`UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004          Commission file No. 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 Identification No.)
 incorporation or organization)

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

Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

Securities registered pursuant to Section 12(g) of the Act:

                    COMMON STOCK, PAR VALUE $0.0005 PER SHARE

Indicate by check mark whether the 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 [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [ ]

Registrant's revenues for its most recent year were $1,179,877.

The aggregate market value of the registrant's Common Stock, par value $0.0005
per share, held by non-affiliates of the registrant as of March 15, 2005 was
$5,888,254.50 based on the price of the last reported sale on the OTC Bulletin
Board.

As of March 15, 2005 there were 42,902,368 shares of the registrant's Common
Stock, par value $0.0005 per share, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Orthometrix, Inc. Proxy Statement for the 2005 Annual Meeting of
Stockholders are incorporated by reference in Items 9, 10, 11 and 12 of Part III
of this Form 10-KSB. A definitive proxy statement will be filed with the
Securities and Exchange Commission within 120 days after the close of the fiscal
year covered by this Form 10-KSB.



                                TABLE OF CONTENTS



                                                                               Page
                                                                               ----

INTRODUCTION                                                                     3

ITEM 1.                  BUSINESS                                                3

ITEM 2.                  PROPERTIES                                             15

ITEM 3.                  LEGAL PROCEEDINGS                                      15

ITEM 4.                  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS    15

ITEM 5.                  MARKET FOR REGISTRANT'S COMMON EQUITY AND
                            RELATED STOCKHOLDER MATTERS                         16

ITEM 6.                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                            CONDITION AND RESULTS OF OPERATIONS                 16

ITEM 7.                  FINANCIAL STATEMENTS                                   20

ITEM 8.                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                            ACCOUNTING AND FINANCIAL DISCLOSURE                 41

ITEM 8a                  CONTROLS AND PROCEDURES                                41

ITEMS 9, 10, 11 and 12   DOCUMENTS INCORPORATED BY REFERENCE                    42

ITEM 13.                 EXHIBITS                                               42

ITEM 14.                 PRINCIPAL ACCOUNTING FEES AND SERVICES                 45




                                  INTRODUCTION

          The statements included in this Report regarding future financial
performance and results and other statements that are not historical facts
constitute forward-looking statements. The words "believes," "intends,"
"expects," "anticipates," "projects," "estimates," "predicts," and similar
expressions are also intended to identify forward-looking statements. These
forward-looking statements are based on current expectations and are subject to
risks and uncertainties. In connection with the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, Orthometrix, Inc.,
("Orthometrix" or the "Company" or "OMRX"), cautions the reader that actual
results or events could differ materially from those set forth or implied by
such forward-looking statements and related assumptions due to certain important
factors, including, without limitation, the following: (i) the effect of product
diversification efforts on future financial results; (ii) the availability of
new products and product enhancements that can be marketed by the Company; (iii)
the importance to the Company's sales growth and that regulatory approval of
products be granted, particularly in the United States; (iv) the acceptance and
adoption by primary care providers of new products and the Company's ability to
expand sales of its products to these physicians; (v) adverse affect resulting
from changes in the reimbursement policies of governmental programs (e.g.,
Medicare and Medicaid) and private third party payors, including private
insurance plans and managed care plans; (vi) the high level of competition in
the rehabilitation and physical therapy markets; (vii) the high level of
competition in the pain management market; (viii) changes in technology; (ix)
the Company's ability to continue to maintain and expand acceptable
relationships with third party dealers and distributors; (x) the Company's
ability to provide attractive financing options to its customers and to provide
customers with fast and efficient service for the Company's products; (xi)
changes that may result from health care reform in the United States may
adversely affect the Company; (xii) the Company's cash flow and the results of
its ongoing financing efforts; (xiii) the effect of regulation by the United
States Food and Drug Administration ("FDA") and other government agencies; (xiv)
the Company's ability to secure FDA approval to market its products; (xv) the
effect of the Company's accounting policies; (xvi) the outcome of pending
litigation; and (xvii) other risks described elsewhere in this Report and in
other documents filed by the Company with the Securities and Exchange
Commission. The Company is also subject to general business risks, including
adverse state, federal or foreign legislation and regulation, adverse publicity
or news coverage, changes in general economic factors and the Company's ability
to retain and attract key employees. Any forward-looking statements included in
this Report are made as of the date hereof, based on information available to
the Company as of the date hereof, and, subject to applicable law, the Company
assumes no obligation to update any forward-looking statements.

                                     PART I

ITEM 1. BUSINESS.

          Orthometrix, Inc. markets, sells and services several musculoskeletal
product lines used in pharmaceutical research, diagnosis and monitoring of bone
and muscle disorders, sports medicine, rehabilitative medicine, physical therapy
and pain management. Prior to April 11, 2002, the Company also developed,
manufactured, sold and serviced a broad line of traditional bone densitometers
used to assess bone mineral content and density, one of several factors used by
physicians to aid in the diagnosis and monitoring of bone disorders,
particularly osteoporosis. This line of products, which was the Company's
primary business, was sold on April 11, 2002 to CooperSurgical Acquisition Corp.
("Cooper"), a wholly-owned subsidiary of the Cooper Companies, Inc. (NYSE:COO)
(the "Asset Sale"). As of April 11, 2002, the Company changed its name from
Norland Medical Systems, Inc. to Orthometrix, Inc. As a result of the Asset
Sale, the Company's subsidiaries became inactive and were subsequently dissolved
in 2003.


