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, 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 May 13, 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 March 31, 2002
TABLE OF CONTENTS
PART I
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis and Plan of Operation 1
PART II
Item 1. Legal Proceedings 2
Item 2. Changes in Securities 2
Item 3. Defaults upon Senior Securities 2
Item 4. Submission of Matters to a Vote of Security Holders 2
Item 5. Other Information 3
Item 6. Exhibits and Reports on Form 8-K 3
SIGNATURES 3
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 months ended March 31, 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
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 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 MARCH 31, 2002
For the quarter ended March 31, 2002, the Company recorded a net loss of
approximately $35,800 or $0.01 per share. Included in the financial results
for the quarter ended March 31, 2002, were general and administrative
expenses of approximately $40,600 and interest and other income of
approximately $4,900.
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, 2002, the Company had cash and cash equivalents of
approximately $862,800 and total liabilities of approximately $70,100. 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 June 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.
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
2
During the quarter ended March 31, 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: May 13, 2002 By: /s/ Glenn L. Halpryn
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Glenn L. Halpryn
Chairman and President (Principal
Executive Officer)
Dated: May 13, 2002 By: /s/ Alan Jay Weisberg
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Alan Jay Weisberg
Acting Chief Financial Officer
(Principal Financial and
Accounting Officer)
3
INDEX TO FINANCIAL STATEMENTS
Pages
Condensed Consolidated Balance Sheets as of March 31, 2002
(Unaudited) and December 31, 2001 F-2
Condensed Consolidated Statements of Operations
for the Three Months Ended March 31, 2002 and 2001 (Unaudited) F-3
Condensed Consolidated Statement of Changes in Stockholders' Equity
for the Three Months Ended March 31, 2002 (Unaudited) F-4
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 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
MARCH 31, 2002 DECEMBER 31,
ASSETS (UNAUDITED) 2001
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Current assets:
Cash and cash equivalents $ 862,762 $ 915,635
Prepaid expenses and other current assets 56,218 40,493
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Total current assets 918,979 956,128
Notes and other receivables 61,250 67,056
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Total assets $ 980,229 $ 1,023,184
=============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 70,080 $ 77,276
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Total current liabilities 70,080 77,276
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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, 2002
and December 31, 2001 292 292
Additional paid-in capital 4,232,821 4,232,821
Accumulated deficit (3,322,963) (3,287,205)
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Total stockholders' equity 910,150 945,908
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Total liabilities and stockholders' equity $ 980,229 $ 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
MARCH 31,
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2002 2001
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General and administrative $ 40,623 $ 105,824
Loss on sale of certain assets and liabilities
of Founding Practice (Note 4) - 94,000
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Total expenses 40,623 199,824
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Net operating loss (40,623) (199,824)
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Other income:
Interest income 4,715 27,560
Other income 150 -
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Total other income 4,865 27,560
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Net loss $(35,758) $(172,264)
========= =========
Loss per common and common
equivalent share:
Basic $ (0.01) $ (0.04)
========= =========
Diluted $ (0.01) $ (0.04)
========= =========
Weighted average number of common and
common equivalent shares outstanding -
basic and diluted 2,915,428 3,933,571
========= =========
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 three months ended March 31, 2002
Additional Total
Common Stock Paid-In Accumulated Stockholders'
Shares Amounts Capital Deficit Equity
------------ ------------- ------------- ------------- ----------------
Balance, December 31, 2001 2,915,428 $ 292 $ 4,232,821 $ (3,287,205) $ 945,908
Net loss for the period - - - (35,758) (35,758)
------------ ------------- ------------- ------------- ----------------
Balance, March 31, 2002 2,915,428 $ 292 $ 4,232,821 $ (3,322,963) $ 910,150
============ ============= ============== ============= ================
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)
THREE MONTHS ENDED
MARCH 31,
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2002 2001
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Cash flows from operating activities:
Net loss $ (35,758) $(172,264)
Adjustments to reconcile net loss to net cash used in
operating activities:
Changes in assets and liabilities (26,498) 86,579
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Net cash used in operating activities (62,256) (85,685)
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Cash flows from investing activities:
Payment of notes receivable 9,233 31,120
Proceeds from the sale of fixed assets 150 -
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Net cash provided by investing activities 9,383 31,120
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Net decrease in cash and cash equivalents (52,873) (54,565)
Cash and cash equivalents, beginning of period 915,635 390,739
--------- ---------
Cash and cash equivalents, end of period $ 862,762 $ 336,174
========= =========
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
MARCH 31, 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 three months ended March 31, 2002 are
not necessarily indicative of the results of operations to be expected
for the year ending 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 27, 2002.
2. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following:
March 31, 2002 December 31,
(Unaudited) 2001
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Accounts payable $ 4,214 $ 4,214
Accrued expenses 65,866 73,062
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$ 70,080 $ 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 three month period
ended March 31, 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 three months ended March 31, 2002.
F-6
ORTHODONTIX, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 the 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 three months ended March 31, 2001.
F-7