U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
AMENDMENT NUMBER 1
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year Ended December 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____ to _____
Commission File No. 000-27836
ORTHODONTIX, INC.
----------------------------------------------------
(Exact name of small business issuer in its charter)
FLORIDA 65-0643773
---------------------------- -------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1428 Brickell Avenue, Suite 105
Miami, Florida 33131
----------------------------------------
(Address of principal executive offices)
(305) 371-4112
--------------------------------
(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Exchange Act: None.
Securities registered under Section 12(g) of the Exchange Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, OTC Electronic Bulletin Board
par value $.0001 per share
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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $0.
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates of the Company based on the average of the bid and
asked price of $0.30 of such Common Stock, as of March 22, 2004, is $624,338
based upon 2,081,127 shares of the Company's Common Stock outstanding as of
March 22, 2004, held by non-affiliates. For purposes of this computation,
all executive officers, directors and 5% beneficial owners of the Common
Stock of the registrant have been deemed to be affiliates. Such determination
should not be deemed to be an admission that such directors, officers or 5%
beneficial owners are, in fact, affiliates of the registrant.
As of March 22, 2004, the Company had a total of 2,915,428 shares of Common
Stock, par value $.0001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None.
ORTHODONTIX, INC.
FORM 10-KSB
FISCAL YEAR ENDED DECEMBER 31, 2003
TABLE OF CONTENTS Page
----
PART I -1-
Item 1. Description of Business -1-
Item 2. Description of Property -2-
Item 3. Legal Proceedings -2-
Item 4. Submission of Matters to a Vote
of Security Holders -2-
PART II -2-
Item 5. Market for Common Equity and Related Stockholder
Matters -2-
Item 6. Management's Discussion and Analysis and Plan of
Operation -3-
Item 7. Financial Statements -4-
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure -5-
Item 8A. Controls and Procedures -5-
PART III -5-
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance With Section 16(a)
of the Exchange Act -5-
Item 10. Executive Compensation -7-
Item 11. Security Ownership of Certain Beneficial Owners
And Management and Related Stockholder Matters -9-
Item 12. Certain Relationships and Related Transactions -10-
Item 13. Exhibits And Reports on Form 8-K -10-
Item 14. Principal Accountant Fees and Services -10-
SIGNATURES -12-
EXHIBIT INDEX -13-
-i-
PART I
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND
Orthodontix, Inc. (the "Company") was formed as Embassy Acquisition
Corp., a Florida corporation, in November 1995 for the purpose of effecting a
merger with an operating business. In April 1998, the Company merged with an
orthodontic practice management company and acquired certain assets and
assumed certain liabilities of 26 orthodontic practices (the "Practices") in
exchange for shares of the Company's Common Stock and the entering into of
practice management service agreements with the Practices (the "Merger").
Upon completing the Merger, the Company changed its name to Orthodontix, Inc.
and began managing the business aspects of the Practices, including billing,
collections, cash management and payroll processing, in exchange for a
management fee. By November 1999, the Company had ceased providing practice
management services. By May 2001, the Company had terminated its affiliation
with all the Practices. The Company sold certain Practice assets back to the
Practices and assumed certain liabilities. During the years ended December
31, 2000 and 2001, the Company terminated its affiliation with all of the
Practices and recorded the sales of all the Practice assets and the shares of
Common Stock returned in connection with the transactions. In addition, the
Company recorded the Common Stock returned in connection with the
resignations of management. Such transactions are reflected in the Company's
Annual Reports on Form 10-KSB for the years then ended. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS AND PLAN OF OPERATION" at page 3 for a further
discussion.
FUTURE PLANS
The Company intends to effect a merger, acquisition or other business
combination with an operating company by using a combination of Common Stock,
cash on hand, or other funding sources that the Company reasonably believes
are available. Management devotes substantially all of its time to
identifying potential merger or acquisition candidates. The Company is
searching for an established business, principally in South Florida, and the
Company has evaluated companies operating in selected industries, including
business services, health care, manufacturing, distribution, aviation,
pharmaceutical and banking.
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 future or on
terms favorable to the Company, or that other funding sources will be
available.
EMPLOYEES
Except for Glenn L. Halpryn, the Company's Chief Executive Officer, the
Company currently has no full-time or part-time employees. The Company's
Acting Chief Financial Officer, Alan Jay Weisberg, is compensated by the
Company on a project basis through the accounting firm of Weisberg Brause &
Co., a firm in which Mr. Weisberg is a shareholder.
1
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently maintains, at no cost to the Company, its
executive offices in approximately 500 square feet of office space located at
1428 Brickell Avenue, Suite 105, Miami, Florida 33131. Such office space
represents a portion of the corporate offices of Transworld Investment
Corporation ("TIC"), a company in which Glenn L. Halpryn and Noah Silver,
directors and executive officers of the Company, are officers and/or
directors.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the year ended December 31, 2003, no
matters were submitted to a vote of security holders of the Company.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company is quoted for trading in the over-the-
counter electronic bulletin board market (the "OTC Bulletin Board") under the
symbol "OTIX." The following table shows the reported high and low bid
quotations for the Common Stock obtained from the OTC Bulletin Board for the
periods indicated. The high and low bid prices for such periods are
interdealer prices, without retail mark-up, mark-down or commissions and may
not represent actual transactions.
