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, 2006
---------------
[ ] 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.
---------------------------------------------------------------------------
(Exact name of small business issuer as specified in its
charter)
Florida 65-0643773
---------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1428 Brickell Avenue, Suite 105
Miami, Florida 33131
---------------------------------------------------------------------------
(Address of principal executive offices)
(305) 371-4112
---------------------------------------------------------------------------
(Issuer's Telephone Number)
---------------------------------------------------------------------------
(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 []
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [X] No []
On August 9, 2006, the number of shares of outstanding Common Stock of
the issuer was 5,830,856.
Transitional Small Business Disclosure Format (check one) Yes [] No [X]
ORTHODONTIX, INC.
FORM 10-QSB
QUARTER ENDED June 30, 2006
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 3
SIGNATURES 4
INDEX TO FINANCIAL STATEMENTS F-1
EXHIBIT INDEX 5
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited, condensed financial statements included herein,
commencing at page F-1, have been prepared in accordance with the
requirements of Regulation S-B and, therefore, omit or condense certain
footnotes and other information normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America. In the opinion of management, all adjustments
(including all normal recurring adjustments) necessary for a fair
presentation of the financial information for the interim periods reported
have been made.
Results of operations for the three months ended June 30, 2006, are not
necessarily indicative of the results of operations expected for the year
ending December 31, 2006.
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 SIX MONTHS ENDED JUNE 30, 2006 AND 2005
For the six months ended June 30, 2006, the Company had net income of
approximately $17,700 or less than $0.01 per share. General and
administrative expenses for the six-month period were approximately $47,200.
Interest income was approximately $16,900. The Company also had other income
of $48,000 from the reversal of an income tax accrual from 2001.
For the six months ended June 30, 2005, the Company had a net loss of
approximately $23,100 or less than $0.01 per share. General and
administrative expenses for the period were approximately $31,300. Interest
income was approximately $4,000, and the Company had other income of $4,200
from reversal of an account payable that was not required to be paid.
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 June 30, 2006, the Company had cash and cash equivalents of
approximately $924,900 and total liabilities of $13,500. The Company's cash
is primarily invested in certificates of deposit. 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. The Company has focused its efforts on businesses operating in
selected industries including aircraft maintenance and related service
companies, health care, pharmaceutical, biotechnology, 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, 2006, 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. UNREGISTERED SALES OF EQUITY SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On or about June 23, 2006, the Company advised its shareholders that
the holders of a majority of the Company's outstanding stock had approved an
increase in the number of authorized shares of Common Stock of the Company.
The Company amended its Articles of Incorporation on July 14, 2006 to provide
for 1.5 billion shares of Common Stock.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
(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)
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 11, 2006 By: /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chairman and President (Principal
Executive Officer)
Dated: August 11, 2006 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 June 30, 2006 (Unaudited) F-2
Statements of Operations for the Three Months and
Six Months Ended June 30, 2006 and 2005 (Unaudited) F-3
Statements of Cash Flows for the Six Months
Ended June 30, 2006 and 2005 (Unaudited) F-4
Notes to Unaudited Financial Statements F-5 - F-7
F-1
ORTHODONTIX, INC.
BALANCE SHEET
JUNE 30, 2006
ASSETS (UNAUDITED)
-----------------
Current assets:
Cash and cash equivalents $ 924,871
Prepaid expenses 20,691
---------------
Total current assets $ 945,562
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,530
Accounts payable-related parties 2,950
---------------
Total current liabilities 13,480
---------------
Stockholders' equity:
Preferred stock, $.0001 par value, 100,000,000 shares
authorized, no shares issued and outstanding -
Common stock, $.0001 par value, 1,500,000,000 shares authorized,
5,830,856 shares issued and outstanding 583
Additional paid-in capital 4,726,530
Accumulated deficit (3,795,031)
---------------
Total stockholders' equity 932,082
---------------
Total liabilities and stockholders' equity $ 945,562
===============
See accompanying notes to unaudited financial statements.
