-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LEp0D7/jValLSoM1B2sssmG5nQAoqOjrqGIasAYqE3wdw3KIXiIbHuytEYPCnfp9 GrNcJCfDntATgiKG8vzeCg== 0000898432-02-000371.txt : 20020520 0000898432-02-000371.hdr.sgml : 20020520 20020520164841 ACCESSION NUMBER: 0000898432-02-000371 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORTHOMETRIX INC CENTRAL INDEX KEY: 0000946428 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 061387931 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26206 FILM NUMBER: 02657939 BUSINESS ADDRESS: STREET 1: 106 CORPORATE PARK DRIVE STREET 2: SUITE 106 CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 9146942285 MAIL ADDRESS: STREET 1: 106 CORPORATE PARK DRIVE STREET 2: SUITE 106 CITY: WHITE PLAINS STATE: NY ZIP: 10604 FORMER COMPANY: FORMER CONFORMED NAME: OSTECH INC DATE OF NAME CHANGE: 19950608 FORMER COMPANY: FORMER CONFORMED NAME: NORLAND MEDICAL SYSTEMS INC DATE OF NAME CHANGE: 19951115 10QSB 1 form10qsb.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002 --------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------- ----------- Commission file number 0-26206 ORTHOMETRIX, INC. (Exact name of small business issuer as specified in its charter) Delaware 06-1387931 ------------------------------------ ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 106 Corporate Park Drive, Suite 106, White Plains, NY 10604 ------------------------------------------------------ -------------------- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (914) 694-2285 ---------------- NORLAND MEDICAL SYSTEMS, INC. ----------------------------- (Former name, former address and former fiscal year if it changed since last report) Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 There were 29,544,621 shares of common stock outstanding as of May 20, 2002. 1 of 15
ORTHOMETRIX, INC. (formerly NORLAND MEDICAL SYSTEMS, INC.) FORM 10-QSB MARCH 31, 2002 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. CONSOLIDATED BALANCE SHEET (UNAUDITED) MARCH 31, 2002 ---------------------- ASSETS - ------ Current assets: Cash $ 17,113 Accounts receivable-trade, less allowance for for doubtful accounts of $282,500 98,494 Inventories 32,835 Assets of discontinued operations 1,699,638 Prepaid expenses and other current assets 76,772 ---------------------- Total current assets 1,924,852 Property and equipment, net 95,085 Other 7,808 ---------------------- Total Assets $ 2,027,745 ====================== Liabilities and Stockholders' Deficit Current liabilities: Notes and accrued interest payable - related parties $ 346,225 Note payable - net of discount 1,135,810 Accounts payable - related parties 551,489 Accounts payable - trade 811,757 Liabilities of discontinued operations 1,919,901 Accrued expenses 610,919 Accrued interest expense 139,165 ---------------------- Total current liabilities 5,515,266 ---------------------- Stockholders' deficit: Common stock - par value $.0005 per share, 45,000,000 shares authorized, and 29,544,621 shares issued and outstanding 14,771 Additional paid-in capital 38,648,693 Accumulated deficit (42,150,985) ---------------------- Total stockholders' deficit (3,487,521) ---------------------- Total Liabilities and Stockholders' Deficit $ 2,027,745 ====================== See notes to consolidated financial statements.
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ORTHOMETRIX, INC. (formerly NORLAND MEDICAL SYSTEMS, INC.) FORM 10-QSB MARCH 31, 2002 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, MARCH 31, 2002 2001 --------------------- --------------------- Revenue $ 64,347 $ 186,482 Cost of revenue 43,831 141,562 ------------------- --------------------- Gross profit 20,516 44,920 Sales and Marketing 109,906 228,186 General and administrative expense 256,507 304,274 Research and development expense - 23,121 --------------------- --------------------- Operating loss (345,897) (510,661) --------------------- --------------------- Interest expense (38,302) (34,039) Interest income - 375 --------------------- --------------------- Net loss from continuing operations (384,199) (544,325) Net (loss) income from discontinued operations (323,691) 449,633 --------------------- --------------------- Net loss $ (707,890) $ (94,692) ===================== ===================== Basic and diluted weighted average shares 29,969,312 30,229,065 ===================== ===================== Basic and diluted loss per share: Net loss from continuing operations $ (0.01) $ (0.02) Net (loss) income from discontinued operations (0.01) 0.02 --------------------- --------------------- Net loss $ (0.02) $ 0.00 ===================== ===================== See notes to consolidated financial statements.
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ORTHOMETRIX, INC. (formerly NORLAND MEDICAL SYSTEMS, INC.) FORM 10-QSB MARCH 31, 2002 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, MARCH 31, 2002 2001 ---------------------- --------------------- Cash Flows From Operating Activities: Net loss $ (707,890) $ (94,692) Adjustments to reconcile net loss to net cash used in operating activities: Net loss (income) from discontinued operations 323,691 (449,633) Amortization expense 13,281 13,281 Depreciation expense 1,499 5,355 Provision for doubtful accounts - (18,500) Changes in assets and liabilities: Increase in accounts receivable (32,881) (71,595) Decrease (increase) in inventories 19,871 (39,741) Decrease in non current assets - 500 Increase in prepaid expenses and other current assets (12,552) (57,787) Increase (decrease) in accounts payable 153,578 (3,216) Increase (decrease) in accrued expenses 41,987 (77,365) ---------------------- --------------------- Net cash used in continuing operations (199,416) (793,393) Net cash provided by discontinued operations 327 560,104 ---------------------- --------------------- Net cash used in operating activities (199,089) (233,289) ---------------------- --------------------- Cash Flows From Financing Activities: Issuance of common stock - 180,000 Proceeds of borrowings from related parties 200,000 - ---------------------- --------------------- Cash provided by financing activities 200,000 180,000 ---------------------- --------------------- Net increase (decrease) in cash 911 (53,289) Cash at beginning of period 16,202 53,289 ---------------------- --------------------- Cash at end of period $ 17,113 $ - ====================== ===================== See notes to consolidated financial statements.
4 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 1. BASIS OF PRESENTATION --------------------- The consolidated financial statements of Orthometrix, Inc. (formerly Norland Medical Systems, Inc.) and subsidiaries (the "Company") presented herein, have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-QSB and do not include all of the information and footnote disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2001, and included in the Company's Report on Form 10-K as filed with the Securities and Exchange Commission on March 12, 2002. In the opinion of management, the accompanying interim unaudited consolidated financial statements contain all adjustments (consisting of normal, recurring accruals) necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for these interim periods. The results of operations for the three months ended March 31, 2002 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2002. 2. INVENTORIES ----------- As of March 31, 2002, inventories consisted of the following: March 31, 2002 -------------- Raw materials, product kits, spare parts and assemblies $32,835 ====== 3. CASH FLOWS ---------- During February 2002, the Company exchanged inventory with a net book value of $40,000 for 888,888 shares of the Company's common stock, with a market value of $35,556 on the date of exchange. The difference between the net book value of the inventory exchanged and the market value of the stock received was recorded in cost of revenue during the three months ended March 31, 2002. Cash paid for interest was $0 for the three months ended March 31, 2002. 