                                       -3-



          During the past two years, the Company has experienced aggregate
losses from operations of $3,293,341 and has incurred a total negative cash flow
from operations of $2,180,729 for the same two-year period. 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 has recently completed a $1,740,000 share issuance that will
significantly improve the Company's liquidity for the near future. 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.

          On April 11, 2002, the Company sold its bone measurement business to
Cooper, the Company's exclusive distributor to U.S. physicians and group
practices specializing in Obstetrics and Gynecology. The Company was entitled to
receive up to a maximum of $12.0 million for the sale of substantially all its
assets and the assumption of certain liabilities. The Company received $3.5
million of the purchase price at the closing of the Asset Sale. An additional
$1.0 million of the remaining purchase price (plus or minus any required
purchase price adjustment) was to be released to the Company by Cooper during
August 2002 upon submission to the Company by Cooper of a closing statement
setting forth the value of the net assets and liabilities of the transferred
business in the Asset Sale as of the closing date of the Asset Sale. In August
2002, Cooper submitted a closing statement to the Company and notified the
Company of a downward adjustment to the purchase price based on Cooper's
purported valuation of the net assets and liabilities of the transferred
business. Based on its downward adjustment, Cooper paid approximately $405,000
to the Company on August 16, 2002. The Company did not agree with Cooper's
valuation of the applicable net assets and liabilities and, accordingly, did not
agree with Cooper's downward purchase price adjustment. The Company and Cooper
were unable to settle the disagreement and engaged an independent accounting
firm to provide a binding resolution of such disagreement. During June 2003 the
arbitrator settled the disagreement in favor of the Company for $268,569.
Accordingly, the Company received a total of $673,569 out of the potential
$1,000,000 installment payable in connection with the Asset Sale to Cooper. The
settlement from Cooper was received in July 2003. The full amount of the
remaining $500,000 installment of the purchase price was released by Cooper to
the Company on January 30, 2004, without any adjustment. The Company recorded a
gain from the Asset Sale of $4.3 million during the year ending December 31,
2002.

          In addition, the Company was eligible to receive up to an additional
$7.0 million in earn-out payments based on the net sales of certain products
over a three-year period from May 1, 2002 to April 30, 2005. No amounts have
been earned through March 15, 2005 and the Company does not anticipate receiving
any proceeds from the earn-out.

          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; and (2) patented exercise systems used
for physical therapy, sports medicine and rehabilitative medicine - the
Galileo(TM) and Leonardo(TM) product lines, as well as the Mini VibraFlex. The
healthcare division is continuing to work towards completion of the premarket
approval ("PMA") process for its Orbasone(TM) pain management system (ESWT or
Extracorporal Shock Wave Therapy), 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 the Mini
VibraFlex(R), the Mini VibraFlex(R) Plus and the


                                       -4-



VibraFlex(R) 500. The Company also intends to introduce the VibraFlex Rx in the
near future to replace the Galileo 2000 in the physical therapy, sports medicine
and rehabilitation markets. 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.

          The Company is in the process of assembling a sales organization to
market the VibraFlex equipment in the U.S. and Canada.

RECENT DEVELOPMENTS

          In February 2004, the Company introduced the VibraFlex(R) 500, the
Mini VibraFlex(R) and the Mini VibraFlex(R) Plus. Assembled in the U.S., the
VibraFlex 500 is based on the same patented technology as the Galileo 2000 and
offer a novel approach to muscle strength development given that such products
are based on short and intense stimulations of the muscles. The VibraFlex 500
and the Mini VibraFlex Plus have been designed for the fitness clubs and the
home exercise markets. Delivery of the first VibraFlex 500 units to fitness
clubs occurred in December 2004. The products are being tested by a variety of
potential users but no significant orders have been received.

MARKETS AND PRODUCTS

          The Company currently offers 5 product types comprised of a total of
16 models: 6 models of pQCT systems for bone & muscle research application (XCT
Research SA, XCT Research SA+, XCT Research M, XCT Research M+, XCT Microscope,
and XCT 3000 Research); 2 models of pOCT systems for clinical application
related to bone & muscle disorders (XCT 2000L and XCT 3000); 5 models of
patented powered exercise systems for rehabilitation and physical therapy (Mini
VibraFlex(R), Galileo XS, Galileo Home Plus, Galileo "Kipptisch" and Galileo
2000); 1 model of human performance measurement system (Leonardo); and 2 models
of VibraFlex for sports and fitness (Mini VibraFlex(R) Plus and VibraFlex(R)
500). In addition, the Company has several products under development, such as
the VibraFlex Rx for sports medicine, rehabilitation and physical therapy.

The following is a description of each of the Company's product types and
primary models.

1. BONE & MUSCLE DISORDERS / PHARMACEUTICAL RESEARCH

          We believe that over the past decade, peripheral Quantitative Computed
Tomography (pQCT(R)) has replaced Dual Energy Bone Absorptiometry (DEXA or DXA)
as the technology of choice for pharmaceutical research laboratories
specializing in bone disorders such as osteoporosis. Unlike DXA, pQCT allows
true volumetric measurement of both bones and muscles. We believe that it allows
not only faster assessment of new therapeutic agents but also their impact on
the entire musculoskeletal system.

         The Company directly markets, sells and services in the US and Canada
the following pQCT systems for in vivo and in vitro research:

XCT Research SA/SA+ (bone/muscle measurement for small laboratory animals such
as rats);

XCT Research M/M+ (bone/muscle measurement for transgenic mice);

XCT Microscope - (bone measurement for in vitro research);

XCT 3000 Research - (bone/muscle measurement for large laboratory animals such
as primates).