OTC Bulletin Board Low Bid High Bid
---------------------------------- ------------- ------------
2003
First Quarter $.11 $.15
Second Quarter $.10 $.15
Third Quarter $.15 $.18
Fourth Quarter $.18 $.20
2002
First Quarter $.23 $.38
Second Quarter $.23 $.38
Third Quarter $.16 $.23
Fourth Quarter $.11 $.16
2
The Company has approximately 61 stockholders of record as of March 22,
2004, inclusive of those brokerage firms and/or clearinghouses holding the
Company's shares of Common Stock for their clientele (with each such
brokerage house and/or clearing- house being considered as one holder).
The Company has not paid or declared any dividends upon its Common Stock
since its inception and does not contemplate or anticipate paying any
dividends upon its Common Stock in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The following discussion with regard to the Company's financial
condition and 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 the Company and
involve substantial 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 from the
Company's plans and expectations 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 that 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 Financial
Statements and Notes thereto included elsewhere in this Report.
FINANCIAL RESULTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31,
2002.
REVENUES. The Company ceased providing orthodontics practice management
services to the Practices as of November 1999. No management service fee
revenue or other operating revenue was recorded by the Company during the
years ended December 31, 2003 and 2002. The Company does not expect to
generate operating revenue until such time as the Company consummates a
business combination with an operating company.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses were approximately $143,000 and $166,000 for the years ended
December 31, 2003 and 2002, respectively. During 2003, such expenses
consisted primarily of executive officer compensation totaling approximately
$50,000, insurance of approximately $26,000, and legal and accounting costs
amounting to approximately $55,000.
The Company anticipates that its general and administrative expenses
will remain low until such time as the Company effects a merger or other
business combination with an operating company.
3
INTEREST INCOME. Interest income of approximately $7,000 and $16,000
for the years ended December 31, 2003 and 2002, respectively, represents
interest earned on excess cash balances invested primarily in short-term
money market accounts and the outstanding balances on notes receivable, which
were repaid in 2003. The decrease in interest income for year 2003 is
primarily attributable to lower market rates of interest combined with the
Company's having less excess cash invested during the year.
NET LOSS. For the years ended December 31, 2003 and 2002, the Company
recorded a net loss of approximately $141,000 and $150,000, respectively, or
$0.05 and $0.05 per share, respectively.
The Company does not expect to generate net income, if at all, until
such time as it effects a business combination with an operating company.
However, in the event that 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 December 31, 2003, the Company had cash, cash equivalents and
investments of approximately $732,000 and total liabilities of approximately
$79,000. The Company's cash is currently invested in money market accounts
and overnight repurchase agreements. The Company's investments consist of
certificates of deposit with financial institutions. 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. At December 31, 2003, the Company had no ongoing contractual
commitments or off-balance sheet arrangements.
PLAN OF OPERATION
Management of the Company intends to continue devoting substantially all
of its time to identifying merger or acquisition candidates, targeting
established businesses that operate principally in South Florida and in
selected industries, including business services, health care, manufacturing,
distribution, aviation, pharmaceutical and banking. In the event that the
Company locates an acceptable operating business, the Company intends to
effect the transaction by using a combination of its Common Stock, cash on
hand, or other funding sources that the Company reasonably believes are
available. However, there can be no assurances that the Company will be able
to consummate a merger or acquisition of an operating business on terms
favorable to the Company, or that other funding sources will be available.
ITEM 7. FINANCIAL STATEMENTS
The financial statements included herein, commencing at page F-1, have
been prepared in accordance with the requirements of Regulation S-B.
4
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 8A. CONTROLS AND PROCEDURES
The Company's management concluded an evaluation, under the supervision
and with the participation of the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of December 31, 2003. Based
on this evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective
as of December 31, 2003.
In addition, the Chief Executive Officer and Chief Financial Officer
have determined that there have been no changes in the Company's internal
control over financial reporting during the period covered by this report
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of the Company are as
follows:
NAME AGE POSITION
---- --- --------
Glenn L. Halpryn 43 Chairman of the Board of
Directors, Chief Executive
Officer, President and
Secretary
Alan Jay Weisberg 58 Acting Chief Financial and
Accounting Officer, Director
Noah M. Silver 45 Director
Glenn L. Halpryn has been the Company's Chief Executive Officer since
May 2001 and Chairman of the Board of Directors, President and Secretary of
the Company since April 2001. Mr. Halpryn has been a member of the Board of
Directors since its inception and served a previous term as President of the
Company from its inception through the closing of the Merger. Mr. Halpryn is
also Chief Executive Officer and a director of Transworld Investment
Corporation ("TIC"), serving in such capacity since June 2001. From 1984 to
June 2001, Mr. Halpryn served as Vice President/Treasurer of TIC. From 1999,
5
Mr. Halpryn also served as Vice President of Ivenco, Inc. ("Ivenco") until
Ivenco's merger into TIC in June 2001. In addition, since 1984, Mr. Halpryn
has been engaged in real estate investment and development activities,
including the management, finance and leasing of commercial real estate.
From April 1988 through June 1998, Mr. Halpryn was Vice Chairman of Central
Bank, a Florida state-chartered bank. Since June 1987, Mr. Halpryn has been
the President of and beneficial holder of stock of United Security
Corporation ("United Security"), a broker-dealer registered with the NASD.
From June 1992 through May 1994, Mr. Halpryn served as the Vice President,
Secretary-Treasurer of Frost Hanna Halpryn Capital Group, Inc., a "blank
check" company whose business combination was effected in May 1994 with
Sterling Healthcare Group, Inc. From June 1995 through October 1996, Mr.
