-----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, Pf9SAvf8IqiLVEs+ce8E3915w8gx8RPfADYZHhfIuMxtYbz6dXk5tfzLRY6TclMu LPWBVXWAS00mCrKj6GAkzQ== 0000950136-04-001599.txt : 20040517 0000950136-04-001599.hdr.sgml : 20040517 20040514173944 ACCESSION NUMBER: 0000950136-04-001599 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040517 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: 04809229 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: NORLAND MEDICAL SYSTEMS INC DATE OF NAME CHANGE: 19951115 FORMER COMPANY: FORMER CONFORMED NAME: OSTECH INC DATE OF NAME CHANGE: 19950608 10QSB 1 file001.txt QUARTERLY REPORT 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, 2004 --------------- 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 102, White Plains, NY 10604 - ----------------------------------------------------- ------------------------ (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (914) 694-2285 -------------- 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 14, 2004. 1 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. BALANCE SHEET (UNAUDITED)
MARCH 31, 2004 -------------- Assets Current assets: Cash $ 57,755 Accounts receivable-trade 3,733 Inventories 100,853 Prepaid expenses and other current assets 53,497 ------------ Total current assets 215,838 Property and equipment, net 19,528 Other 11,658 ------------ Total Assets $ 247,024 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable, net of discount and accrued interest payable - related parties $ 928,786 Accounts payable - trade 367,878 Accrued expenses 104,983 Unearned service revenue 7,350 ------------ Total current liabilities 1,408,997 ------------ Stockholders' equity: 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 38,777,546 Accumulated deficit (39,954,290) ------------ Total stockholders' equity (1,161,973) ------------ Total Liabilities and Stockholders' Equity $ 247,024 ============
See notes to financial statements. 2 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, MARCH 31, 2004 2003 ------------ ------------ (CONSOLIDATED) Revenue $ 168,387 $ 500,160 Cost of revenue 73,708 154,289 ------------ ------------ Gross profit 94,679 345,871 Sales and marketing expense 154,826 177,335 General and administrative expense 225,935 401,054 Research and development expense 99,231 73,668 ------------ ------------ Operating loss (385,313) (306,186) ------------ ------------ Interest expense (39,100) (6,054) Interest income 188 142 ------------ ------------ Net loss $ (424,225) $ (312,098) ============ ============ Basic and diluted weighted average shares 29,544,621 29,544,621 ============ ============ Basic and diluted loss per share: Net loss $ (0.01) $ (0.01) ============ ============
See notes to financial statements. 3 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, MARCH 31, 2004 2003 ------------- -------------- (CONSOLIDATED) Cash Flows From Operating Activities: Net loss $(424,225) $(312,098) Adjustments to reconcile net loss to net cash used in operating activities: Amortization expense 19,264 2,882 Depreciation expense 1,377 1,906 Changes in assets and liabilities: Decrease (increase) in accounts receivable 496,315 (81,186) Decrease (increase) in inventories 26,445 (41,270) (Increase) decrease in prepaid expenses and other current assets (2,450) 1,501 Increase in accounts payable 5,546 177,607 Increase (decrease) in accrued expenses 27,602 (69,150) (Decrease) increase in unearned service revenue (4,853) 3,406 Decrease in other liabilities (5,645) -- --------- --------- Net cash provided by (used in) operating activities 139,376 (316,402) --------- --------- Cash Flows From Investing Activities: Purchases of Property and Equipment (742) (9,642) --------- --------- Cash Flows From Financing Activities: Repayment of borrowings from related parties (350,000) -- Proceeds of borrowings from related parties 225,000 300,000 --------- --------- Cash (used in) provided by financing activities (125,000) 300,000 Net increase (decrease) in cash 13,634 (26,044) Cash at beginning of period 44,121 26,044 --------- --------- Cash at end of period $ 57,755 $ -- ========= =========
See notes to financial statements. 4 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 NOTES TO FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND GOING CONCERN The financial statements of Orthometrix, Inc. (formerly Norland Medical Systems, Inc.) (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 accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2003, and included in the Company's Report on Form 10-KSB as filed with the Securities and Exchange Commission on March 24, 2004. In the opinion of management, the accompanying interim unaudited financial statements contain all adjustments (consisting of normal, recurring accruals) necessary for a fair presentation of the financial position, results of operations and cash flows for these interim periods. During the past two fiscal years ended December 31, 2003 and 2002, the Company has experienced aggregate losses from continuing operations of $2,966,415 and has incurred total negative cash flow from continuing operations of $3,600,911 for