5 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 4. INCOME TAXES ------------ Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes and net operating loss carryforwards. Realization of the deferred tax asset is dependent on the Company's ability to generate sufficient taxable income in future periods. Based on the Company's existing financial condition, the Company determined that it was more likely than not that the deferred tax assets would not be realized. Accordingly, the Company recorded a valuation allowance to reduce the deferred tax assets to zero. 5. DISCONTINUED OPERATIONS AND SUBSEQUENT EVENTS --------------------------------------------- On April 11, 2002, the Company sold its bone measurement business to CooperSurgical Acquisition Corp. Inc., ("Cooper") the women's health care business of the Cooper Companies, Inc. The purchase price for the sale (the "Asset Sale") was $5 million, subject to adjustment, of which, the Company received $3.5 million at the closing of the Asset Sale. The $1.5 million balance of the purchase price will be released to the Company (subject to any post-closing adjustments and any indemnification obligations of the Company in respect of its representations and warranties) as follows: (i) $1 million during August 2002 upon approval by the Company of the closing statement prepared by Cooper and (ii) $500,000 on or before January 31, 2004. After paying transaction-related expenses, the Company expects to record a pre-tax gain of approximately $4.5 million in the second quarter of the year ending December 31, 2002. In addition, the Company is eligible to receive earn-out payments (up to a maximum purchase price of $12,000,000 for the Asset Sale) based on Cooper's net sales over three twelve-month periods of (i) the products sold by the Company to Cooper in the Asset Sale, (ii) the McCue C.U.B.A. product and (iii) each bone measurement product (other than the Sahara Clinical Bone Sonometer of Hologic, Inc.) that will be acquired or introduced by Cooper during the earn-out periods. Assets of $1,699,638 and liabilities of $1,919,901 have been segregated on the March 31, 2002 Consolidated Balance Sheet. The results of operations for all periods presented have been restated for the discontinued operations. March 31, 2002 -------------- Assets of Discontinued Operations: Accounts receivable - trade $ 791,881 Inventory 619,726 Other current assets 29,516 Property and equipment, net 258,515 ----------- Total Assets of Discontinued Operations $ 1,699,638 =========== Liabilities of Discontinued Operations: Accounts payable $ 1,129,292 Accrued expenses 116,321 Accrued warranty reserves 255,000 Unearned service revenue 419,288 ----------- Total Liabilities of Discontinued Operations $ 1,919,901 =========== 6 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 6. DISCONTINUED OPERATIONS AND SUBSEQUENT EVENTS (CONTINUED) --------------------------------------------------------- For the Three Months Ended March 31, 2002 March 31, 2001 -------------- -------------- Summary of Operating Results of Discontinued Operations: Revenue $1,603,280 $2,692,158 Cost of revenue 989,111 1,476,651 Sales and marketing 650,074 440,572 General and administrative 215,736 278,724 Research and development expense 72,050 46,578 ------------ ---------- Net (loss) income from discontinued operations $ (323,691) $ 449,633 ============ ========== In connection with the Asset Sale, Cooper assumed the lease commitment for the Company's facility located in Fort Atkinson, Wisconsin. The following is a schedule of the Company's remaining future minimum lease payments as of December 31, 2001. 2002 $133,442 2003 114,480 2004 114,480 2005 114,480 2006 76,320 In April 2002, the Company repurchased two promissory notes from Nissho Iwai Corporation and Nissho Iwai American Corporation, respectively, for a discount and an aggregate amount of $463,888. The discounted amount included accrued and unpaid interest of $133,017. The Company will record a gain on the purchase of the note and the forgiveness of the accrued and unpaid interest of approximately $800,000 in the second quarter of the year ending December 31, 2002. 7 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS ---------------------------------------------------------- The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosure contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Company from time to time. The discussion of the Company's liquidity, capital resources and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Partnership's operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. This item should be read in conjunction with the financial statements and other items contained elsewhere in the report. CRITICAL ACCOUNTING POLICIES AND ESTIMATES ------------------------------------------ The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities. The Company believes the following critical accounting policies involve additional management judgment due to the sensitivity of the methods, assumptions and estimates necessary in determining the related asset and liability amounts. The Company recognizes revenues in accordance with invoice terms, typically when products are shipped. The Company provides estimated inventory allowances for slow-moving and obsolete inventory based on current assessments about future demands, market conditions and related management initiatives. If market conditions are less favorable than those projected by management, additional inventory allowances may be required. The Company has recorded a valuation allowance to reduce its deferred tax assets. The Company limited the amount of tax benefits recognizable from these assets based on an evaluation of the amount of the assets that are expected to be ultimately realized. An adjustment to income could be required if the Company determined it could realize these deferred tax assets in excess of the net recorded amount or it would not be able to realize all or part of its net deferred tax assets. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The level of liquidity based on cash and cash equivalents experienced a $911 increase at March 31, 2002, as compared to December 31, 2001. The Company's $200,000 of cash provided by financing activities was offset by $199,089 of cash used in operating activities. Financing activities consisted of proceeds of borrowings from directors and officers of the Company. On April 11, 2002, the Company sold its bone measurement business to CooperSurgical Acquisition Corp. Inc., ("Cooper") the women's health care business of the Cooper Companies, Inc. The purchase price for the sale (the "Asset Sale") was $5 million, subject to adjustment, of which, the Company received $3.5 million at the closing of the Asset Sale. The $1.5 million balance of the purchase price will be released to the Company (subject to any post-closing adjustments and any indemnification obligations of the Company in respect of its 8 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- representations and warranties) as follows: (i) $1 million during August 2002 upon approval by the Company of the closing statement prepared by Cooper and (ii) $500,000 on or before January 31, 2004. After paying transaction-related expenses, the Company expects to record a pre-tax gain of approximately $4.5 million in the second quarter of the year ending December 31, 2002. In addition, the Company is eligible to receive earn-out payments (up to a maximum purchase price of $12,000,000 for the Asset Sale) based on Cooper's net sales over three twelve-month periods of (i) the products sold by the Company to Cooper in the Asset Sale, (ii) the McCue C.U.B.A. product and (iii) each bone measurement product (other than the Sahara Clinical Bone Sonometer of Hologic, Inc.) that will be acquired or introduced by Cooper during the earn-out periods. Assets of $1,699,638 and liabilities of $1,919,901 have been segregated on the March 31, 2002 Consolidated Balance Sheet. After paying approximately $188,000 (a portion of estimated transaction-related expenses of $500,000), the Company used the net proceeds of approximately $3,312,000 to satisfy approximately $2,400,000 of indebtedness of the Company not assumed by Cooper and current operating expenses, including $463,888 to repurchase $1,268,827 of the promissory note (including accrued and unpaid interest) previously issued to Nissho Iwai Corporation and Nissho Iwai American Corporation. None of the proceeds from the Asset Sale will be distributed to any shareholders of the Company. The Company intends to market, sell and service a wide range of proprietary non-invasive musculoskeletal and other devices through two divisions, a healthcare division and a sports & fitness division. The healthcare division will market, sell and service (1) pQCT (peripheral Quantitative Computed Tomography) bone and muscle measurement systems used for musculoskeletal research and clinical applications (including for bone disorders and human performance) and (2) ESWT (Extracorporal Shock Wave Therapy) systems used for urology (lithotripsy) and pain management and (3) patented exercise systems used for physical therapy, sports medicine and rehabilitative medicine. The healthcare division's product line will include the Orbasone pain management system, subject to approval from the United States Food and Drug Administration (the "FDA"). The sports division will market, sell and service patented exercise systems to fitness centers, gyms, sports clubs and associations and to the general public. The sports division's product line will include the Galileo systems. Galileo products offer a novel approach to muscle strength development given that such products are based on short and intense stimulations of the muscles rather than on longer repetitive movements on conventional exercise systems. There can be no assurance that the Company's efforts will be successful. 