required at all times during the manufacture and processing of
drug products. Accordingly, to the extent that the Company utilizes contract
manufacturers, such manufacturers must be in compliance with all FDA
requirements.

The Company is also subject to regulation under various federal and state
laws regarding, among other things, occupational safety, environmental
protection, hazardous substance control and product advertising and promotion.
In connection with its research and development activities, the Company is
subject to federal, state and local laws, rules, regulations and policies
governing the use, generation, storage, discharge, handling and disposal of
certain materials and wastes. The Company believes that it has complied with
these laws and regulations in all material respects and it has not been required
to take any action to correct any material noncompliance. The Company does not
currently anticipate that any material capital expenditures will be required in
order to comply with federal, state and local environmental laws or that
compliance with such laws will have a material effect on the financial condition
or competitive position of the Company. The Company may also be subject to
foreign government regulations regarding over-the-counter drug products.
Accordingly, the Company intends to submit applications to foreign regulatory
agencies, if necessary, to make therapeutic health claims for its products to be
marketed abroad. See "Risk Factors -- Compliance with Other Government
Regulation."

TRADEMARKS AND PROPRIETARY INFORMATION

Trademarks

The Company intends to protect the names of certain of its products and
formulations by registration of its trademarks, where appropriate, both in the
United States and in foreign countries.

The Company has filed applications in the United States Patent and
Trademark Office to register the word mark ENAMELON, on the Principal Register,
for toothpaste, chewing gum, certain confection products, and various oral care
products, such as medicated mouth washes and professional dental gels. The
applications covering toothpaste, chewing gum and confection have been allowed,
subject to use of the mark. The application for the oral care products has been
allowed, subject to publication for opposition and use of the mark. The Company
has also applied to register the ENAMELON mark for toothpaste, chewing gum and
certain confection products in eight foreign countries. It is possible that
prior registrations and/or uses of the mark (or a confusingly similar mark) may
exist in one or more countries, in which case the Company might thereby be
precluded from registering and/or using the ENAMELON mark in such countries.
Accordingly, other trademarks are being considered by the Company.

29
<PAGE> 32

The Company has also applied to register its stylized "E" logo in the
United States and Canada, for toothpaste, chewing gum, certain confection
products, and various oral care products. The United States application for the
first three types of goods has been approved, subject to use of the mark. The
United States application for oral care products, and the single Canada
application for all of such goods, have each been approved, subject to
publication for opposition and use of the mark.

The Company has also filed applications, in the United States and Canada,
to register the word mark FLUOREMIN for toothpaste. Each of such applications
has been allowed, subject to use of the mark.

In connection with its trademark protection and registration program, the
Company acquired from a third party its rights in and to the mark ENAMELINE, for
use in connection with chewing gum, including the United States registration for
such mark. The assignment was made on a quitclaim basis without any
representations or warranties as to the validity or subsistence of the rights
and registration so assigned, and the Company may or may not make use of the
mark ENAMELINE.

Proprietary Information

Much of the Company's technology is dependent upon the knowledge,
experience and skills of key scientific and technical personnel. To protect
rights to its proprietary know-how and technology, Company policy requires all
employees and consultants to execute confidentiality agreements that prohibit
the disclosure of confidential information to anyone outside the Company. These
agreements also require disclosure and assignment to the Company of discoveries
and inventions made by such persons while devoted to Company activities. There
can be no assurance that these agreements will not be breached, that the Company
will have adequate remedies for any such breach or that the Company's trade
secrets will not otherwise become known or be independently developed by
competitors. In addition, it is possible others may infringe the patent rights
of the Company. See "Risk Factors -- Protection of Proprietary Technology and
Information."

LIABILITY INSURANCE

The Company's business involves exposure to potential product liability
risks that are inherent in manufacturing and marketing of pharmaceutical
products. Although the Company has not experienced any product liability claims
to date, any such claims could have a material adverse impact on the Company.
See "Risk Factors -- Product Liability." The Company currently has general
liability insurance with coverage limits of $1.0 million per occurrence and $2.0
million on an annual aggregate basis and product liability insurance with
coverage limits of $6.0 million per occurrence and $7.0 million on an aggregate
basis. While the Company's insurance polices provide coverage on a "per
occurrence" basis and are subject to annual renewal, there can be no assurance
that the Company will be able to maintain such insurance on acceptable terms,
that the Company will be able to secure increased coverage or that any insurance
will provide adequate protection against potential liabilities.

PERSONNEL

The Company presently has 11 full-time employees and one part-time
employee.

PROPERTIES

The Company currently subleases office facilities located at 15 Kimball
Avenue, Yonkers, New York from an affiliate. Commencing on January 1, 1996, the
Company obtained a one year lease of an additional 1,300 square feet of space at
its current address. See "Certain Transactions." The Company leases its
laboratory facilities in East Brunswick, New Jersey pursuant to a five year
lease expiring December 31, 1998. The leased premises are approximately 4,000
square feet. The Company believes that its current properties are sufficient for
its administrative and research and development needs for the foreseeable
future. Since the Company presently intends to rely on outside manufacturers to
manufacture its products, it does not have a manufacturing facility. See "Risk
Factors -- Dependence on Others to Manufacture" and "Business -- Manufacturing."

30
<PAGE> 33

MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding the Company's
directors and executive officers.

<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------- --- -------------------------------------------------------------
<S> <C> <C>
Dr. Steven R. Fox............... 42 Chairman of the Board and Chief Executive Officer
D. Brooks Cole.................. 56 President and Chief Operating Officer
Norman Usen..................... 55 Vice President-Operations, Vice President-Product Development
and Secretary
Anthony E. Winston.............. 51 Vice President-Technology and Clinical Research
Edwin Diaz...................... 33 Vice President-Finance, Chief Financial Officer and Treasurer
Dr. S.N. Bhaskar................ 73 Director
Dr. Bert D. Gaster.............. 68 Director
Richard A. Gotterer............. 33 Director
Eric D. Horodas, Esq............ 43 Director
</TABLE>

The business experience, principal occupations and employment, as well as
the periods of service, of each of the directors and executive officers of the
Company during at least the last five years are set forth below.

Steven R. Fox, D.D.S., F.I.C.D., F.A.C.D., is the founder of the Company,
and has been the Chairman of the Board of Directors and Chief Executive Officer
of the Company since June 1992. From June 1992 through December 1995 and from
June 1992 through August 1996, respectively, Dr. Fox was also the Company's
President and Treasurer. Dr. Fox is a member of the faculty of the Harvard
School of Dental Medicine. Since July 1978, Dr. Fox has been a practicing
dentist and currently practices dentistry on a part-time basis. Dr. Fox was an
Assistant Clinical Professor at New York University's College of Dentistry from
1979 to 1987. Dr. Fox has been active in various professional organizations,
including the International Dental Research Society, the American Dental
Association and the Ethics Committee of the Ninth District Dental Society. See
"Management -- Employment and Consulting Agreements."

D. Brooks Cole has been the President and Chief Operating Officer of the
Company since January 1996. Commencing in September 1993, Mr. Cole was retained
by the Company as a consultant. Mr. Cole has over 25 years of experience in the
marketing of over-the-counter drugs, oral care products and cosmetics. Mr. Cole
was employed by the Mentholatum Company, Inc., an over-the-counter drug company,
in various positions from 1980 to 1993, most recently as President of the United
States Division, and a member of the Executive Committee and the Board of
Directors from 1983 to 1993. He was employed at Avon Products, Inc., a cosmetics
company, in various positions from 1971 to 1980, most recently as a Vice
President from 1976 to 1980. Mr. Cole was employed at Vick Chemical Company, a
consumer drug company, and served in several sales, promotion and product
marketing positions from 1961 to 1971. Mr. Cole was a Vice President of the
Non-Prescription Drug Manufacturers Association and served on its Board of
Directors and Executive Committee from 1990 to 1993. See
"Management -- Employment and Consulting Agreements."

Norman Usen had been the Vice President-Research and Development and
Product Development of the Company since July 1993. In May 1995, Mr. Usen became
the Company's Vice President-Product Development, Vice President-Operations and
Secretary. Mr. Usen specializes in consumer product development and has over 30
years of experience in product development, contract manufacturing and consumer
research. He had substantial responsibility for the development of Arm & Hammer
Toothpaste and Toothpowder for Church & Dwight Co., Inc. from 1982 to 1991.
Since 1992, Mr. Usen, as President and sole stockholder of Nu-Products, Inc.
("NP"), has been an independent consultant. From August 1993 through April 1995,
NP was retained by the Company as a consultant on a part-time basis to
coordinate product development. See "Management -- Employment and Consulting
Agreements."

Anthony E. Winston has been the Vice President-Technology and Clinical
Research since January 1995. Mr. Winston has over 25 years of technology
development and clinical research experience most recently as Technical Director
for Church & Dwight Co., Inc. where he was responsible for technology
development, clinical research, ADA and FDA interface, claim substantiation and
patent protection for Arm & Hammer's

31
<PAGE> 34

baking soda toothpastes, including the introduction of Peroxy Care(R). Mr.
Winston was employed at Church & Dwight Co., Inc. from 1970 to 1995. Mr. Winston
is the holder or co-holder of more than 60 United States patents, of which 14
are for toothpaste products, with two additional oral care patents pending. See
"Management -- Employment and Consulting Agreements."

Edwin Diaz has been the Vice President-Finance, Chief Financial Officer and
Treasurer of the Company since August 1996. Prior to joining the Company, Mr.
Diaz was the Corporate Controller of NYCOR, Inc., a manufacturer of devices used
in heating and cooling systems, from 1994 to 1996 and the Controller of Lancer
Industries, Inc., a company specializing in the acquisition of distressed and
under-performing companies, from 1990 until 1994. Mr. Diaz was employed by the
Alfieri Organization, a real estate development company, as Assistant Controller
from 1988 until 1990 and by the accounting firm of Arthur Young & Company from
1986 until 1988. Mr. Diaz is a certified public accountant. See
"Management -- Employment and Consulting Agreements."

S.N. Bhaskar, D.D.S., M.S., Ph.D., Major General U.S. Army (Ret.) has been
a director of the Company since August 1994 and the Chairman of the Scientific
Advisory Board since August 1992. Since 1981, Dr. Bhaskar has been in a private
dental practice in Monterey and Salinas, California. From January 1955 to
December 1980, Dr. Bhaskar was Major General, Dental Corps in the United States
Army, Assistant Surgeon General for Dental Services of the United States Army
and Chief of the United States Army Dental Corps. He is an Honorary Fellow of
the Academy of General Dentistry, a Diplomat to the American Board of Oral
Medicine and the American Board of Oral Pathology, and a member of the Dental
Research Advisory Committee to the United States Army. Dr. Bhaskar is a former
Vice Chairman of Atrix Laboratories, Inc. and a consultant to the Board of
Directors at Vipont, Inc., a publicly-traded company engaged in the development
and marketing of oral care products.

Bert D. Gaster, D.D.S., M.S.D. has been a director of the Company since
November 1992 and is a tenured Associate Professor at New York University's
College of Dentistry. Dr. Gaster has held various faculty positions with New
York University's College of Dentistry since 1972, including that of Clinic
(Module) Director for nine years. Dr. Gaster is a member of the American College
of Prosthodontics, has served on the Budget Policy Development Committee and
currently is a Director of the New York University Dental Alumni Association.
Dr. Gaster is currently an attending Prosthodontist with four hospitals in the
New York metropolitan area.

Richard A. Gotterer has been a director of the Company since November 1992
and has been a portfolio manager of fixed income securities at Schroder Wertheim
Investment Services, a division of Schroder Wertheim & Co., an investment
banking firm, since September 1993. Mr. Gotterer was a private investor from
June 1990 through August 1993. Mr. Gotterer was the Vice President of Finance
and Chief Financial Officer of Channel American LPTV Holdings, Inc., an
entertainment company, from February 1988 to May 1990.

Eric D. Horodas, Esq. has been a director of the Company since November
1992. Mr. Horodas is President of Markev Realty Corporation, and is Vice
President and Secretary of Baco Realty Corporation, both of which are actively
engaged in originating, managing and servicing commercial real estate and
mortgage investments. He has also been acting as a consultant to various
insurance regulators and insurance industry members in connection with the
restructuring and rehabilitation of financially troubled insurance companies
since October 1993. Mr. Horodas was a founding partner and member of the
Management Committee of the law firm of Rubinstein & Perry, from February 1988
until October 1993.

All directors hold office until the next annual meeting of stockholders or
until their successors are elected and qualify. Officers are elected annually
by, and serve at the discretion of, the Board of Directors.

SCIENTIFIC ADVISORY BOARD

The Company has established a five-member Scientific Advisory Board (the
"SAB"). Each member is a distinguished chemist or dental researcher chosen for
his continuing commitment to chemistry and dental science. The SAB provides
expertise and advice to the Company in several areas including guidance for the
ethical and scientific conduct of the scientific testing of the Company's
proposed products. The SAB also

32
<PAGE> 35

works in cooperation with the Company and the scientists at the American Dental
Association's Paffenbarger Research Center at the United States Government's
National Institute of Standards and Technology, where the ADAHF Patented
Technology was developed.

Consulting compensation at annual rates ranging from $5,000 to $15,000 are
paid to certain members of the SAB. In addition, the Company intends to grant,
from time to time, stock options to members of the SAB. See
"Management -- Employee Benefit Plans" for a description of options already
granted to certain SAB members. SAB members are elected annually by, and serve
at the discretion of, the Board of Directors. Currently, the members of the SAB
are as follows:

S.N. Bhaskar, D.D.S., M.S., Ph.D., Major General United States Army (Ret.)
serves as the Chairman of the SAB and is also a member of the Company's Board of
Directors. See "Management -- Directors and Executive Officers."

Robert Bruce Merrifield, Ph.D. is the recipient of the 1984 Nobel Prize in
Chemistry as well as numerous other scientific honors, and has been the John D.
Rockefeller, Jr. Professor at The Rockefeller University since 1966. He has been
a member of the faculty at The Rockefeller Institute for Medical Research since
1963. Dr. Merrifield is a member of the American Chemical Society, American
Society of Biological Chemists, American Institute of Chemists and the National
Academy of Sciences. Dr. Merrifield has been the Nobel Guest Professor, Uppsala,
Sweden.

Ming S. Tung, Ph.D. is the inventor of the ADAHF Patented Technology
licensed to the Company, and has been the Project Leader on the chemistry of
calcium phosphates, prevention of dental caries, and coatings of the tooth
research projects at the American Dental Association Health Foundation
Paffenbarger Research Center, National Institute of Standards and Technology,
since 1974.

Joseph L. Henry, D.D.S., M.S., Ph.D., F.A.C.D., F.R.S.H., F.I.C.D. has held
faculty positions at the Harvard School of Dental Medicine, including Interim
Dean for the Dental School and Associate Dean for Government and Community
Affairs, since 1975. In December 1994, Dr. Henry retired as Associate Dean at
the Harvard School of Dental Medicine, and Professor and Chairman of the
Department of Oral Diagnosis and Oral Radiology at the Harvard School of Dental
Medicine. Dr. Henry held various faculty positions at Howard University College
of Dentistry from 1953 to 1975, and served as Dean for nine years.

Jason Michael Tanzer, D.M.D., Ph.D., F.A.C.D. has been a Professor and head
of the Division of Oral Medicine, Department of Oral Diagnosis, at the
University of Connecticut School of Dental Medicine since 1977, and a Professor,
Department of Laboratory Medicine, University of Connecticut School of Medicine
since 1979. Dr. Tanzer was the recipient of the Basic Research in Oral Science
Award in April 1973 and the Dental Caries Research Award in March 1985, both
from the International Association for Dental Research.