the same two-year period. During the three months ended March 31, 2004 the Company experienced a net loss from operating activities of $424,225 and a positive cash flow from operating activities of $139,376. The Company does not currently have an operating line of credit. These matters raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company's continued existence is dependent upon several factors including increased sales volume and the ability to achieve profitability on the sale of some of the Company's remaining product lines. The Company is pursuing initiatives to increase liquidity, including external investments and obtaining a line of credit. The Company does not have a commitment for such financing, and there can be no guarantee that the Company will be able to attain such financing. In order to increase its cash flow, the Company is continuing its efforts to stimulate sales. The Company has implemented high credit standards for its customers and is emphasizing the receipt of down payments from customers at the time their purchase orders are received and attempting to more closely coordinate the timing of purchases. The results of operations for the three months ended March 31, 2004 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2004. 5 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 2. INVENTORIES As of March 31, 2004, inventories consisted of the following: March 31, 2004 -------------- Product kits, spare parts and sub-assemblies $ 100,853 =========== 3. CASH FLOWS The Company paid $1,858 and $0 for interest during the three months ended March 31, 2004 and 2003, respectively. 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 CONTINGENCY On January 30, 2004, the Company received the remaining $500,000 of the purchase price of its bone measurement business sold to CooperSurgical Acquisition Corp. ("Cooper") in 2002. In addition, the Company is eligible to receive earn-out payments (up to a maximum purchase price of $12.0 million 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 may be acquired or introduced by Cooper during the earn-out periods. No amounts have been earned through March 31, 2004 and there is no assurance that the Company will receive any sales proceeds from the earn-out. The Company leases its corporate office space located in White Plains, New York. Effective August 1, 2003, the Company amended its lease for office space expiring on July 31, 2008. Minimum future rental commitments with regard to the original and amended lease are payable as follows: 2004 21,275 2005 29,500 2006 30,816 2007 31,584 2008 18,424 ---------- $ 131,599 ========== 6 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 6. RELATED PARTY TRANSACTIONS During the first quarter of 2004, the Company borrowed $225,000 from certain officers and directors of the Company, adding to the $1,095,000 borrowed in 2003. The Company issued notes bearing interest at prime plus one (5.00% as of March 31, 2004) which mature in one year from the date of issuance. The Company is obligated to prepay the principal amount within 10 days upon the occurrence of either of two events; if it (i) receives at least $1,000,000 from an equity financing or (ii) sells substantially all of its assets. In addition, for the $500,000 of notes issued from August 2003 through November 2003, the Company was obligated to prepay the principal amount within 10 days upon the Company receiving the remaining $500,000 from the Asset Sale, which was released by Cooper to the Company on January 30, 2004. In February 2004, $350,000 of the borrowings were repaid from the $500,000 of sale proceeds received from Cooper. The portion of the borrowings not satisfied was extended for one year. As additional compensation, the Company granted the note holders five-year warrants to purchase up to 700,000 shares of common stock at $0.05 per share. $43,955 of the proceeds received as of March 31, 2004 were allocated to the warrants based on the application of the Black-Scholes option pricing model, with the remaining proceeds of $656,045 allocated to the notes payable. The value allocated to the warrants is being amortized to interest expense over the term of the notes. At March 31 2004, the unamortized discount on notes payable is $41,214. In January 2004, the Company granted a director of the Company warrants to purchase up to 50,000 shares of common stock at $0.05 per share as additional compensation in connection with the renewal of his $50,000 note dated September 18, 2003. The value of the warrants were based on the application of the Black-Scholes option pricing model and valued at $3,415. The value of the warrants was recorded as interest expense and as additional paid-in-capital. 7. STOCK-BASED COMPENSATION The Company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Options Issued to Employees." The Company accounts for stock-based compensation to employees using the intrinsic value method, whereby compensation cost is recognized when the exercise price at the date of grant is less than the fair market value of the Company's common stock. The Company discloses the proforma effect of compensation cost based on the fair value method for determining compensation cost. The value of stock-based compensation awarded to non-employees is determined using the fair value method. Compensation cost is recognized over the service or vesting period. Had the compensation cost for stock options granted to employees been determined using the fair value method, the proforma net loss per share would have been as follows:
For the Three Months Ended ---------------------------------------- March 31, 2004 March 31, 2003 -------------- -------------- Net loss, as reported $(424,225) $(312,098) Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effect (6,953) (14,292) --------- --------- Proforma net loss $(431,178) $(326,390) ========= ========= Basic and diluted loss per share As reported $ (0.01) $ (0.01) ========= ========= Pro forma $ (0.01) $ (0.01) ========= =========
7 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 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 Company'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 accounting principles generally accepted in the United States of America 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. Products are covered by warranties provided by the Company's vendors. Therefore, no warranty reserve is required on products sold by the Company. 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 provides allowances for uncollectable receivable amounts based on current assessment of collectability. If collectability is less favorable than those projected by management, additional allowances for uncollectability 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. Liquidity and Capital Resources During the past two fiscal years ended December 31, 2003 and 2002, the Company has experienced aggregate losses from continuing operations of $2,966,415 and has incurred total negative cash flow from continuing operations of $3,600,911 for the same two-year period. During the three months ended March 31, 2004 the Company experienced a net loss from operating activities of $424,225 and a positive cash flow from operating activities of $139,376. The Company does not currently have an operating line of credit. These matters raise substantial doubt about the Company's ability to continue as a going concern. The Company's continued existence is dependent upon several factors including increased sales volume and the ability to achieve profitability on the sale of some of the Company's remaining product lines. The Company is pursuing initiatives to increase liquidity, including external investments and obtaining a line of credit. The Company does not have a commitment for such financing, and there can be no guarantee that the Company will be able to attain such financing. 8 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED) Liquidity and Capital Resources (Continued) In order to increase its cash flow, the Company is continuing its efforts to stimulate sales. The Company has implemented high credit standards for its customers and is emphasizing the receipt of down payments from customers at the time their purchase orders are received and attempting to more closely coordinate the timing of purchases. The level of liquidity based on cash experienced a $13,634 increase at March 31, 2004, as compared to December 31, 2003. The Company's $139,376 provided by operating activities was partially offset by $742 of cash used in investing activities and $125,000 of cash used in financing activities. Investing activities consisted of $742 of purchases of property and equipment. Financing activities consisted of $225,000 of proceeds of borrowings and $350,000 repayment of borrowings from directors and officers of the Company. During the first quarter of 2004, the Company borrowed $225,000 from certain officers and directors of the Company, adding to the $1,095,000 borrowed in 2003. The Company issued notes bearing interest at prime plus one (5.00% as of March 31, 2004) which mature in one year from the date of issuance. The Company is obligated to prepay the principal amount within 10 days upon the occurrence of either of two events; if it (i) receives at least $1,000,000 from an equity financing or (ii) sells substantially all of its assets. In addition, for the $500,000 of notes issued from August 2003 through November 2003, the Company was obligated to prepay the principal amount within 10 days upon the Company receiving the remaining $500,000 from the Asset Sale, which was released by Cooper to the Company on January 30, 2004. In February 2004, $350,000 of the borrowings were repaid from the $500,000 of sale proceeds received from Cooper. The portion of the borrowings not satisfied was extended for one year. As additional compensation, the Company granted the note holders five-year warrants to purchase up to 700,000 shares of common stock at $0.05 per share. $43,955 of the proceeds received as of March 31, 2004 were allocated to the warrants based on the application of the Black-Scholes option pricing model, with the remaining proceeds of $656,045 allocated to the notes payable. The value allocated to the warrants is being amortized to interest expense over the term of the notes. At March 31 2004, the unamortized discount on notes payable is $41,214. In January 2004, the Company granted a director of the Company warrants to purchase up to 50,000 shares of common stock at $0.05 per share as additional compensation in connection with the renewal of his $50,000 note dated September 18, 2003. The value of the warrants were based on the application of the Black-Scholes option pricing model and valued at $3,415. The value of the warrants was recorded as interest expense and as additional paid-in-capital. 