9 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED) ---------------------------------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) ------------------------------------------- During fiscal year 2000, the Company suspended sales of the Orbasone system pending FDA review of such product. The Company generated sales of $600,000 attributable to the Orbasone system during fiscal year 2000 before such suspension. No sales of the Orbasone system were made by the Company in 2001 or 2002 as the FDA review of the device is still pending. The Galileo 2000, XS and 100 systems are exercise devices that feature an efficient method of muscle strength development. The systems mechanically stimulate targeted muscles at a specific frequency, typically 20 to 25 impulses per second, causing the muscles to respond by contracting and relaxing by natural reflex 20 to 25 times per second. The Galileo systems target the leg and lower back (Galileo 2000 and XS), the arm and shoulder muscles (Galileo 100). Based on its larger size, the Galileo 2000 has the potential for a more robust exercise routine, than the Galileo and XS systems which have been designed for usage at home. The Company has no current backlog of orders as of March 31, 2002. As of May 16, 2002, the Company has working capital of approximately $900,000. The Company estimates that it will have payroll costs of approximately $850,000 per year for its 8 employees and 2 consultants. Additionally, the Company estimates that its aggregate annual costs for rent, insurance, audit services, legal services, Commission filings and other items will be approximately $500,000. For the following 12 months, the Company has also budgeted $250,000 for costs related to the Orbasone PMA. Accordingly, without taking into consideration (i) any revenue generated by current and future sales of products and services by the Company or (ii) the release of any portion of the $1,500,000 in funds held back by Cooper pursuant to the terms of the sale of the Company's bone measurement business, the Company believes that its current cash position is sufficient to sustain approximately 6 months of operations. The release in August 2002 of $1,000,000 (subject to any post-closing adjustments and any indemnification obligations) from the $1,500,000 in funds held back by Cooper will enable the Company to sustain operations through June 2003, without any revenue generated by current or future sales. 10 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED) ---------------------------------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) ------------------------------------------- The nature of the Company's business is such that it is subject to changes in technology, government approval and regulation, and changes in third-party reimbursement in the United States and numerous foreign markets. Significant changes in one or more of these factors in a major market for the Company's products could significantly affect the Company's cash needs. If the Company experiences significant demand for any of its products, additional third party debt or equity financing will be required. RESULTS OF OPERATIONS --------------------- The Company had a net loss of $707,890 ($0.02 per share based on 29,969,312 weighted average shares) for the three months ended March 31, 2002 compared to a net loss of $94,692 ($0.00 per share based on 30,229,065 weighted average shares) for the three months ended March 31, 2001. Net loss from continuing operations decreased from $544,325 for the three months ended March 31, 2001 to $384,199 for the three months ended March 31, 2002. Revenue for the three months ended March 31, 2002 decreased $122,135 (or 65.5%) to $64,347 from $186,482 from the comparable period of fiscal 2001. The decrease in sales was primarily due to the Company's liquidity problems, which forced management to focus its efforts and the Company's limited financial resources towards a sale of the Company rather than attempting to develop markets for its remaining products. Cost of revenue as a percentage of revenue was 68.1% and 75.9% for the three months ended March 31, 2002 and 2001, respectively, resulting in a gross margin of 31.9% for the three months ended March 31, 2002 compared to 24.1% for the comparable period of 2001. Sales and marketing expense for the three months ended March 31, 2002 decreased $118,280 or (51.8%) to $109,906 from $228,186 for the three months ended March 31, 2001 for the aforementioned reasons. General and administrative expense for the three months ended March 31, 2002 decreased $47,767 (or 15.7%) to $256,507 from $304,274 for the three months ended March 31, 2001. The decrease was primarily due to decreased consulting fees and lower labor expense. Research and development expense for the three months ended March 31, 2002 decreased $23,121 (or 100.0%) to $0 from $23,121 for the three months ended March 31, 2001. Spending on research and development commenced again during the second quarter of 2002. Interest expense increased $4,263 (or 12.5%) to $38,302 for the three months ended March 31, 2002 from $34,039 for the three months ended March 31, 2001. Interest expense increased due to an increase in principal balance on related party loans. 11 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED) ---------------------------------------------------------------------- RECENTLY ISSUED ACCOUNTING STANDARDS ------------------------------------ In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 prohibits pooling-of-interests method of accounting for business combinations initiated after June 30, 2001, and applies to all business combinations completed after June 30, 2001. There are also transition provisions that apply to purchase combinations completed prior to June 30, 2001. SFAS 141 is effective immediately. SFAS No. 142 is effective for the Company beginning January 1, 2002, and applies to goodwill and other intangible assets recognized in the Company's consolidated balance sheet as of that date, regardless of when those assets were initially recognized. SFAS No. 141 and No. 142 did not impact the Company's consolidated financial statements when adopted. In August 2001, the FASB issued SFAS No. 143, "Accounting For Asset Retirement Obligations." This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This standard requires entities to record the fair value of a liability for an asset retirement obligation in the period incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The Company adopted the provisions of SFAS No. 143 at the beginning of fiscal 2002. SFAS No. 143 did not have an impact on the Company's consolidated financial statements. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." This Statement also amends ARB No. 51, "Consolidated Financial Statements," to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. This statement requires that one accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. This statement also broadens the presentation of discontinued operations to include more disposal transactions. The Company adopted the provisions of SFAS No. 144 at the beginning of fiscal 2002. The adoption of this statement resulted in the presentation of the Company's financial statements to include the assets, liabilities and results of operations of its bone measurement business, which was sold in April 2002, as discontinued operations. 12 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED) ---------------------------------------------------------------------- RECENTLY ISSUED ACCOUNTING STANDARDS (CONTINUED) ------------------------------------------------ In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections," which updates, clarifies and simplifies existing accounting pronouncements. In part, this statement rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt". FASB No. 145 will be effective for fiscal years beginning after May 15, 2002. Upon adoption, enterprises must reclassify prior period items that do not meet the extraordinary item classification criteria in APB 30. The Company does not expect that this statement will have a material effect on the Company's financial statements. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK ------------------------------------------------------- All of the Company's notes payable outstanding at March 31, 2002 have fixed interest rates and therefore are not subject to interest rate risk. All of these notes payable were paid off in connection with the sale of the Company's bone measurement business in April 2002. 13 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- PART II - OTHER INFORMATION - --------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. --------------------------------- (a) Exhibits: 10.1 $90,281 Promissory Note dated July 1, 2001, between Norland Medical Systems, Inc. and Reynald Bonmati 10.2 $50,000 Promissory Note dated September 20, 2001, between Norland Medical Systems, Inc. and Michael W. Huber 10.3 Note Repurchase Agreement dated December 28, 2001, between Norland Medical Systems, Inc. and Nissho Iwai American Corporation 10.4 $75,000 Promissory Note, dated January 8, 2002, between Norland Medical Systems, Inc. and Michael W. Huber 10.5 $25,000 Promissory Note, dated January 9, 2002, between Norland Medical Systems, Inc. and Jeremy Allen 10.6 Note Repurchase Agreement dated January 10, 2002, between Norland Medical Systems, Inc. and Nissho Iwai Corporation 10.7 $75,000 Promissory Note dated March 13, 2002, between Norland Medical Systems, Inc. and Michael W. Huber 10.8 $25,000 Promissory Note dated March 15, 2002, between Norland Medical Systems, Inc. and James Baker (b) Reports on Form 8-K: One report on Form 8-K, dated January 29, 2002 (filed on February 5, 2002 and amended February 21, 2002) for a change in the Company's auditors. 14 of 15 ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- FORM 10-QSB MARCH 31, 2002 -------------------------- SIGNATURES ---------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ORTHOMETRIX, INC. ----------------- (FORMERLY NORLAND MEDICAL SYSTEMS, INC.) ---------------------------------------- BY: /s/ Reynald Bonmati -------------------------- Reynald Bonmati President BY: /s/ Richard Rahn -------------------------- Richard Rahn Vice President, Finance (Principal Financial) Dated: May 20, 2002 15 of 15 EX-10 3 exhibit10one.txt EXHIBIT 10.1 Exhibit 10.1 THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED BY SAID ACT OR STATE LAWS, NORLAND MEDICAL SYSTEMS, INC. $90,281 White Plains, New York July 1, 2001 NORLAND MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company"), for value received, promises to pay to REYNALD BONMATI (the "Payee"), the principal sum of Ninety Thousand Two Hundred Eighty One Dollars ($90,281) on September 11, 2002 (the "Maturity Date"), except as otherwise provided herein, together with interest on the outstanding principal amount of this Note at the rate of six and one-half percent (6-1/2 %) per annum, except as otherwise provided herein. Interest shall be payable quarterly on the last business day of each March, June, September and December, commencing September 30, 2001. If the entire principal amount of this Note is not paid in full on or before the Maturity Date, the Company may elect to extend the Maturity Date for an additional period of two years (the "Extension Period"). If the Company so elects to extend the Maturity Date, then effective on September 11, 2002 and on each succeeding September 11 during the Extension Period, the interest rate on this Note shall be increased by one percentage point. 1. Payments and Prepayments. ------------------------ 1.1 Payments and prepayments of principal and interest on this Note shall be made to Payee at 106 Corporate Park Drive, Suite 106, White Plains, New York 10604, or such other place or places within the United States as may be specified by the holder of this Note in a written notice to the Company at least 10 business days before a given payment date. 1.2 Payments and prepayments of principal and interest on this Note shall be made in lawful money of the United States of America. 1.3 If any payment an this Note becomes due and payable on a Saturday, Sunday or other day an which commercial banks in New York City are authorized or required by law to close, the maturity thereof shall be extended to the next succeeding business day, and, with respect to payments of principal, interest thereon shall be payable during such extension at the then applicable rate. 1.4 The Company shall be obligated to prepay the outstanding principal amount of this Note within ten (10) days after such time as the Company receives net proceeds of at least $2,000,000 from an equity financing. The Company shall have the right at any time and from time to time to prepay this Note in whole or in part, together with interest on the amount prepaid to the date of prepayment, without penalty or premium. Upon payment of part of the principal amount of this Note, the Company may require the holder to present this Note for notation of such payment and, if this Note is paid in full, require the holder to surrender this Note. 1.5 Upon payment in full of all outstanding principal and interest due under this Note, the Company's obligations in respect of payment of this Note shall terminate and the holder shall return it to the Company. 2. Events of Default. In the event that: ----------------- (a) the Company defaults for more than five business days in making any payment required to be made on this Note; or (b) the Company hereafter makes an assignment for the benefit of creditors, or files a petition in bankruptcy as to itself, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for the appointment of any receiver of or any trustee for the Company or any substantial part of its property under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there is hereafter commenced against the Company any such proceeding and an order approving the petition is entered or such proceeding remains undismissed for a period of 60 days, or the Company or its general partner by any such act or omission to act indicates its consent to or approval of or acquiescence in any such proceeding or the appointment of any receiver of, or trustee for, the Company or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for a period of 60 days; then, and in any such event, and at any time thereafter, if such event shall then be continuing, the holder of this Note may, by written notice to the Company, declare the Note due and payable, whereupon the same shall be due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived. 3. Investment Representation. ------------------------- 3.1 The Payee hereby acknowledges that the Note is not being registered (i) under the Securities Act of 1933, as amended (the "Act"), on the ground that the issuance of the Note is exempt from registration under Section 4(2) of the Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of the Note does not involve any public offering; and that the Company's reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Payee that it is acquiring the Note for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. 3.2 The Payee hereby agrees that it will not sell or transfer all or any part of this Note unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company an opinion, reasonably satisfactory to counsel for the Company, of counsel skilled in securities matters (selected by the holder and reasonably satisfactory to the Company) to the effect that the proposed sale or transfer may be made without registration under the Act and without registration or qualification under any state. 3.3 The Company may refuse to recognize a transfer of this Note on its books should a holder attempt to transfer this Note otherwise than in compliance with this Section 3. 4. Miscellaneous. ------------- 4.1 Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and of a letter of indemnity reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incident thereto, and upon surrender or cancellation of the Note, if mutilated, the Company will make and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. 4.2 This Note and the rights and obligations of the Company and each holder hereunder shall be construed in accordance with and be governed by the laws of the State of New York. IN WITNESS WHEREOF, the Company has executed this Note as of the day and year first above written. NORLAND MEDICAL SYSTEMS, INC. By: /s/ Reynald Bonmati ------------------------ Name: Reynald Bonmati Title: President EX-10 4 exhibit10two.txt EXHIBIT 10.2 Exhibit 10.2 THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED BY SAID ACT OR STATE LAWS, NORLAND MEDICAL SYSTEMS, INC. $50,000.00 White Plains, New York September 20, 2001 NORLAND MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company"), for value received, promises to pay to MICHAEL W. HUBER (the "Payee"), the principal sum of Fifty Thousand U.S. Dollars ($50,000) on March 31, 2002 (the "Maturity Date"), except as otherwise provided herein, together with interest on the outstanding principal amount of this Note at the rate of ten percent (10%) per annum, except as otherwise provided herein. Interest shall be payable quarterly on the last business day of each March, June, September and December, commencing December 31, 2001. 