                                       -5-



          Stratec Medizintechnik GmbH ("Stratec"), a worldwide leader in pQCT
technology, manufactures these systems in Germany and markets them in the rest
of the world. North America accounts for about 80% of the worldwide research
market.

2. BONE DISORDERS / DIAGNOSTIC AND MONITORING

          The clinical market is usually lagging several years behind the
research market. Therefore, DXA still is the "gold standard" in the diagnostic
and monitoring of bone disorders, in spite of its shortcomings. However, the
two-dimensional nature of DXA technology makes it of little value in situations
when parameters such as bone thickness or bone cross section area need to be
measured (orthopedics) or when long bones continue to grow (pediatrics).

          The Company directly markets, sells and services in the US and Canada
the following pQCT systems for clinical assessment and monitoring of bone
density and architecture:

XCT2000L (bone/muscle measurement at the forearm and foot/tibia);
XCT 3000 (bone/muscle measurement at the tibia and femur).

          All systems are principally marketed to the pediatrics and orthopedics
specialties. Stratec, a worldwide leader in pQCT technology, manufactures these
systems in Germany and markets them in the rest of the world.

          Sales, rental, and service of all pQCT systems for in vivo and in
vitro research, clinical assessment and monitoring of bone density and
architecture represented approximately 70% of the Company systems sales from
operations during fiscal year 2004.

3. PATIENTS WITH INCONTINENCE THAT BENEFIT FROM EXERCISE

               Our target is the large incontinence market. It is well
recognized that exercise of the perineal muscles can improve their strength and
reduce incontinence. The Galileo(TM) 2000 is a patented powered exercise system
that allows patients with incontinence to stimulate such muscles at a rapid
(25/30 Hz) rate, providing them with the exercise that can reduce incontinence.
The Galileo systems are made by Novotec Medical GmbH ("Novotec"). The Company
intends to introduce the VibraFlex Rx in the near future to replace the Galileo
2000. Unlike the Galileo 2000, the VibraFlex Rx will be manufactured for the
Company in the US by Kimchuk, Inc ("Kimchuk")

4. PATIENTS WITH DIABETES THAT BENEFIT FROM EXERCISE

          It is well known that individuals with diabetes benefit from exercise.
In particular, exercise can improve blood circulation in legs of diabetics.
Unfortunately, diabetics usually are not capable of long exercise sessions, and
their exercise efforts must be predictable so proper insulin levels can be
maintained. The Galileo(TM) rapid (25/30 Hz) stimulation rate, which does not
tax the cardiopulmonary system, is well suited to the needs of these
individuals. The Galileo allows people with diabetes to enjoy the benefits of
exercise. Galileo sales accounted for approximately 25% of total systems sales
from operations during fiscal year 2004. The Company intends to introduce the
VibraFlex Rx in the near future to replace the Galileo 2000. Unlike the Galileo
2000, the VibraFlex Rx will be manufactured for the Company in the U.S. by
Kimchuk.

5. REHABILITATION / PHYSICAL THERAPY

          The patented Galileo powered exercise system has already penetrated
the European rehabilitation and physical therapy market. The Galileo 2000 model
targets the leg and lower back. The Mini VibraFlex model targets the arm and
shoulder muscles. The system now is marketed in the U.S. for the rehabilitation
of muscle, tendons and ligaments, and to improve muscle strength and
coordination. Like the Galileo 2000, the Mini VibraFlex system is


                                      -6-



also made by Novotec. The Company intends to introduce the VibraFlex Rx in the
near future to replace the Galileo 2000. Unlike the Galileo 2000, the VibraFlex
Rx will be manufactured for the Company in the U.S. by Kimchuk.

These systems are specifically used to:

     o    Exercise postural muscles, joints and reflexes;

     o    Improve muscle strength, reflexes and joint motions;

     o    Redevelop postural muscles, joints and reflexes after injury/disease;

     o    Reduce the pain and disability associated with Osteoarthritis; and

     o    Allow patients with Parkinson's disease to benefit from exercise that
          can slow the progress of the disease.

          The Leonardo(TM) measures various key parameters of human performance,
such as force and power. It has been designed to help the rehabilitation
specialist and the physical therapist measure the progress made by his/her
patients. The Leonardo system is made by Novotec. Leonardo sales accounted for
less than 2% of total systems sales from operations during fiscal year 2004.

6. SPORTS AND FITNESS

          The VibraFlex is a revolutionary exercise system based on the same new
and patented concept as the Galileo systems. Many European athletes and
professional teams already use the Galileo as an inherent part of their training
to increase muscle power (ski, soccer, volley ball, basket ball, tennis). One of
the first U.S. athletes to use the Galileo system was Lance Armstrong, several
times winner of the Tour de France. The Chicago White Sox baseball team was the
first U.S. professional sports team to use the Galileo. The patented Galileo
technology was developed for Rehabilitative Medicine and Physical Therapy to
improve various conditions affecting muscle, tendons and ligaments, improve
muscle strength/coordination, and blood circulation. The VibraFlex system has
been developed by the Company to make the powerful Galileo technology affordable
to the sports & fitness industry and to the home exercise market. The VibraFlex
500 model targets the leg and lower back while the Mini VibraFlex Plus model
targets the arm and shoulder muscles. The VibraFlex 500 model is manufactured
for the Company in the U.S. by Kimchuk, and the Mini VibraFlex Plus model is
manufactured for the Company by Novotec.

