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 September 30, 2005
[ ] 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 November 9, 2005, 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 September 30, 2005
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 nine months ended September 30, 2005, are
not necessarily indicative of the results of operations expected for the year
ending December 31, 2005.
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 THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005
For the quarter ended September 30, 2005, the Company recorded a net
loss of approximately $31,900 or $0.01 per share. Included in the financial
results for the quarter ended September 30, 2005, were general and
administrative expenses of approximately $35,900, and interest and other
income of approximately $3,900.
For the nine months ended September 30, 2005, the Company recorded a net
loss of approximately $55,000 or $0.02 per share. Included in the financial
results for the nine months ended September 30, 2005, were general and
administrative expenses of approximately $67,200, and interest and other
income of approximately $12,000.
1
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.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2005, the Company had cash and cash equivalents of
approximately $493,800 and total liabilities of $62,000. 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 September 30, 2005, 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 September 30, 2005, 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
The Form 8-K filed on September 30, 2005 is incorporated by
reference as part of this report.
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: November 10, 2005 By: /s/ Glenn L. Halpryn
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Glenn L. Halpryn
Chairman and President (Principal
Executive Officer)
Dated: November 10, 2005 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
(Principal Financial and
Accounting Officer)
4
INDEX TO FINANCIAL STATEMENTS
Pages
Balance Sheet as of September 30, 2005 (Unaudited) F-2
Statements of Operations for the Three and Nine Months
Ended September 30, 2005 and 2004 (Unaudited) F-3
Statements of Cash Flows for the Nine Months Ended
September 30, 2005 and 2004 (Unaudited) F-4
Notes to the Financial Statements (Unaudited) F-5
F-1
ORTHODONTIX, INC.
BALANCE SHEET
SEPTEMBER 30, 2005
ASSETS (UNAUDITED)
------------------
Current assets:
Cash and cash equivalents $ 493,789
Prepaid expenses 8,490
---------------
Total current assets $ 502,279
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued liabilities $ 62,000
---------------
Total current liabilities $ 62,000
---------------
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 292
Additional paid-in capital 4,232,821
Accumulated deficit (3,792,834)
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Total stockholders' equity 440,279
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Total liabilities and stockholders' equity $ 502,279
===============
See accompanying notes to unaudited financial statements.
F-2
ORTHODONTIX, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -----------------------
2005 2004 2005 2004
------------ ------------ ------------ ----------
Operating expenses
General and administrative expenses $ 35,885 $ 43,882 $ 67,194 $ 133,475
------------ ------------ ------------ ------------
Total operating expenses $ 35,885 43,882 67,194 133,475
------------ ------------ ------------ ------------
Loss from operations $ (35,885) $ (43,882) $ (67,194) $ (133,475)
------------ ------------ ------------ ------------
Other income:
Interest income 3,939 592 7,899 4,949
Other income - - 4,214 -
------------ ------------ ------------ ------------
Total other income $ 3,939 $ 592 $ 12,113 $ 4,949
------------ ------------ ------------ ------------
Net loss $ (31,946) $ (43,290) $ (55,081) (128,526)
============ ============ ============ ============
Net loss per share - Basic and Diluted $ (0.01) $ (0.01) $ (0.02) $ (0.04)
============ ============ ============ ============
Weighted average number of shares outstanding
during the period - basic and diluted 2,915,428 2,915,428 2,915,428 2,915,428
============ ============ ============ ============
See accompanying notes to unaudited financial statements.
F-3
ORTHODONTIX, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
2005 2004
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Cash flows from operating activities:
Net loss $ (55,081) $(128,525)
Adjustments to reconcile net loss to net cash used in
operating activities:
(Increase) Decrease in:
Prepaids (6,367) -
Increase (Decrease) in:
Accounts payable (4,214) (24,248)
Accrued liabilities (4,261) -
--------- ---------
Net cash used in operating activities $ (69,923) $(152,773)
--------- ---------
Cash flows from investing activities:
Redemption of investments $ - $ 552,359
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Net cash provided by investing activities $ - $ 552,359
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Cash flows from financing activities: $ - $ -
--------- ---------
Net increase (decrease) in cash and cash equivalents $ (69,923) $ 399,586
Cash at beginning of period $ 563,712 $ 179,479
--------- ---------
Cash at end of period $ 493,789 $ 579,065
========= =========
Supplemental disclosure of cash paid for:
Interest $ - $ -
========= =========
Taxes $ - $ -
========= =========
See accompanying notes to unaudited financial statements.
F-4
ORTHODONTIX, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
of America and the rules and regulations of the United States Securities and
Exchange Commission for interim financial information. Accordingly, they do
not include all the information and footnotes necessary for a comprehensive
presentation of financial position and results of operations.