1. Payments and Prepayments. ------------------------ 1.1 Payments and prepayments of principal and interest on this Note shall be made to Payee at 180 Avenue at the Common, Suite 7, Shrewsbury, NJ 07702, or by wire to Payee's account at the First Union National Bank, 303 Broad Street, Red Bank, NJ 07701, ABA # 021200025, Acct. # 8881807686. Notice of a wire transfer shall be given by the Company to the Payee at the Shrewsbury address. 1.2 Payments and prepayments of principal and interest on this Note shall be made in lawful money of the United States of America. 1.3 If any payment an this Note becomes due and payable on a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, the maturity thereof shall be extended to the next succeeding business day, and, with respect to payments of principal, interest thereon shall be payable during such extension at the then applicable rate. 1.4 The Company shall be obligated to prepay the outstanding principal amount of this Note within ten (10) days after such time as (i) the Company receives net proceeds of at least $2,000,000 from an equity financing, or (ii) the Company sells substantially all its assets. The Company shall have the right at any time and from time to time to prepay this Note in whole or in part, together with interest on the amount prepaid to the date of prepayment, without penalty or premium. Upon payment of part of the principal amount of this Note, the Company may require the holder to present this Note for notation of such payment and, if this Note is paid in full, require the holder to surrender this Note. 1.5 Upon payment in full of all outstanding principal and interest due under this Note, the Company's obligations in respect of payment of this Note shall terminate and the holder shall return it to the Company. 2. Events of Default. In the event that: ----------------- (a) the Company defaults for more than five business days in making any payment required to be made on this Note; or (b) the Company hereafter makes an assignment for the benefit of creditors, or files a petition in bankruptcy as to itself, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for the appointment of any receiver of or any trustee for the Company or any substantial part of its property under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there is hereafter commenced against the Company any such proceeding and an order approving the petition is entered or such proceeding remains undismissed for a period of 60 day, or the Company or its general partner by any act or omission to act indicates its consent to or approval of or acquiescence in any such proceeding or the appointment of any receiver of, or trustee for, the Company or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for a period of 60 days; then, and in any such event, and at any time thereafter, if such event shall then be continuing, the holder of this Note may, by written notice to the Company, declare the Note due and payable, whereupon the same shall be due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived. 3. Investment Representation. ------------------------- 3.1 The Payee hereby acknowledges that the Note is not being registered (i) under the Securities Act of 1933, as amended (the "Act"), on the ground that the issuance of the Note is exempt from registration under Section 4(2) of the Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of the Note does not involve any public offering; and that the Company's reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Payee that it is acquiring the Note for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. 3.2 The Payee hereby agrees that it will not sell or transfer all or any part of this Note unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company an opinion, reasonably satisfactory to counsel for the Company, of counsel skilled in securities matters (selected by the holder and reasonably satisfactory to the Company) to the effect that the proposed sale or transfer may be made without registration under the Act and without registration or qualification under any state. 3.3 The Company may refuse to recognize a transfer of this Note on its books should a holder attempt to transfer this Note otherwise than in compliance with this Section 3. 4. Miscellaneous. ------------- 4.1 Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and of a letter of indemnity reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incident thereto, and upon surrender or cancellation of the Note, if mutilated, the Company will make and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. 4.2 This Note and the rights and obligations of the Company and each holder hereunder shall be construed in accordance with and be governed by the laws of the State of New York. IN WITNESS WHEREOF, the Company has executed this Note as of the day and year first above written. NORLAND MEDICAL SYSTEMS, INC. By: /s/ Reynald Bonmati ------------------------ Name: Reynald Bonmati Title: President EX-10 5 exhibit10three.txt EXHIBIT 10.3 Exhibit 10.3 NOTE REPURCHASE AGREEMENT AGREEMENT, dated as of December 28, 2001 (the "Agreement") by and between NORLAND MEDICAL SYSTEMS, INC., a Delaware corporation ("Norland") on one hand; and NISSHO IWAI AMERICAN CORPORATION, a New York corporation ("NIAC"), on the other hand. WHEREAS, NIAC (the "Note Holder") holds a promissory note dated as of March 28, 1999 (the "Note") pursuant to which Norland promises to pay the Note Holder on September 11, 2002 (the "Maturity Date") the amount of $695,831; WHEREAS, Norland has the right to extend the Maturity Date for additional period of two years until September 11, 2004; WHEREAS, the Note Holder has agreed to discount the Note in order to induce Norland to repurchase the Note on or before April 30, 2002; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, the parties hereby agree as follows: 1. REPURCHASE OF NOTE. Subject to the terms and conditions herein set forth, the Note Holder agrees to sell to Norland, and Norland agrees to purchase from the Note Holder, by the Closing Date (as defined in Section 2 hereof), the Note for an aggregate amount of $278,333. All accrued and unpaid interests on the Note shall be waived. The Note Holder agrees that the payment received pursuant to this Agreement shall be in full satisfaction of the Note. 2. CLOSING. The "Closing Date" shall be the earlier of (i) April 30, 2002, (ii) the date of the closing of the transaction for the sale of certain assets of Norland referred to in Mr. R. Bonmati's letter of December 26, 2001 to NIAC or (iii) such other earlier date as may be mutually agreed upon by the Note Holder and Norland. The closing will take place 10:00 a.m. on the Closing Date at the offices of Norland, 106 Corporate Park Drive, Suite 106, White Plains, New York 10604, or at such other time and place on the Closing Date as the Note Holder and Norland shall agree. At such closing Norland shall deliver to NIAC the amount of $278,333 in the form of a Certified or Cashier's Check, against receipt by Norland of the original Note. 3. COUNTERPARTS. This Agreement may be executed in any number of counterparts, and all of such counterparts shall for all purposes constitute an agreement, binding on the parties hereto, notwithstanding that all parties are not signatories to the same counterpart. 4. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to the choice of law principles of such laws. 5. TERMINATION. Except as amended herein, the Note shall remain in full force and effect. If Norland fails to repurchase the Note by the Closing Date, then this Agreement shall become null and void as though this Agreement had never been entered into. 6. ENTIRE AGREEMENT. This Agreement represents the entire agreement of the parties with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written. NORLAND MEDICAL SYSTEMS INC. By: /s/ Reynald G. Bonmati ------------------------------- Name: Reynald G. Bonmati Title: Chief Executive Officer NISSHO IWAI AMERICAN CORPORATION By: /s/ Masakazu Arisaka -------------------------------------- Name: Masakazu Arisaka Title: Senior Vice President EX-10 6 exhibit10four.txt EXHIBIT 10.4 Exhibit 10.4 THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED BY SAID ACT OR STATE LAWS, NORLAND MEDICAL SYSTEMS, INC. $75,000.00 White Plains, New York January 8, 2002 NORLAND MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company"), for value received, promises to pay to MICHAEL W. HUBER (the "Payee"), the principal sum of Seventy Five Thousand U.S. Dollars ($75,000) on June 30, 2002 (the "Maturity Date"), except as otherwise provided herein, together with interest on the outstanding principal amount of this Note at the rate of ten percent (10%) per annum, except as otherwise provided herein. Interest shall be payable quarterly on the last business day of each March, June, September and December, commencing March 31, 2002. 