U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
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 August 9, 2004, the number of shares of outstanding Common Stock of
the issuer was 2,915,428.
Transitional Small Business Disclosure Format (check one) Yes [] No [X ]
Documents Incorporated by reference None
ORTHODONTIX, INC.
FORM 10-QSB
QUARTER ENDED June 30, 2004
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
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: OTHER INFORMATION
Item 1. Legal Proceedings 3
Item 2. Changes in Securities 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
INDEX TO FINANCIAL STATEMENTS F-1
EXHIBIT INDEX 12
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 six months ended June 30, 2004, are not
necessarily indicative of the results of operations expected for the year
ending December 31, 2004.
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 JUNE 30, 2004
For the quarter ended June 30, 2004, the Company recorded a net loss of
approximately $58,500 or $0.02 per share. Included in the financial results
for the quarter ended June 30, 2004, were general and administrative expenses
of approximately $59,900, and interest and other income of approximately
$1,400.
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 June 30, 2004, the Company had cash and cash equivalents and
investments of approximately $622,100 and total liabilities of approximately
$67,400. 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
As of June 30, 2004, the Company's President and Chief Executive Officer
and its Acting Chief Financial Officer evaluated the Company's disclosure
controls and procedures and they concluded that the Company maintains
effective disclosure controls and procedures. There have been no significant
changes in internal control over financial reporting that have materially
affected, or are likely to materially affect, the Company's internal control
over financial reporting subsequent to the Evaluation Date.
2
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended June 30, 2004, 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 31.1 Certification of Chief Executive Officer
pursuant to Rule 13a-14(a)
Exhibit 31.2 Certification of Acting Chief Financial
Officer pursuant to Rule 13a-14(a)
Exhibit 32 Certification pursuant to Rule 13a-14(b) and
Section 906 of the Sarbanes-Oxley Act of 2002 (subsections
(a) and (b) of Section 1350, Title 18, United States Code)
(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: August 12, 2004 By: /s/ Glenn L. Halpryn
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Glenn L. Halpryn
Chairman and President (Principal
Executive Officer)
Dated: August 12, 2004 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
(Principal Financial and
Accounting Officer)
4
INDEX TO FINANCIAL STATEMENTS
Pages
Condensed Balance Sheets as of June 30, 2004 (Unaudited)
and December 31, 2003 F-2
Condensed Statements of Operations for the
Three and Six Months Ended June 30, 2004 and 2003 (Unaudited) F-3
Condensed Statement of Changes in Stockholders' Equity
for the Six Months Ended June 30, 2004 (Unaudited) F-4
Condensed Statements of Cash Flows
for the Six Months Ended June 30, 2004 and 2003 (Unaudited) F-5
Notes to the Condensed Financial Statements F-6
F-1
ORTHODONTIX, INC.
CONDENSED BALANCE SHEETS
JUNE 30, 2004 DECEMBER 31,
ASSETS (UNAUDITED) 2003
------------------ ------------
Current assets:
Cash and cash equivalents $ 622,143 $ 179,479
Investments - 552,359
Prepaid expenses and other current assets 15,491 2,417
--------------- ------------
Total current assets $ 637,634 $ 734,255
=============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 67,438 $ 78,823
--------------- ------------
Total current liabilities 67,438 78,823
--------------- ------------
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 June 30, 2004,
and December 31, 2003 292 292
Additional paid-in capital 4,232,821 4,232,821
Accumulated deficit (3,662,917) (3,577,681)
--------------- ------------
Total stockholders' equity 570,916 655,432
--------------- ------------
Total liabilities and stockholders' equity $ 637,634 $ 734,255
=============== ============
The accompanying notes are an integral part of these condensed financial statements.