7. PRODUCTS AND APPLICATIONS UNDER DEVELOPMENT

     o    PAIN MANAGEMENT: Manufactured for MIP GmbH, a Swiss Corporation
          ("MIP"), under a contractual arrangement by Nippon Infrared Industries
          Co., Ltd. (Japan), the Orbasone(TM)was classified in August 1998 by
          the FDA as a Class I therapeutic vibrator (21 CFR Section 890.5975)
          exempt from the 510(k) requirements of the Federal Food, Drug and
          Cosmetic Act. The Company distributed the Orbasone and began
          generating modest sales in fiscal year 2000. The Orbasone delivers
          energy waves (Extracorporeal Shock Wave Treatment or ESWT) that
          provide relief to patients from minor pain in soft tissues at the
          treatment site, which is typically, the foot, ankle, elbow or
          shoulder. The 30 to 40 minute treatment sessions are delivered to
          patients under the supervision and care of a physician such as an
          orthopedic surgeon or podiatrist. On June 21, 2000, the FDA informed
          MIP that the FDA erred in its 1998 decision and rescinded its
          determination that the Orbasone was an exempt product. As a result,
          the Company suspended sales of the Orbasone pending FDA review of the
          product in June 2000. The FDA determined that the Orbasone was a Class
          III device requiring pre-market approval ("PMA"). During 2002, the
          Company acquired the rights to manufacture the Orbasone under license
          from MIP and initiated a clinical study as part of the PMA process.
          The Company is continuing to work towards completion of the PMA
          process for its Orbasone pain management system, which will be added
          to the U.S. product line upon successful completion of the process and
          approval by the FDA. The Orbasone is marketed by MIP in Europe and
          Asia, but not yet available for sale in the U.S.


                                      -7-



     o    DIABETES: The Company intends to conduct clinical studies to quantify
          the benefits of exercising with the VibraFlex for patients at various
          stages of the disease (neuropathy).

     o    SPINAL CORD INJURIES: The first major U.S. rehabilitation center to
          use the Galileo was the Rusk Institute for Rehabilitative Medicine of
          New York University Medical Center. In addition to routine motor and
          cardiac rehabilitation situations, our Galileo system is being studied
          in various patient populations, including those with Parkinson's
          disease and spinal cord injuries. The Company intends to introduce the
          VibraFlex Rx when available, to be utilized in these situations.

SALES, MARKETING AND CUSTOMER SERVICE

          The Company currently employs one Sales Manager for Rehabilitation /
Fitness, one Sales Administration Manager, one full-time pQCT Sales Applications
Consultant, one Marketing Manager and two Service Engineers.

          The Company sells pQCT Research systems and pQCT Clinical systems
directly to its customers, whether they are research or clinical institutions.
For Galileo, VibraFlex and Leonardo sales, the Company typically uses an
exclusive independent sales representative to cover one or more states. The
Company also sells directly to its customers in those markets where the Company
does not have third party sales representatives. The Company's sales staff is
responsible for the support and supervision of independent sales representatives
within their geographic region. Support includes participation in trade shows,
symposiums, customer visits, product demonstrations, ongoing distribution of
literature and publications, sales training and presentations of financing
programs. The Company is in the process of expanding its network of independent
sales representatives to make use of the country's large market of
rehabilitation centers, physical therapists and fitness facilities. The Company
has also started an effort to recruit a network of international distributors.

          Marketing efforts are focused primarily on supporting the Sales
Manager for Rehabilitation / Fitness and the pQCT Sales Applications Consultant
in their direct sales and management of sales representatives, managing sales
requests received on the Company's websites, managing sales lead generation
programs, managing product introductions and new product financing programs,
designing and maintaining media support such as brochures, manuals, and trade
show material, and developing and maintaining the Company Web sites.

          The Company offers one-year warranties on both the hardware and
software included in its systems (except for computer systems, if any, which are
covered under their respective manufacturers' warranty), as well as extended
warranty contracts. The Company provides warranty services to its customers. Any
costs incurred by the Company in connection with a warranty of a system not
manufactured by the Company are borne by such manufacturer pursuant to the
applicable distribution agreement.

          The Company has no obligation to provide any other services to its
third party independent sales representatives or other customers. However, the
Company does offer non-warranty services and a range of other product support
services in cooperation with its third-party independent sales representatives.
The Company also offers training at customer locations and the Company's
facilities to end-user customers, independent sales representatives and service
technicians.

MANUFACTURING

          Following the sale of its bone measurement business, the Company
relied exclusively on third parties for the manufacturing of its products.


                                      -8-



          Manufacturing processes for the products marketed by the Company are
subject to stringent federal, state and local laws and regulations governing the
use, generation, manufacture, storage, handling and disposal of certain
materials and wastes. In the United States, such laws and regulations include
the Occupational Safety and Health Act, the Environmental Protection Act, the
Toxic Substances Control Act, and the Resource Conservation and Recovery Act.
The Company believes that it has complied in all material respects with such
laws and regulations. There can be no assurance that the Company will not be
required to incur significant costs in the future with respect to compliance
with such laws and regulations.