COMMITTEES OF THE BOARD OF DIRECTORS

The Audit Committee, established in July 1993, currently consists of Dr.
Bhaskar and Mr. Gotterer (Chairman). The functions of the Audit Committee are to
recommend annually to the Board of Directors the appointment of the independent
public accountants of the Company, review the scope of their annual audit and
other services they are asked to perform, review the report on the Company's
financial statements following the audit, review the accounting and financial
policies of the Company and review management's procedures and policies with
respect to the Company's internal accounting controls.

The Compensation Committee, also established in July 1993, currently
consists of Dr. Gaster and Mr. Horodas (Chairman). The functions of the
Compensation Committee are to review and approve salaries, benefits and bonuses
for all executive officers of the Company, and to review and recommend to the
Board of Directors matters relating to employee compensation and employee
benefit plans. The Compensation Committee also administers the Plan. See
"Management -- Employee Benefit Plans."

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<PAGE> 36

EXECUTIVE COMPENSATION

The table below summarizes the compensation received by the Company's Chief
Executive Officer and Vice President -- Technology and Clinical Research ("named
executive officers") for services rendered during the fiscal years ended
December 31, 1995, 1994 and 1993. No other executive officer of the Company
received compensation in excess of $100,000 during such years.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
NAME AND ---------------------- UNDERLYING
PRINCIPAL POSITION(1) YEAR SALARY ($) BONUS ($) OPTION (#)
- ------------------------------------------------------- ---- ---------- --------- ------------
<S> <C> <C> <C> <C>
Steven R. Fox.......................................... 1995 $ 75,000 $10,000 450,000
Chairman of the 1994 75,000 -- --
Board, President 1993 75,000 -- --
and Chief Executive Officer(2)
Anthony E. Winston..................................... 1995 $ 129,875 -- 160,000
Vice President -- 1994 -- -- --
Technology and 1993 -- -- --
Clinical Research(3)
</TABLE>

- ---------------
(1) See "Management -- Employment and Consulting Agreements" for a description
of Dr. Fox's employment agreement with the Company as Chairman of the Board
and Chief Executive Officer which commenced on January 1, 1994; Anthony E.
Winston's employment agreement with the Company as the Company's Vice
President-Technology and Clinical Research which commenced on January 1,
1995; D. Brooks Cole's employment agreement with the Company whereby Mr.
Cole became the Company's President and Chief Operating Officer as of
January 1, 1996; Norman Usen's employment agreement with the Company as the
Company's Vice President -- Research and Development and Vice
President -- Operations; and Edwin Diaz's employment agreement with the
Company as the Company's Vice President -- Finance, Chief Financial Officer
and Treasurer.

(2) Dr. Fox resigned as the Company's President effective on January 1, 1996.

(3) Mr. Winston became the Company's Vice President -- Technology and Clinical
Research as of January 24, 1995.

The following table sets forth the individual grants of stock options made
during the fiscal year ended December 31, 1995 to each of the named executive
officers.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE
PERCENT VALUE
NUMBER OF OF TOTAL AT ASSUMED RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED EXERCISE FOR OPTION TERM(1)
OPTIONS TO EMPLOYEES OR BASE EXPIRATION -------------------------
NAME GRANTED(#) IN FISCAL YEAR PRICE ($/SH) DATE 5%($) 10%($)
- ------------------------- --------- -------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven R. Fox............ 450,000 48.0% $ 3.00 05/31/00 $2,956,365 $3,761,040
Anthony E. Winston....... 150,000 16.0 1.33 12/31/04 1,595,608 2,437,114
10,000 1.1 4.00 06/14/05 82,383 143,634
</TABLE>

- ---------------
(1) The potential realizable value through the expiration date of the options
has been determined on the basis of the anticipated initial public offering
price, compounded annually over the remaining term of the respective option,
net of exercise price. These values have been determined based upon assumed
rates of appreciation and are not intended to forecast the possible future
appreciation, if any, of the price or value of the Company's Common Stock.

34
<PAGE> 37

The following table sets forth the number of exercisable or vested and
unexercisable or unvested options during the fiscal year ended December 31, 1995
held by each of the named executive officers and the year-end value of such
unexercised options.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- -------------------- ---------------------
<S> <C> <C>
Steven R. Fox............................................ 450,000/0 $ 2,250,000/0
Anthony E. Winston....................................... 160,000/0 1,040,500/0
</TABLE>

COMPENSATION OF DIRECTORS

Members of the Board of Directors presently receive no remuneration for
acting in that capacity. The Company anticipates that upon completion of this
offering, each non-employee director will receive $500 for attendance at each
meeting plus reimbursement for expenses for each meeting attended. See
"Management -- Employee Benefit Plans" and "-- Employment and Consulting
Agreements" for a description of options granted to members of the Board of
Directors. It is anticipated that each member of the Audit Committee and the
Compensation Committee will receive $250 for each meeting attended together with
reimbursement of expenses.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Dr. Bert D. Gaster and Mr. Eric D. Horodas served as members of the
Company's compensation committee during the last completed fiscal year. There
are no compensation committee (or board of directors) interlock relationships
with respect to the Company.

EMPLOYMENT AND CONSULTING AGREEMENTS

The Company has entered into an employment agreement with Dr. Steven R.
Fox, pursuant to which Dr. Fox is employed as Chairman of the Board of Directors
and Chief Executive Officer for a term of five years commencing on January 1,
1994. The agreement, as amended, provides that Dr. Fox shall devote such time to
the Company as necessary to perform his responsibilities thereunder, but no less
then forty hours per week, in consideration of an annual salary of $75,000,
which increased to $175,000 per year in January 1996. The employment agreement
acknowledges that Dr. Fox shall be entitled to maintain his dental practice and
see patients on a basis that does not interfere with the performance of his
duties thereunder. Dr. Fox continues to practice dentistry on a part-time basis.
Pursuant to the agreement, if Dr. Fox opposes a change of control of the
Company, as defined in the agreement, and thereafter elects to terminate his
employment with the Company, he is entitled to a one time payment of either (i)
two and nine-tenths (2.9) times the sum of Dr. Fox's current base annual salary
plus any amounts due to him under the Company's Incentive Compensation Plan if a
majority of the Company's Board of Directors opposed the change of control or
(ii) two and one-half (2.5) times the sum of Dr. Fox's current base annual
salary plus any amounts due to him under the Company's Incentive Compensation
Plan if a majority of the Company's Board of Directors voted in favor of the
change of control. However, such payment shall not exceed the maximum payment
permitted by Section 280G of the Internal Revenue Code of 1986, as amended.
Pursuant to the Company's Incentive Compensation Plan, Dr. Fox shall be entitled
to 50% of all amounts allocated to such plan. See "Management -- Employee
Benefit Plans."

The Company has entered into an employment agreement with D. Brooks Cole,
pursuant to which Mr. Cole is employed as President and Chief Operating Officer.
The agreement, as amended, provides that

35
<PAGE> 38

Mr. Cole is required to devote all of his business time to the Company in
consideration of an annual salary of $150,000, subject to adjustment. In
addition, Mr. Cole will be entitled to 15% of all amounts allocated to the
Company's Incentive Compensation Plan. Mr. Cole serves at the pleasure of the
Board of Directors; however, if the Company elects to terminate the agreement,
Mr. Cole is entitled to six months severance pay including all salary and
benefits. Pursuant to the employment agreement, Mr. Cole was granted seven-year
options to purchase 99,000 shares of Common Stock at an exercise price equal to
$3.00 per share, immediately exercisable from the date of the grant, and
expiring seven years thereafter. Prior to the commencement of this agreement,
Mr. Cole had been retained by the Company on a consulting basis at a rate of
$3,000 per month, plus, for the period from July 1994 through July 1995, 3,000
Common Stock options per month at an exercise price of $1.33 per share.
Effective November 1, 1995, the consulting fee was increased to $4,000 per
month.

The Company has entered into an employment agreement with Norman Usen,
pursuant to which Mr. Usen is employed full-time as Vice President-Product
Development and Vice President-Operations for a term of three years commencing
on May 1, 1995. The consulting agreement between the Company and NP terminated
upon the commencement of Mr. Usen's employment agreement. Pursuant to the
employment agreement, Mr. Usen will devote his full time to the Company in
consideration of an annual salary of $105,000 the first year of the term,
$115,000 the second year of the term, and $125,000 for the third year of the
term. If Mr. Usen is terminated from the Company without cause, as defined in
the agreement, then he will be entitled to continue to receive his salary and
benefits until the end of the term of the agreement. As additional compensation,
Mr. Usen will be entitled to 12.5% of all amounts allocated to the Company's
Incentive Compensation Plan. Pursuant to the employment agreement, Mr. Usen was
granted seven-year options to purchase an aggregate 90,000 shares of Common
Stock at an exercise price equal to $1.33 per share. The options previously
granted to NP were terminated and reissued to Mr. Usen. See "Certain
Transactions."

The Company has entered into an employment agreement with Anthony E.
Winston, pursuant to which Mr. Winston is employed full-time as Vice
President-Technology and Clinical Research for a term of two years commencing in
January 1995. Pursuant to the employment agreement, Mr. Winston will devote his
full time to the Company in consideration of an annual salary of $135,000. If
Mr. Winston is terminated from the Company without cause, as defined in the
agreement, then he shall be entitled to continue to receive his salary and
benefits until the end of the term of the agreement. As additional compensation,
Mr. Winston shall be entitled to 5% of all amounts allocated to the Company's
Incentive Compensation Plan. Pursuant to the employment agreement, Mr. Winston
was granted ten-year options to purchase an aggregate 150,000 shares of Common
Stock at an exercise price equal to $1.33 per share.

The Company has entered into an employment agreement with Edwin Diaz
pursuant to which Mr. Diaz is employed full-time as Vice President-Finance and
Chief Financial Officer at the discretion of the Company's Board of Directors.
Pursuant to the employment agreement, Mr. Diaz will devote his full time to the
Company in consideration of an annual salary of $89,000. In addition, Mr. Diaz
will be entitled to not less than 5% of all amounts allocated to the Company's
Incentive Compensation Plan. If the Company terminates Mr. Diaz's employment
without cause, as defined in the agreement, he will be entitled to six months'
severance pay, including all salary and benefits. If, after a change of control
of the Company, Mr. Diaz's employment is terminated without cause or he
terminates his employment, he will be entitled to receive one year's
compensation, including salary and benefits. In connection with his employment,
Mr. Diaz was granted options to purchase 25,000 shares of the Company's Common
Stock at an exercise price equal to the public offering price or $8.00 per share
if the public offering is not consummated by January 1, 1997, half of which vest
on the first anniversary of his employment and the balance of which vest on the
second anniversary of his employment.

EMPLOYEE BENEFIT PLANS

1993 Stock Option Plan

In July 1993, the Board of Directors adopted the Plan which was approved by
the Company's stockholders in September 1993. The Plan provides for the grant to
qualified employees (including officers and directors) of the Company of options
to purchase shares of Common Stock. A total of 1,500,000 shares of Common Stock
have been reserved for issuance upon exercise of stock options granted under the
Plan. The

36
<PAGE> 39

Plan is administered by the Board of Directors or a committee of the Board of
Directors (the "Committee") whose members are not entitled to receive options
under the Plan (excluding options granted exclusively for directors fees). The
Committee has complete discretion to select the optionee and to establish the
terms and conditions of each option, subject to the provisions of the Plan.
Options granted under the Plan may or may not be "incentive stock options" as
defined in Section 422 of the Internal Revenue Code ("Incentive Options")
depending upon the terms established by the Committee at the time of grant, but
the exercise price of options granted may not be less than 100% of the fair
market value of the Common Stock as of the date of grant (110% of the fair
market value if the grant is an Incentive Option granted to an employee who owns
more than 10% of the outstanding Common Stock). Options may not be exercised
more than 10 years after the grant (five years if the grant is an Incentive
Option to any employee who owns more than 10% of the outstanding Common Stock).
Options granted under the Plan are not transferable and may be exercised only by
the respective grantees during their lifetimes or by their heirs, executors or
administrators in the event of death. Under the Plan, shares subject to canceled
or terminated options are reserved for subsequently granted options. The number
of options outstanding and the exercise price thereof are subject to adjustment
in the case of certain transactions such as mergers, recapitalizations, stock
splits or stock dividends.

As of the date of this Prospectus, the Company has granted options
exercisable for periods of three to ten years to purchase an aggregate of
1,233,806 shares of Common Stock, at an exercise price ranging from $1.33 to
$8.00 per share, to certain employees, officers and directors of the Company,
including options to purchase an aggregate of 450,000 shares granted to the
Company's Chairman of the Board at $3.00 per share, options to purchase an
aggregate of 130,515 shares granted to other members of the Company's Board of
Directors at prices ranging from $3.06 to $3.68 per share, and options to
purchase an aggregate of 47,079 shares granted to members of the Company's
Scientific Advisory Board other than members of the Company's Board of Directors
at prices ranging from $2.00 to $4.40 per share. See "Management -- Employment
and Consulting Agreements" for a description of options granted to an affiliate
of an officer of the Company.

INCENTIVE COMPENSATION PLAN

The Company has established a five-year incentive compensation program to
award officers and key employees for their efforts on behalf of the Company as
measured by yearly increases in the net income (before income taxes and
extraordinary items) generated by the Company. The program provides for
incentive compensation utilizing an objective formula based upon guidelines in
accordance with the Company's goals. The Company will establish a yearly bonus
pool commencing with the closing date of the offering, equal to five percent of
its net income before income taxes including the amount provided for by the
incentive compensation plan, and extraordinary items ("ICP Income"), to be
distributed to officers and key employees. For the subsequent four fiscal years,
such bonus pool shall only be established in the event the Company's ICP Income
equals or exceeds by at least 5% the Company's ICP Income for the prior fiscal
year. Amounts remaining in the yearly bonus pool which are not distributed do
not carry over into the subsequent year's pool. The maximum amount an executive
or key employee may receive from the bonus pool is limited to two times such
person's salary.

INDEMNIFICATION

Pursuant to the Company's Certificate of Incorporation and By-laws,
officers and directors of the Company shall be indemnified by the Company to the
fullest extent allowed under Delaware law for claims brought against them in
their capacities as officers or directors. Indemnification is not allowed if the
officer or director does not act in good faith and in a manner reasonably
believed to be in the best interests of the Company, or if the officer or
director had no reasonable cause to believe his conduct was lawful. Accordingly,
indemnification may occur for liabilities arising under the Securities Act. The
Company and the Underwriters have agreed to indemnify each other (including
officers and directors) against certain liabilities, including liabilities under
the Securities Act. See "Underwriting." Insofar as indemnification for
liabilities arising under the Securities Act may be permitted for directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company 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.

37
<PAGE> 40

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of July 31, 1996, and as adjusted to
reflect the sale of 2,000,000 shares of Common Stock offered hereby, certain
information, with respect to the beneficial ownership of shares of Common Stock
by (i) each person known by the Company to be the owner of more than 5% of the
outstanding shares of Common Stock, (ii) each director, (iii) each named
executive officer and (iv) all directors and executive officers as a group:

<TABLE>
<CAPTION>
PERCENTAGE OF
AMOUNT AND OUTSTANDING SHARES OWNED
NATURE OF ---------------------------
NAME AND ADDRESS BENEFICIAL BEFORE AFTER
OF BENEFICIAL OWNERS OWNERSHIP(1) OFFERING(2) OFFERING(3)
- --------------------------------------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
Dr. Steven R. Fox(4)(5).................................. 3,543,240 62.7% 46.3%
Dr. Bert D. Gaster(6).................................... 21,753 * *
Mr. Richard A. Gotterer(6)............................... 87,012 1.7% 1.2%
Eric D. Horodas, Esq.(6)(7).............................. 105,762 2.0% 1.5%
Dr. S.N. Bhaskar(8)...................................... 65,256 1.2% *
Anthony E. Winston(9).................................... 160,000 3.0% 2.2%
All directors and executive officers as a group (8
persons)(10)........................................... 4,316,785 68.7% 52.1%
</TABLE>

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

(1) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within
60 days from the date hereof upon the exercise of warrants or options. Each
beneficial owner's percentage ownership is determined by assuming that
options or warrants that are held by such person (but not those held by any
other person) and which are exercisable within 60 days from the date hereof
have been exercised.

