U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the transition period from ________ to __________
Commission File No. 000-27836
ORTHODONTIX, INC.
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(Exact name of small business issuer as specified in its
charter)
Florida 65-0643773
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1428 Brickell Avenue, Suite 105
Miami, Florida 33131
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(Address of principal executive offices)
(305) 371-4112
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(Issuer's Telephone Number)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports);
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ].
On May 9, 2003, the number of shares of outstanding Common Stock of the
issuer was 2,915,428.
Traditional Small Business Disclosure Format (check one) Yes [X] No [ ]
Documents Incorporated by reference None
ORTHODONTIX, INC.
FORM 10-QSB
QUARTER ENDED March 31, 2003
TABLE OF CONTENTS
PART I
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis or Plan of Operation 1
Item 3. Controls and Procedures 2
PART II
Item 1. Legal Proceedings 3
Item 2. Changes in Securities and Use of Proceeds 3
Item 3. Defaults upon Senior Securities 3
Item 4. Submission of Matters to a Vote of Security Holders 3
Item 5. Other Information 3
Item 6. Exhibits and Reports on Form 8-K 3
SIGNATURES 4
CERTIFICATIONS 5
INDEX TO FINANCIAL STATEMENTS F-1
EXHIBIT INDEX 14
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited, condensed financial statements included herein,
commencing at page F-1, have been prepared in accordance with the
requirements of Regulation S-B and, therefore, omit or condense certain
footnotes and other information normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America. In the opinion of management, all adjustments
(including all normal recurring adjustments) necessary for a fair
presentation of the financial information for the interim periods reported
have been made.
Results of operations for the three months ended March 31, 2003 are not
necessarily indicative of the results of operations expected for the year
ending December 31, 2003.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion with regard to the Company's financial
condition and operating results contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are based on current plans and expectations of Orthodontix,
Inc. (the "Company") and involve risks and uncertainties that could cause
actual future activities and results of operations to be materially different
from those set forth in the forward-looking statements. Important factors
that could cause actual results to differ include, among others, the
Company's inability to consummate an acquisition of an operating business on
terms favorable to the Company or, in the event the Company does consummate
the transaction contemplated, the Company's ability to successfully manage
and operate the combined business.
The discussion of the Company's financial condition and plan of
operation should be read in conjunction with the Company's unaudited,
condensed financial statements and notes thereto included elsewhere in this
Report and the Company's Annual Report on Form 10-KSB filed with the
Securities and Exchange Commission.
FINANCIAL RESULTS FOR THE QUARTER ENDED MARCH 31, 2003
For the quarter ended March 31, 2003, the Company recorded a net loss of
approximately $32,500 or $0.01 per share. Included in the financial results
for the quarter ended March 31, 2003, were general and administrative
expenses of approximately $30,300, other operating expense of approximately
$4,200, and interest and other income of approximately $2,100.
The Company does not expect to generate operating revenues or net income
until such time as it effects a business combination with an operating
company. However, in the event the Company does consummate a merger or an
acquisition of an operating company, there can be no assurances that the
combined operation will operate profitably.
1
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2003, the Company had cash and cash equivalents of
approximately $819,400 and total liabilities of approximately $81,100. The
Company's cash is primarily invested in money market accounts. The Company
continues to anticipate that the primary uses of working capital will include
general and administrative expenses and costs associated with seeking to
locate and consummate a business combination. The Company believes that its
operating funds will be sufficient for its cash expenses for at least the
next twelve months.
PLAN OF OPERATION
Management of the Company intends to continue devoting substantially all
of its time to consummating a merger or acquisition with an operating
business and has evaluated numerous companies and other business combinations
since July 2001. The Company has focused its efforts on businesses operating
in selected industries including aircraft maintenance and related service
companies, health care, pharmaceutical, banking and financial services. In
the event the Company locates an acceptable operating business, the Company
intends to effect the transaction utilizing any combination of its common
stock, cash on hand, or other funding sources that the Company reasonably
believes are available. The Company currently has no contractual commitment
with regard to effecting an acquisition or other business combination with an
operating company.
Although the Company believes that it will be successful in consummating
a business combination with an operating company, there can be no assurances
that the Company will enter into such a transaction in the near term or on
terms favorable to the Company, or that other funding sources will be
available.