1. Payments and Prepayments. ------------------------ 1.1 Payments and prepayments of principal and interest on this Note shall be made to Payee at 180 Avenue at the Common, Suite 7, Shrewsbury, NJ 07702, or by wire to Payee's account at the First Union National Bank, 303 Broad Street, Red Bank, NJ 07701, ABA # 021200025, Acct. # 8881807686. Notice of a wire transfer shall be given by the Company to the Payee at the Shrewsbury address. 1.2 Payments and prepayments of principal and interest on this Note shall be made in lawful money of the United States of America. 1.3 If any payment on this Note becomes due and payable on a Saturday, Sunday or other day an which commercial banks in New York City are authorized or required by law to close, the maturity thereof shall be extended to the next succeeding business day, and, with respect to payments of principal, interest thereon shall be payable during such extension at the then applicable rate. 1.4 The Company shall be obligated to prepay the outstanding principal amount of this Note within ten (10) days after such time as (i) the Company receives net proceeds of at least $2,000,000 from an equity financing, or (ii) the Company sells substantially all its assets. The Company shall have the right at any time and from time to time to prepay this Note in whole or in part, together with interest on the amount prepaid to the date of prepayment, without penalty or premium. Upon payment of part of the principal amount of this Note, the Company may require the holder to present this Note for notation of such payment and, if this Note is paid in full, require the holder to surrender this Note. 1.5 Upon payment in full of all outstanding principal and interest due under this Note, the Company's obligations in respect of payment of this Note shall terminate and the holder shall return it to the Company. 2. Events of Default. In the event that: ----------------- (a) the Company defaults for more than five business days in making any payment required to be made on this Note; or (b) the Company hereafter makes an assignment for the benefit of creditors, or files a petition in bankruptcy as to itself, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for the appointment of any receiver of or any trustee for the Company or any substantial part of its property under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there is hereafter commenced against the Company any such proceeding and an order approving the petition is entered or such proceeding remains undismissed for a period of 60 day, or the Company or its general partner by any act or omission to act indicates its consent to or approval of or acquiescence in any such proceeding or the appointment of any receiver of, or trustee for, the Company or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for a period of 60 days; then, and in any such event, and at any time thereafter, if such event shall then be continuing, the holder of this Note may, by written notice to the Company, declare the Note due and payable, whereupon the same shall be due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived. 3. Investment Representation. ------------------------- 3.1 The Payee hereby acknowledges that the Note is not being registered (i) under the Securities Act of 1933, as amended (the "Act"), on the ground that the issuance of the Note is exempt from registration under Section 4(2) of the Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of the Note does not involve any public offering; and that the Company's reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Payee that it is acquiring the Note for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. 3.2 The Payee hereby agrees that it will not sell or transfer all or any part of this Note unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company an opinion, reasonably satisfactory to counsel for the Company, of counsel skilled in securities matters (selected by the holder and reasonably satisfactory to the Company) to the effect that the proposed sale or transfer may be made without registration under the Act and without registration or qualification under any state. 3.3 The Company may refuse to recognize a transfer of this Note on its books should a holder attempt to transfer this Note otherwise than in compliance with this Section 3. 4. Miscellaneous. ------------- 4.1 Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and of a letter of indemnity reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incident thereto, and upon surrender or cancellation of the Note, if mutilated, the Company will make and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. 4.2 This Note and the rights and obligations of the Company and each holder hereunder shall be construed in accordance with and be governed by the laws of the State of New York. IN WITNESS WHEREOF, the Company has executed this Note as of the day and year first above written. NORLAND MEDICAL SYSTEMS, INC, By: /s/ Reynald Bonamati ------------------------ Name: Reynald Bonmati Title: President EX-10 7 exhibit10five.txt EXHIBIT 10.5 Exhibit 10.5 THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED BY SAID ACT OR STATE LAWS, NORLAND MEDICAL SYSTEMS, INC. $25,000.00 White Plains, New York January 9, 2002 NORLAND MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company"), for value received, promises to pay to JEREMY ALLEN (the "Payee"), the principal sum of Twenty Five Thousand U.S. Dollars ($25,000) on June 30, 2002 (the "Maturity Date"), except as otherwise provided herein, together with interest on the outstanding principal amount of this Note at the rate of ten percent (10%) per annum, except as otherwise provided herein. Interest shall be payable quarterly on the last business day of each March, June, September and December, commencing March 31, 2002. 1. Payments and Prepayments. ------------------------ 1.1 Payments and prepayments of principal and interest on this Note shall be made to Payee 130 Jaffrey Road, Malvern, PA 19355. 1.2 Payments and prepayments of principal and interest on this Note shall be made in lawful money of the United States of America. 1.3 If any payment on this Note becomes due and payable on a Saturday, Sunday or other day an which commercial banks in New York City are authorized or required by law to close, the maturity thereof shall be extended to the next succeeding business day, and, with respect to payments of principal, interest thereon shall be payable during such extension at the then applicable rate. 1.4 The Company shall be obligated to prepay the outstanding principal amount of this Note within ten (10) days after such time as (i) the Company receives net proceeds of at least $2,000,000 from an equity financing, or (ii) the Company sells substantially all its assets. The Company shall have the right at any time and from time to time to prepay this Note in whole or in part, together with interest on the amount prepaid to the date of prepayment, without penalty or premium. Upon payment of part of the principal amount of this Note, the Company may require the holder to present this Note for notation of such payment and, if this Note is paid in full, require the holder to surrender this Note. 1.5 Upon payment in full of all outstanding principal and interest due under this Note, the Company's obligations in respect of payment of this Note shall terminate and the holder shall return it to the Company. 