(2) Based on 5,200,378 shares issued and outstanding, after giving effect to
the automatic conversion of 558,399 shares of Series A Preferred Stock into
558,399 shares of Common Stock.

(3) Based on 7,200,378 shares issued and outstanding.

(4) The address of Dr. Fox is c/o Enamelon, Inc., 15 Kimball Avenue, Yonkers,
NY 10704.

(5) Includes 36,348 shares held in trust for the benefit of Dr. Fox's minor
children. Also includes 450,000 shares issuable upon exercise of currently
exercisable stock options.

(6) Includes 21,753 shares issuable upon exercise of currently exercisable
stock options.

(7) Includes 9,375 shares issuable upon exercise of warrants.

(8) Includes 65,256 shares issuable upon exercise of currently exercisable
stock options.

(9) Includes 160,000 shares issuable upon exercise of currently exercisable
stock options.

(10) Includes 1,074,277 shares issuable upon exercise of currently exercisable
stock options and 9,375 shares issuable upon exercise of currently
exercisable warrants.

By virtue of his ownership of shares of Common Stock and position with the
Company, Dr. Steven R. Fox may be deemed a "parent" and a "founder" of the
Company as such terms are defined under the federal securities laws.

CERTAIN TRANSACTIONS

The Company has subleased its office facilities without a written
agreement, since December 1, 1992, from Dr. Steven R. Fox, the Chairman of the
Board, at a rent of $600 per month. Commencing January 1, 1996 for a period of
one year, the Company entered into a lease with a relative of Dr. Fox for
additional office facilities at a rent of $2,500 per month. See
"Business -- Properties" for a description of such facilities.

38
<PAGE> 41

For information concerning employment and consulting agreements with, and
compensation of, the Company's executive officers and directors, see
"Management -- Executive Compensation," "-- Employment and Consulting
Agreements" and "-- Employee Benefit Plans."

The Company believes that the terms of each of the foregoing transactions
and those which will exist after the consummation of the offering are no less
favorable to the Company than could have been obtained from non-affiliated third
parties, although no independent appraisals were obtained. In the future, all
transactions between the Company and its affiliates will also be on terms which
the Company believes will continue to be no less favorable to the Company than
the Company could obtain from non-affiliated parties.

DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is authorized to issue 20,000,000 shares of Common Stock,
$0.001 par value per share, of which 5,200,378 shares (assuming the automatic
conversion of 558,399 shares of Series A Preferred Stock into 558,399 shares of
Common Stock) are currently outstanding and held of record by approximately 225
holders. Holders of shares of Common Stock are entitled to one vote for each
share held of record on all matters to be voted on by stockholders. There are no
preemptive, subscription, conversion or redemption rights pertaining to the
shares of Common Stock. Holders of shares of Common Stock are entitled to
receive dividends when, as and if declared by the Board of Directors from funds
legally available therefor and to share ratably in the assets of the Company
available upon liquidation, dissolution or winding up. The holders of shares of
Common Stock do not have cumulative voting rights for the election of directors
and, accordingly, the holders of more than 50% of the shares of Common Stock are
able to elect all directors. If the officers and directors of the Company were
to exercise all of their presently exercisable warrants and options, they would
continue to control a majority of the votes following completion of the
offering. After the completion of this offering, they would be entitled to vote
52.1% of the shares of Common Stock, and, accordingly, in all likelihood they
will be able to elect all of the Company's directors. All of the outstanding
shares of Common Stock are duly authorized, validly issued, fully paid and
non-assessable.

PREFERRED STOCK

The Company is authorized by its Amended Certificate of Incorporation to
issue 5,000,000 shares of Preferred Stock, $0.01 par value per share. Pursuant
to the Company's Certificate of Designation, 827,250 shares have been designated
as Series A Preferred Stock, of which 558,399 shares were previously issued. By
their terms, all shares of Series A Preferred Stock then outstanding shall
automatically be converted into Common Stock upon (i) the consummation of a firm
underwritten public offering of the Company's Common Stock at a price of at
least $7.00 per share (ascribing no value to any warrants or other securities
sold if the Common Stock is sold in units), which results in aggregate gross
proceeds to the Company of not less than $10,000,000 or (ii) a merger,
consolidation or sale of all or substantially all of the assets of the Company,
which results in the Company or all of the holders of Common Stock receiving
consideration per share of Common Stock so owned of at least $7.00, at the
conversion price per share with respect to the Series A Preferred Stock then in
effect immediately prior to the consummation of such event. Therefore, all
558,399 issued and outstanding shares of Series A Preferred Stock will be
automatically converted into 558,399 shares of Common Stock upon consummation of
this offering. Accordingly, following the completion of the offering and the
automatic conversion of the outstanding shares of Series A Preferred Stock into
shares of Common Stock, there will be 268,851 shares of Series A Preferred Stock
authorized of which none shall be outstanding.

LIMITATIONS UPON TRANSACTIONS WITH "INTERESTED STOCKHOLDERS"

Section 203 of the Delaware General Corporation Law prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder unless (i)
prior to the date of the business combination, the transaction is approved by
the board of directors of the corporation, (ii) upon

39
<PAGE> 42

consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owns at least 85% of the
outstanding voting stock or (iii) on or after such date the business combination
is approved by the board of directors and by the affirmative vote of at least
66 2/3% of the outstanding voting stock which is not owned by the interested
stockholder. A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the stockholder. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years, did own), 15% or more of the corporation's voting stock. The
restrictions of Section 203 do not apply, among other things, if a corporation,
by action of its stockholders, adopts an amendment to its certificate of
incorporation or by-laws expressly electing not to be governed by Section 203,
provided that, in addition to any other vote required by law, such amendment to
the certificate of incorporation or by-laws must be approved by the affirmative
vote of a majority of the shares entitled to vote. Moreover, an amendment so
adopted is not effective until twelve months after its adoption and does not
apply to any business combination between the corporation and any person who
became an interested stockholder of such corporation on or prior to such
adoption. The Company's Amended Certificate of Incorporation and By-laws do not
currently contain any provisions electing not to be governed by Section 203 of
the Delaware General Corporation Law. The provisions of Section 203 of the
Delaware General Corporation Law may have a depressive effect on the market
price of the Common Stock because they could impede any merger, consolidating
takeover or other business combination involving the Company or discourage a
potential acquirer from making a tender offer or otherwise attempting to obtain
control of the Company.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is North American
Stock Transfer Co.

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of shares by current stockholders could adversely affect the
price of the Company's Common Stock. Upon completion of this offering, the
Company will have 7,200,378 shares of Common Stock outstanding (7,500,378 shares
if the Underwriters' over-allotment option is exercised in full), of which
5,200,378 shares of Common Stock (72.2% of the shares to be outstanding) were
issued by the Company in private transactions. In addition, the Company has
reserved for issuance 1,233,806 shares upon exercise of options granted under
the Plan, 266,194 shares upon the exercise of options to be granted under the
Plan, 810,652 shares for issuance upon exercise of outstanding warrants and up
to 200,000 shares for issuance upon exercise of the Representatives' Warrants.
Of the shares of Common Stock to be issued and outstanding after this offering,
the 2,000,000 shares of Common Stock sold in this offering will be freely
tradeable without restriction or further registration under the Securities Act,
except for any shares purchased by an "affiliate" of the Company within the
meaning of Rule 144. The remaining 5,200,378 outstanding shares of Common Stock
are "restricted securities," as that term is defined under Rule 144, and may not
be sold in the absence of registration under the Securities Act unless an
exemption from registration is available, including the exemption provided by
Rule 144. Approximately 3,785,000 of such shares will be eligible for sale under
Rule 144 commencing no later than 90 days following the completion of this
offering. The remaining shares will be eligible for sale between May 1997
through January 1998.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including a person deemed to be an "affiliate" of
the Company, who has beneficially owned his or her shares for at least two years
is entitled to sell within any three-month period that number of restricted
securities that does not exceed the greater of one percent of the then
outstanding shares of Common Stock (72,004 shares based on the number of shares
to be outstanding after the offering), or the average weekly trading volume of
the Common Stock during the four calendar weeks immediately preceding such sale.
Sales under Rule 144 are further subject to certain restrictions relating to the
manner of sale, notice and the availability of current public information about
the Company. After three years have elapsed from the later of the issuance of
restricted securities by the Company or their acquisition from an affiliate,
such shares may be sold without limitations by persons who have not been
affiliates of the Company for at least three months.

40
<PAGE> 43

Rule 701 under the Securities Act provides that, beginning 90 days after
the date of this Prospectus, shares of Common Stock acquired on the exercise of
outstanding employee options may be resold by persons other than affiliates
subject only to the manner of sale provisions of Rule 144, and by affiliates
subject to all provisions of Rule 144 except its two-year minimum holding
period. The Company intends to file one or more registration statements on Form
S-8 under the Securities Act to register shares of Common Stock subject to stock
options granted under the Plan.

The Company has agreed not to register, issue, sell or otherwise dispose of
any of its securities, subject to certain exceptions, for a period of 180 days
from the date of this Prospectus without the prior written consent of the
Representative. The Company's officers, directors and principal stockholders
have agreed (i) not to, directly or indirectly, issue, agree or offer publicly
to sell, grant an option for the purchase or sale of, assign, transfer, pledge,
hypothecate, distribute or otherwise encumber or dispose of, any shares of
Common Stock or other equity securities of the Company or other securities
convertible into or exercisable for such shares of Common Stock or other equity
securities for 180 days from the date of this Prospectus without the prior
written consent of the Representative and (ii) not to register any shares held
by them for a period of 180 days from the date of this Prospectus.

REGISTRATION RIGHTS

The holders of 211,875 shares of Common Stock and warrants to purchase
152,814 shares of Common Stock of the Company at an exercise price $1.33 per
share have been granted certain incidental registration rights relating to the
underlying Common Stock. These securities were purchased in private transactions
with the Company in September 1994 and May 1995. The piggyback registration
rights expire on June 30, 1997 and do not apply to registrations relating to
initial public offerings, mergers, acquisitions or pursuant to Form S-8 (or any
successor form).

At any time (subject to certain limitations) at least six months after the
Company completes an initial public offering, the holders of at least 40% of the
Common Stock issued or issuable upon conversion of the Series A Preferred Stock
have three "demand" registration rights for a period of five years after such
offering and unlimited demand registration rights for a filing on Form S-3,
provided the anticipated aggregate offering price in each such filing exceeds
$500,000, for a period of five years after the issuance of the Series A
Preferred Stock. The holders also have unlimited piggyback registration rights
(subject to certain limitations) for a period of seven years exercisable until
January 23, 2003. Such piggyback registration rights have been waived in
connection with this offering.

Prior to this offering, there has been no public trading market for the
shares of Common Stock and there can be no assurance that a regular trading
market will develop after this offering, or that if developed it will be
sustained. In addition, no prediction can be made as to the effect, if any, that
market sales of shares of Common Stock or the availability of such shares for
sale will have on the market prices prevailing from time to time. Nevertheless,
the possibility that substantial amounts of shares of Common Stock may be sold
in the public market may adversely affect prevailing market prices for the
shares of Common Stock and could impair the Company's ability to raise capital
through the sale of its equity securities.

The Company intends to file a registration statement under the Securities
Act to register the shares of Common Stock issued and reserved for issuance in
compensatory arrangements and under its stock plan. Registration would permit
the resale of such shares by non-affiliates in the public market without
restriction under the Securities Act.

41
<PAGE> 44

UNDERWRITING

The Underwriters below, for whom Rodman & Renshaw, Inc. ("Rodman") and GKN
Securities Corp. are acting as Representatives (the "Representatives"), have
severally agreed, subject to the terms and conditions contained in the
Underwriting Agreement, to purchase from the Company the number of shares of
Common Stock set forth below opposite their respective names:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
--------------------------------------------------------------------- ----------------
<S> <C>
Rodman & Renshaw, Inc................................................
GKN Securities Corp..................................................
---------
Total...................................................... 2,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to purchase and pay for all of the
above shares of Common Stock offered hereby if any are purchased.

The Underwriters, through the Representatives, have advised the Company
that they propose to offer the shares of Common Stock initially at the public
offering price set forth on the cover page of this Prospectus; that the
Underwriters may allow to selected dealers a concession of $ per share and
that such dealers may reallow a concession of $ per share to certain other
dealers who are members of the National Association of Securities Dealers, Inc.
After the public offering, the offering price and other selling terms may be
changed by the Underwriters. The Common Stock has been approved for quotation on
the Nasdaq National Market.

The Company has granted to the Underwriters a 30-day over-allotment option
to purchase from the Company up to an aggregate of 300,000 additional shares of
Common Stock exercisable at the public offering price less the underwriting
discount. If the Underwriters exercise such over-allotment option, then each of
the Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage thereof as the number of shares of
Common Stock to be purchased by it as shown in the above table bears to
2,000,000 shares of Common Stock offered hereby. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the shares of Common Stock offered hereby.

In connection with this offering, the Company has agreed to sell to the
Representatives, for nominal consideration, warrants to purchase a number of
shares of Common Stock equal to 10% of the shares of Common Stock sold in the
offering, exclusive of any shares of Common Stock sold pursuant to the
Underwriters' over-allotment option (the "Representatives' Warrants"). The
Representatives' Warrants are initially exercisable at a price of $ per
share of Common Stock (120% of the initial public offering price) for a period
of four years, commencing one year from the effective date of the offering and
are restricted from sale, transfer, assignment or hypothecation for a period of
12 months from the effective date of the offering, except to officers, partners
or successors of the Representatives. The exercise price of the Representatives'
Warrants and the number of shares of Common Stock issuable upon exercise thereof
are subject to adjustment under certain circumstances. The Representatives'
Warrants grant to the holders thereof certain rights of registration for the
securities issuable upon exercise of the Representatives' Warrants. The
Representatives' Warrants are not redeemable by the Company, under any
circumstances.

In addition, the Representatives have a right of first refusal to perform
services for the Company with respect to certain future transactions for a
period of two years after the effective date of the offering.

42
<PAGE> 45

The holders of the Representatives' Warrants will have no voting, dividend
or other rights as stockholders of the Company unless and until the exercise of
such warrants. The number of securities deliverable upon any exercise of the
Representatives' Warrants and the exercise price of such warrants are subject to
adjustment to protect against any dilution upon the occurrence of certain
events.

During the exercise period, the Representatives and any transferee are
given, at nominal cost, the opportunity to profit from a rise in the market
price for the Common Stock, if any, at the expense of the Company's then
stockholders. For the life of the Representatives' Warrants, the Company may be
deprived of favorable opportunities to procure additional equity capital, if it
should be needed for the purpose of the business of the Company, and the holders
of the Representatives' Warrants may be expected to exercise such warrants at a
time when the Company would, in all likelihood, be able to obtain equity
capital, if then needed, by the sale of additional securities on terms more
favorable than those provided in the Representatives' Warrants.

The Company's executive officers, directors, principal stockholders and
certain Series A Preferred Stockholders have agreed that they will not publicly
sell or dispose of any shares of Common Stock for a period of 180 days from the
date of this Prospectus without the prior written consent of the
Representatives. See "Shares Eligible for Future Sale."

The Company has agreed to indemnify the Underwriters against certain
liabilities, losses and expenses, including liabilities under the Securities
Act, or to contribute to certain payments that the Underwriters may be required
to make in respect thereof.