F-2
ORTHODONTIX, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -----------------------
2004 2003 2004 2003
------------ ------------ ------------ ----------
General and administrative $ 59,908 $ 30,961 $ 89,592 $ 61,262
Other operating expense - - - 4,250
------------ ------------ ------------ ------------
Net operating loss (59,908) (30,961) (89,592) (65,512)
------------ ------------ ------------ ------------
Other income:
Interest income 1,365 1,177 4,356 3,241
------------ ------------ ------------ ------------
Total other income 1,365 1,177 4,356 3,241
------------ ------------ ------------ ------------
Net loss $ (58,543) (29,784) $ (85,236) (62,271)
============ ============ ============ ============
Loss per common and common
equivalent share:
Basic $ (0.02) $ (0.01) $ (0.03) $ (0.02)
============ ============ ============ ============
Diluted $ (0.02) $ (0.01) $ (0.03) $ (0.02)
============ ============ ============ ============
Weighted average number of common and
common equivalent shares outstanding -
basic and diluted 2,915,428 2,915,428 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 six months ended June 30, 2004
Additional Total
Common Stock Paid-In Accumulated Stockholders'
Shares Amounts Capital Deficit Equity
------------ ------------- ------------- ------------- ----------------
Balance, December 31, 2003 2,915,428 $ 292 $ 4,232,821 $ (3,577,681) $ 655,432
Net loss for the period - - - (85,236) (85,236)
------------ ------------- ------------- ------------- ----------------
Balance, June 30, 2004 2,915,428 $ 292 $ 4,232,821 $ (3,662,917) $ 570,196
============ ============= ============== ============= ================
The accompanying notes are an integral part of these condensed financial statements.
F-4
ORTHODONTIX, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
-------------------------
2004 2003
--------- ---------
Cash flows from operating activities:
Net loss $ (85,236) $ (62,271)
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 (24,459) (33,918)
--------- ---------
Net cash used in operating activities (109,695) (91,939)
--------- ---------
Cash flows from investing activities:
Payment of notes receivable - 60,881
Redemption of investments 552,359 -
--------- ---------
Net cash provided by investing activities 552,359 60,881
--------- ---------
Net increase (decrease) in cash and cash equivalents 442,664 (31,058)
Cash and cash equivalents, beginning of period 179,479 807,639
--------- ---------
Cash and cash equivalents, end of period $ 622,143 $ 776,581
========= =========
The accompanying notes are an integral part of these condensed financial statements.
F-5
ORTHODONTIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2004
(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 six months ended June 30, 2004
are not necessarily indicative of the results of operations to be
expected for the year ending December 31, 2004. 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 amended, as filed with the Securities and Exchange
Commission on April 22, 2004.
2. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following:
June 30, 2004 December 31,
(Unaudited) 2003
-------------- -----------
Accounts payable $ 4,214 $ 4,214
Accrued expenses 63,224 74,609
-------------- -----------
$ 67,438 $ 78,823
============== ===========
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 were no potential common equivalent
shares for the six months ended June 30, 2004 and 2003.
F-6
ORTHODONTIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2004, 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 of $4,250 for the six
months ended June 30, 2003.
F-7
EXHIBIT INDEX
Exhibit No. Description
31.1 Certification of Chief Executive Officer pursuant to
Rule 13a-14(a)
31.2 Certification of Acting Chief Financial Officer pursuant
to Rule 13a-14(a)
32 Certification pursuant to Rule 13a-14(b) and Section 906
of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of Section 1350, Title 18, United States Code).
12
Exhibit 31.1
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 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the small
business issuer as of, and for, the periods presented in this quarterly
report;
4. The small business issuer's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the small business issuer and have:
a) Designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such
evaluation; and
c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the small business issuer's
internal control over financial reporting; and
5. The small business issuer's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal control over financial reporting.
Dated: August 12, 2004 /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
Exhibit 31.2
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 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the small
business issuer as of, and for, the periods presented in this quarterly
report;
4. The small business issuer's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the small business issuer and have:
a) Designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such
evaluation; and
c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the small business issuer's
internal control over financial reporting; and
5. The small business issuer's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal control over financial reporting.
Dated: August 12, 2004 /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
Exhibit 32
CERTIFICATION PURSUANT TO RULE 13a-14(b) AND SECTION 906 OF THE SARBANES-
OXLEY ACT OF 2002 (SUBSECTIONS (a) AND (b) OF SECTION 1350, TITLE 18, UNITED
STATES CODE)
In connection with the Quarterly Report on Form 10-QSB of Orthodontix,
Inc. for the period ended June 30, 2004, as filed with the Securities and
Exchange Commission (the "Report"), we, Glenn L. Halpryn, Chief Executive
Officer of Orthodontix, Inc., and 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: August 12, 2004 /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
Dated: August 12, 2004 /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.