ITEM 3. CONTROLS AND PROCEDURES
On May 5, 2003, the Company's management concluded its evaluation of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures. As of the Evaluation Date, the Company's President
and Chief Executive Officer and its Acting Chief Financial Officer concluded
that the Company maintains disclosure controls and procedures that are
effective in providing reasonable assurance that information required to be
disclosed in the Company's reports under the Securities Exchange Act of 1934
(Exchange Act) is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to the Company's management,
including its President and Chief Executive Officer and its Acting Chief
Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. The Company's management necessarily applied its
judgment in assessing the costs and benefits of such controls and procedures,
which, by their nature, can provide only reasonable assurance regarding
management's control objectives. There have been no significant changes in
the Company's internal controls or in other factors that could significantly
affect these controls subsequent to the Evaluation Date.
2
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended March 31, 2003, no matters were submitted to a
vote of security holders of the Company through the solicitation of proxies
or otherwise.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 99.1: Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.2: Certification of Acting Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None.
3
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ORTHODONTIX, INC.
(Registrant)
Dated: May 12, 2003 By: /s/ Glenn L. Halpryn
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Glenn L. Halpryn
Chairman and President (Principal
Executive Officer)
Dated: May 12, 2003 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
(Principal Financial and
Accounting Officer)
4
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Glenn L. Halpryn, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
Orthodontix, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the
period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Dated: May 12, 2003 By: /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
5
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Alan Jay Weisberg, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
Orthodontix, Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the
period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Dated: May 12, 2003 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
6
INDEX TO FINANCIAL STATEMENTS
Pages
Condensed Balance Sheets as of March 31, 2003 (Unaudited)
and December 31, 2002 F-2
Condensed Statements of Operations
for the Three Months Ended March 31, 2003 and 2002 (Unaudited) F-3
Condensed Statement of Changes in Stockholders' Equity
for the Three Months Ended March 31, 2003 (Unaudited) F-4
Condensed Statements of Cash Flows
for the Three Months Ended March 31, 2003 and 2002 (Unaudited) F-5
Notes to the Condensed Financial Statements F-6
F-1
ORTHODONTIX, INC.
CONDENSED BALANCE SHEETS
MARCH 31, 2003 DECEMBER 31,
ASSETS (UNAUDITED) 2002
--------------- ------------
Current assets:
Cash and cash equivalents $ 819,368 $ 807,639
Prepaid expenses and other current assets 25,368 24,323
--------------- ------------
Total current assets 844,736 831,962
Notes and other receivables - 43,258
--------------- ------------
Total assets $ 844,736 $ 875,220
=============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 81,077 $ 79,074
--------------- ------------
Total current liabilities 81,077 79,074
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Commitments
Stockholders' equity:
Preferred stock, $.0001 par value, 100,000,000 shares
authorized, no shares issued and outstanding - -
Common stock, $.0001 par value, 100,000,000 shares authorized,
2,915,428 shares issued and outstanding at March 31, 2003
and December 31, 2002 292 292
Additional paid-in capital 4,232,821 4,232,821
Accumulated deficit (3,469,454) (3,436,967)
--------------- ------------
Total stockholders' equity 763,659 796,146
--------------- ------------
Total liabilities and stockholders' equity $ 844,736 $ 875,220
=============== ============
The accompanying notes are an integral part of these condensed financial statements.
F-2
ORTHODONTIX, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2003 2002
--------- ---------
General and administrative expenses $ 30,301 $ 40,623
Other operating expense 4,250 -
--------- ---------
Net operating loss (34,551) (40,623)
--------- ---------
Other income (expense):
Interest income 2,064 4,715
Other income - 150
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Total other income 2,064 4,865
--------- ---------
Net loss $(32,487) $(35,758)
========= =========
Loss per common and common
equivalent share:
Basic $ (0.01) $ (0.01)
========= =========
Diluted $ (0.01) $ (0.01)
========= =========
Weighted average number of common and
common equivalent shares outstanding -
basic and diluted 2,915,428 2,915,428
========= =========
The accompanying notes are an integral part of these condensed financial statements.
F-3
ORTHODONTIX, INC.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
for the three months ended March 31, 2003
Additional Total
Common Stock Paid-In Accumulated Stockholders'
Shares Amounts Capital Deficit Equity
------------ ------------- ------------- ------------- ----------------
Balance, December 31, 2002 2,915,428 $ 292 $ 4,232,821 $ (3,436,967) $ 796,146
Net loss for the period - - - (32,487) (32,487)
------------ ------------- ------------- ------------- ----------------
Balance, March 31, 2003 2,915,428 $ 292 $ 4,232,821 $ (3,469,454) $ 763,659
============ ============= ============== ============= ================
The accompanying notes are an integral part of these condensed financial statements.