The foregoing does not purport to be a complete statement of the terms and
conditions of the Underwriting Agreement and related documents, copies of which
are on file at the offices of the Representatives, the Company and the
Securities and Exchange Commission, forms of which have been filed as exhibits
to the Registration Statement of which this Prospectus forms a part.

Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price has been determined
through negotiations between the Company and the Representatives. Such price was
based on a number of factors, including, without limitation, estimates of the
business potential and earnings prospects of the Company, the present state of
the Company's development, an assessment of the Company's management, the
consideration of the above factors in relation to market valuations of
comparable companies, and the current condition of the industry and the economy
as a whole.

LEGAL MATTERS

The legality of the securities offered hereby will be passed upon for the
Company by Snow Becker Krauss P.C., New York, New York. Snow Becker Krauss P.C.
owns 27,261 shares of Common Stock and SBK Investment Partners, a partnership
consisting of members of Snow Becker Krauss P.C., owns 105,000 shares of Common
Stock and holds an option to purchase 32,628 shares of Common Stock. Certain
legal matters in connection with this offering will be passed upon for the
Underwriters by Squadron, Ellenoff, Plesent & Sheinfeld, LLP, New York, New
York.

EXPERTS

The financial statements included in this Prospectus have been audited by
BDO Seidman, LLP, independent certified public accountants, to the extent and
for the periods indicated in their report appearing elsewhere herein and are
included in reliance on such report given upon the authority of said firm as
experts in auditing and accounting.

43
<PAGE> 46

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 including all amendments
thereto (the "Registration Statement") under the Securities Act with respect to
the Common Stock offered by this Prospectus via the Electronic Data Gathering
Analysis and Retrieval system ("EDGAR") and may be found on the Commission's web
site at http://www.sec.gov. 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 the Registration Statement, including the exhibits filed therewith.
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 such reference to the applicable
document filed with the Commission.

Following the effectiveness of the Registration Statement, the Company will
be subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and in accordance therewith the Company will file reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information may be inspected and copied at public reference
facilities of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the Northeast Regional Office, 7 World Trade
Center, 13th Floor, New York, New York 10048 and the Chicago Regional Office,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661-2511, upon payment
of the fees prescribed by the Commission. Copies of all or any part of the
Registration Statement (including the exhibits thereto) also may be obtained
from the Public Reference Section of the Commission at the Commission's
principal office in Washington, D.C., at the Commission's prescribed rates.
Electronic filings made via EDGAR are publicly available through the
Commission's web site referenced above.

The Company intends to distribute to its stockholders annual reports
containing audited financial statements certified by its certified public
accountants and such other periodic reports as the Company may determine to be
appropriate or as may be required by law.

44
<PAGE> 47

GLOSSARY

The following glossary is intended to provide the reader with an
explanation of certain terms used in this Prospectus.

ACTIVE INGREDIENT.......... Element responsible for the therapeutic activity of
a product. However, other ingredients in the
product may enhance the effectiveness of the active
ingredient. In Enamelon toothpaste, the active
ingredient is sodium fluoride.

CALCIUM.................... Important elemental constituent of teeth and bones.

CARIES..................... An oral disease caused by the presence of
cariogenic bacteria in plaque. Signs of the disease
are lesions and/or cavities in the teeth.

CAVITY..................... Area of the tooth where mineral loss, due to
demineralization, has been extensive, resulting in
collapse of the tooth structure. A cavity cannot be
remineralized and must be filled by a dentist.

DEMINERALIZATION........... Chemical process whereby acids, produced by
cariogenic bacteria in plaque, dissolve and remove
calcium and phosphate from tooth enamel and/or
dentin, making the tooth weaker and more porous. If
allowed to continue, demineralization will
eventually cause the tooth structure to collapse
and a cavity to be formed.

DENTIN..................... An underlying tooth material that contains minerals
and organic matter. Dentin is covered by enamel in
the crown and cementum in the root.

ENAMELON TECHNOLOGIES...... The ADAHF Patented Technology together with the
Enamelon Proprietary Technology as described in
"Prospectus Summary -- The Company."

FLUORIDE................... Inorganic form of the element fluorine in
combination with other elements.

INACTIVE INGREDIENT........ Element not responsible for the therapeutic
activity of the product. Inactive ingredients may
be important for other product attributes and may
substantially enhance the effectiveness of the
active ingredient.

INTERPROXIMAL LESIONS...... Lesions that occur between the teeth.

IN VITRO................... Literally means "in glass" (Latin). Refers to
experimental studies carried out under laboratory
conditions that do not involve living species.

IN VIVO.................... Literally means "in life" (Latin). Refers to
experimentation performed on live animals or
humans.

IONS....................... Dissolved particles bearing a positive or negative
charge. Because of their charge, ions attract a
sphere of water molecules around themselves, which
helps to keep them in solution.

LESIONS.................... Defects in teeth resulting from loss of tooth
mineral due to demineralization in localized areas
of the tooth. Lesions often, but not always, show
up as visible white or colored spots on teeth. They
may or not be detected by x-rays.

PHOSPHATE.................. Combination of the elements phosphorous and oxygen
in ionic form or part of an inorganic or organic
compound. An important constituent of teeth and
bones.

45
<PAGE> 48

PLAQUE..................... Soft sticky film formed on teeth and between teeth
due to eating sugar-containing foods. Contains a
very high concentration of bacteria.

PLAQUE ACIDS............... Acidic materials formed by the break-down of sugars
due to the action of plaque bacteria. Plaque acids,
primarily lactic and acetic acid, are highly
corrosive to the tooth mineral structure, and cause
demineralization of the tooth.

PROFESSIONAL GELS.......... Therapeutic materials applied to the teeth for the
prevention, arrestment, or reversal of lesions or
cavities. Applied directly by a qualified dental
practitioner or supplied to the user through a
prescription supplied by a qualified dental
practitioner.

REMINERALIZATION........... Chemical process whereby calcium and phosphate,
lost during demineralization, are replaced into
tooth enamel and dentin, thereby rebuilding,
restoring and restrengthening the tooth.

SODIUM FLUORIDE............ Compound consisting of the element sodium combined
with the element flourine and which provides
flouride ions when dissolved in water. Sodium
flouride is an accepted active ingredient in
anti-caries products for over-the-counter use.

TOOTH ENAMEL............... Outer hard mineral layer of the crown, which is the
part of the tooth that emerges from the gum.

VICKERS HARDNESS UNITS
("VHUS")................. A standard measure of surface hardness based on the
size of indentation made by a diamond indenter.

46
<PAGE> 49

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

CONTENTS

<TABLE>
<S> <C>
Report of independent certified public accountants.................................... F-2
Financial statements:
Balance sheets................................................................... F-3
Statements of operations......................................................... F-4
Statements of stockholders' equity............................................... F-5
Statements of cash flows......................................................... F-6
Notes to financial statements.................................................... F-7
</TABLE>

F-1
<PAGE> 50

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Enamelon, Inc.
Yonkers, New York

We have audited the accompanying balance sheets of Enamelon, Inc. (a
development stage company) as of December 31, 1994 and 1995, and the related
statements of operations and cash flows for each of the years in the three-year
period ended December 31, 1995 and the statements of stockholders' equity for
the period from June 9, 1992 (inception) to December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Enamelon, Inc. as of
December 31, 1994 and 1995, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1995 in
conformity with generally accepted accounting principles.

New York, New York BDO Seidman, LLP
April 5, 1996

F-2
<PAGE> 51

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
-------------------------- JUNE 30, JUNE 30,
1994 1995 1996 1996
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents (Note 1)...... $ 50,097 $ 1,790,666 $ 2,449,690 $ 2,449,690
Prepaid expenses and other assets....... 6,714 11,077 24,390 24,390
----------- ----------- ----------- -----------
Total current assets................. 56,811 1,801,743 2,474,080 2,474,080
Equipment, less accumulated depreciation
of $7,897, $20,545 and $32,505 (Note
1)...................................... 41,776 58,077 146,907 146,907
Deferred costs, less accumulated
amortization of $12,383, $23,227 and
$30,374 (Notes 1, 2 and 3).............. 155,495 172,157 493,469 493,469
Other assets -- security deposit.......... 11,098 8,939 8,939 8,939
----------- ----------- ----------- -----------
$ 265,180 $ 2,040,916 $ 3,123,395 $ 3,123,395
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses........................ $ 114,652 $ 173,939 $ 342,341 $ 342,341
----------- ----------- ----------- -----------
Total current liabilities............ 114,652 173,939 342,341 342,341
----------- ----------- ----------- -----------
Commitments (Notes 3, 6, 7 and 8)
Redeemable preferred stock, net of
offering costs (Notes 3 and 8).......... -- -- 1,904,000 --
----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY (NOTE 4):
Preferred stock, $0.01 par value --
shares authorized 4,172,750; none
issued or outstanding................ -- -- -- --
Common stock, $0.001 par value -- shares
authorized 20,000,000; issued and
outstanding 3,784,800, 4,635,273,
4,641,979 and 5,200,378.............. 3,785 4,635 4,641 5,200
Additional paid-in capital.............. 1,279,408 4,055,925 4,082,743 5,986,184
Accumulated deficit during the
development stage.................... (1,132,665) (2,193,583) (3,210,330) (3,210,330)
----------- ----------- ----------- -----------
Total stockholders' equity........... 150,528 1,866,977 877,054 2,781,054
----------- ----------- ----------- -----------
$ 265,180 $ 2,040,916 $ 3,123,395 $ 3,123,395
=========== =========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE> 52

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 9, 1992
----------------------------------- JUNE 30, (INCEPTION) TO
1993 1994 1995 ------------------------- JUNE 30,
--------- --------- ----------- 1995 1996 1996
----------- ----------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Expenses:
Payroll and benefits.... $ 98,749 $ 133,714 $ 368,110 $ 142,512 $ 412,250 $ 1,020,620
Research and testing.... 92,059 147,412 274,864 74,518 325,786 840,121
Administrative and
other................ 119,688 255,154 437,607 245,737 347,190 1,188,912
--------- --------- ----------- --------- --------- -----------
Total expenses....... 310,496 536,280 1,080,581 462,767 1,085,226 3,049,653
Other charges (income):
Interest and
dividends............ (13,825) (7,325) (19,663) (472) (68,479) (109,292)
Write-off of deferred
offering costs (Note
1)................... -- 269,969 -- -- -- 269,969
--------- --------- ----------- --------- --------- -----------
Net loss.................. $(296,671) $(798,924) $(1,060,918) $(462,295) $(1,016,747) $ (3,210,330)
========= ========= =========== ========= ========= ===========
Pro forma net loss per
common share (Note 1)... $(0.20) $(0.18)
=========== =========
Pro forma weighted average
common shares
outstanding............. 5,328,176 5,510,651
=========== =========
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE> 53

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (NOTE 4)

<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL DEFICIT DURING TOTAL
---------------------- PAID-IN THE DEVELOPMENT STOCKHOLDERS'
SHARES PAR VALUE CAPITAL STAGE EQUITY
--------- --------- --------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock in June and December
1992.......................................... 3,331,458 $ 3,331 $ 111,684 $ -- $ 115,015
Issuance of common stock for legal services
rendered...................................... 9,792 10 29,960 -- 29,970
Net loss........................................ -- -- -- (37,070) (37,070)
--------- ------ ---------- ----------- -----------
BALANCE, DECEMBER 31, 1992...................... 3,341,250 3,341 141,644 (37,070) 107,915
Issuance of common stock at $3.06 per share in
private placement, net of costs............... 293,619 294 868,648 -- 868,942
Issuance of common stock for legal services
rendered...................................... 17,268 17 63,348 -- 63,365
Net loss........................................ -- -- -- (296,671) (296,671)
--------- ------ ---------- ----------- -----------
BALANCE, DECEMBER 31, 1993...................... 3,652,137 3,652 1,073,640 (333,741) 743,551
Issuance of common stock at $1.33 per share in
private placement, net of costs............... 118,125 118 141,783 -- 141,901
Issuance of common stock for legal services
rendered...................................... 14,538 15 63,985 -- 64,000
Net loss........................................ -- -- -- (798,924) (798,924)
--------- ------ ---------- ----------- -----------
BALANCE, DECEMBER 31, 1994...................... 3,784,800 3,785 1,279,408 (1,132,665) 150,528
Issuance of common stock at $1.33 per share in
private placement, net of costs............... 93,750 94 124,906 -- 125,000
Issuance of common stock at $4.00 per share in
private placement, net of costs............... 648,723 648 2,504,024 -- 2,504,672
Issuance of common stock for professional
services rendered............................. 108,000 108 147,587 -- 147,695
Net loss........................................ -- -- -- (1,060,918) (1,060,918)
--------- ------ ---------- ----------- -----------
BALANCE, DECEMBER 31, 1995...................... 4,635,273 4,635 4,055,925 (2,193,583) 1,866,977
Issuance of common stock for legal services
rendered (unaudited).......................... 6,706 6 26,818 -- 26,824
Net loss (unaudited)............................ -- -- -- (1,016,747) (1,016,747)
--------- ------ ---------- ----------- -----------
BALANCE, JUNE 30, 1996 (UNAUDITED).............. 4,641,979 $ 4,641 $ 4,082,743 $(3,210,330) $ 877,054
========= ====== ========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE> 54

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE
------------------------------------- 30,
1993 1994 1995 ------------------------
--------- --------- ----------- 1995
---------
(UNAUDITED) PERIOD FROM
JUNE 9, 1992
1996 (INCEPTION) TO
----------- JUNE 30, 1996
(UNAUDITED) --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................. $(296,671) $(798,924) $(1,060,918) $(462,295) $(1,016,747) $ (3,210,330)
Adjustments to reconcile net loss to net
cash used in operating activities:
Write-off of deferred offering
costs............................. -- 269,969 -- -- -- 269,969
Stock issued for services............ -- -- 147,695 147,695 26,824 174,519
Depreciation and amortization........ 4,342 15,433 23,490 10,398 19,107 62,876
Increase in prepaid expenses and
other assets...................... (9,916) (7,896) (2,203) 8,165 (13,313) (33,328)
Increase in deferred costs........... -- -- -- -- -- (1,133)
Increase in accrued expenses......... 47,086 63,633 59,287 102,306 168,402 342,341
--------- --------- ----------- --------- ---------- -----------
Net cash used in operating
activities........................ (255,159) (457,785) (832,649) (193,731) (815,727) (2,395,086)
--------- --------- ----------- --------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment.................... (9,437) (39,559) (28,949) (2,000) (100,790) (179,412)
Patents, trademarks and licenses.......... (72,863) (35,707) (27,505) (25,006) (44,900) (192,506)
--------- --------- ----------- --------- ---------- -----------
Net cash used in investing
activities........................ (82,300) (75,266) (56,454) (27,006) (145,690) (371,918)
--------- --------- ----------- --------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock........ 868,942 141,901 2,718,459 125,000 -- 3,844,317
Proceeds from sale of preferred stock..... -- -- -- -- 2,004,000 2,004,000
Offering costs............................ (73,958) (75,520) (88,787) -- (383,559) (631,623)
Proceeds from loans....................... -- -- -- 52,625 -- --
--------- --------- ----------- --------- ---------- -----------
Net cash provided by financing
activities........................ 794,984 66,381 2,629,672 177,625 1,620,441 5,216,694
--------- --------- ----------- --------- ---------- -----------
Net increase (decrease) in cash and cash
equivalents............................... 457,525 (466,670) 1,740,569 (43,112) 659,024 2,449,690
Cash and cash equivalents, beginning of
period.................................... 59,242 516,767 50,097 50,097 1,790,666 --
--------- --------- ----------- --------- ---------- -----------
Cash and cash equivalents, end of period.... $ 516,767 $ 50,097 $ 1,790,666 $ 6,985 $ 2,449,690 $ 2,449,690
========= ========= =========== ========= ========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH
FINANCING ACTIVITIES:
The Company issued common stock for
professional services performed by
unrelated parties...................... $ 63,365 $ 64,000 $ 147,695 $ 147,695 $ 26,824 $ 331,854
========= ========= =========== ========= ========== ===========
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE> 55

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE PERIODS ENDED JUNE 30, 1995 AND
1996 IS UNAUDITED.)

1. ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES

Organization

Enamelon, Inc. (a development stage company) (the "Company"), a Delaware
corporation, was founded in June 1992 to take advantage of a technological
development by scientists at the American Dental Association Health Foundation
("ADAHF"), a not-for-profit research affiliate of the American Dental
Association. This technological development is the subject of four patents and
one patent pending application owned by the ADAHF and has been licensed to the
Company. The Company has developed additional technologies relating to the
prevention of tooth decay before it begins and has five United States patent
applications pending. The Company plans to develop and market dentifrices,
chewing gum, food and confectionery products, employing such patented and/or
patent pending technologies. To date, the Company has no material operations and
its activities have been limited to finalization of domestic and foreign patent
agreements, organizational and initial capitalization activities, and assisting
in the research and development of prototype dentifrice products. Once the
effectiveness of the initial toothpaste formulas are determined, full scale
development activities will commence to establish the commercial viability of
such products.

Use of Estimates

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

Fair Value of Financial Instruments

The carrying amounts of cash, prepaid expenses and accrued expenses
approximate fair value because of the short maturity of these items.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of highly liquid debt instruments
with original maturities of three months or less, principally Treasury Bills and
money market accounts.

Equipment

Equipment is stated at cost. Depreciation is computed over the estimated
useful lives of the assets using the straight-line method.

Deferred Costs

Organization costs are amortized using the straight-line method over a
sixty-month period.

Licensing costs and patent rights are amortized using the straight-line
method over seventeen years, which is the term of the licensing agreements and
the estimated useful lives of the patents, respectively.

Trademarks are being amortized using the straight-line method over
seventeen years.

Deferred offering costs related to a proposed private placement had been
deferred until the proceeds of the private placement were raised. Since the
related private placement transaction did not occur as expected, these costs
were expensed in 1994.

F-7
<PAGE> 56

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

Deferred offering costs related to a proposed public offering pending as of
June 30, 1996 will be charged against the proceeds of the offering. If the
offering is not consummated as expected, such costs will be expensed.

Income Taxes

Income taxes are computed in accordance with the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), which requires, among other things, a liability approach to calculating
deferred income taxes. SFAS 109 requires a company to recognize deferred tax
liabilities and assets for the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred tax
assets must be reduced by a valuation allowance to amounts expected to be
realized.

Earnings Per Share

Earnings per share are presented for 1995 and the six months ended June 30,
1996 on a pro forma basis to give effect to the conversion of the redeemable
preferred stock as a result of the proposed public offering discussed in Note 8.
The calculation of earnings per share reflects the conversion of the preferred
stock as if it occurred on January 1, 1995. Earnings per share are not presented
for prior periods since the Company does not believe historical earnings per
share are meaningful as a result of changes in the Company's capital structure
contemplated by the proposed public offering.

The weighted average number of common shares outstanding used in computing
the pro forma net loss per common share for the year ended December 31, 1995 and
the six months ended June 30, 1996 was adjusted for the effects of the
application of Securities and Exchange Commission (SEC) Staff Accounting
Bulletin (SAB) No. 83. Pursuant to SAB No. 83, common stock issued by the
Company at a price less than the initial public offering price during the twelve
months immediately preceding the initial filing of the offering contemplated by
this Prospectus, together with common stock purchase warrants and options issued
during such period with an exercise price less than the initial public offering
price, are treated as outstanding for all periods presented. Earnings (loss) per
share are computed using a treasury stock method, under which the number of
shares outstanding reflects an assumed use of the proceeds from the issuance of
such shares and from the assumed exercise of such warrants and options, to
repurchase shares of the Company's common stock at the initial public offering
price.

Interim Financial Information

The financial statements as of June 30, 1996 and for the six months ended
June 30, 1996 and 1995 are unaudited but include all adjustments (consisting of
normal recurring adjustments) that the Company considers necessary for a fair
presentation of its financial position, results of operations and cash flows for
the interim periods. Results for the interim period ended June 30, 1996 are not
necessarily indicative of results for the entire year.

Recent Accounting Standards

SFAS No. 121. In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," which requires that certain long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. The adoption of this pronouncement is not expected to
have a significant effect on the Company's financial statements.

F-8
<PAGE> 57

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

SFAS No. 123. In October 1995, the Financial Accounting Standards Board
issued SFAS No. 123, "Accounting for Stock-Based Compensation," which allows the
choice of either the intrinsic value method or the fair value method of
accounting for employee stock options. The Company has selected the option to
continue the use of the current intrinsic value method.

Presentation of Prior Year Data

Certain reclassifications have been made to conform prior year data with
the current presentation.

2. DEFERRED COSTS

Deferred costs are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
-------- -------- ---------
<S> <C> <C> <C>
Patent rights......................................... $107,201 $132,207 $ 175,409
Trademarks............................................ 40,582 43,082 44,780
Licensing costs....................................... 18,962 18,962 18,962
Organization costs.................................... 1,133 1,133 1,133
Offering costs........................................ -- -- 283,559
-------- -------- --------
167,878 195,384 523,843
Less: Accumulated amortization........................ 12,383 23,227 30,374
-------- -------- --------
$155,495 $172,157 $ 493,469
======== ======== ========
</TABLE>

3. REDEEMABLE PREFERRED STOCK

In January 1996, the Company issued 500,000 units at $4.00 per unit, each
consisting of 1.103 shares of 5% convertible preferred stock (the "Series A
Preferred Stock") and 1 common stock purchase warrant, exercisable at $5.75 per
share. In April 1996, the Company issued an additional 6,250 units at $4.00 per
unit. The Company received proceeds of $1,904,000, net of expenses, for these
issuances.

The Series A Preferred Stock may be redeemed by the holder of the shares on
the seventh anniversary of the issuance at a redemption price of $8.00 per
share. Each holder of the Series A Preferred Stock has the right to convert the
preferred shares into shares of common stock, on a stock-for-stock basis. The
Series A Preferred Stock becomes mandatorily converted into common stock upon
(i) the consummation of a public offering at a price of at least $7.00 per share
or, (ii) a merger, consolidation or sale of substantially all of the assets of
the Company, which results in the Company or its common stockholders receiving
consideration per share of at least $7.00 per share.

In connection with the placement of the transaction, the Company issued
warrants to purchase 100,000 shares at an exercise price of $4.80 and 23,750
shares at $3.60 per share, which expire January 23, 2003.

4. STOCKHOLDERS' EQUITY

In November 1992, the Board of Directors amended the Company's Certificate
of Incorporation to increase the number of authorized common shares from 15,000
shares to 3,000,000 shares and effected a 100-for-one stock split. The Company
effectuated a 1.19688-for-one reverse stock split of its common stock in July
1993, a one-for-1.65068 stock split of its common stock in September 1994 and a
three-for-one stock split in June 1995. All common shares, common stock options
and price per share information disclosed in the financial statements and notes
thereto have been adjusted to give retroactive effect for these stock splits.
The

F-9
<PAGE> 58

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

Board of Directors amended the Company's Certificate of Incorporation to
increase the Company's authorized shares of common stock from 3,000,000 to
20,000,000.

In December 1992, 9,792 shares of stock were issued for services performed
by unrelated parties. In September 1993, November 1993 and January 1994, an
additional 4,545 shares, 12,723 shares and 14,538 shares, respectively, were
issued for services performed by unrelated parties. In May and June 1995, an
additional 105,000 shares and 3,000 shares, respectively, were issued for
services performed by unrelated parties. In January 1996, an additional 6,706
shares were issued for services performed by unrelated parties. Common stock
issued for services was valued at the estimated fair value of the stock issued.

In January 1993, the Company issued an aggregate 293,619 shares of its
common stock to private investors, officers and directors of the Company for the
aggregate consideration of $900,000.

In September 1994, the Company sold 118,125 shares of common stock and
warrants to purchase 59,064 shares of common stock at an exercise price of $1.33
per share for an aggregate amount of $157,500.

In May 1995, the Company issued an aggregate 93,750 shares of its common
stock and warrants to purchase 93,750 shares of common stock at an exercise
price of $1.33 per share to private investors, officers and directors of the
Company for an aggregate consideration of $125,000.

On various dates through December 31, 1995, the Company issued an aggregate
648,723 shares of its common stock pursuant to a private placement memorandum
dated June 20, 1995 to private investors, officers and directors of the Company
for an aggregate consideration of $2,504,672, net of expenses. In connection
with the private placement, the Company authorized the issuance of warrants to
purchase 26,276 shares of common stock at an exercise price of $4.00 per share,
and 1,562 shares of common stock at an exercise price of $3.60 per share, which
expire December 14, 2000, to representatives in the offering.

Stock Option Plan

In 1993, the Company adopted the 1993 Stock Option Plan (the "Option
Plan"). The Option Plan provides for the grant of options to qualified employees
(including officers and directors) of the Company to purchase an aggregate of
1,500,000 shares of common stock. The Option Plan is administered by the Board
of Directors or a committee of the Board of Directors (the "Compensation
Committee") whose members are not entitled to receive options under the Option
Plan (excluding options granted exclusively for directors' fees). Options
granted under the Plan may or may not be "incentive stock options" as defined in
the Internal Revenue Code ("Incentive Options") depending upon the terms
established by the Compensation Committee at the time of grant. The exercise
price shall not be less than the fair market value of the Company's common stock
as of the date of grant (110% of the fair market value if the grant is an
Incentive Option to an employee who owns more than 10% of the Company's
outstanding common stock). Options granted under the Plan are subject to a
maximum term of 10 years.

F-10
<PAGE> 59

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

A summary of activity for the Company's Plan, including those options
granted pursuant to the terms of certain employment and other agreements (see
Note 6), is as follows:

<TABLE>
<CAPTION>
EXERCISE PRICE
OPTION SHARES RANGE PER SHARE
------------- ---------------
<S> <C> <C>
Balance, December 31, 1992............................... -- --
Granted.................................................. 348,036 $3.06-$3.68
Exercised................................................ -- --
Cancelled................................................ -- --
--------- -----------
Balance, December 31, 1993............................... 348,036 $3.06-$3.68
Granted.................................................. 32,451 $1.33-$4.40
Exercised................................................ -- --
Cancelled................................................ -- --
--------- -----------
Balance, December 31, 1994............................... 380,487 $1.33-$4.40
Granted.................................................. 937,081 $1.33-$4.00
Exercised................................................ -- --
Cancelled................................................ (108,762) $3.06-$3.68
--------- -----------
Balance, December 31, 1995............................... 1,208,806 $1.33-$4.40
Granted.................................................. -- --
Exercised................................................ -- --
Cancelled................................................ -- --
--------- -----------
Balance, June 30, 1996................................... 1,208,806 $1.33-$4.40
========= ===========
</TABLE>

All of the issued and outstanding options are exercisable.

5. INCOME TAXES

The Company's net operating loss carryforwards and deferred tax asset
account are summarized as follows:

<TABLE>
<CAPTION>
NET OPERATING LOSS DEFERRED TAX
CARRYFORWARDS ASSET
------------------ ------------
<S> <C> <C>

1994.......................................................... $1,132,000 $453,000
1995.......................................................... 2,193,000 877,000
========== ========
</TABLE>

The deferred tax asset has been fully reserved by a valuation allowance of
the same amount.

The net operating loss carryforwards will expire if not used by the period
from 2007 through 2010 and may be limited by United States federal tax law as a
result of future changes in ownership.

6. COMMITMENTS

Leases

The Company leases office facilities in New York from a related party and
laboratory facilities in New Jersey. The lease for the laboratory facilities
includes provisions requiring the Company to pay a proportionate

F-11
<PAGE> 60

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

share of the increase in real estate taxes and operating expenses over base
period amounts. The minimum rents for the leased property for subsequent years
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
--------------------------------------------------------------------------
<S> <C>
1996...................................................................... $ 76,000
1997...................................................................... 49,000
1998...................................................................... 52,000
--------
$177,000
========
</TABLE>

Rent expense for the years ended December 31, 1994 and 1995 was $34,155 and
$35,500, respectively. For the six months ended June 30, 1995 and 1996, rent
expense was $17,730 and $41,802, respectively, and $119,257 for the period from
June 9, 1992 (inception) to June 30, 1996.

Patent License Agreements

In June 1992, the Company entered into a patent licensing agreement with
the ADAHF, the holder and/or the applicant for the patents for the Amorphous
Calcium Compounds ("ACC"). The agreement, as modified, grants the Company the
exclusive United States license to manufacture and sell dentifrices, chewing
gum, food and confection formulated according to the patented process in return
for royalty payments to the licensor. In November 1992, the Company entered into
an exclusive international patent licensing agreement which, as modified,
granted the Company patent license rights in Austria, Belgium, Canada, China,
Denmark, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Monaco, the
Netherlands, Portugal, Spain, Sweden, Switzerland, Liechtenstein, Taiwan and the
United Kingdom. The grants extend to improvements in patent compounds and
utilities in dentifrices, chewing gum, food and confectionery products developed
by the ADAHF.

The exclusive United States license has been granted for an initial term
from the date of the agreement until three years following the physical and
chemical stabilization of the formula in a commercially viable product, and
following the first Food and Drug Administration ("FDA") approval necessary to
market any ACC products in their commercially viable form to professionals or
the general public. The foreign license expires upon the earlier of the
termination of the United States license or the expiration of the foreign
patents licensed thereunder. The licenses are renewable in four year increments
for the life of the ACC patents subject to minimum royalty payment terms, and
transferable under certain conditions with the prior written consent of the
licensor, which consent may not be unreasonably withheld. The licenses are
subject to cancellation in the event the Company fails to comply with its terms
and conditions, including payment of royalties and other amounts due thereunder.

The Company was also granted an option and right of first refusal, as
amended, for a limited license under future patents and patent applications for
ACC for all territories not included within the licensed territories under the
foreign patent license, with respect to dentifrices, chewing gum, food and
confection. Before granting such a license to third parties, the ADAHF must
first offer the license to the Company on the terms consistent with the foreign
license agreement. To the extent the ADAHF has not granted the license to a
third party due to the Company's failure to exercise its right of first refusal,
the Company has the option to receive a license in any of such territories with
the terms consistent with the foreign license agreement.

In consideration for the grant of the exclusive United States license, the
Company is required to make royalty payments of four percent of net sales,
subject to minimum royalty payments of $7,000 in 1994 and each subsequent year.
In consideration for the grant of foreign patent rights, the Company is required
to pay seven percent of net sales and four percent in a joint venture and bear
the costs of prosecution of foreign patent

F-12
<PAGE> 61

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

applications. However, to the extent the ADAHF grants a foreign license to a
third party to use ACC in products other than dentifrices, chewing gum, food and
confection, then such third party must share with the Company the costs
associated with the foreign patent applications. If the Company sublicenses a
foreign patent, it will pay to the ADAHF twenty-five percent of the gross income
resulting from such sublicense actually received by the Company.

7. EMPLOYMENT AND CONSULTING AGREEMENTS

The Company has entered into a five-year employment agreement for the
services of a Chairman of the Board of Directors and Chief Executive Officer
commencing January 1, 1994. The agreement, as amended, provides for an annual
salary of $75,000 (increasing to $175,000 upon the Company's attaining certain
levels of cash balances or earlier as mutually agreed upon), subject to
adjustment, as well as 50% of all amounts allocated by the Board of Directors to
the Company's Incentive Compensation Program, as defined below. The agreement
also provides for a lump-sum payment equal to either 2.9 or 2.5 times the
officer's annual base salary in the event of a change in control of the Company
that is opposed by the officer, depending on whether the change in control is
approved by a majority of the Board of Directors. The Company has granted this
officer an option to purchase 450,000 shares of common stock at an exercise
price of $3.00 per share.