9 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED) Liquidity and Capital Resources (Continued) The Company markets, sells and services 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 markets, sells and services (1) pQCT(R) (peripheral Quantitative Computed Tomography) bone and muscle measurement systems used for musculoskeletal research and clinical applications (including for bone disorders and human performance)- the XCT(TM) product line; (2) ESWT (Extracorporal Shock Wave Therapy) systems used for urology (lithotripsy) - the Genestone(TM); and (3) patented exercise systems used for physical therapy, sports medicine and rehabilitative medicine - the Galileo(TM) and Leonardo(TM) product lines. The healthcare division has initiated a clinical study of the Orbasone(TM) pain management system (ESWT), which will be added to its product line, upon successful completion of the study and approval of the system by the United States Food and Drug Administration (the "FDA"). The sports & fitness division markets, sells and services patented exercise systems to fitness centers, gyms, sports clubs and associations and to the general public - the VibraFlex(R) product line. The sports & fitness division's product line includes Mini VibraFlex(R) and the VibraFlex(R) 500. The VibraFlex products are based on the same patented technology as the Galileo products and offer a novel approach to muscle strength development given that such products are based on short and intense stimulations of the muscles. There can be no assurance that these efforts will be successful. The Company has no current backlog of orders as of March 31, 2004. There are no material commitments for capital expenditures as of March 31, 2004. 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 $424,225 ($.01 per share based on 29,544,621 weighted average shares) for the three months ended March 31, 2004 compared to a net loss of $312,098 ($0.01 per share based on 29,544,621 weighted average shares) for the three months ended March 31, 2003. Revenue for the three months ended March 31, 2004 decreased $331,773 (or 66.3%) to $168,387 from $500,160 for the three months ended March 31, 2003. The decrease in sales was primarily due to a decrease in XCT sales for the three months ended March 31, 2004. Cost of revenue as a percentage of revenue was 43.8% and 30.8% for the three months ended March 31, 2004 and 2003, respectively, resulting in a gross margin of 56.2% for the three months ended March 31, 2004 compared to 69.2% for the three months ended March 31, 2003. The decrease in gross margin was due to the increase in manufacturing expenses attributable to the XCT sales during the three months ended March 31, 2004. 10 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED) Results of Operations (Continued) Sales and marketing expense for the three months ended March 31, 2004 decreased $22,509 or (12.7%) to $154,826 from $177,335 for the three months ended March 31, 2003. The decrease is due to the Company's decreased payroll expense. General and administrative expense for the three months ended March 31, 2004 decreased $175,119 (or 43.6%) to $225,935 from $401,054 for the three months ended March 31, 2003. The decrease was primarily due to a decrease in legal fees connected to the 2003 Cooper closing. Research and development expense for the three months ended March 31, 2004 increased $25,563 (or 34.70%) to $99,231 from $73,668 for the three months ended March 31, 2004. The increase was primarily due to increased expenses incurred for the development of the Vibraflex 500 product. Interest expense increased $33,046 (or 545.9%) to $39,100 for the three months ended March 31, 2004 from $6,054 for the three months ended March 31, 2003. Interest expense increased due to an increase in the outstanding principal balances of loans payable during the three months ended March 31, 2004 as compared to the three months ended March 31, 2003. Recently Issued Accounting Standards In April 2003, the FASB issued SFAS No. 149, "Amendment of SFAS No. 133 on Derivative Instruments and Hedging Activities." This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The changes in this statement improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. In particular, this statement (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative discussed in SFAS No. 