F-4
ORTHODONTIX, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2003 2002
--------- ---------
Cash flows from operating activities:
Net loss $ (32,487) $ (35,758)
Loss on collection of notes receivable 4,250 -
Adjustments to reconcile net loss to net cash used in
operating activities:
Changes in assets and liabilities (20,915) (26,498)
--------- ---------
Net cash used in operating activities (49,152) (62,256)
--------- ---------
Cash flows from investing activities:
Payment of notes receivable 60,881 9,233
Proceeds from the sale of fixed assets - 150
--------- ---------
Net cash provided by investing activities 60,881 9,383
--------- ---------
Net increase (decrease) in cash and cash equivalents 11,729 (52,873)
Cash and cash equivalents, beginning of period 807,639 915,635
--------- ---------
Cash and cash equivalents, end of period $ 819,368 $ 862,762
========= =========
The accompanying notes are an integral part of these condensed financial statements.
F-5
ORTHODONTIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2003
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited condensed financial statements of Orthodontix,
Inc. ("Orthodontix" or the "Company") presented herein do not include all
disclosures required by accounting principles generally accepted in the
United States of America for a complete set of financial statements. In
the opinion of management, these financial statements include all
adjustments, including normal recurring adjustments, necessary for a fair
presentation of the results of interim periods.
The results of operations for the three months ended March 31, 2003 are
not necessarily indicative of the results of operations to be expected
for the year ending December 31, 2003. The unaudited condensed
financial statements should be read in conjunction with the financial
statements and footnotes thereto included in the Company's Annual Report
on Form 10-KSB as filed with the Securities and Exchange Commission on
March 28, 2003.
2. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following:
March 31, 2003 December 31,
(Unaudited) 2002
-------------- -----------
Accounts payable $ 4,214 $ 4,214
Accrued expenses 76,863 74,860
-------------- -----------
$ 81,077 $ 79,074
============== ===========
3. EARNINGS PER SHARE:
Basic earnings per share is calculated by dividing the net income or
loss by the weighted average number of common and potential common
shares outstanding during the period. Diluted earnings per share is
calculated by dividing net income or loss by the weighted average
number of common shares and potential common equivalent shares
outstanding during the period. Potential common equivalent shares
consist of the dilutive effect of outstanding options calculated using
the treasury stock method. There are no potential common equivalent
shares for the three months ended March 31, 2003 and 2002.
F-6
ORTHODONTIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2003, Continued
(UNAUDITED)
4. LOSS ON COLLECTION OF NOTE RECEIVABLE:
At December 31, 2002, the Company had a note receivable as a result of
the termination of the affiliation with a Founding Practice with an
outstanding balance of approximately $65,000. Such note receivable was
due in monthly payments through August 2004. On March 31, 2003, the
Company entered into an agreement for the Founding Practice to settle
the outstanding balance on the note receivable for a payment of
approximately $60,900. As a result of the agreement, the Company
recorded other operating expenses in the amount $4,250 for the three
months ended March 31, 2003.
F-7
EXHIBIT INDEX
Exhibit No. Description
99.1 Certification of Chief Executive Officer, pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Statement of Acting Chief Financial Officer, pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
14
Exhibit 99.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report on Form 10-QSB of Orthodontix,
Inc. for the period ended March 31, 2003 as filed with the Securities
and Exchange Commission (the "Report"), I, Glenn L. Halpryn, Chief Executive
Officer of Orthodontix, Inc., hereby certify pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
Orthodontix, Inc.
Dated: May 12, 2003 By: /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
A signed original of this written statement required by Section 906 has been
provided to Orthodontix, Inc. and will be retained by Orthodontix, Inc. and
furnished to the Securities and Exchange Commission or its staff upon
request.
Exhibit 99.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report on Form 10-QSB of Orthodontix,
Inc. for the period ended March 31, 2003 as filed with the Securities
and Exchange Commission (the "Report"), I, Alan Jay Weisberg, Acting Chief
Financial Officer of Orthodontix, Inc., hereby certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
Orthodontix, Inc.
Dated: May 12, 2003 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to Orthodontix, Inc. and will be retained by Orthodontix, Inc. and
furnished to the Securities and Exchange Commission or its staff upon
request.