F-2
ORTHODONTIX, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -----------------------
2006 2005 2006 2005
------------ ------------ ------------ ----------
Operating expenses
General and administrative expenses $ 26,112 $ 20,445 $ 47,223 $ 31,308
------------ ------------ ------------ -----------
Total operating expenses $ 26,112 20,445 47,223 31,308
------------ ------------ ------------ -----------
Loss from operations $ (26,112) $ (20,445) $ (47,223) $ (31,308)
------------ ------------ ------------ -----------
Other income:
Interest income 7,010 3,455 16,874 3,959
Other income 48,000 4,214 48,000 4,214
------------ ------------ ------------ ------------
Total other income $ 55,010 $ 7,669 $ 64,874 $ 8,173
------------ ------------ ------------ ------------
Income (Loss) before provision for income taxes 28,898 (12,776) 17,651 (23,135)
Provision for income taxes - - - -
------------ ------------ ------------ ------------
Net Income (Loss) $ 28,898 (12,776) 17,651 (23,135)
Net Income (Loss) per share-Basic and Diluted $ 0.00 $ (0.00) $ 0.00 $ (0.01)
============ ============ ============ ============
Weighted average number of shares outstanding
during the period - basic and diluted 5,830,856 2,915,428 5,830,856 2,915,428
============ ============ ============ ============
See accompanying notes to unaudited financial statements.
F-3
ORTHODONTIX, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 30,
-------------------------
2006 2005
---------- ---------
Cash Flows from Operating Activities:
Net Income (Loss) $ 17,651 $ (23,135)
Adjustments to reconcile net income to net cash used
in operating activities:
Changes in operating assets and liabilities (78,018) (25,424)
---------- ----------
Net cash used in operating activities $ (60,367) $ (48,559)
---------- ----------
Net Decrease in Cash and Cash Equivalents $ (60,367) $ (48,559)
Cash at beginning of period $ 985,238 $ 563,712
---------- ----------
Cash at end of period $ 924,871 $ 515,153
========== ==========
Supplemental Disclosure of Cash Paid for:
Interest $ - $ -
========== ==========
Taxes $ - $ -
========== ==========
See accompanying notes to unaudited financial statements.
F-4
ORTHODONTIX, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2006
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, 2005 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 $3,795,031 at June 30, 2006 as a
result of operations in connection with the termination of its affiliation
with the Founding Practices. The Company had net income of $17,651 for the
six months ended June 30, 2006. The Company also reflects net cash used in
operations of $60,367 for the six months ended June 30, 2006.
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 June 30, 2006, management has devoted
substantially all of its time to identifying potential merger or acquisition
F-5
ORTHODONTIX, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2006
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 limited. At June 30, 2006, the Company had deposits
of $796,422 in excess of federally insured limits. The Company has not
experienced any losses in such accounts through June 30, 2006.
C. 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
common 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
June 30, 2006 and 2005, respectively, there were no common share equivalents
which could potentially dilute future earnings per unit.
Additionally, the Company reflected net income for the three and six
months ended June 30, 2006; however, the Company applied prior net operating
loss carryforwards so that there was no taxable income. As a result, there
is no separate computation of diluted earnings per share.
D. Reclassifications
Certain amounts in the year 2005 financial statements have been
reclassified to conform to the year 2006 presentation. Such
reclassifications had no effect on the financial position, results of
operations or cash flows.
3. ACCOUNTS PAYABLE
During 2006, the Company recorded other income totaling $48,000 from an
income tax accrual from 2001 that was reversed.
4. ACCOUNTS PAYABLE-RELATED PARTIES
The Company recorded $2,950 for fees payable as compensation to members
of the board of directors.
F-6
ORTHODONTIX, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2006
5. STOCKHOLDERS' EQUITY
On June 9, 2006, the Company's board of directors approved an increase of
authorized common stock to 1,500,000,000 shares.
6. SUBSEQUENT EVENTS
On July 5, 2006, the Company's board of directors appointed an unrelated
party as a director.
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).
5
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 11, 2006 /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 11, 2006 /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, 2006, 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 11, 2006 /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
Dated: August 11, 2006 /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.