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying to conform it to language used in FASB Interpretation No. 45, and (4) amends certain other existing pronouncements. Those changes will result in more consistent reporting of contracts as either derivatives or hybrid instruments. This statement is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The guidance should be applied prospectively. The provisions of this statement that relate to SFAS No. 133 implementation issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In addition, certain provisions relating to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to existing contracts as well as new contracts entered into after June 30, 2003. The Company does not expect that this statement will have an impact on the Company's financial statements. 11 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED) Recently Issued Accounting Standards (Continued) In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." The statement improves the accounting for certain financial instruments that under pervious guidance, issuers could account for as equity. The new statement requires that those instruments be classified as liabilities in statements of financial position. SFAS No. 150 affects the issuer's accounting for three types of freestanding financial instruments. One type is mandatorily redeemable shares, which the issuing company is obligated to buy back in exchange for cash and other assets. A second type, which includes put options and forward purchase contracts, involves instruments that do or may require the issuer to buy back some of its shares in exchange for cash or other assets. The third type of instruments that are liabilities under this statement is obligations that can be settled with shares, the monetary value of which is fixed, tied solely or predominantly to a variable such as a market index, or varies inversely with the value of the issuers' shares. SFAS No. 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. In addition to its requirements for the classification and measurement of financial instruments in its scope, SFAS No. 150 also requires disclosures about alternative ways of settling the instruments and the capital structure of entities, all of whose shares are mandatory redeemable. Most of the guidance in SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. This statement had no effect on the Company's financial statements. Quantitative and Qualitative Disclosures of Market Risk The Company does not have any financial instruments that would expose it to market risk associated with the risk of loss arising from adverse changes in market rates and prices. All of the Company's notes payable outstanding at March 31, 2004 have variable interest rates and therefore are subject to interest rate risk. A one percent change in the variable interest rate would result in a $9,700 change in annual interest expense. ITEM 3. CONTROLS AND PROCEDURES The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective. 12 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: 10.24 $405,000 Promissory Note, dated January 31, 2004, between Orthometrix, Inc. and Reynald Bonmati. This note replaces notes dated August 20, 2003; August 26, 2003; September 12, 2003; September 26, 2003; November 7, 2003; January 16, 2004 and January 23, 2004 in the amounts of $25,000 ($20,000 of which has been paid off); $10,000; $40,000; $25,000;$250,000; $50,000 and $25,000, respectively. (A) 10.25 $70,000 Promissory Note, dated January 31, 2004, between Orthometrix, Inc. and Yukon Associates. This note replaces notes dated January 22, 2003; September 12, 2003 and October 8, 2003 in the amounts of $50,000 ($30,000 of which has been paid off), $25,000 and $25,000, respectively. (A) 10.26 $50,000 Promissory Note, dated February 20, 2004 between Orthometrix, Inc. and Reynald Bonmati. 10.27 $50,000 Promissory Note, dated February 25, 2004 between Orthometrix, Inc. and Reynald Bonmati. 10.28 $50,000 Promissory Note, dated March 3, 2004 between Orthometrix, Inc. and The Arthur A. Rossler Trust. Exhibits required by Item 601 of Regulation S-B are filed herewith: 31.1 Chief Executive Officer's Certification, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Chief Financial Officer's Certification, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. + Confidentiality requested as to certain provisions. (A) This Exhibit was previously filed as an Exhibit to the Company's Report on Form 10-KSB dated March 25, 2004 and is incorporated herein by reference. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the period ended March 31, 2004. 13 of 19 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 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. BY: /s/ Reynald Bonmati ----------------------------- Reynald Bonmati President BY: /s/ Neil H. Koenig ----------------------------- Neil H. Koenig Chief Financial Officer (Principal Financial Officer) Dated: May 14, 2004 14 of 19 EX-10.26 2 file002.txt PROMISSORY NOTES, DATED FEBRUARY 20, 2004 EXHIBIT 10.26 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, ORTHOMETRIX, INC. $50,000.00 White Plains, New York February 20, 2004 ORTHOMETRIX, INC., a Delaware corporation (the "Company"), for value received, promises to pay to REYNALD BONMATI (the "Payee"), the principal sum of Fifty Thousand U.S. Dollars ($50,000) on February 20, 2005 (the "Maturity Date"), except as otherwise provided herein, together with interest on the outstanding principal amount of this Note at the rate of prime (as published from time to time by JP Morgan Chase) plus one 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, 2004. 