Halpryn served as a member of the Board of Directors of Sterling Healthcare
Group, Inc. During 2002, Mr. Halpryn became a director of Ivax Diagnostics,
Inc., a publicly held corporation, and is a member of its audit committee.
Alan Jay Weisberg has been the Company's Acting Chief Financial Officer
since September 1999 and a member of the Board of Directors and Treasurer of
the Company since April 2001. Since July 1986, Mr. Weisberg has been a
stockholder in the accounting firm of Weisberg Brause & Co., Boca Raton,
Florida. Mr. Weisberg has been the principal financial officer of United
Security since June 1987.
Noah M. Silver has been a member of the Company's Board of Directors
since April 2001 and was a consultant to the Company during 1999. Mr. Silver
has been the Chief Financial Officer of TIC since June 2001, a firm in which
Mr. Halpryn is the Chief Executive Officer and a director. From March 2000,
Mr. Silver served as the Chief Financial Officer of Ivenco, serving in such
capacity until Ivenco's merger into TIC in June 2001. From January 1997
through February 1999, Mr. Silver was the President of Dryclean USA, Florida
Division, and Dryclean USA Franchise Company. From April 1995 through
December 1996, Mr. Silver was the Florida Division Controller and Vice
President of Dryclean USA, the parent company of Dryclean USA, Florida
Division. Mr. Silver is a Certified Public Accountant and a Certified
Management Accountant and has earned a Master of Accounting Degree.
AUDIT COMMITTEE FINANCIAL EXPERTS
The Board of Directors has determined that the Company has two audit
committee financial experts serving on its audit committee--Noah M. Silver
and Alan Jay Weisberg. Only Mr. Silver is independent.
COMPLIANCE WITH SECTION 16(a)
To the Company's knowledge, based solely upon the Company's review of
Forms 3, 4 and 5 furnished to the Company, for the year ended December 31,
2003, no person who was a director, officer or beneficial owner of more than
ten percent of the Company's outstanding Common Stock or any other person
subject to Section 16 of the Securities Exchange Act of 1934 (the "Exchange
Act") failed to file on a timely basis, reports required by Section 16(a) of
the Exchange Act.
6
CODE OF ETHICS
The Company adopted a code of ethics that applies to all officers,
directors and employees of the Company. A copy of the code of ethics is
being filed with this Annual Report on Form 10-KSB, and any person may obtain
a copy of the code of ethics at no charge from the Company by writing to the
Company at 1428 Brickell Avenue, Suite 105, Miami, Florida 33131.
ITEM 10. EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
During the year ended December 31, 2003, each director of the Company
(employee and non-employee directors alike) received $300 for each Board
meeting attended as well as reimbursement for any reasonable business
expenses incurred by the director in connection with his activities on behalf
of the Company. During 2003, the Company held one meeting of the Board of
Directors. In addition, directors are entitled to receive stock options
under the 1997 Orthodontix, Inc. Stock Option Plan. No such stock options
were granted to directors during the year ended December 31, 2003.
EXECUTIVE COMPENSATION
No executive officer of the Company was compensated more than $100,000
during the year ended December 31, 2003. The following table sets forth all
the compensation earned by Glenn L. Halpryn, who has been the Company's Chief
Executive Officer since May 2001.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Awards
______________________ _____________________________________________
Name and Securities
Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation Options Compensation
Glenn Halpryn, 2003 $50,000 $ 0 $ 0 0 $300
Chief Executive 2002 $50,000 $ 0 $ 0 0 $600
Officer(1) 2001 $71,000 $ 0 $ 0 0 $900
(1) In April 2001, the Board of Directors of the Company decided to
compensate Mr. Halpryn for his services to the Company during the years ended
December 31, 1999 and 2000 in the amount of $50,000 for each year and to
reimburse Mr. Halpryn for certain legal and accounting fees of approximately
$175,000 paid by Mr. Halpryn from January 1999 through April 2001 for advice
in connection with the termination of the Company's practice management
business and its affiliation with the Practices. Mr. Halpryn had not
previously received any compensation for any of the years reported. The
Board of Directors also agreed to pay Mr. Halpryn a salary of $50,000 for the
year ended December 31, 2001 for his service as President and Chairman of the
Board of Directors of the Company. When Mr. Halpryn became the Company's
Chief Executive Officer, the Board of Directors agreed to increase Mr.
7
Halpryn's salary, and he received $70,833 in salary and $900 in directors'
fees during 2001. In January 2002, Mr. Halpryn reduced his salary to $50,000
annually.
