THIS DOCUMENT IS A COPY OF THE FORM 10-QSB FILED ON NOVEMBER 14, 2002
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
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 September 30, 2002
[ ] 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 November 11, 2002, 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 September 30, 2002
TABLE OF CONTENTS
PART I
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis and Plan of Operation 1
Item 3. Controls and Procedures 3
PART II
Item 1. Legal Proceedings 4
Item 2. Changes in Securities 4
Item 3. Defaults upon Senior Securities 4
Item 4. Submission of Matters to a Vote of Security Holders 4
Item 5. Other Information 4
Item 6. Exhibits and Reports on Form 8-K 4
SIGNATURES 4
CERTIFICATION OF CHIEF EXECUTIVE OFFICER 5
CERTIFICATION OF CHIEF FINANCIAL OFFICER 6
CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350 7
INDEX TO FINANCIAL STATEMENTS F-1
1
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited, condensed consolidated 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 and nine months ended September 30,
2002 are not necessarily indicative of the results of operations expected
for the year ending December 31, 2002.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND 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
such a transaction, 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 consolidated 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 SEPTEMBER 30, 2002
For the quarter ended September 30, 2002, the Company recorded a net
loss of approximately $32,200 or $0.01 per share. Included in the financial
results for the quarter ended September 30, 2002, were general and
administrative expenses of approximately $35,800 and interest and other
income of approximately $3,600.
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.
2
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2002, the Company had cash and cash equivalents of
approximately $823,700 and total liabilities of approximately $65,400. 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
The Board of Directors 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 November 5, 2002 (the "Evaluation Date"), 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 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 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.
3
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 September 30, 2002, 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.
None.
(b) Reports on Form 8-K
None.
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: November 11, 2002 By: /s/ Glenn L. Halpryn
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Glenn L. Halpryn
Chairman and President (Principal
Executive Officer)
Dated: November 11, 2002 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 we 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: November 11, 2002 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 we 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: November 11, 2002 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
6
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 quarter ended September 30, 2002 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: November 11, 2002 By: /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
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 quarter ended September 30, 2002 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: November 11, 2002 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
7
INDEX TO FINANCIAL STATEMENTS
Pages
Condensed Consolidated Balance Sheets as of September 30, 2002
(Unaudited) and December 31, 2001 F-2
Condensed Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 2002 and 2001 (Unaudited) F-3
Condensed Consolidated Statement of Changes in Stockholders' Equity
for the Nine Months Ended September 30, 2002 (Unaudited) F-4
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 2002 and 2001 (Unaudited) F-5
Notes to the Condensed Consolidated Financial Statements F-6
F-1
ORTHODONTIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2002 DECEMBER 31,
ASSETS (UNAUDITED) 2001
--------------- ------------
Current assets:
Cash and cash equivalents $ 823,609 $ 915,635
Prepaid expenses and other current assets 38,212 40,493
--------------- ------------
Total current assets 861,821 956,128
Notes and other receivables 49,352 67,056
--------------- ------------
Total assets $ 911,173 $ 1,023,184
=============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 65,357 $ 77,276
--------------- ------------
Total current liabilities 65,357 77,276
--------------- ------------
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
September 30, 2002 and December 31, 2001 292 292
Additional paid-in capital 4,232,821 4,232,821
Accumulated deficit (3,387,297) (3,287,205)
--------------- ------------
Total stockholders' equity 845,816 945,908
--------------- ------------
Total liabilities and stockholders' equity $ 911,713 $ 1,023,184
=============== ============
The accompanying notes are an integral part of these condensed
consolidated financial statements.