BONE & MUSCLE DISORDERS PRODUCTS

          The pQCT products marketed by the Company were developed and are
manufactured by Stratec at its facilities located in Pforzheim, Germany.
Manufacturing consists primarily of testing of components, final assembly and
systems testing. All establishments, whether foreign or domestic, manufacturing
medical devices for sale in the United States are subject to periodic
inspections by or under the authority of the FDA to determine whether the
manufacturing establishment is operating in compliance with FDA Quality System
Regulation ("QSR") requirements. The Company is dependent on Stratec to
manufacture the pQCT products that the Company and others market in amounts and
at levels of quality necessary to meet demand. The Company has no ownership
interest in Stratec.

          Some components are manufactured in accordance with custom
specifications and require substantial lead times. While efforts are made to
purchase components from more than one source and to use generally available
parts, certain components are available from only one or a limited number of
sources. In the past, there have been delays in the receipt of certain
components, although to date no such delays have had a material adverse effect
on the Company. The Company believes that Stratec has sufficient manufacturing
capacity to supply the Company's product needs for at least the next twelve
months.

MUSCULOSKELETAL DEVELOPMENT PRODUCTS

          The Galileo, Leonardo and the Mini VibraFlex products marketed by the
Company were developed and are manufactured by Novotec at its facilities located
in Pforzheim, Germany. Manufacturing consists primarily of testing components,
forming and painting of plastic covers, final assembly and quality assurance
testing. The Company is dependent on Novotec to manufacture the Galileo and Mini
VibraFlex products that the Company and others market in amounts and at levels
of quality necessary to meet demand. The Company has no ownership interest in
Novotec.

          Some components are manufactured in accordance with specifications
that are specific to the Galileo, Leonardo and Mini VibraFlex products and
require substantial lead times. Until such time as production quantities
increase to a level that provides for opportunities to realize economies of
scale and dual sourcing of components, each component is generally purchased
from a limited number of sources and is subject to the risk that its
availability could become delayed. To date there have been no delays in
production which have had a material adverse effect on the Company. The Company
believes that Novotec has sufficient capacity to supply the Company's need for
Galileo, Leonardo and Mini VibraFlex products for at least the next 12 months.

          The VibraFlex 500 product marketed by the Company was developed by the
Company and is manufactured for the Company by Kimchuk, Inc. at its facilities
located in Connecticut. Manufacturing consists primarily of testing components,
forming and painting of plastic covers, final assembly and quality assurance
testing. The Company is dependent on Kimchuk to manufacture the VibraFlex 500
product that the Company and others market in amounts and at levels of quality
necessary to meet demand. The Company has no ownership interest in Kimchuk.


                                      -9-



          Some components are manufactured in accordance with specifications
that are specific to the VibraFlex 500 product and require substantial lead
times. Until such time as production quantities increase to a level that
provides for opportunities to realize economies of scale and dual sourcing of
components, each component is generally purchased from a limited number of
sources and is subject to the risk that its availability could become delayed.
To date there have been no delays in production which have had a material
adverse effect on the Company. The Company believes that Kimchuk has sufficient
capacity to supply the Company's need for the VibraFlex 500 product for at least
the next 12 months.

PAIN MANAGEMENT SYSTEMS

          In 2002, the Company acquired rights to manufacture the Orbasone under
a license from MIP and has since retained Kimchuk to manufacture the Orbasone in
the U.S. for the U.S. and Canadian markets. The manufacturing of the Orbasone
consists primarily of procuring and testing components, final assembly and
quality assurance testing. If and when the Orbasone receives market clearance,
the Company will be dependent on several component manufacturers to supply
sufficient components for the Orbasone systems, and on Kimchuk to assemble such
components, in amounts and at levels of quality necessary to meet demand and be
competitive. The Company has no ownership interest in MIP or Kimchuk.

          Some components are produced in accordance with specifications that
are specific to the Orbasone and require substantial lead times. Until such time
as production quantities increase to a level that provides for opportunities to
realize economies of scale and dual sourcing of components, each component is
generally purchased from a limited number of sources and is subject to the risk
that its availability could become delayed. The Orbasone has not yet been
approved by the FDA for sale in the U.S. market.

DISTRIBUTION AGREEMENTS

          Following the sale of its bone measurement business, the Company
focused exclusively on its musculoskeletal products. The following parties have
provided to the Company rights to market, sell and service certain products:

STRATEC

          The Company and Stratec are parties to an exclusive agreement dated
October 1, 1999 with respect to the marketing, sales and service of pQCT systems
in North America. Under the terms of the four-year distribution agreement, the
Company may purchase products from Stratec at a fixed price to be adjusted from
time to time by mutual consent. On October 1, 2004, the agreement with Stratec
was renewed for one year, and will be renewed automatically on every October 1st
for a one-year term until the Company elects to terminate the agreement.

NOVOTEC

          The Company and Novotec are parties to an exclusive agreement dated
October 1, 1999 with respect to the marketing, sales and service of Galileo and
Leonardo systems in North America. Under the terms of the four-year distribution
agreement, the Company may purchase products from Novotec at a fixed price to be
adjusted from time to time by mutual consent. On October 1, 2004, the agreement
with Novotec was renewed for one year, and will be renewed automatically on
every October 1st for a one-year term until the Company elects to terminate the
agreement.


                                      -10-



MIP

          The Company and MIP are parties to a product approval and licensing
agreement dated February 12, 2002 with respect to the Orbasone system. Under the
terms of the agreement, MIP granted the Company the exclusive and perpetual
authority, right and license in North America to seek PMA approval for the
Orbasone, and to manufacture, market, sell and service the Orbasone. The
Orbasone has not yet been approved by the FDA for sale in the U.S. market.