STOCK OPTION GRANTS IN 2003
No options to purchase shares of the Company's Common Stock were granted
to any executive officer during the year ended December 31, 2003. The
following table sets forth certain summary information concerning grants of
options to purchase shares of the Company's Common Stock during the year
ended December 31, 2003:
Number of Securities % of Total Options Exercise/
Underlying Options Granted to Employees Base Price/ Expiration
Name Granted in Fiscal Year Share Date
Glenn Halpryn N/A --- --- ---
STOCK OPTION EXERCISES IN 2003
AND YEAR-END OPTION VALUES
No options to purchase shares of the Common Stock of the Company were
exercised by any executive officer of the Company during the year ended
December 31, 2003 and at December 31, 2003, there were no unexercised options
to purchase the Company's Common Stock held by any executive officer of the
Company. The following table sets forth certain summary information
concerning exercised and unexercised options to purchase shares of the
Company's Common Stock as of December 31, 2003:
Shares Value of Unexercisable In-
Acquired Number of Unexercised the-money Options at FY-
on Value Options at FY-end end Exercisable /
Name Exercise Realized Exercisable/Unexercisable Unexercisable
Glenn L. Halpryn --- N/A 0/0 $0/$0
8
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Neither Mr. Halpryn, the Company's Chief Executive Officer, nor any
other executive officer of the Company, has an employment agreement with the
Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The following table sets forth information known to the Company with
respect to the beneficial ownership of its Common Stock as of March 22, 2004
by (i) each stockholder known by the Company to own beneficially more than 5%
of the outstanding Common Stock, (ii) each named executive officer of the
Company, (iii) each director of the Company, and (iv) all directors and
executive officers as a group. As of March 22, 2004, there were 2,915,428
shares of Common Stock outstanding.
PRINCIPAL SHAREHOLDERS
Name and Address Shares of Common Stock Percent
of Beneficial Owner Beneficially Owned(1) Owned
Stephen Grussmark 450,000(2) 15.4%
7400 North Kendall Drive Suite 704
Miami, FL 33156
Glenn L. Halpryn 380,100 13.0%
1428 Brickell Avenue, Suite 105
Miami, FL 33131
Alan Jay Weisberg 4,201 0.14%
1428 Brickell Avenue, Suite 105
Miami, FL 33131
Noah Silver 0 0%
1428 Brickell Avenue, Suite 105
Miami, FL 33131
All Officers and 384,301 13.2%
Directors as a Group(2)
Total Shares Outstanding
as of March 22, 2004 2,915,428
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options or warrants held by that person
that are currently exercisable or will become exercisable within 60 days
after March 22, 2004 are deemed outstanding, while such shares are not deemed
outstanding for purposes of computing percentage ownership of any other
9
person. Unless otherwise indicated in the footnotes below, the persons and
entities named in the table have sole voting and investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable.
(2) Represents shares of Common Stock held in various trusts for which
either Dr. Grussmark or his wife is the sole trustee and the beneficiaries of
which are Dr. Grussmark, his wife or his children.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Alan Jay Weisberg, CPA, the Company's Acting Chief Financial Officer
since September 1999 and a member of the Company's Board of Directors and
Treasurer since April 2001, is a shareholder of Weisberg Brause, which firm
was paid $6,200 and $9,100 during the years ended December 31, 2003 and 2002,
respectively.
Since June 2001, the Company has utilized as its principal office, a
portion of the corporate offices of TIC, a company in which Messrs. Halpryn
and Silver are officers and directors. The Company occupies such space free
of rent.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report
1. Financial Statements
See page F-1.
2. Exhibits:
See Exhibit Index. The Exhibits listed in the accompanying Exhibit
Index are filed or incorporated by reference as part of this report.
(b) Reports on Form 8-K:
None
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES
PricewaterhouseCoopers LLC, the principal accountant for the Company,
billed the Company $28,000 in 2003 and $28,000 in 2002 for professional
services rendered for the audit of the Company's annual financial statements
and review of financial statements included in the Company's Forms 10-QSB.
AUDIT-RELATED FEES
The Company paid no fees to its principal accountant except the audit
fees reported above for 2002 and 2003.
10
TAX FEES
The Company paid no fees to its principal accountant for tax compliance,
tax advice or tax planning during the past two fiscal years. The Company
paid $1,215 in 2003 and $3,145 in 2002 to another accounting firm that filed
the Company's tax returns.
ALL OTHER FEES
The Company paid only the audit fees reported above to its principal
accountant during 2002 and 2003.
AUDIT COMMITTEE PRE-APPROVAL POLICIES
The Audit Committee pre-approved all services performed by the Company's
principal accountant before the accountant was engaged in accordance with the
Audit Committee's procedure of requiring the details of the services to be
performed.
11
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
By: /s/ Glenn Halpryn____
Glenn Halpryn, Chief Executive Officer
March 29, 2004
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant in the capacities and on
the dates indicated.
By: /s/ Glenn Halpryn_____
Glenn Halpryn, Chairman of the Board,
Chief Executive Officer, President, Secretary
March 29, 2004
By: /s/ Alan Jay Weisberg_
Alan Jay Weisberg, Acting Chief Financial
and Accounting Officer, Director
March 29, 2004
By: /s/ Noah Silver_______
Noah Silver, Director
March 29, 2004
12
INDEX TO FINANCIAL STATEMENTS
Pages
Report of Independent Certified Public Accountants F-2
Financial Statements
Balance Sheets F-3
Statements of Operations F-4
Statements of Stockholders' Equity F-5
Statements of Cash Flows F-6
Notes to the Financial Statements F-7--F-12
F-1
Report of Independent Certified Public Accountants
To the Board of Directors and
Shareholders of Orthodontix, Inc.
In our opinion, the accompanying balance sheets and the related statements of
operations, stockholders' equity and cash flows present fairly, in all
material respects, the financial position of Orthodontix, Inc. (the
"Company") at December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
As discussed in Note 1, the Company terminated its affiliation with all of
its Founding Practices and 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.
PricewaterhouseCoopers LLP
Miami, Florida
March 19, 2004
F-2
ORTHODONTIX, INC.