2. Events of Default. In the event that: ----------------- (a) the Company defaults for more than five business days in making any payment required to be made on this Note; or (b) the Company hereafter makes an assignment for the benefit of creditors, or files a petition in bankruptcy as to itself, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for the appointment of any receiver of or any trustee for the Company or any substantial part of its property under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there is hereafter commenced against the Company any such proceeding and an order approving the petition is entered or such proceeding remains undismissed for a period of 60 day, or the Company or its general partner by any act or omission to act indicates its consent to or approval of or acquiescence in any such proceeding or the appointment of any receiver of, or trustee for, the Company or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for a period of 60 days; then, and in any such event, and at any time thereafter, if such event shall then be continuing, the holder of this Note may, by written notice to the Company, declare the Note due and payable, whereupon the same shall be due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived. 3. Investment Representation. ------------------------- 3.1 The Payee hereby acknowledges that the Note is not being registered (i) under the Securities Act of 1933, as amended (the "Act"), on the ground that the issuance of the Note is exempt from registration under Section 4(2) of the Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of the Note does not involve any public offering; and that the Company's reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Payee that it is acquiring the Note for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. 3.2 The Payee hereby agrees that it will not sell or transfer all or any part of this Note unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company an opinion, reasonably satisfactory to counsel for the Company, of counsel skilled in securities matters (selected by the holder and reasonably satisfactory to the Company) to the effect that the proposed sale or transfer may be made without registration under the Act and without registration or qualification under any state. 3.3 The Company may refuse to recognize a transfer of this Note on its books should a holder attempt to transfer this Note otherwise than in compliance with this Section 3. 4. Miscellaneous. ------------- 4.1 Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and of a letter of indemnity reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incident thereto, and upon surrender or cancellation of the Note, if mutilated, the Company will make and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. 4.2 This Note and the rights and obligations of the Company and each holder hereunder shall be construed in accordance with and be governed by the laws of the State of New York. IN WITNESS WHEREOF, the Company has executed this Note as of the day and year first above written. NORLAND MEDICAL SYSTEMS, INC. By: /s/ Reynald Bonamati ----------------------- Name: Reynald Bonmati Title: President EX-10 8 exhibit10six.txt EXHIBIT 10.6 Exhibit 10.6 NOTE REPURCHASE AGREEMENT AGREEMENT, dated as of January 10, 2002 (the "Agreement") by and between NORLAND MEDICAL SYSTEMS, INC., a Delaware corporation ("Norland") on one hand; and NISSHO IWAI CORPORATION, a Japanese corporation ("NIC"), on the other hand. WHEREAS, NIC (the "Note Holder") holds a promissory note dated as of March 28, 1999 (the "Note") pursuant to which Norland promises to pay the Note Holder on September 11, 2002 (the "Maturity Date") the amount of $463,888; WHEREAS, Norland has the right to extend the Maturity Date for additional period of two years until September 11, 2004; WHEREAS, the Note Holder has agreed to discount the Note in order to induce Norland to repurchase the Note on or before April 30, 2002; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, the parties hereby agree as follows: 1. REPURCHASE OF NOTE. Subject to the terms and conditions herein set forth, the Note Holder agrees to sell to Norland, and Norland agrees to purchase from the Note Holder, by the Closing Date (as defined in Section 2 hereof), the Note for an aggregate amount of $185,555. All accrued and unpaid interests on the Note shall be waived. The Note Holder agrees that the payment received pursuant to this Agreement shall be in full satisfaction of the Note. 2. CLOSING. The "Closing Date" shall be the earlier of (i) April 30, 2002, (ii) the date of the closing of the transaction for the sale of certain assets of Norland referred to in Mr. R. Bonmati's letter of December 26, 2001 to NIAC or (iii) such other earlier date as may be mutually agreed upon by the Note Holder and Norland. The closing will take place 10:00 a.m. on the Closing Date at the offices of Norland, 106 Corporate Park Drive, Suite 106, White Plains, New York 10604, or at such other time and place on the Closing Date as the Note Holder and Norland shall agree. At such closing Norland shall deliver to NIC the amount of $185,555 in the form of a Certified or Cashier's Check, against receipt by Norland of the original Note. 3. COUNTERPARTS. This Agreement may be executed in any number of counterparts, and all of such counterparts shall for all purposes constitute an agreement, binding on the parties hereto, notwithstanding that all parties are not signatories to the same counterpart. 4. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to the choice of law principles of such laws. 5. TERMINATION. Except as amended herein, the Note shall remain in full force and effect. If Norland fails to repurchase the Note by the Closing Date, then this Agreement shall become null and void as though this Agreement had never been entered into. 6. ENTIRE AGREEMENT. This Agreement represents the entire agreement of the parties with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written. NORLAND MEDICAL SYSTEMS INC. By: /s/ Reynald G. Bonmati ------------------------------- Name: Reynald G. Bonmati Title: Chief Executive Officer NISSHO IWAI CORPORATION By: /s/ Masao Ohsawa -------------------------------------- Name: Masao Ohsawa Title: General Manager, Medical Systems Dept. EX-10 9 exhibit10seven.txt EXHIBIT 10.7 Exhibit 10.7 THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED BY SAID ACT OR STATE LAWS, NORLAND MEDICAL SYSTEMS, INC. $75,000.00 White Plains, New York March 13, 2002 NORLAND MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company") for value received, promises to pay to MICHAEL W. HUBER (the "Payee"), the principal sum of Seventy Five Thousand U.S. Dollars (S75,000) on September 30, 2002 (the "Maturity Date"), except as otherwise provided herein, together with interest on the outstanding principal amount of this Note at the rate of ten percent (10%) per annum, except as otherwise provided herein. Interest shall be payable quarterly on the last business day of each March, June, September and December, commencing June 30, 2002. 1. Payments and Prepayments. ------------------------ 1.1 Payments and prepayments of principal and interest on this Note shall be made to Payee at 180 Avenue at the Common, Suite 7, Shrewsbury, NJ 07702, or by wire to Payee's account at the First Union National Bank, 303 Broad Street, Red Bank, NJ 07701, ABA # 021200025, Acct. #8881807686. Notice of a wire transfer shall be given by the Company to the Payee at the Shrewsbury address. 1.2 Payments and prepayments of principal and interest on this Note shall be made in lawful money of the United States of America. 1.3 If any payment on this Note becomes due and payable on a Saturday, Sunday or other day an which commercial banks in New York City are authorized or required by law to close, the maturity thereof shall be extended to the next succeeding business day, and, with respect to payments of principal, interest thereon shall be payable during such extension at the then applicable rate. 1.4 The Company shall be obligated to prepay the outstanding principal amount of this Note within ten (10) days after such time as (i) the Company receives net proceeds of at least $2,000,000 from an equity financing, or (ii) the Company sells substantially all its assets. The Company shall have the right at any time and from time to time to prepay this Note in whole or in part, together with interest on the amount prepaid to the date of prepayment, without penalty or premium. Upon payment of part of the principal amount of this Note, the Company may require the holder to present this Note for notation of such payment and, if this Note is paid in full, require the holder to surrender this Note. 1.5 Upon payment in full of all outstanding principal and interest due under this Note, the Company's obligations in respect of payment of this Note shall terminate and the holder shall return it to the Company. 