It is management's opinion, however, that all material adjustments
(consisting of normal recurring adjustments) have been made which are
necessary for a fair financial statement presentation. The results for the
interim period are not necessarily indicative of the results to be expected
for the year.
For further information, refer to the audited financial statements and
footnotes of the Company for the year ended December 31, 2004 included in the
Company's Form 10-KSB.
2. Nature of Operations and Summary of Significant Accounting Policies:
A. Nature of Operations
On April 16, 1998, Orthodontix, Inc. and subsidiaries ("Orthodontix" or
the "Company") consummated a merger (the "Merger") with Embassy Acquisition
Corp. ("Embassy"), a publicly held Florida corporation. Simultaneously with
the closing of the Merger, the Company acquired certain assets and assumed
certain liabilities of 26 orthodontic practices (the "Founding Practices").
During the year ended December 31, 1999, the Company began to terminate
its affiliation with the Founding Practices. During the year ended December
31, 2001, the Company terminated its affiliation with all 26 Founding
Practices.
The accompanying unaudited financial statements have been prepared on the
basis which assumes that the Company will continue to operate as a going
concern and which contemplates the realization of assets and the satisfaction
of liabilities and commitments in the normal course of business. The Company
has generated an accumulated deficit of $3,792,834 at September 30, 2005 as a
result of operations and the termination of its affiliation with the Founding
Practices. The Company incurred a net loss of $55,081 for the nine months
ended September 30, 2005. The Company also reflects net cash used in
operations of $69,923 for the nine months ended September 30, 2005.
F-5
ORTHODONTIX, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(UNAUDITED)
The Company currently intends to effect a merger, acquisition or other
business combination with an operating company utilizing any combination of
its common stock, cash on hand or other funding sources that the Company
believes are available. As of September 30, 2005, management has devoted
substantially all of its time to identifying potential merger or acquisition
candidates. There can be no assurances that management's efforts to
consummate a merger, acquisition or business combination with an operating
company or management's efforts to identify other funding sources will be
successful. The Company anticipates that its current working capital is
sufficient to fund its operating expenses at their current level for at least
the next twelve months. Therefore, the going concern is mitigated.
B. Concentrations
The Company maintains its cash in bank deposit accounts, which, at times,
exceed federally insured limits. At June 30, 2005, the Company had deposits
of $382,394 in excess of federally insured limits. The Company has not
experienced any losses in such accounts through September 30, 2005.
C. Earnings per Share
In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings per Share", basic earnings per share is computed by dividing the
net income (loss) less preferred dividends for the period by the weighted
average number of shares outstanding. Diluted earnings per share is computed
by dividing net income (loss) less preferred dividends by the weighted
average number of shares outstanding including the effect of share
equivalents. At September 30, 2005 and 2004, respectively, there were no
common share equivalents, which could potentially dilute future earnings per
unit.
D. Stock Options
The Company accounts for options granted to employees using the intrinsic
value method. The Company has chosen not to apply the fair value accounting
rules in the statements of operations for employee stock-based compensation
but such treatment is required for non-employee stock-based compensation.
The Company has chosen the alternative to disclose pro forma net loss and
loss per share as if the fair value accounting rules were used for options
granted to employees.
The Company had no stock options outstanding at September 30, 2005 and
2004, respectively. Therefore, there was no impact of fair value accounting
rules on the Company's net loss and net loss per share - basic and diluted for
the nine months ended September 30, 2005 and 2004, respectively.
F-6
ORTHODONTIX, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
(UNAUDITED)
E. Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based
Payment". This Statement requires that the cost resulting from all share-
based transactions be recorded in the financial statements. The Statement
establishes fair value as the measurement objective in accounting for share-
based payment arrangements and requires all entities to apply a fair-value-
based measurement in accounting for share-based payment transactions with
employees. The Statement also establishes fair value as the measurement
objective for transactions in which an entity acquires goods or services from
non-employees in share-based payment transactions. The Statement replaces
SFAS 123 "Accounting for Stock-Based Compensation" and supersedes APB Opinion
No. 25 "Accounting for Stock Issued to Employees". The provisions of 123R
will be effective for the Company beginning with fiscal year 2006. The
Company is currently evaluating the impact this new Standard will have on its
financial position, results of operations or cash flows.
F. Reclassifications
Certain amounts in the year 2004 financial statements have been
reclassified to conform to the year 2005 presentation.
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: November 10, 2005 /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: November 10, 2005 /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 September 30, 2005, 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: November 10, 2005 /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
Dated: November 10, 2005 /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.