BALANCE SHEETS
December 31, 2003 and 2002
------------------------------------------
2003 2002
Assets
Current assets:
Cash and cash equivalents $ 179,479 $ 807,639
Investments 552,359 -
Prepaid expenses and other current assets 2,417 24,323
------------ ------------
Total current assets 734,255 831,962
Notes receivable and other assets - 43,258
------------ ------------
Total assets $ 734,255 $ 875,220
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 78,823 $ 79,074
------------ ------------
Total current liabilities 78,823 79,074
------------ ------------
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 outstanding
at December 31, 2003 and 2002 292 292
Additional paid-in capital 4,232,821 4,232,821
Accumulated deficit (3,577,681) (3,436,967)
------------ ------------
Total stockholders' equity 655,432 796,146
------------ ------------
Total liabilities and stockholders' equity $ 734,225 $ 875,220
============ ============
The accompanying notes are an integral part of these financial statements.
F-3
ORTHODONTIX, INC.
Statements of Operations
For the years ended December 31, 2003 and 2002
----------------------------------------------
2003 2002
General and administrative expenses $ 143,135 $ 165,790
Other operating expenses 4,250 -
------------ ------------
Total expenses 147,385 165,790
------------ ------------
Operating loss (147,385) (165,790)
------------ ------------
Other income:
Interest income 6,671 15,716
Other income - 312
------------ ------------
Total other income 6,671 16,028
------------ ------------
Net loss $ (140,714) $ (149,762)
============ ============
Loss per common and common
equivalent share:
Basic $ (0.05) $ (0.05)
============ ============
Diluted $ (0.05) $ (0.05)
============ ============
Weighted average number of common and
common equivalent shares outstanding -
basic and diluted 2,915,428 2,915,428
============ ============
The accompanying notes are an integral part of these financial statements.
F-4
ORTHODONTIX, INC.
Statements of Stockholder's Equity
For the years ended December 31, 2003 and 2002
-----------------------------------------------
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
--------- ---------- ----------- ------------ ----------
Balance, December 31, 2001 2,915,428 $ 292 $ 4,232,821 $(3,287,205) $ 945,908
Net loss for the year ended
December 31, 2002 - - - (149,762) (149,762)
--------- ---------- ----------- ------------ ----------
Balance, December 31, 2002 2,915,428 292 4,232,821 (3,436,967) 796,146
Net loss for the year ended
December 31, 2003 - - - (140,714) (140,714)
--------- ---------- ----------- ------------ ----------
Balance, December 31, 2003 2,915,428 $ 292 $ 4,232,821 $(3,577,681) $ 655,432
========= ========== =========== ============ ==========
The accompanying notes are an integral part of these financial statements.
F-5
ORTHODONTIX, INC.
Statements of Cash Flows
For the years ended December 31, 2003 and 2002
-----------------------------------------------
2003 2002
------------- ------------
Cash flows from operating activities:
Net loss $ (140,714) $ (149,762)
Adjustments to reconcile net loss to net cash used
in operating activities:
Loss on notes receivable 4,250 -
Gain on sale of fixed asset - (150)
Changes in assets and liabilities
Prepaid expenses and other current assets 33 1,528
Accounts payable and accrued liabilities (251) 1,798
------------- ------------
Net cash used in operating activities (136,682) (146,586)
------------- ------------
Cash flows from investing activities:
Purchase of investments (552,359) -
Payment on notes receivable 60,881 38,440
Proceeds from the sale of fixed asset - 150
------------- ------------
Net cash (used in) provided by
investing activities (491,478) 38,590
------------- ------------
Net decrease in cash and cash equivalents (628,160) (107,996)
Cash and cash equivalents
Beginning of year 807,639 915,635
------------- ------------
End of year $ 179,479 $ 807,639
============= ============
The accompanying notes are an integral part of these financial statements.
F-6
ORTHODONTIX, INC.
Notes to Financial Statements
December 31, 2003 and 2002
------------------------------------------
1. Description of Business
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 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 approximately $3.6 million at
December 31, 2003 as a result of operations and the termination of its
affiliation with the Founding Practices. The Company incurred net losses of
approximately $141,000 and $150,000 for the years ended December 31, 2003 and
2002, respectively.
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. During the year ended December 31, 2003, 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.
F-7
ORTHODONTIX, INC.
Notes to Financial Statements
December 31, 2003 and 2002
------------------------------------------
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements for the year ended December 31,
2003, include the accounts of Orthodontix. During the year ended December
31, 2002, the Company liquidated the Company's remaining wholly owned
subsidiaries.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates
of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid financial instruments with
maturities of 90 days or less at the date of purchase to be cash equivalents.
The Company maintains its cash and cash equivalents, which consist
principally of demand deposit accounts and money market accounts, with
financial institutions. The balance in demand deposit accounts, at times,
may exceed FDIC insurance limits.
Investments
The Company's investments consist of certificates of deposit with
maturities of 90 days or more at the date of purchase. The investments are
carried at cost plus accrued interest, which approximates the fair value.
Such investments are with what management believes to be high quality
financial institutions, and thus, limits its credit exposure. At times,
balances in a certificate of deposit with a financial institution may be in
excess of the federally insured limit of $100,000.
Income Taxes
The Company utilizes the liability method of accounting for income
taxes. The liability method requires recognition of deferred tax assets and
liabilities based on the differences between the financial statement and the
F-8
ORTHODONTIX, INC.
Notes to Financial Statements
December 31, 2003 and 2002
------------------------------------------
tax bases of assets and liabilities using enacted tax rates and laws in
effect in the years in which the differences are expected to reverse.