2. Events of Default. In the event that: ----------------- (a) the Company defaults for more than five business days in making any payment required to be made on this Note; or (b) the Company hereafter makes an assignment for the benefit of creditors, or files a petition in bankruptcy as to itself, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for the appointment of any receiver of or any trustee for the Company or any substantial part of its property under any bankruptcy. reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there is hereafter commenced against the Company any such proceeding and an order approving the petition is entered or such proceeding remains undismissed for a period of 60 day, or the Company or its general partner by any act or omission to act indicates its consent to or approval of or acquiescence in any such proceeding or the appointment of any receiver of, or trustee for, the Company or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for a period of 60 days; then, and in any event, and at any time thereafter, if such event shall then be continuing, the holder of this Note may, by written notice to the Company, declare the Note due and payable, whereupon the same shall be due and payable without presentment, demand, protest or other notice of any kind. all of which are hereby expressly waived. 3. Investment Representation. ------------------------- 3.1 The Payee hereby acknowledges that the Note is not being registered (i) under the Securities Act of 1933, as amended (the "Act"), on the ground that the issuance of the Note is exempt from registration under Section 4(2) of the Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of the Note does not involve any public offering; and that the Company's reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Payee that it is acquiring the Note for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. 3.2 The Payee hereby agrees that it will not sell or transfer all or any part of this Note unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company an opinion, reasonably satisfactory to counsel for the Company, of counsel skilled in securities matters (selected by the older and reasonably satisfactory to the Company) to the effect that the proposed sale or transfer may be made without registration under the Act and without registration or qualification under any state. 3.3 The Company may refuse to recognize a transfer of this Note on its books should a holder attempt to transfer this Note otherwise than in compliance with this Section 3. 4. Miscellaneous. ------------- 4.1 Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and of a letter of indemnity reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incident thereto, and upon surrender or cancellation of the Note, if mutilated, the Company will make and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. 4.2 This Note and the rights and obligations of the Company and each holder hereunder shall be construed in accordance with and be governed by the laws of the State of New York. IN WITNESS WHEREOF, the Company has executed this Note as of the day and year first above written. NORLAND MEDICAL SYSTEMS. INC. By: /s/ Reynald Bonamati ------------------------ Name: Reynald Bonmati Title: President EX-10 10 exhibit10eight.txt EXHIBIT 10.8 Exhibit 10.8 THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED BY SAID ACT OR STATE LAWS, NORLAND MEDICAL SYSTEMS, INC. $25,000.00 White Plains, New York March 15, 2002 NORLAND MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company"), for value received, promises to pay to JAMES BAKER (the "Payee"), the principal sum of Twenty Five Thousand U.S. Dollars ($25,000) on September 30, 2002 (the "Maturity Date"), except as otherwise provided herein, together with interest on the outstanding principal amount of this Note at the rate of ten percent (10%) per annum, except as otherwise provided herein. Interest shall be payable quarterly on the last business day of each March, June, September and December, commencing June 30, 2002. 1. Payments and Prepayments. ------------------------ 1.1 Payments and prepayments of principal and interest on this Note shall be made to Payee at 221 Mt Auburn Street, Apt. 702, Cambridge, MA 02138. 1.2 Payments and prepayments of principal and interest on this Note shall be made in lawful money of the United States of America. 1.3 If any payment on this Note becomes due and payable on a Saturday, Sunday or other day an which commercial banks in New York City are authorized or required by law to close, the maturity thereof shall be extended to the next succeeding business day, and, with respect to payments of principal, interest thereon shall be payable during such extension at the then applicable rate. 1.4 The Company shall be obligated to prepay the outstanding principal amount of this Note, within ten (10) days after such time as (i) the Company receives net proceeds of at least $2,000,000 from an equity financing, or (ii) the Company sells substantially all its assets. The Company shall have the right at any time and from time to time to prepay this Note in whole or in part, together with interest on the amount prepaid to the date of prepayment, without penalty or premium. Upon payment of part of the principal amount of this Note, the Company may require the holder to present this Note for notation of such payment and, if this Note is paid in full, require the holder to surrender this Note. 1.5 Upon payment in full of all outstanding principal and interest due under this Note, the Company's obligations in respect of payment of this Note shall terminate and the holder shall return it to the Company. 2. Events of Default. In the event that: ----------------- (a) the Company defaults for more than five business days in making any payment required to be made on this Note; or (b) the Company hereafter makes an assignment for the benefit of creditors, or files a petition in bankruptcy as to itself, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for the appointment of any receiver of or any trustee for the Company or any substantial part of its property under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there is hereafter commenced against the Company any such proceeding and an order approving the petition is entered or such proceeding remains undismissed for a period of 60 day, or the Company or its general partner by any such act or omission to act indicates its consent to or approval of or acquiescence in any such proceeding or the appointment of any receiver of, or trustee for, the Company or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for a period of 60 days; then, and in any such event, and at any time thereafter, if such event shall then be continuing, the holder of this Note may, by written notice to the Company, declare the Note due and payable, whereupon the same shall be due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived. 3. Investment Representation. ------------------------- 3.1 The Payee hereby acknowledges that the Note is not being registered (i) under the Securities Act of 1933, as amended (the "Act"), on the ground that the issuance of the Note is exempt from registration under Section 4(2) of the Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of the Note does not involve any public offering; and that the Company's reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Payee that it is acquiring the Note for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. 3.2 The Payee hereby agrees that it will not sell or transfer all or any part of this Note unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company an opinion, reasonably satisfactory to counsel for the Company, of counsel skilled in securities matters (selected by the holder and reasonably satisfactory to the Company) to the effect that the proposed sale or transfer may be made without registration under the Act and without registration or qualification under any state. 3.3 The Company may refuse to recognize a transfer of this Note on its books should a holder attempt to transfer this Note otherwise than in compliance with this Section 3. 4. Miscellaneous. ------------- 4.1 Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and of a letter of indemnity reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incident thereto, and upon surrender or cancellation of the Note, if mutilated, the Company will make and deliver a new Note of like tenor in lieu of such lost, stolen, destroy or mutilated Note. 4.2 This Note and the rights and obligations of the Company and each holder hereunder shall be construed in accordance with and be governed by the laws of the State of New York. IN WITNESS WHEREOF, the Company has executed this Note as of the day and year first above written. NORLAND MEDICAL SYSTEMS, INC. By: /s/ Reynald Bonmati ------------------------ Name: Reynald Bonmati Title: President -----END PRIVACY-ENHANCED MESSAGE-----