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 102, White Plains, N.Y. 10604. 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 $1,000,000 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 payrnent 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 2 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. ORTHOMETRIX, INC, By: /s/ Neil Koenig -------------------------- Name: Neil Koenig Title: Chief Financial Officer EX-10.27 3 file003.txt PROMISSORY NOTE, DATED FEBRUARY 25, 2004 EXHIBIT 10.27 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, ORTHOMETRIX, INC. $50,000.00 White Plains, New York February 25, 2004 ORTHOMETRIX, INC., a Delaware corporation (the "Company"), for value received, promises to pay to REYNALD BONMATI (the "Payee"), the principal sum of Fifty Thousand U.S. Dollars ($50,000) on February 25, 2005 (the "Maturity Date"), except as otherwise provided herein, together with interest on the outstanding principal amount of this Note at the rate of prime (as published from time to time by JP Morgan Chase) plus one 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, 2004. 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 102, White Plains, N.Y. 10604. 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 $1,000,000 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 payrnent 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 2 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. ORTHOMETRIX, INC, By: /s/ Neil Koenig ---------------------------- Name: Neil Koenig Title: Chief Financial Officer EX-10.28 4 file004.txt PROMISSORY NOTE, DATED MARCH 3, 2004 EXHIBIT 10.28 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, ORTHOMETRIX, INC. $50,000.00 White Plains, New York March 3, 2004 ORTHOMETRIX, INC., a Delaware corporation (the "Company"), for value received, promises to pay to THE ARTHUR A. ROSSLER TRUST DATED 12/30/99 (the "Payee"), the principal sum of Fifty Thousand U.S. Dollars ($50,000) on March 3, 2005 (the "Maturity Date"), except as otherwise provided herein, together with interest on the outstanding principal amount of this Note at the rate of prime (as published from time to time by JP Morgan Chase) plus one 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, 2004. 1. Payments and Prepayments. 1.1 Payments and prepayments of principal and interest on this Note shall be made to Payee at 914 Spanish Moss Trail, Naples, FL 34108. 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 $1,000,000 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 payrnent 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. ORTHOMETRIX, INC, By: /s/ Reynald Bonmati ---------------------- Name: Reynald Bonmati Title: President EX-31.1 5 file005.txt CERTIFICATION EXHIBIT 31.1 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 CERTIFICATIONS I, Reynald Bonmati, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Orthometrix, Inc.; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries is made known to us by others within these entities, particularly during the period in which this quarterly 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 such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financing and reporting; and EXHIBIT 31.1 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely effect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: May 14, 2004 /s/ Reynald Bonmati --------------------------- Reynald Bonmati President (Chief Executive Officer) EX-31.2 6 file006.txt CERTIFICATION EXHIBIT 31.2 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 CERTIFICATIONS I, Neil H. Koenig, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Orthometrix, Inc.; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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, or cause such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including consolidated subsidiaries is made known to us, by others within these entities particularly during the period in which this quarterly 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 such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financing and reporting; and EXHIBIT 31.2 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely effect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: May 14, 2004 /s/ Neil H. Koenig ------------------ Neil H. Koenig Chief Financial Officer EX-32 7 file007.txt CERTIFICATION EXHIBIT 32 ORTHOMETRIX, INC. FORM 10-QSB MARCH 31, 2004 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Orthometrix, Inc., (the "Company"), on Form 10-QSB for the quarterly period ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and 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 the Company. Date: May 14, 2004 /s/ Reynald Bonmati ----------------------- Reynald Bonmati Chief Executive Officer Date: May 14, 2004 /s/ Neil H. Koenig ----------------------- Neil H. Koenig Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----