Deferred tax assets are also established for the future tax benefits of loss
and credit carryovers.
Earnings Per Share
Basic earnings per share is calculated by dividing the net income or
loss by the weighted average number of common shares outstanding during the
period. Diluted earnings per share is calculated by dividing the net income
or loss by the weighted average number of common 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. There are no potential common shares as of December
31, 2003 and 2002.
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 during the years ended
December 31, 2003 and 2002. 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 years ended December 31, 2003 and 2002.
3. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following at
December 31, 2003 and 2002:
2003 2002
Accounts payable $ 4,214 $ 4,214
Other accrued expenses 74,609 74,860
------------- -------------
$ 78,823 $ 79,074
============= =============
F-9
ORTHODONTIX, INC.
Notes to Financial Statements
December 31, 2003 and 2002
------------------------------------------
4. Loss on Collection of Notes Receivable
At December 31, 2002, the Company had a note receivable as a result of
the termination of the affiliation with a Founding Practice with an
outstanding balance of approximately $65,000. Such note receivable was due
in monthly payments through August 2004. On March 31, 2003, the Company
entered into an agreement for the Founding Practice to settle the outstanding
balance on the note receivable for a payment of approximately $60,900. As a
result of the agreement, the Company recorded other operating expenses in the
amount of $4,250 for the year ended December 21, 2003.
5. Commitments and Contingencies
At December 31, 2003, the Company has a month-to-month operating lease
for record storage. The Company incurred rental expense for a noncancelable
operating lease and a month-to-month lease of approximately $2,000 for each
of the years ended December 31, 2003 and 2002.
6. Income Taxes
The components of the income tax expense is as follows for the years
ended December 31, 2003 and 2002:
2003 2002
Deferred:
Federal $ 45,104 $ 47,732
State 7,721 8,170
Change in valuation allowance (52,825) (55,902)
----------- -----------
Total $ - $ -
=========== ===========
F-10
ORTHODONTIX, INC.
Notes to Financial Statements
December 31, 2003 and 2002
------------------------------------------
The differences between the effective rate, which was 0% at December
31, 2003, and 2002, and the U.S. federal income tax statutory rates are as
follows for the years ended December 31, 2003 and 2002:
2003 2002
Tax benefit at statutory rate $ (47,843) $ (50,919)
State income tax, net of
federal benefit (5,096) (5,392)
Other 114 409
Change in valuation allowance 52,825 55,902
----------- -----------
$ - $ -
=========== ===========
The significant components of deferred income tax assets and
liabilities are as follows at December 31, 2003 and 2002:
2003 2002
Deferred tax assets:
Start-up expenses $ - $ 20,292
Net operating loss carryforward 999,927 925,993
Accrued expenses 5,090 5,908
----------- -----------
1,005,017 952,193
Valuation allowance (1,005,017) (952,193)
----------- -----------
$ - $ -
=========== ===========
The Company has recorded a valuation allowance at December 31, 2003
and 2002 with respect to the deferred tax assets to the extent that
management has determined that it is more likely than not that the benefit of
such amounts will not be realized.
The Company has net operating loss carryforwards for federal and state
tax purposes of approximately $2,633,000 and $2,886,000, respectively, at
December 31, 2003. Such net operating loss carryforwards expire commencing
in 2019.
F-11
ORTHODONTIX, INC.
Notes to Financial Statements
December 31, 2003 and 2002
------------------------------------------
7. Stock Option Plan
The Company adopted an option plan (the "Option Plan") that provides
for granting up to 500,000 shares of common stock by November 2007. The
Option Plan provides for the issuance of incentive stock options and non-
qualified stock options. Under the Option Plan, options may be granted at
not less than the fair market value of the stock on the date of the grant.
The term of each option generally may not exceed ten years.
There were no options outstanding as of or for the years ended
December 31, 2003 and 2002.
F-12
EXHIBIT INDEX
Exhibit
Number Exhibit Description
------ -------------------
2.1* Agreement and Plan of Merger and Reorganization, dated
October 30, 1997, between Embassy Acquisition Corp.
(now known as Orthodontix, Inc. (the "Company")) and
Orthodontix, Inc. (now known as Orthodontix Subsidiary,
Inc.).
3.1* Amended and Restated Articles of Incorporation of the
Company.
3.2* Bylaws of the Company as amended.
4.1* Form of certificate representing shares of Common Stock
of the Company.
10.1* 1997 Orthodontix, Inc. Stock Option Plan.
10.2* Form of Administrative Services Agreement of the Company.
10.3* Forms of Services Agreement of the Company.
10.4* Form of Agreement and Plan of Reorganization of the
Company.
10.5* Forms of Lock-Up Agreement.
14.1 Code of Ethics
31.1 Certification of Chief Executive Officer pursuant to
Rule 13a-14(a) as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to
Rule 13a-14(a) as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002,
Certification of Chief Executive Officer
and Chief Financial Officer
---------------------------
* Incorporated by reference to the Company's Registration Statement on Form
S-4 declared effective on March 26, 1998 by the Securities and Exchange
Commission, SEC File No. 333-48677.
13
ORTHODONTIX, INC.
Introduction to Code of Conduct and Ethics
Orthodontix has a Code of Conduct and Ethics (the "Code") that applies
to all directors, officers and employees.