COMPETITION

BONE DENSITOMETRY PRODUCTS

          The Company believes that the pQCT-based products it markets provide
measurement capabilities, such as three-dimensional measurements and separate
measurement of cortical and trabecular bone, not available with traditional
DXA-based technology, at prices competitive with systems using that technology.
In the research market, the range, accuracy and precision of measurements are
the principal competitive factors. Despite the absence of directly similar
products, there are a number of competing approaches and products that compete
with the pQCT products. Many of the Company's existing competitors and potential
competitors have substantially greater financial, marketing and technological
resources, as well as established reputations for success in developing, selling
and servicing products. The Company expects existing and new competitors will
continue to introduce products that are directly or indirectly competitive with
the pQCT products. Such competitors may be more successful in marketing such
products. There can be no assurance that the Company will be able to continue to
compete successfully in this market. The Company sold its traditional DXA-based
technology to CooperSurgical on April 11, 2002 and can receive earn-out payments
based on the net sales of certain products over a three-year period from May 1,
2002 to April 30, 2005. No amounts have been earned through March 15, 2005 and
the Company does not anticipate that it will receive any sales proceeds from the
earn-out.

MUSCULOSKELETAL DEVELOPMENT PRODUCTS

          The Galileo and VibraFlex products offer a novel approach to muscle
strength development. The owner of Novotec has applied for patents regarding the
Galileo products and has already received certain patents, namely in Germany and
in the U.S. Despite the absence of directly similar products, there are a number
of competing approaches and products that develop muscle strength. Many of the
Company's existing competitors and potential competitors have substantially
greater financial, marketing and technological resources, as well as established
reputations for success in developing, selling and servicing products. The
Company expects existing and new competitors will continue to introduce products
that are directly or indirectly competitive with the Galileo and VibraFlex
products. Such competitors may be more successful in marketing such products.
There can be no assurance that the Company will be able to compete successfully
in this market.

          The Company's primary competitors for the sale of musculoskeletal
development products are marketers of exercise equipment such as OMNI Fitness
and Stairmaster. These companies have products that compete directly with the
products marketed by the Company in certain segments of the market. Other
smaller companies, such as Power Plate are marketing products that compete
directly with the Galileo 2000 and the VibraFlex 500. There can be no assurance
that the Company's competitors will fail to develop and market products that
make use of the Galileo's and VibraFlex's novel approach or that are lower
priced or better performing as compared to the Galileo or VibraFlex products.


                                      -11-



          The Company believes that the products it markets compete primarily on
the basis of price/performance characteristics, perceived efficacy of results,
ease, convenience and safeness of use, quality of service and price. The Company
is using its initial product marketing efforts to assess the competitiveness of
the Galileo and VibraFlex products, which the Company recently introduced to the
U.S. market.

PAIN MANAGEMENT SYSTEMS

          The pain management systems market is highly competitive. Several
companies have developed or are developing devices that compete or will compete
with the Orbasone. Many of the Company's competitors existing and potential
competitors have substantially greater financial, marketing and technological
resources, as well as established reputations for success in developing, selling
and servicing products. The Company expects existing and new competitors will
continue to introduce products that are directly or indirectly competitive with
the Orbasone. Such competitors may be more successful in marketing such
products. There can be no assurance that the Company will be able to compete
successfully in this market.

          The Company's primary competitors for the sales of pain management
systems are HealthTronics, Inc., Donier MedTech and Siemens AG, which have
products that have already obtained premarket approval, as well as Storz
Medical, MTS Medical Technologies & Services GmbH, and other companies that have
or potentially plan to have products that are in various stages of the FDA
review process for the purpose of obtaining premarket approval. The Orbasone was
classified in August 1998 as a Class I therapeutic vibrator (21CFR Section
890.5975) exempt from the 510 (k) requirements of the Federal Food, Drug and
Cosmetic Act. However, on June 21, 2000, the FDA informed MIP that it erred in
its 1998 decision and rescinded its determination that the Orbasone was an
exempt product. As a result the Company suspended sales of the Orbasone pending
FDA review of the product. The FDA determined that the Orbasone is a Class III
device requiring premarket approval. Following such determination MIP granted
the Company the exclusive and perpetual authority, right and license in North
America to seek PMA approval for the Orbasone, and to manufacture, market, sell
and service the Orbasone. The Orbasone has not yet been approved by the FDA for
sale in the U.S. market, but the Company continues to seek approval.

THIRD PARTY REIMBURSEMENT

Bone densitometry products and pain management systems

          Outside of the research market, the pQCT bone densitometry products
marketed by the Company are purchased principally by hospitals, managed care
organizations, including independent practice associations and physician
practice organizations or independent physicians or physician groups, who are
regulated in the United States by federal and state authorities and who
typically bill and are dependent upon various third party payers, such as
federal and state governmental programs (e.g., Medicare and Medicaid), private
insurance plans and managed care plans, for reimbursement for use of the
Company's products. The Health Care Financing Administration ("HCFA")
establishes new reimbursement codes and recommended reimbursement rates
effective January 1 of each calendar year. On several occasions, HCFA has
affected increases and decreases in its recommended reimbursement rates for bone
densitometry examinations and has made changes in the types of examinations
eligible for reimbursement. There can be no assurance that HCFA will not
continue to make changes from time to time. However, the current sales volume of
pQCT equipment subject to reimbursement are no longer significant to our
Company.

          Postoperative pain management is reimbursed under limited
circumstances. There can be no assurance that HCFA or other third party payers
will reimburse patients for pain management systems and pain treatment sessions
involving the Orbasone system.