The Company has entered into an employment agreement for the services of a
President and Chief Operating Officer commencing upon the Company achieving
certain levels of cash balances. The agreement provides for an annual salary of
$150,000, subject to adjustment, as well as 15% of all amounts allocated by the
Board of Directors to the Company's Incentive Compensation Program, as defined
below. In addition, the Company has granted this individual an option to
purchase 99,000 shares of common stock as of the commencement of the term of the
employment agreement at an exercise price of $3.00 per share which expires seven
years from the date of grant. If the Company elects to terminate the agreement,
six months' severance pay including all salary and benefits is due. Prior to the
commencement of the agreement, this individual was retained on a consulting
basis for $3,000 per month plus, for the period from July 1994 through July
1995, 3,000 options per month at an exercise price of $1.33 per share. Effective
November 1, 1995, the consulting fee was increased to $4,000 per month.

The Company entered into a one-year renewable consulting agreement (the
"Consulting Agreement") for assistance on all aspects of the testing and
development of the Company's products, and in obtaining all required approvals
by the FDA. During 1994 and 1995, the Company incurred fees and expenses of
approximately $69,000 and $37,000, respectively, for research and testing
performed pursuant to this agreement. In addition, the following nonqualified
stock options were issued pursuant to the Option Plan as part of the Consulting
Agreement: an option to purchase 54,381 shares of common stock effective July
22, 1993 and expiring July 21, 1998 at an exercise price of $1.86 per share and
an option to purchase 54,381 shares of common stock effective July 22, 1993 and
expiring July 21, 1998 at an exercise price of $2.67. In May 1995, the Company
entered into a three-year employment agreement with the sole owner of the entity
that holds the Consulting Agreement to become the Company's Vice
President-Product Development/Operations and Secretary. This agreement, which
replaced the Consulting Agreement, provides for annual compensation of $105,000
in the first year, $115,000 in the second year and $125,000 in the third year,
subject to adjustment, as well as 12.5% of all amounts allocated by the Board of
Directors to the Company's Incentive Compensation Program, as defined below. The
options granted pursuant to the Consulting Agreement were cancelled pursuant to
the employment agreement and regranted to the officer at an exercise price of
$1.33 per share. In addition, the Company has granted this individual an option
to purchase 90,000 shares of common stock as of the commencement of the term of
the employment agreement at an exercise price of $1.33 per share which expires
seven years from the date of grant.

F-13
<PAGE> 62

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

The Company has entered into a two-year employment agreement commencing
January 1995 for the services of a Vice-President of Technology and Clinical
Research. The agreement provides for an annual salary of $135,000, as well as 5%
of all amounts allocated by the Board of Directors to the Company's Incentive
Compensation Program. In addition, the Company has granted this individual an
option to purchase 150,000 shares of common stock at an exercise price of $1.33
per share, which expires ten years from the date of grant.

The Company has entered into an employment agreement commencing August 1996
for the services of a Vice President-Finance and Chief Financial Officer. The
agreement provides for an annual salary of $89,000, as well as not less than 5%
of all amounts allocated by the Board of Directors to the Company's Incentive
Compensation Program, as defined below. In addition, the Company has granted
this individual an option to purchase 25,000 shares of the Company's common
stock at an exercise price equal to the public offering price or $8.00 per share
if the public offering is not consummated by January 1, 1997, which expires five
years from the date of the grant. The option to purchase half of the shares
vests on the first anniversary of employment and the balance vests on the second
anniversary. If the Company elects to terminate this agreement, six months'
severance pay, including all salary and benefits, is due. In the event of a
change in control of the Company, the individual will be entitled to receive one
year's compensation, including all salary and benefits, if the agreement is
terminated by either the Company or the individual.

The Company has established a five-year incentive compensation program (the
"Incentive Compensation Program") for certain of its officers and key employees.
The Incentive Compensation Program provides for the establishment of a yearly
pool, commencing with the effective date of a proposed initial public offering,
equal to 5% of the Company's net income before expenses pursuant to the
Incentive Compensation Program, taxes and extraordinary items ("Plan Net
Income"). For the subsequent four fiscal years, such pool shall only be
established in the event that the Company's Plan Net Income equals or exceeds by
at least 5% the Company's Plan Net Income for the prior fiscal year.

8. PROPOSED PUBLIC OFFERING

In May 1996, the Company entered into an agreement with an underwriter in
connection with a proposed public offering of the Company's common stock. The
offering is expected to be consummated in the third quarter of 1996 at a minimum
offering price of $7.00 per share. The automatic conversion of the outstanding
Series A Preferred Stock upon the consummation of the proposed public offering
has been reflected in the pro forma balance sheet as of June 30, 1996.

F-14
<PAGE> 63

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

NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF ANY OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

UNTIL , 1996 ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary......................... 3
Risk Factors............................... 6
Use of Proceeds............................ 14
Dividend Policy............................ 14
Capitalization............................. 15
Dilution................................... 16
Selected Financial Data.................... 17
Management's Discussion and Analysis of
Financial Condition and Results
of Operations............................ 18
Business................................... 21
Management................................. 31
Principal Stockholders..................... 38
Certain Transactions....................... 38
Description of Securities.................. 39
Shares Eligible for Future Sale............ 40
Underwriting............................... 42
Legal Matters.............................. 43
Experts.................................... 43
Additional Information..................... 44
Glossary................................... 45
Index to Financial Statements.............. F-1
</TABLE>

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

LOGO

2,000,000 SHARES

COMMON STOCK
--------------------

PROSPECTUS
--------------------
RODMAN & RENSHAW, INC.

GKN SECURITIES CORP.
, 1996

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 64

APPENDIX I

This Registration Statement contains spaces for the following graphic and
image materials:

INSIDE FRONT COVER

TEXT:

Heading centered: How Enamelon toothpaste will fight tooth decay.

FIRST ILLUSTRATION: Cross section of a tooth showing enamel and dentin.
Arrows indicating calcium and phosphate leaving
tooth enamel.

Line going from location on tooth enamel where
calcium and phosphate are leaving to a magnified
photograph of tooth enamel showing a dark spot
where calcium and phosphate have been reduced.

Text accompanying first
illustration: DEMINERALIZATION
Early tooth decay begins with the loss of calcium
and phosphate and other minerals. This weakens
tooth enamel.

This photo, magnified 250 times, illustrates the
mineral loss in the demineralized area (between the
dark zone and the outer tooth surface).

SECOND ILLUSTRATION: Same cross section of a tooth showing calcium,
phosphate and fluoride entering the tooth.

Line going from location on tooth enamel where
calcium, phosphate, and fluoride are entering tooth
to a magnified photograph of tooth enamel showing
consistent white enamel with no dark spots.

Text accompanying second
illustration: REMINERALIZATION
The new Enamelon toothpaste with the active
ingredient sodium fluoride will strengthen teeth by
enhancing tooth remineralization.

This photo, magnified 250 times, indicates that
using Enamelon toothpaste with the active
ingredient sodium fluoride will facilitate the
process by which minerals such as calcium and
phosphate are introduced into the teeth.

Additional text at the end
of the illustration below
the blue background and
above the "Stabilization"
language: These are photographs of cross sections of
different samples of similarly demineralized tooth
enamel that were taken in connection with the
Company's in vitro testing at the Indiana
University Oral Health Research Institute. The
remineralized area was subjected to fifteen testing
cycles over three days under conditions that
simulated typical conditions in the human mouth.

INSIDE BACK COVER

TEXT: The Enamelon patent pending dual chamber toothpaste
tube dispenses fluoride toothpaste that enhances
tooth remineralization.

ILLUSTRATIONS: Mock up of box for Enamelon toothpaste.

Illustration of toothpaste being squeezed from the
tube onto a toothbrush.
<PAGE> 65

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the issuance and distribution of the securities being registered hereunder.
All of the amounts shown are estimates (except for the SEC and the NASD filing
fees).

<TABLE>
<S> <C>
SEC filing fee................................................. $ 8,758.62
NASD, Inc. filing fee.......................................... 2,800.00
NASDAQ listing fee............................................. 34,500.95
Transfer agent's fee........................................... 5,000.00
Printing and engraving expenses................................ 125,000.00
Legal fees and expenses........................................ 250,000.00
Blue sky filing fees and expenses (including counsel fees)..... 30,000.00
Accounting fees and expenses................................... 100,000.00
Miscellaneous expenses......................................... 43,940.43
----------
Total................................................ $600,000.00
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). The Registrant's By-laws provide
that the Registrant will indemnify its directors, executive officers, other
officers, employees and agents to the fullest extent permitted by Delaware law.

The Registrant's Certificate of Incorporation provides for the elimination
of liability for monetary damages for breach of the directors' fiduciary duty of
care to the Registrant and its stockholders. These provisions do not eliminate
the directors' duty of care and, in appropriate circumstances, equitable
remedies such as injunctive or other forms of non-monetary relief will remain
available under Delaware law. In addition, each director will continue to be
subject to liability for breach of the director's duty of loyalty to the
Registrant, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit, and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision does not affect a director's responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.

Reference is made to Section 7 of the Underwriting Agreement (Exhibit 1.1
to this Registration Statement) which provides for indemnification by the
Underwriters and their controlling persons, on the one hand, and of the
Registrant and its controlling persons on the other hand, against certain civil
liabilities, including liabilities under the Securities Act.

The Registrant has applied for a director and officer liability insurance
policy, under which each director and certain officers of the Company would be
insured against certain liabilities.

ITEM 15. RECENT SALE OF UNREGISTERED SECURITIES.

Effective November 30, 1992, the Company effectuated a 100-for-one stock
split of its Common Stock. In July 1993, the Company effectuated a
1.19688-for-one stock split of its Common Stock. In September 1994, the Company
effectuated a one-for-1.65068 stock split of its Common Stock. In June 1995, the
Company effectuated a three-for-one stock split of its Common Stock. All of the
following information regarding the issuance of shares of the Company's Common
Stock has been adjusted, where appropriate, to

II-1
<PAGE> 66

reflect such stock splits. Since June 1992, the Registrant has sold the
following securities without registration under the Securities Act:

(1) In June 1992, the Registrant sold 3,132,408 shares of its Common
Stock in consideration of $14,400 ($.005 per share) to Dr. Steven R. Fox,
Chairman of the Board of Directors of the Registrant. In December 1992, the
Registrant sold an aggregate of 133,782 shares of its Common Stock to three
persons for the aggregate consideration of $615 ($.005 per share). Eric D.
Horodas and Richard A. Gotterer, Directors of the Registrant, each acquired
65,259 shares of Common Stock.

(2) In December 1992, the Registrant sold an aggregate of 65,268
shares of its Common Stock to six unaffiliated persons in consideration for
$100,000 ($1.53 per share).

(3) In December 1992, the Registrant sold an aggregate of 9,792 shares
of its Common Stock to two unaffiliated persons in consideration for
services rendered to the Registrant valued at $29,970 ($3.06 per share).

(4) In January 1993, the Registrant sold an aggregate 293,619 shares
of its Common Stock to 58 persons for an aggregate consideration of
$900,000 ($3.06 per share). Albert M. Goldstein, formerly a director of the
Registrant, subscribed for and purchased 4,077 shares of the Registrant's
Common Stock in such transaction.

(5) In September 1993, the Registrant sold 4,545 shares of its Common
Stock to one unrelated person in consideration for services rendered to the
Registrant, valued at $16,680 ($3.66 per share).

(6) In November 1993, the Registrant sold 12,723 shares of its Common
Stock to Snow Becker Krauss P.C. in consideration for services rendered to
the Registrant, valued at $46,685 ($3.66 per share). In January 1994, the
Registrant sold 14,538 shares of its Common Stock to Snow Becker Krauss
P.C. in consideration for services rendered to the Registrant, valued at
$64,000 ($4.40 per share). In May 1995, the Registrant sold 105,000 shares
of its Common Stock to SBK Investment Partners, a partnership consisting of
members of Snow Becker Krauss P.C. in consideration for services rendered
to the Registrant, valued at $139,650 ($1.33 per share).

(7) In September 1994, the Registrant sold an aggregate of 118,125
shares of its Common Stock and Warrants to purchase 59,064 shares of Common
Stock at an exercise price of $1.33 a share to 6 unaffiliated persons, for
an aggregate consideration of $157,500 ($1.33 per share ascribing no value
to the Warrants).

(8) In May 1995, the Registrant sold an aggregate of 93,750 shares of
its Common Stock and Warrants to purchase 93,750 shares of Common Stock at
an exercise price of $1.33 a share to 8 persons, for an aggregate
consideration of $125,000 ($1.33 per share ascribing no value to the
Warrants). Eric Horodas, a Director of the Registrant, acquired 9,375
shares of Common Stock and 9,375 Warrants.

(9) In June 1995 the Registrant sold an aggregate of 3,000 shares of
its Common Stock to an unrelated party in consideration for services
rendered to the Registrant, valued at $8,045 ($2.68 per share).

(10) In August through December 1995, the Registrant sold an aggregate
of 648,723 shares of its Common Stock to an aggregate of 112 unaffiliated
persons, for an aggregate consideration of $2,594,892 ($4.00 per share).

(11) In connection with the offering in 15(10) above, the Registrant
authorized the issuance of warrants to purchase an aggregate of 26,276
shares of Common Stock at an exercise price of $4.00 per share, and 1,562
shares of Common Stock at an exercise price of $3.60 per share.

(12) In January 1996 the Registrant sold an aggregate of 6,706 shares
of its Common Stock to an unrelated party in consideration for services
rendered to the Registrant, valued at $26,824 ($4.00 per share).

II-2
<PAGE> 67

(13) In January 1996, the Registrant sold an aggregate of 500,000
Units to an aggregate of 19 unaffiliated persons, for an aggregate
consideration of $2,000,000 ($4.00 per Unit). Each Unit consisted of 1.103
shares of 5% Convertible Preferred Stock and 1 Common Stock Purchase
Warrant, exercisable at $5.75 per share.

(14) In connection with the placement of the offering in 15(13) above,
the Registrant authorized the issuance of warrants to purchase an aggregate
of 100,000 shares of Common Stock at an exercise price of $4.80 per share,
and 23,750 shares of Common Stock at an exercise price of $3.60 per share.

(15) In April 1996, the Registrant sold an aggregate of 6,250 Units to
an unrelated party, for an aggregate consideration of $25,000 ($4.00 per
Unit). Each Unit consisted of 1.103 shares of 5% Convertible Preferred
Stock and 1 Common Stock Purchase Warrant, exercisable at $5.75 per share.

The issuances described in paragraphs 15(1), (3), (5), (6), (11), (12), and
(14) above were made in reliance upon the exemption from the registration
requirements of the Securities Act provided by Section 4(2) of the Securities
Act for transactions by an issuer not involving a public offering. The issuances
described in paragraphs 15(2) and (9) above were made in reliance upon the
exemption from the registration requirements of the Securities Act provided by
Section 4(2) and Rule 506 of Regulation D promulgated thereunder. The issuances
described in paragraphs 15(4) and 15(7), (8), (10), (13) and (15) above were
made to accredited investors in reliance upon the exemption from the
registration requirements of the Securities Act for transactions by an issuer
not involving a public offering provided by Section 4(6) of the Securities Act
and Regulation D promulgated thereunder. The recipients of the securities in
each of the above transactions represented their intentions to acquire the
securities for investment only and not with a view to or a sale in connection
with any distribution thereof. Allen & Company Incorporated acted as the
placement agent for the issuances described in paragraph 15(13) above and
received a fee of 100,000 warrants described in 15(14). Claremont York Capital
acted as a finder in such transaction and received 23,750 warrants as described
in 15(14). No underwriter or underwriting discount or commission was involved in
any other issuance.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

The following Exhibits are filed herewith and made a part hereof.