All employees will:
act honestly and ethically, including the ethical
handling of actual or apparent conflicts of interest
between personal and professional relationships.
provide full, accurate, timely and understandable
disclosure in reports and documents that Orthodontix
files with, or submits to, the Securities and Exchange
Commission and in any other public communications.
comply with all applicable governmental laws, rules
and regulations.
Violations of this Code may result in penalties ranging from warnings
and reprimands to termination of employment as deemed appropriate by
Orthodontix.
Each employee of Orthodontix is charged with the responsibility of
familiarizing himself or herself with this Code and of reporting any
violation or potential violation of this Code to the Chief Executive Officer
of Orthodontix or, if you are uncomfortable reporting such violation or
potential violation to the Chief Executive Officer, then you may instead
report such violation or potential violation to any member of the Board of
Directors of the Company.
Any employee who reports a violation or potential violation of this Code
is assured that he or she will, to the extent practicable, remain anonymous.
14
ORTHODONTIX, INC.
Code of Conduct and Ethics
1. LAWFUL AND ETHICAL BEHAVIOR IS REQUIRED AT ALL TIMES.
It is the responsibility of each director, officer and employee to obey
all laws and regulations. We must also conduct our affairs in a clearly
ethical manner. Even the appearance of ethical impropriety is to be avoided.
Integrity is, and must continue to be, the basis of all our corporate
relationships. Employees can obtain advice concerning this Code from
officers or directors of the Company. On doubtful questions, directors,
officers and employees should seek and receive advice in advance of taking
action.
2. AVOID CONFLICTS OF INTEREST.
Directors, officers and employees should avoid situations that present a
potential conflict between their interests and the interests of Orthodontix
and should be aware of Orthodontix's best interests at all times. Directors,
officers and employees must be careful to avoid situations where their
personal interests could conflict or appear to conflict with the interests of
the Company. Where a conflict exists, it must be resolved to the Company's
satisfaction in order for the director or employment relationship to
continue.
Circumstances that may give rise to conflicts of interest are not always
obvious. There are many areas of uncertainty, as well as conflicts, that
arise despite the best intentions of a director, officer or employee. To
avoid potentially damaging effects on both the Company and the individual,
employees should promptly disclose to their supervisors any facts or
circumstances that may involve, or appear to involve, a conflict of interest.
Such disclosure can assist employees in resolving honest doubts as to the
propriety of a particular course of conduct.
Circumstances that could involve conflicts of interest include, among
others: personal or family financial interests in a competitor, supplier, or
customer; employment by a competitor in any capacity; placement of business
in a firm owned or controlled by an employee or a family member; employment
of relatives (any person who is related by blood or marriage, or whose
relationship with the director, officer or employee is similar to that of
persons who are related by blood or marriage) in a direct working
relationship; acting as a consultant to a customer or supplier; or acceptance
of entertainment, gifts, payments, services or travel from those seeking to
do business with the Company. While business courtesies are to be
encouraged, directors, officers and employees should not accept
entertainment, gifts, payments, services or travel that may reasonably be
viewed by others to affect the director's, officer's or employee's judgment
or actions in the performance of his or her duties.
15
3. DO NOT USE INSIDE INFORMATION.
The Company prohibits its directors, officers and employees from using
for personal advantage information that they acquire during the course of
their association with Orthodontix. Inside information is any information
about the Company that has not been publicly disclosed.
Trading of Orthodontix stock in the market by a director, officer or
employee on the basis of material inside information, or trading by others
who have acquired inside information from a director, officer or employee, is
forbidden. Such trading, in addition to ethical considerations, subjects the
user of such information to legal liability and could prove embarrassing to
the individual and to Orthodontix. All directors, officers and employees
must exercise caution not to disclose inside information to outsiders, either
intentionally or inadvertently, under any circumstances, whether during the
business day or in after-hours discussions.
Even after the Company publicly discloses information through
appropriate channels, a reasonable time must be allowed to pass to permit
public dissemination and evaluation of the information before trading in the
Company's stock, or exercising stock options, can take place.
In addition, no one should buy or sell securities in any other company
about which they have material inside information.
Because it is often difficult to determine whether the standards
described above have been satisfied, to prevent inadvertent violation of this
policy or of the securities laws, directors, officers and employees should
consult with Orthodontix's CEO prior to engaging in any transaction involving
Orthodontix stock or stock options.
4. PRESERVE ORTHODONTIX'S ASSETS.
Each director, officer and employee has a responsibility to preserve
Orthodontix's assets, including its property, plants, equipment and
resources. This responsibility includes the duty not to misuse the Company's
assets. Use of the Company's assets or personnel for non-business purposes
is improper.
5. PROTECT PROPRIETARY INFORMATION.
In addition to preserving tangible assets and resources, each director,
officer and employee must also protect the Company's intellectual property.
Intellectual property includes scientific and technical knowledge, know-how,
and the experience and information developed in research, production,
marketing, sales, legal and finance. Such information is a vital asset of
the Company and is essential to our continued success.
This type of information is highly confidential. It should be protected
by all directors, officers and employees and not disclosed to outsiders. Its
loss through inadvertent or improper disclosure could be harmful to the
Company. The loyalty, integrity and sound judgment of the Company's
directors, officers and employees both on and off the job are essential to
the protection of Orthodontix's proprietary information.
16
6. GOOD COMMUNITY RELATIONS ARE IMPORTANT.
Orthodontix is determined to be a good corporate citizen. The Company
realizes that constructive interaction with society and a positive
relationship with the communities where we do business are important to our
success. We conduct business, whenever possible, so that we contribute to
the overall economic vitality of our community by operating our facilities in
accordance with applicable laws, and by supporting and encouraging public
policies that enhance the proper operation of business and take into account
legitimate employee and community interests.