                                      -12-



Musculoskeletal development products

          As with general exercise equipment which requires no professional
supervision, the Galileo and VibraFlex series of musculoskeletal development
products are not covered under federal or state health care insurance programs
or by third party health insurance payers. However, as with other exercise
equipment used during an exercise session provided by a licensed physical
therapy provider, sessions using the Galileo and VibraFlex series may be
reimbursed under various reimbursement codes for which HCFA establishes
recommended reimbursement rates effective January 1 of each calendar year. On
several occasions, HCFA has affected increases and decreases in its recommended
reimbursement rates and has made changes in the types of sessions eligible for
reimbursement. There can be no assurance that HCFA will not continue to make
changes from time to time. The Company could be materially and adversely
affected by such changes.

GOVERNMENT REGULATION

          The development, testing, manufacturing and marketing of the bone
densitometry and pain management products marketed by the Company are regulated
by the FDA in the United States and by various foreign regulatory agencies. The
testing for, preparation of, and subsequent FDA review of required applications
is expensive, lengthy and uncertain. Moreover, regulatory approval or clearance,
if granted, can include significant limitations on the indicated uses for which
a product may be marketed. Failure to comply with applicable regulations can
result in warning letters, civil penalties, refusal to approve or clear new
applications or notifications, withdrawal of existing product approvals or
clearances, product seizures, injunctions, recalls, operating restrictions, and
criminal prosecutions. Delays in receipt of or failure to receive clearances or
approvals for new products would adversely affect the marketing of such products
and the results of future operations.

          Medical devices are classified as either Class I, II, or III based on
the risk presented by the device. Class I devices generally do not require
review and approval or clearance by the FDA prior to marketing in the U.S. Class
II devices generally require premarket clearance through the Section 510(k)
premarket notification process, and Class III devices generally require
premarket approval through the lengthier premarket approval application ("PMA")
process. Orthometrix markets Class I, II, and III devices. Section 510(k)
submissions may be filed only for those devices that are "substantially
equivalent" to a legally marketed Class I or Class II device or to a Class III
device for which the FDA has not called for PMAs. A Section 510(k) submission
generally requires less data than a PMA. The FDA must determine whether or not
to clear a Section 510(k) submission within 90 days of its receipt. The FDA may
extend this time period, however, if additional data or information is needed to
demonstrate substantial equivalence. If a device is not "substantially
equivalent" to a legally marketed Class I or Class II device or to a Class III
device for which the FDA has not previously called for PMAs, a PMA is required.
The premarket approval procedure involves a more complex and lengthy testing and
FDA review process than the Section 510(k) premarket notification process. There
can be no assurances that clearances or approvals will be obtained on a timely
basis, if at all. Modifications or enhancements to products that are either
cleared through the Section 510(k) process or approved through the PMA process
that could effect a major change in the intended use, or affect the safety or
effectiveness, of the device may require further FDA review and clearance or
approval through new Section 510(k) or PMA submissions.

          The Company has received Section 510(k) clearance for all its bone
densitometers marketed in the U.S. for use in humans. The pain management
devices (Orbasone) marketed by the Company in the U.S. were classified by the
FDA in August 1998 as Class I devices exempt from Section 510(k) premarket
notification requirements. On June 21, 2000, the FDA informed MIP that it erred
in its classification of the Orbasone and the Company suspended marketing of the
Orbasone. The FDA determined that the Orbasone is a Class III device requiring
premarket approval. Following such determination MIP granted the Company the
exclusive and perpetual authority, right and license in North America to seek
PMA for the Orbasone, and to manufacture, market, sell and service the Orbasone.


                                      -13-



The Company is currently seeking PMA for the Orbasone. The Galileo and VibraFlex
musculoskeletal development products are not medical devices subject to FDA
regulation but are consumer products subject to regulation under the Consumer
Product Safety Act. However, the Company requested and received on July 25, 2002
a written opinion from the FDA regarding the classification of the Galileo for
uses in connection with certain medical conditions as a Class I device exempt
from Section 510(k) premarket notification requirements.

          All entities, whether foreign or domestic, manufacturing medical
devices for sale in the United States are subject to periodic inspections by or
under authority of the FDA to determine whether the manufacturing establishment
is operating in compliance with QSR requirements. Manufacturers must continue to
expend time, money and effort to ensure compliance with QSR requirements. The
FDA also requires that medical device manufacturers undertake post-market
reporting for serious injuries, deaths, or malfunctions associated with their
products. If safety or efficacy problems occur after the product reaches the
market, the FDA may take steps to prevent or limit further marketing of the
product. Additionally, the FDA actively enforces regulations concerning
marketing of devices for indications or uses that have not been cleared or
approved by the FDA.

          The Company's products also are subject to regulatory requirements for
electronic products under the Radiation Control for Health and Safety Act of
1968. The FDA requires that manufacturers of diagnostic x-ray systems comply
with certain performance standards, and record keeping, reporting, and labeling
requirements.

          The Company may export a medical device not approved in the United
States to any country without obtaining FDA approval, provided that the device
(i) complies with the laws of that country and (ii) has valid marketing
authorization or the equivalent from the appropriate authority in a "listed
country." The listed countries are Australia, Canada, Israel, Japan, New
Zealand, Switzerland, South Africa and countries in the European Union and the
European Economic Area. Export of unapproved devices that would be subject to
PMA requirements if marketed in the United States and that do not have marketing
authorization in a listed country generally continue to require prior FDA export
approval.