<TABLE>
<S> <C>
1.1 -- Form of Underwriting Agreement.*
3.1 -- Certificate of Incorporation of the Registrant, as amended.*
3.2 -- Amended and Restated By-laws of the Registrant.*
4.1 -- Specimen Copy of Stock Certificate for shares of Common Stock.
4.2 -- Form of Warrant to be issued to the Representatives.*
4.3 -- Form of Registration Rights Agreement between the Registrant and certain
purchasers of Units.*
5.1 -- Securities Opinion of Snow Becker Krauss P.C.*
10.1 -- Restated Patent License Agreement by and between the Registrant and the
American Dental Association Health Foundation dated as of June 24, 1992.*
10.2 -- Amendment Agreement by and between the Registrant and the American Dental
Association Health Foundation dated as of June 12, 1995.*
10.3 -- Restated Foreign Patent License Agreement by and between the Registrant
and the American Dental Association Health Foundation dated as of
November 18, 1992.*
10.4 -- Foreign License Amendment Agreement by and between the Registrant and the
American Dental Association Health Foundation dated as of June 14, 1995.*
10.5 -- The Registrant's 1993 Stock Option Plan.*
10.6 -- The Registrant's Incentive Compensation Plan.*
10.7 -- Employment Agreement between the Registrant and Dr. Steven R. Fox, as
amended as of June 15, 1996.*
</TABLE>

II-3
<PAGE> 68

<TABLE>
<S> <C>
10.8 -- Amended and Restated Employment Agreement between the Registrant and
D. Brooks Cole dated as of June 1, 1995.*
10.9 -- Employment Agreement between the Registrant and Norman Usen and
Nu-Products dated as of May 1, 1995.*
10.10 -- Employment Agreement between the Registrant and Anthony E. Winston dated
as of January 17, 1995.*
10.11 -- Employment Agreement between the Registrant and Edwin Diaz dated as of
July 29, 1996.
10.12 -- Lease Agreement with Elaine Fox dated December 19, 1995.*
10.13 -- Lease Agreement with Unum Life Insurance Company of America dated
December 27, 1993.*
10.14 -- Lease Agreement with East Brunswick Woods Associates, L.P. dated
November 1995.*
23.1 -- The consent of Snow Becker Krauss P.C. is included in Exhibit 5.1.
23.2 -- The consent of BDO Seidman, LLP, independent certified public
accountants, is included in Part II of this Registration Statement.
23.3 -- Consent of Bruce R. Schemehorn, M.S., scientist who directed the in vitro
studies.*
23.4 -- Consent of Dr. Jason M. Tanzer, scientist who directed the in vivo
studies.*
24.1 -- Powers of Attorney (included on the signature page of this Registration
Statement).
- ---------------
* Previously filed.
</TABLE>

(b) Financial Statement Schedule

All other schedules have been omitted because the information to be set
forth therein is not applicable or is shown in the financial statements or the
notes thereto.

ITEM 17. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes (1) to file, during
any period in which it offers or sells securities, a post-effective
amendment to this registration statement to:

(i) include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");

(ii) reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
registration statement;

(iii) include 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;

(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 which remain unsold at the
termination of the offering.

(b) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required
by the underwriter to permit prompt delivery to each purchaser.

(c) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, 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 Act and is, therefore, unenforceable. In the

II-4
<PAGE> 69

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.

(d) The undersigned Registrant hereby undertakes that (1) For purposes
of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1), or (4) or 497(h) under
the Securities Act as part of this registration statement as of the time it
was declared effective.

(2) 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 that offering of such securities at that time shall be
deemed the initial bona fide offering thereof.

II-5
<PAGE> 70

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF YONKERS, STATE OF NEW
YORK, ON THE 22ND DAY OF OCTOBER 1996.

<TABLE>
<S> <C>
ENAMELON, INC.
By: /s/ DR. STEVEN R.
FOX
---------------------------------------------
DR. STEVEN R. FOX,
CHAIRMAN OF THE BOARD OF DIRECTORS,
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
</TABLE>

POWER OF ATTORNEY

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES STATED:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
<C> <S> <C>
/s/ DR. STEVEN R. FOX Chairman of the Board of October 22, 1996
- ------------------------------------------ Directors and Chief Executive
(DR. STEVEN R. FOX) Officer (Principal Executive
Officer )
/s/ EDWIN DIAZ Vice President - Finance, Chief October 22, 1996
- ------------------------------------------ Financial Officer and
(EDWIN DIAZ) Treasurer
* Director October 22, 1996
- ------------------------------------------
(DR. BERT D. GASTER)
* Director October 22, 1996
- ------------------------------------------
(RICHARD A. GOTTERER)
* Director October 22, 1996
- ------------------------------------------
(ERIC D. HORODAS)
* Director October 22, 1996
- ------------------------------------------
(DR. S.N. BHASKAR)
*By: /s/ DR. STEVEN R.
FOX
- ------------------------------------------
(DR. STEVEN R. FOX,
ATTORNEY-IN-FACT
FOR EACH OF THE
ABOVE-NAMED PERSONS)
</TABLE>

II-6
<PAGE> 71

CONSENT OF COUNSEL

The consent of Snow Becker Krauss P.C. is contained in its opinion which
was filed as Exhibit 5.1 to this Registration Statement.

II-7
<PAGE> 72

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting a part of this
Amendment No. 2 to the Registration Statement of our report dated April 5, 1996,
relating to the financial statements of Enamelon, Inc., which is contained in
that Prospectus.

We also consent to the reference to us under the caption 'Experts' in the
Prospectus.

BDO SEIDMAN, LLP

New York, New York

October 22, 1996

II-8
<PAGE> 73

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
- ---------- ------------------------------------------------------------------------ ------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.*
3.1 -- Certificate of Incorporation of the Registrant, as amended.*
3.2 -- Amended and Restated By-laws of the Registrant.*
4.1 -- Specimen Copy of Stock Certificate for shares of Common Stock.
4.2 -- Form of Warrant to be issued to the Representatives.*
4.3 -- Form of Registration Rights Agreement between the Registrant and certain
purchasers of Units.*
5.1 -- Securities Opinion of Snow Becker Krauss P.C.*
10.1 -- Restated Patent License Agreement by and between the Registrant and the
American Dental Association Health Foundation dated as of June 24,
1992.*
10.2 -- Amendment Agreement by and between the Registrant and the American
Dental Association Health Foundation dated as of June 12, 1995.*
10.3 -- Restated Foreign Patent License Agreement by and between the Registrant
and the American Dental Association Health Foundation dated as of
November 18, 1992.*
10.4 -- Foreign License Amendment Agreement by and between the Registrant and
the American Dental Association Health Foundation dated as of June 14,
1995.*
10.5 -- The Registrant's 1993 Stock Option Plan.*
10.6 -- The Registrant's Incentive Compensation Plan.*
10.7 -- Employment Agreement between the Registrant and Dr. Steven R. Fox, as
amended as of June 15, 1996.*
10.8 -- Amended and Restated Employment Agreement between the Registrant and
D. Brooks Cole dated as of June 1, 1995.*
10.9 -- Employment Agreement between the Registrant and Norman Usen and Nu-
Products dated as of May 1, 1995.*
10.10 -- Employment Agreement between the Registrant and Anthony E. Winston dated
as of January 17, 1995.*
10.11 -- Employment Agreement between the Registrant and Edwin Diaz dated as of
July 29, 1996.
10.12 -- Lease Agreement with Elaine Fox dated December 19, 1995.*
10.13 -- Lease Agreement with Unum Life Insurance Company of America dated
December 27, 1993.*
10.14 -- Lease Agreement with East Brunswick Woods Associates, L.P. dated
November 1995.*
23.1 -- The consent of Snow Becker Krauss P.C. is included in Exhibit 5.1.
23.2 -- The consent of BDO Seidman, LLP, independent certified public
accountants, is included in Part II of this Registration Statement.
23.3 -- Consent of Bruce R. Schemehorn, M.S., scientist who directed the in
vitro studies.*
23.4 -- Consent of Dr. Jason M. Tanzer, scientist who directed the in vivo
studies.*
24.1 -- Powers of Attorney (included on the signature page of this Registration
Statement).
</TABLE>

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

<TABLE>
<S> <C>
* Previously filed.
</TABLE>

<PAGE> 1
EXHIBIT 4.1

COMMON STOCK COMMON STOCK
[SEAL] [SEAL]
CUSIP 292499 10 0

SEE REVERSE FOR CERTAIN DEFINITIONS

ENAMELON, INC.

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

THIS CERTIFIES that

SPECIMEN

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK,
$0.001 PAR VALUE PER SHARE, OF

ENAMELON, INC. transferable on the books of the Corporation by the holder
thereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued and shall be held subject to all the provisions of the
Certificate of Incorporation. This certificate is not valid unless countersigned
by the Transfer Agent.

WITNESS the seal of the Corporation and the facsimile signatures of its
authorized officers.

Dated:

[ENAMELON, INC. CORPORATE SEAL OF DELAWARE 1992]

/s/ Norman Usen /s/ David B. Cole
SPECIMEN SPECIMEN
SECRETARY PRESIDENT

Countersigned and Registered:
NORTH AMERICAN TRANSFER CO.
Transfer Agent and Registrar

Authorized Signature
<PAGE> 2
The Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional, or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. Such requests shall be made to the Corporation's Secretary at the
principal office of the Corporation.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - ______________ Custodian ________________
(Cust) (Minor)
under Uniform Gifts to Minors Act
_________________________________________
(State)

Additional abbreviations may also be listed though not in the above list.

For value received, _________________________ hereby sell, assign and
transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________

______________________________________

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________________________________________________

_________________________________________________________________________ Shares
of the capital stock represented by the within Certificate and do hereby
irrevocably constitute and appoint

_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.

Dated ______________________________

__________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed By

______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

<PAGE> 1
EXHIBIT 10.11

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, entered into as of the 29th day of July 1996, by
and between ENAMELON, INC., a Delaware corporation with its principal place of
business at 15 Kimball Avenue, Yonkers, New York 10704 (the "Company"), and
EDWIN DIAZ, residing at 384 Stony Brook Drive, Bridgewater, New Jersey 08807
(the "Employee").

W I T N E S S E T H :

WHEREAS, the Company is desirous of employing the Employee upon the
terms and conditions contained herein; and

WHEREAS, the Employee is desirous of accepting employment with the
Company upon the terms and conditions contained herein.

NOW, THEREFORE, in consideration of the mutual premises contained
herein and for other good and valuable consideration, the parties hereto hereby
agree as follows:

1. Employment

The Company hereby employs the Employee and the Employee hereby accepts
employment upon the terms and conditions set forth herein.

2. Term

The term of this Agreement shall commence on the date hereof and shall
continue until terminated by the Company or the Employee in their sole
discretion, subject to the termination provisions of Sections 6 and 10 and the
other provisions of this Agreement.

3. Services To Be Rendered

(a) During the term of this Agreement, the Employee shall
serve the Company in an executive capacity and shall perform such duties as are
determined from time to time by the Company's Chairman or President. Unless
prevented by death or disability, the Employee shall devote his full business
time, allowing for vacations and national holidays, as set forth in Sections
5(e) and (f) hereof, and illnesses, exclusively to the business and affairs of
the Company, and shall use his best efforts, skill and abilities to promote the
Company's interests.

(b) The Employee shall serve as the Company's Vice President
and Chief Financial Officer and shall perform duties consistent with those of a
chief financial officer and such other duties as shall be designated from time
to time by the Board of Directors, Chairman or President of the Company. The
Employee will be one of the Company's principal operating officers and will
conduct and manage the Company's business in accordance with policies
established by the Company from time to time. The precise services of the
Employee may be extended or curtailed from time to time at the direction and in
the sole discretion of the

<PAGE> 2
Company's Chairman or President. As an officer of the Company, the Employee
shall be entitled to all rights of indemnification as may be provided to
officers by applicable Delaware law. Nothing herein shall be construed as
requiring the Company, or anybody else, to cause the election of the Employee as
a Director of the Company.

4. Compensation

For the services rendered hereunder, the Company shall pay and
the Employee shall accept the following compensation:

(a) From the commencement of the term hereof, the Employee
shall receive a base annual salary of $89,000 subject to increase from time to
time as determined by the Board of Directors.

(b) The Employee shall participate in an executive
compensation plan to be established by the Board of Directors of the Company.
The Employee shall be entitled to not less than 5% of any amounts allocated by
the Board of Directors each year during the term hereof to such plan for the
purpose of providing an incentive to key employees. In no event, however, shall
Employee receive more than two times his base salary, inclusive of any increases
described above. In addition, in the event the term hereof is not commensurate
with the fiscal year of the Company or the Employee is not employed hereunder
for a full fiscal year, any such amounts due Employee hereunder pursuant to the
terms of an executive compensation plan shall be pro-rated for any such fiscal
year during which the Employee was not employed for the full twelve month period
thereof.

(c) The Company will use its best efforts to procure (i) a
term life insurance policy designating the Employee as the insured in an amount
equal to not less than two times the Employee's base annual salary, inclusive of
any increases described above, the terms of which policy shall be consistent
with those of the other officers of the Company, and (ii) a disability insurance
policy designating the Employee as the insured and providing for disability
income to the Employee equal to 60% of the Employee's base annual salary,
inclusive of any increases described above. The beneficiary of such policies
shall be designated by the Employee. In the event the Company is unable to
procure either of such policies, nothing hereunder shall obligate the Company to
remit any payments which would have been used to pay the premiums for such
policy to Employee.

(d) The Employee's salary shall be payable subject to such
deductions as are then required by law and such further deductions as may be
agreed to by the Employee, in accordance with the Company's prevailing salary
payroll practices.

(e) The Employee shall be granted as of the date hereof
qualified options to purchase 25,000 shares of the Company's Common Stock in
accordance with the terms of the Company's Stock Option Plan at an exercise
price equal to the public offering price of the Company's Common Stock on the
effective date of the Registration Statement that is now on file

-2-

<PAGE> 3
with the Securities and Exchange Commission or, if the Registration Statement is
not declared effective by January 1, 1997, $8.00 per share. Options to purchase
12,500 shares shall become exercisable on the first anniversary hereof, and
options to purchase the remaining 12,500 shares shall become exercisable on the
second anniversary hereof; provided, however, that if the Employee's employment
is terminated before the second anniversary hereof by the Company without cause
or as a result of his death or disability, then such options shall become
exercisable ratably based upon the proportion that the number of full calendar
months for which the Employee was employed prior to termination bears to 24.
Such options shall remain exercisable for a period of five years after the date
hereof.

5. Benefits and Expenses

(a) The Employee shall participate in all fringe benefits such
as medical, disability, hospital and health insurance plans, profit sharing,
pension and stock option plans, other forms of incentive compensation plans,
life insurance and other plans, if any, which the Company may generally make
available to its executive employees, except that the Company shall pay 70% of
the cost of hospital and health insurance coverage maintained for him and his
family.

(b) In the event that the Employee's employment by the Company
is terminated for any reason, the Employee shall have the right to purchase from
the Company any insurance policies on his life owned by the Company for a price
equal to the cash surrender value of the policies at the date of such
termination, plus prepaid premiums, and to acquire any disability income
insurance policies maintained for him as provided in such policies. The right to
purchase shall be exercised by the Employee by written notice to the Company not
less than thirty (30) days after the date of such termination, and the purchase
price for such policies shall be paid by the Employee to the Company.

(c) During the term of this Agreement, the Company shall, upon
presentation of proper vouchers, reimburse the Employee for all reasonable
expenses incurred by him directly in connection with his performance of services
as an officer and employee of the Company.