Each director, officer and employee is a representative of Orthodontix
in the communities in which he or she lives and works. Directors, officers
and employees should therefore act in a manner that enhances the Company's
relationship in the communities in which it does business.
7. GOOD EMPLOYEE RELATIONS ARE ALSO IMPORTANT.
The Company seeks to ensure high levels of employee motivation,
satisfaction and commitment. It is our policy to hire and retain employees
without regard to race, color, religion, sex, age, national origin, handicap,
or veteran status; to provide challenging opportunities for individual growth
and advancement; to ensure open communication throughout the organization in
order to resolve problems or complaints; to strive to protect our employees'
health and safety; to provide a work environment free from harassment; and to
comply with all laws relating to employees.
Individual managers and supervisory personnel have direct responsibility
for implementing this policy, but the support of all employees is essential
to the policy's success.
8. ACCURATE FINANCIAL RECORDS MUST BE MAINTAINED.
It has always been the policy of Orthodontix to maintain the integrity
of its financial records and to assure that its financial statements fairly
and accurately reflect its financial condition and results of operations.
All of the Company's assets and liabilities are to be recorded in the
Company's accounts. No false or artificial entries may be made in the
Company's records for any reason, and no payment may be approved or made with
the intention or understanding that any part of such payment is to be used
for any purpose other than that described by the documents supporting the
payment.
Any employee having information or knowledge of any hidden fund,
undisclosed assets or liabilities, any false or artificial entry in the books
and records of the Company, or any hidden payment shall promptly report the
matter to the CFO of Orthodontix.
9. BRIBERY OF GOVERNMENT OFFICIALS IS FORBIDDEN.
Orthodontix has a long-standing policy that forbids bribery of
government officials anywhere in the world. The Company takes this position
not only because such payments violate the law, but also because such
payments undermine good government and the fair and impartial administration
of the laws.
17
United States law makes it a felony to offer or give anything of value
to a government official because of any official act performed or to be
performed. In addition, most government agencies have strict standards,
which their employees must follow, regarding the receipt of gifts,
entertainment, meals, or other things of value.
10. CORPORATE POLITICAL CONTRIBUTIONS TO FEDERAL ELECTION CAMPAIGNS
ARE ILLEGAL.
United States law prohibits corporations from contributing to candidates
for federal office. This does not mean that directors, officers and
employees of the Company cannot contribute to candidates or otherwise take
part in the political process. In fact, the Company encourages participation
by directors, officers and employees in public affairs and political
activities. Such participation must be on an individual basis, on our own
time, and at our own expense. Orthodontix will not provide reimbursement for
contributions to the campaign of any candidate for federal, state, or local
office or to any political party.
11. COMPLYING WITH ANTITRUST LAWS IS ESSENTIAL.
The Company competes fairly and legitimately and complies with antitrust
and competition laws. The antitrust and competition laws apply to many
aspects of business behavior, and those directors, officers and employees who
have responsibility in areas of the business to which these laws apply must
be aware of them and their implications.
The United States antitrust laws, and the competition laws of many other
countries and organization, prohibit agreements and activities that may have
the effect of reducing competition. Agreements and activities that are
prohibited include agreements with competitors to fix or control prices;
agreements with competitors to allocate products, markets or territories;
agreements to boycott certain customers or suppliers; agreements to refrain
from or limit the manufacture, sale or production of any product, or
reciprocal purchase agreements or tie-ins.
To ensure that Orthodontix avoids any possibility of such illegal
agreements, it is the Company's policy that there are no discussions or other
contacts, direct or indirect, with competitors regarding prices, terms and
conditions of sales, the territories or markets in which products will be
sold, or persons or companies to whom products will not be sold.
12. COMPLIANCE WITH THIS CODE
Orthodontix believes that strict compliance by all directors, officers
and employees with this Code will best serve the interests of our customers,
suppliers, employees, communities and shareholders. Accordingly, violations
of this Code will result in penalties ranging from warnings and reprimands to
termination of employment.
Each Orthodontix director, officer and employee is responsible for
familiarizing himself or herself with this Code and reporting any violation
or potential violation. If any employee feels that he or she may not discuss
a particular situation with his or her supervisor, the employee should feel
free to discuss the matter with any of the executive officers of Orthodontix.
18
We wish to assure anyone who reports a violation or potential violation
that he or she will, to the extent practicable, remain anonymous. Under no
circumstances will any employee be subject to any disciplinary or retaliatory
action as the result of filing a report of a violation or a potential
violation of this Code.
19
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Glenn L. Halpryn, certify that:
1. I have reviewed this report on Form 10-KSB 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
registrant as of, and for, the periods presented in this 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-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us by others
within those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant'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 our evaluation;
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.
Dated: March 29, 2004 By: /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
20
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Alan Jay Weisberg, certify that:
1. I have reviewed this report on Form 10-KSB 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
registrant as of, and for, the periods presented in this 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-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us by others
within those entities, particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant'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 our evaluation;
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.
Dated: March 29, 2004 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
21
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 Annual Report on Form 10-KSB of Orthodontix,Inc.
for the period ended December 31, 2003 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: March 29, 2004 By: /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
Dated: March 29, 2004 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Acting Chief Financial Officer
22