UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): JANUARY 26, 2000
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APPLE ORTHODONTIX, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 001-12977 74-2795193
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(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.
2777 ALLEN PARKWAY, SUITE 700, HOUSTON, TEXAS 77019
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (713) 852-2500
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On January 27, 2000, Apple Orthodontix, Inc. (the "Company") filed for
protection under Chapter 11 in the United States Bankruptcy Court for the
District of Delaware. The case has been assigned to United States Bankruptcy
Judge Mary Walrath. The consolidated caption is In Re Apple Orthodontix, Inc.,
Debtor, Chapter 11, case no. 00-347. The initial hearing was held on January 28,
2000.
On January 27, 2000, the Company issued the press release attached hereto
as Exhibit 99 announcing the commencement of the Company's Chapter 11
liquidation proceedings.
ITEM 4. CHANGE IN REGISTRANT"S CERTIFYING ACCOUNTANT.
On January 26, 2000, Arthur Andersen LLP ("Arthur Andersen") was dismissed
by the Company as the certifying accountant of the Company, effective as of that
date.
Arthur Andersen reported on the financial statements for each of fiscal
year 1997 and 1998, and, with respect to the Company"s 1998 financial
statements, Arthur Andersen"s report contained a qualification related to the
Company"s ability to continue as a going concern due to a constrained access to
funds and a net capital deficiency. Currently, there are no audited financial
statements for the year ending December 31, 1999 and the Company does not expect
to obtain such financial statements. The decision to dismiss Arthur Andersen was
recommended and approved by the Audit Committee of the Company. During the last
two fiscal years and subsequent interim period to the date hereof, there have
been no disagreements between the Company and Arthur Andersen on any matters of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures which, if not resolved to the satisfaction of Arthur
Andersen, would have caused it to make reference to the matter in the auditor"s
report. However, by letter dated April 14, 1999, Arthur Andersen advised the
Audit Committee of the Board of Directors that the Company had material
weaknesses in its internal control structure related to the design and operation
of the Company"s evaluation of asset realizability and management team
communication. The Audit Committee and Arthur Andersen discussed the material
weaknesses and the Audit Committee approved and recommended responses to these
material weaknesses. For discussion of the Company"s evaluation of asset
realizability and related disclosures, reference is made to the Company"s Annual
Report on Form 10-K for the year ended December 31, 1998 and the Company"s
subsequent interim reports.
In connection with the filing of this Form 8-K, Arthur Andersen was
provided with a copy of this disclosure and was requested by the Company to
furnish to the Company a letter addressed to the Commission stating whether
Arthur Andersen agrees with the above statements. A copy of Arthur Andersen"s
letter to the Commission is attached hereto as Exhibit 16 to this Form 8-K.
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ITEM 5. OTHER EVENTS.
On January 27, 2000, John G. Vondrak, Chairman of the Board of Directors
of the Company, resigned from the Board of Directors of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
16 Letter dated February 2, 2000, delivered by Arthur
Andersen to the Securities and Exchange Commission.
99 Press Release dated January 27, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Apple Orthodontix, Inc.
Dated: February 2, 2000 By: /s/ JAMES E. BOBBITT
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James E. Bobbitt
Vice President and
Chief Financial Officer
EXHIBIT 16
LETTER FROM ARTHUR ANDERSEN LLP
Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
February 2, 2000
Dear Sir/Madam:
We have read Item 4 included in the Form 8-K dated February 2, 2000, of Apple
Orthodontix, Inc. to be filed with the Securities and Exchange Commission and
are in agreement with the statements contained therein.
Very truly yours,
/s/ ARTHUR ANDERSEN LLP
cc: James E. Bobbitt, Vice President
and Chief Financial Officer
Apple Orthodontix, Inc.
EXHIBIT 99
PRESS RELEASE
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FOR FURTHER INFORMATION:
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
JAMES BOBBITT JACK QUEENEY KATHY BRUNSON BOB SCHWALLER
CHIEF FINANCIAL OFFICER GENERAL INQUIRIES ANALYST INQUIRIES MEDIA INQUIRIES
(713) 852-2500 (312) 640-6726 (312) 640-6696 (972) 830-2295
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FOR IMMEDIATE RELEASE
THURSDAY, JANUARY 27, 2000
APPLE ORTHODONTIX, INC. FILES FOR PROTECTION UNDER
CHAPTER 11 OF THE BANKRUPTCY CODE
HOUSTON, JANUARY 27, 2000--APPLE ORTHODONTIX, INC. (AMEX: AOI) today announced
that it filed for protection under Chapter 11 of the United States Bankruptcy
Code, in Wilmington, Delaware. The filing was necessitated by, among other
things, actions by certain orthodontic practices affiliated with the company
that unjustifiably withheld monies due the company related to the collection of
the company's accounts receivable. The company intends to file complaints and
motions for temporary restraining orders as part of its efforts to recover these
funds, continue collection of accounts receivable and compel compliance by
affiliated orthodontic practices with their respective obligations under their
Services Agreements.
The company has obtained post-petition financing commitments from its
pre-petition senior secured lenders in amounts necessary to fund the company's
business operations under the terms of the Services Agreements.
Prior to the petition date, four orthodontic practices filed lawsuits against
the company seeking damages and termination of their Services Agreements
alleging breach of contract, fraud and securities fraud. These lawsuits and all
other prepetition actions against the company have been stayed from proceeding
pursuant to the provisions of the Bankruptcy Code.
Apple Orthodontix, Inc. is a single specialty practice management company
focused on the practice of orthodontics.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE STATEMENTS ARE BASED ON
CERTAIN ASSUMPTIONS AND ANALYSIS MADE BY THE COMPANY IN LIGHT OF ITS EXPERIENCE
AND ITS PERCEPTION OF HISTORICAL
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TRENDS, CURRENT CONDITIONS, EXPECTED FUTURE DEVELOPMENTS AND OTHER FACTORS THE
COMPANY BELIEVES ARE IMPORTANT UNDER THE CIRCUMSTANCES. SUCH STATEMENTS ARE
SUBJECT TO A NUMBER OF ASSUMPTIONS, RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL FUTURE ACTIVITIES AND RESULTS OF OPERATIONS TO BE MATERIALLY DIFFERENT
FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL ACTIVITIES AND RESULTS TO DIFFER INCLUDE, WITHOUT LIMITATION,
THOSE SET FORTH IN THE COMPANY'S SECURITIES AND EXCHANGE COMMISSION FILINGS.
FOR FURTHER INFORMATION ON APPLE ORTHODONTIX, INC. FREE OF CHARGE VIA FAX,
SIMPLY DIAL 1-800-PRO-INFO AND ENTER "AOI."