F-2
ORTHODONTIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
2002 2001 2002 2001
--------- --------- --------- ---------
General and administrative $ 35,760 $ 58,673 $ 113,258 $ 229,545
Loss on sale of certain assets and liabilities
of Founding Practice (Note 4) - - - 94,000
--------- --------- --------- ---------
Total expenses 35,760 58,673 113,258 323,545
--------- --------- --------- ---------
Net operating loss (35,760) (58,673) (113,258) (323,545)
--------- --------- --------- ---------
Other income:
Interest income 3,602 10,348 12,854 50,432
Other income - - 312 -
--------- --------- --------- ---------
Total other income 3,602 10,348 13,166 50,432
--------- --------- --------- ---------
Net loss $ (32,158) $ (48,325) $(100,092) $(273,113)
========= ========= ========= ========
Loss per common and common
equivalent share:
Basic $ (0.01) $ (0.02) $ (0.03) $ (0.08)
========= ========= ========= ========
Diluted $ (0.01) (0.02) $ (0.03) $ (0.08)
========= ========= ========= ========
Weighted average number of common and
common equivalent shares outstanding -
basic and diluted 2,915,428 2,915,428 2,915,428 3,332,863
========= ========= ========= =========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
F-3
ORTHODONTIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
(UNAUDITED)
for the nine months ended September 30, 2002
Additional
Common Stock Paid-In Accumulated
Shares Amounts Capital Deficit Total
------------ ------------- ------------- ------------- ----------------
Balance, December 31, 2001 2,915,428 $ 292 $ 4,232,821 $ (3,287,205) $ 945,908
Net loss for the period - - - (100,092) (100,092)
------------ ------------- ------------- ------------- ----------------
Balance, September 30, 2002 2,915,428 $ 292 $ 4,232,821 $ (3,387,297) $ 845,816
============ ============= ============== ============= ================
The accompanying notes are an integral part of these condensed
consolidated financial statements.
F-4
ORTHODONTIX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
2002 2001
--------- ---------
Cash flows from operating activities:
Net loss $ (100,092) $(273,113)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Loss on sale of doctor practices - 94,000
Changes in assets and liabilities (20,239) 715,159
--------- ---------
Net cash (used in) provided by operating activities (120,331) 536,046
--------- ---------
Cash flows from investing activities:
Payments received from notes receivable 28,155 84,993
Cash used in sales of certain practices assets - (78,935)
Proceeds from the sale of fixed assets 150 -
--------- ---------
Net cash provided by investing activities 28,305 6,058
--------- ---------
Net (decrease) increase in cash and cash equivalents (92,026) 542,104
Cash and cash equivalents, beginning of period 915,635 390,739
--------- ---------
Cash and cash equivalents, end of period $ 823,609 $ 932,843
========= =========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
F-5
ORTHODONTIX, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated 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 nine months ended September 30, 2002 are
not necessarily indicative of the results of operations to be expected for
the year ended December 31, 2002. The unaudited condensed consolidated
financial statements should be read in conjunction with the consolidated
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 29, 2002.
2. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following:
September 30, 2002 December 31,
(Unaudited) 2001
-------------- ------------
Accounts payable $ 4,214 $ 4,214
Other accrued expenses 61,143 73,062
-------------- ------------
$ 65,357 $ 77,276
============== ============
3. EARNINGS PER SHARE:
Basic earnings per share is calculated by dividing net income or loss by the
weighted average number of 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 shares consist of the
dilutive effect of outstanding options calculated using the treasury stock
method. For the nine months period ended September 30, 2001, the potential
common shares were antidilutive; thus there was no difference in the basic
net income per share and the diluted net income per share. There were no
potential common equivalent shares for the nine months ended September
30, 2002.
F-6
ORTHODONTIX, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002, Continued
(UNAUDITED)
4. LOSS ON SALE OF CERTAIN ASSETS AND LIABILITIES OF FOUNDING PRACTICE:
On May 14, 2001, the Company terminated its affiliation with the one
remaining Founding Practice owned by Dr. Stephen M. Grussmark and sold
certain practice assets, consisting of accounts receivable and property and
equipment. In addition, the Founding Practice assumed certain liabilities.
The carrying value of the practice assets sold less liabilities assumed was
$15,065 at the date of transaction. In connection with this transaction, the
Company received 96,571 shares of the Company's common stock from the
remaining Founding Practice. In addition, in connection with this
transaction, the Company paid $115,000 for the return of an additional
345,385 shares of the Company's common stock. The Company also paid $30,000
for legal expenses in connection with the transaction. All shares received
from Dr. Grussmark have been cancelled and are no longer outstanding.
In connection with these transactions, the Company and Dr. Grussmark executed
certain mutual releases and Dr. Grussmark resigned as the Company's Chief
Executive Officer and a member of the Company's Board of Directors.
As a result of the transactions described above, the Company recorded a loss
in the amount of $94,000 for the nine months ended September 30, 2001.
F-7