(d) As a condition of his employment, the Employee shall
maintain an automobile. Accordingly, the Company shall lease a Nissan Maxima or
comparable automobile for use by the Employee in performing his duties
hereunder. In addition, the Company shall pay or reimburse the Employee for
tolls, parking, gasoline, maintenance, and other expenses with respect to the
operation of such automobile incurred in connection with the performance of his
duties hereunder, which shall be paid upon presentation of original invoices.

(e) The Employee shall be entitled to three (3) weeks of paid
vacation per calendar year, provided that the Employee shall not take more than
two consecutive weeks of vacation during any calendar year. Vacation
entitlements are non-cumulative and if the Employee fails to use any or all of
his three-week vacation allotment during a particular calendar year, such
vacation shall be deemed forfeited forever.

-3-

<PAGE> 4
(f) The Employee shall receive as paid days off all national
holidays, sick days, and personal days that the Company, pursuant to established
policy, recognizes and observes.

6. Disability and Death

(a) In the event of the permanent disability (as hereinafter
defined) of the Employee, the Company shall have the right thereafter to
terminate this Agreement with the Employee by sending written notice of such
termination to the Employee, and thereupon this Agreement shall terminate. For
purposes hereof, "permanent disability" shall mean the inability of the Employee
to perform his duties hereunder due to physical or mental illness, including
drug abuse and alcoholism, for a continuous period of three (3) months or for
six (6) months in any period of twelve (12) consecutive months. In addition, the
"permanent disability" of the Employee shall also have been deemed to have
occurred if the Employee shall have had appointed a guardian or conservator for
him or such appointment shall have been made by a court of competent
jurisdiction.

(b) The parties hereto hereby agree that if a disagreement
arises as to whether a condition of disability exists hereunder, the Employee
shall submit to a physical examination by a physician of his own choice and by a
physician of the Company's choice. If either physician so chosen does not agree
as to the determination of disability, the two physicians shall mutually select
a third qualified physician, whose determination shall be conclusive upon all
parties. Each party shall bear the expense of the physician selected by such
party and the expense of the third physician shall be borne equally by the
Employee and the Company. The Employee hereby consents to the examination
provided for herein and waives, if applicable, any privilege which exists
between any physician and the Employee as a result of such examination.

(c) This Agreement shall also terminate upon and as of the
date of death of the Employee at any time during the term of this Agreement.

(d) Notwithstanding anything contained herein to the contrary,
the Employee shall be compensated as set forth in this Agreement, through the
date of termination of this Agreement due to permanent disability or death,
provided, however, in the event of permanent disability any such compensation
shall be reduced by any amounts payable to Employee from or in respect of
disability insurance plans for which the Company has paid any portion of the
premiums therefore and which payments are received by the Employee for the
period of such incapacity or illness.

7. Covenants and Restrictions

The Employee covenants that, except in carrying out his duties
hereunder, during the term of his employment and for a period of eighteen (18)
months following the date of termination of employment hereunder, irrespective
of the reasons for any such termination and unless such longer period of time is
specifically set forth herein:

-4-

<PAGE> 5
(a) The Employee will not, directly or indirectly, own any
interest in, participate or engage in, assist, render any services (including
advisory services) to, become associated with, work for, serve (in any capacity
whatsoever, including, without limitation, as an employee, consultant, advisor,
agent, independent contractor, officer or director) or otherwise become in any
way or manner connected with the ownership, management, operation, or control
of, any individual, business, firm, corporation, partnership or other entity
(collectively referred to herein as a "Person") that engages in, or assists
others in engaging in or conducting any business, which deals, directly or
indirectly, in products or services competitive with the Company's product line
or services, as described below, anywhere in the world (a "Competitor");
provided, however, that the Employee shall have the right to act as a director
of a corporation for the benefit of the Company with the consent of the
Company's Board of Directors; and provided, further, that Employee shall have
the right to own or acquire securities issued by any corporation whose
securities are listed with a national securities exchange or are traded in the
over-the-counter market, provided that the Employee at no time owns, directly or
indirectly, beneficially or otherwise, one (1%) percent or more of any class of
any such corporation's outstanding capital stock. For purposes hereof, "products
or services competitive with the Company's product line or services" shall mean
any products or services which have as their primary purpose or function or
which are marketed, promoted or sold as having the effect of repairing,
remineralizing, rebuilding, or desensitizing teeth or preventing or retarding
tooth decay and/or cavities.

(b) The Employee shall not sell any products or services to,
or solicit any sales of products or services from, any customer of the Company
on behalf of a Competitor. The term "customer" shall mean any Person (including
any Person who controls, is under common control with or has the ability to
control any such Person) to whom the Company has provided goods or services
within the twenty-four (24) month period prior to the termination of Employee's
employment hereunder or to whom the Employee had actively solicited business in
an attempt to develop such Person as a customer of the Company during the term
hereof, or any licensee of the Company who was a licensee of the Company at any
time during the twenty-four (24) month period prior to the termination of this
Agreement.

(c) The Employee hereby covenants and agrees that the Employee
will not at any time subsequent to the date hereof, reveal, divulge, or make
known to any Person any Confidential Information (as hereinafter defined) made
known to the Employee or of which Employee has become aware, regardless of
whether developed, prepared, devised or otherwise created in whole or in part by
the efforts of the Employee and except to the extent so authorized in writing by
the Company in order to carry out the terms of this Agreement or except as
required by law. For purposes of this Agreement, the term "Confidential
Information" shall mean (i) any technical, scientific or engineering information
relating to the Company's products and/or services, (ii) information relating to
any customer of the Company, including without limitation, the names, addresses,
telephone numbers and sales records of, or pertaining to any such customer, and
(iii) price lists, methods of operation and other information pertaining to the
Company and which the Company, in its sole discretion, regards as confidential
and in the nature of trade secrets. Notwithstanding anything contained herein to
the contrary, Confidential

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<PAGE> 6
Information as used herein shall not include that which (i) was in the public
domain prior to receipt hereunder in the same context as the disclosure made
hereunder, (ii) the Employee can show was in his possession and in the same
context prior to his receipt, (iii) subsequently becomes known to the Employee
as a result of disclosure by third parties not in the course of this Agreement
and as a matter of right and without restriction on disclosure, or (iv)
subsequently comes into the public domain in the same context as the disclosure
by the Company through no fault of the Employee.

(d) The Employee further covenants and agrees that the
Employee will retain all of such Confidential Information in trust for the sole
benefit of the Company, and will not divulge or deliver or show any of such
Confidential Information to any unauthorized person and will not make use of or
in any manner seek to turn to account any of such Confidential Information in an
independent business however unrelated to the business of the Company. The
Employee further agrees that upon the termination of this Agreement or upon the
request of the Company, the Employee will either supply or return to the
Company, in accordance with the Company's request, all Confidential Information
in the Employee's possession, including, without limitation, all account lists,
records and data related to all customers of the Company.

(e) The Employee will not solicit, hire or seek to solicit or
hire any of the Company's personnel, irrespective of the capacities in which
such personnel are employed, including any agent, independent contractor, or
consultant to the Company, nor shall the Employee induce or attempt to induce
any of the Company's personnel to leave the employ of the Company to work for
the Employee or otherwise, or to terminate their relationship with the Company.

(f) The Employee acknowledges that his breach or threatened
violation of any of the restrictive covenants contained in this Section 7 may
cause irreparable damage to the Company for which remedies at law would be
inadequate. The Employee further acknowledges that the restrictive covenants set
forth herein are essential terms and conditions of this Agreement. The Employee
therefore agrees that the Company shall be entitled to a decree or order by any
court of competent jurisdiction enjoining such threatened or actual violation of
any of such covenants. Such decree or order, to the extent appropriate, shall
specifically enforce the full performance of any such covenant by the Employee
and the Employee hereby consents to the jurisdiction of any such court of
competent jurisdiction. This remedy shall be in addition to all other remedies
available to the Company at law or equity. If any portion of this Section 7 is
adjudicated to be invalid or unenforceable, this Section 7 shall be deemed
amended to delete therefrom the portion so adjudicated, such deletion to apply
only with respect to the operation of this Section 7 in the jurisdiction in
which such adjudication is made.

8. Proprietary Property

(a) The parties hereto hereby agree that Proprietary Property
(as hereinafter defined) shall be the sole and exclusive property of the
Company, except as provided below. For purposes hereof, Proprietary Property
shall mean inventions, discoveries, improvements and

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<PAGE> 7
ideas, whether patentable or not, made solely by the Employee or jointly with
others, which relate to the Company's business, including any of its products,
services, processes, technology, research, product development, marketing
programs, manufacturing operations, or engineering activities.

(b) The Employee shall promptly disclose to the Company in
writing all Proprietary Property, including those in the formative stages,
created during the term hereof, irrespective of whether created during normal
business hours. In addition, the Employee hereby agrees to promptly disclose to
the Company all Proprietary Property created subsequent to the date of
termination hereof, irrespective of the reasons for termination hereof, which
relate to or constitute an improvement on Proprietary Property or Confidential
Information, as defined herein.

(c) The Employee hereby agrees and acknowledges that the
Employee shall have no right, title or interest in or with respect to any
Proprietary Property, except as described below, and will during the term hereof
or at any time subsequent to the termination hereof, at the Company's request
and expense, execute any and all patent applications and assignments to the
Company and take any all action as required by the Company to perfect and
maintain the Company's rights and interests in and with respect to the
Proprietary Property.

(d) The Employee hereby agrees to maintain written records
concerning the Proprietary Property and agrees to make those records available
to the Company at all times.

(e) Notwithstanding anything contained herein to the contrary,
Proprietary Property shall not include inventions or discoveries with respect to
which all of the following conditions apply:

(i) no equipment, supplies, facilities or
Confidential Information of the Company was used in
its development;

(ii) it does not relate the Company's business and/or
any proposed or planned products or services of the
Company, including any research and development
activities; and

(iii) it does not result from any work performed by
the Employee for the Company.

(f) During or subsequent to the Employee's employment by
Company, the Employee will not, directly or indirectly, lecture upon, publish
articles concerning, use, disseminate, disclose, sell or offer for sale any
Proprietary Property without the Company's prior written permission.

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<PAGE> 8
9. Prior Agreements

The Employee represents that he is not now under any written
agreement, nor has he previously, at any time, entered into any written
agreement with any person, firm or corporation, which would or could in any
manner preclude or prevent him from giving freely and the Company receiving the
exclusive benefit of his services.

10. Termination Provisions

(a) In addition to, and not in lieu of, the
termination provisions set forth in Section 6 of this Agreement, the employment
of the Employee hereunder may be terminated by the Company in the event that the
Employee (i) breaches this Agreement in any material respect or (ii) engages in
any act of dishonesty with respect to the Company, including any act of willful
misfeasance (the foregoing reasons for termination set forth under clauses (i)
and (ii) above are sometimes referred to hereinafter as termination for
"Cause"). Such termination of the Employee's employment hereunder shall be
effective immediately upon delivery of written notice to the Employee setting
forth the reason or reasons for such termination. Upon the termination of this
Agreement in accordance with this Section 10(a), the Company shall not be
obligated to make any further payments hereunder to the Employee.

(b) Notwithstanding any provisions in this Agreement
to the contrary, the Company may terminate the employment of the Employee
hereunder without Cause, but in such event the Company shall be obligated to pay
the Employee's base annual salary for a period of six (6) months after the
Company gives written notice of such termination (such period being referred to
herein as the "Remainder Term"), and the Company shall also continue for the
Remainder Term to permit the Employee to receive or participate in all fringe
benefits available to him pursuant to Section 5(a) above; provided, however,
that from time to time during the Remainder Term the Employee shall provide such
service to the Company as it shall reasonably request relating to the duties of
the Employee during the term of this Agreement; and provided, further, that
during the Remainder Term any amounts payable to the Employee pursuant to this
Section 10(b), and any fringe benefits which he receives or in which he
participates pursuant to this Section 10(b), shall be reduced by any payments or
fringe benefits the Employee shall receive during the Remainder Term from any
other source of employment which is unaffiliated with the Company.

(c) In the event of a "change of control" (as
hereinafter defined) of the Company during the term of the Employee's employment
hereunder, the Employee may terminate his employment with the Company by giving
thirty (30) days' notice thereof within six months after the occurrence of such
change of control. If the Employee terminates his employment under this Section
10(c) or is terminated without cause within six (6) months after a change of
control, the Company shall pay the Employee an amount equal to his then annual
base salary pursuant to Section 4 above plus a ratable portion of the amount
paid to him under Section 4(b) with respect to the preceding calendar year, if
any, based upon the proportion that

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<PAGE> 9
the number of full calendar months that he was employed during the year of
termination bears to 12. The Employee shall have the option to have such payment
made in a lump sum payable on the date of termination or in three equal
installments payable upon termination and two months and four months after
termination. The Company shall also continue for such period to permit the
Employee to receive or participate in all fringe benefits available to him
pursuant to Section 5(a) above for a period of one year after the termination of
his employment. A "change of control" shall be deemed to occur when any Person
or group of Persons directly or indirectly (through a subsidiary or otherwise),
(A) acquires or is granted the right to acquire, directly or through a merger or
similar transaction, a majority of Company's outstanding voting securities, or
(B) acquires all or substantially all of the Company's assets.

11. Miscellaneous

(a) This Agreement shall inure to the benefit of and
be binding upon the Company, its successors and assigns, and upon the Employee,
his heirs, executors, administrators, legatees and legal representatives.

(b) Should any part of this Agreement, for any reason
whatsoever, be declared invalid, illegal, or incapable of being enforced in
whole or in part, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated,
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement without including therein
any portion which may for any reason be declared invalid.

(c) This Agreement shall be construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in such State without application of the principles of
conflicts of laws of such State.

(d) This Agreement and all rights hereunder are
personal to the Employee and shall not be assignable, and any purported
assignment in violation thereof shall be null and void. Any person, firm or
corporation succeeding to the business of the Company by merger, consolidation,
purchase of assets or otherwise, shall assume by contract or operation of law
the obligations of the Company hereunder; provided, however, that the Company
shall, notwithstanding such assumption and/or assignment, remain liable and
responsible for the fulfillment of the terms and conditions of the Agreement on
the part of the Company.

(e) This Agreement constitutes the entire agreement
between the parties hereto with respect to the terms and conditions of the
Employee's employment by the Company, as distinguished from any other
contractual arrangements between the parties pertaining to or arising out of
their relationship, and this Agreement supersedes and renders null and void any
and all other prior oral or written agreements, understandings, or commitments
pertaining to the Employee's employment by the Company. This Agreement may only
be amended upon the written agreement of both parties hereto.

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<PAGE> 10
(f) Any notice, statement, report, request or demand
required or permitted to be given by this Agreement shall be in writing, and
shall be sufficient if delivered in person or if addressed and sent by certified
mail, return receipt requested, postage prepaid, to the parties at the addresses
set forth above, or at such other place that either party may designate by
notice in the foregoing manner to the other. If mailed as aforesaid, any such
notice shall be deemed given three (3) days after being so mailed.

(g) The failure of either party to insist upon the
strict performance of any of the terms, conditions and provisions of this
Agreement shall not be construed as a waiver or relinquishment of future
compliance therewith, and said terms, conditions and provisions shall remain in
full force and effect. No waiver of any term or any condition of this Agreement
on the part of either party shall be effective for any purpose whatsoever unless
such waiver is in writing and signed by such party.

(h) The provisions of Sections 6, 7, 8, 10 and 11 of
this Agreement shall survive any termination of this Agreement

(i) The headings of the paragraphs herein are
inserted for convenience and shall not affect any interpretation of this
Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.

ENAMELON, INC.

By: /s/ Dr. Steven R. Fox
-------------------------
Steven R. Fox, D.D.S.
Chief Executive Officer

By: /s/ Edwin Diaz
------------------------
Edwin Diaz

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