PROPRIETARY RIGHTS

          The Company believes that its sales are dependent in part on certain
proprietary features of the products it manufactures and/or markets. The Company
relies primarily on know-how, trade secrets and trademarks to protect those
intellectual property rights and has not sought patent protection for such
products. There can be no assurance that these measures will be adequate to
protect the rights of the Company. To the extent that intellectual property
rights are not adequately protected, the Company may be vulnerable to
competitors who attempt to copy the Company's products or gain access to the
trade secrets and know-how related to such products. Further, there can be no
assurance that the Company's competitors will not independently develop
substantially equivalent or superior technology. The Company is not the subject
of any litigation regarding proprietary rights, and the Company believes that
the technologies used in its products were developed independently. In addition,
the Company's business depends on proprietary information regarding customers
and marketing, and there can be no assurance that the Company will be able to
protect such information.

BACKLOG

          Backlog consists of signed purchase orders received by the Company
from its customers. The Company has no current backlog orders as of December 31,
2004. The Company's ability to ship products depends on manufacturers whose
products are distributed by the Company. Purchase orders are generally
cancelable. The Company believes that its backlog as of any date is not a
meaningful indicator of future operations or net revenues for any future period.


                                      -14-



PRODUCT LIABILITY INSURANCE

          The Company's business involves the inherent risk of product liability
claims. If such claims arise in the future they could have a material adverse
impact on the Company. The Company maintains product liability insurance on a
"claims made" basis with respect to its products in the aggregate amount of $4.0
million, subject to certain deductibles and exclusions. The Company's agreements
with the manufacturers of other products distributed by the Company require that
such manufacturers maintain product liability insurance that covers the Company
as an additional named insured. There is no assurance that existing coverage
will be sufficient to protect the Company from risks to which it may be subject,
including product liability claims, or that product liability insurance will be
available to the Company at a reasonable cost, if at all, in the future or that
insurance maintained by the other manufacturers will cover the Company.

EMPLOYEES

          At March 15, 2005, the Company had 7 employees and 3 consultants, of
whom 4 were engaged in direct sales and marketing activities. The remaining
employees and consultants are in finance, administration, product development
and customer service. No employees of the Company are covered by any collective
bargaining agreements, and management considers its employee relations generally
to be good.

ITEM 2. PROPERTIES

          The Company leases its principal executive offices, which are located
at 106 Corporate Park Drive, Suite 102, White Plains, New York 10604. 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:

2005           29,500
2006           30,816
2007           31,584
Thereafter     18,424
             --------
             $110,324
             ========

ITEM 3. LEGAL PROCEEDINGS

          In the normal course of business, the Company is named as defendant in
lawsuits in which claims are asserted against the Company. In the opinion of
management, the liabilities if any, which may ultimately result from such
lawsuits, are not expected to have a material adverse effect on the financial
position, results of operations or cash flows of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          No matters were submitted to a vote to the Company's security holders
during the fourth quarter of the fiscal year ended December 31, 2004.


                                      -15-



                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

          The Company's Common Stock is traded on the Over-The-Counter Bulletin
Board under the symbol "OMRX.OB". Prior to September 23, 1998, the Company's
Common Stock was traded on the NASDAQ National Market. The following table sets
forth, for the periods indicated, the high and low sales prices per share of
Common Stock, as reported by the Over-The-Counter Bulletin Board for the
respective periods. The following prices reflect inter-dollar prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.

          PERIOD FROM JANUARY 1, 2003 THROUGH DECEMBER 31, 2003:

                  High    Low
                 -----   -----
First Quarter    $0.06   $0.04
Second Quarter    0.05    0.04
Third Quarter     0.06    0.03
Fourth Quarter    0.05    0.03

          PERIOD FROM JANUARY 1, 2004 THROUGH DECEMBER 31, 2004:

                  High    Low
                 -----   -----
First Quarter    $0.13   $0.05
Second Quarter    0.20    0.10
Third Quarter     0.19    0.10
Fourth Quarter    0.53    0.18

          As of March 15, 2005, the sales price per share of Common Stock, as
reported by the Over-The-Counter Bulletin Board, was $.50.

          As of February 17, 2005 there were approximately 89 outstanding
stockholders of record of the Company's Common Stock. This number excludes
persons whose shares were held of record by a bank, broker or clearing agency.

          The Company has not paid any cash dividends on its shares of Common
Stock and does not expect to pay any cash dividends in the foreseeable future.
The Company's policy has been to reinvest any earnings in the continued
development and operations of its business.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the Financial Statements and the
related Notes thereto included in Item 7 of this Report. The following
discussion contains forward-looking statements which involve risks and
uncertainties, some of which are described in the Introduction to this Report.
The Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including those
discussed in the Introduction.


                                      -16-



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 uncollectible 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 eliminate 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
were to determine it could realize its deferred tax assets.

Liquidity and Capital Resources

          During the past two years, the Company has experienced aggregate
losses from operations of $3,293,341 and has incurred total negative cash flow
from operations of $2,180,729 for the same two-year period. 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. In February and March 2005, the Company completed a $1,740,000 share
issuance that will improve the Company's liquidity for the near future. 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 $44,121 decrease at
December 31, 2004, as compared to December 31, 2003. The Company's $1,120,123 of
net cash used in operating activities and $3,204 of cash used in investing
activities was offset by the $1,079,206 of cash provided by financing
activities. Investing activities consisted of $3,204 of purchases of property
and equipment. Financing activities consisted of $995,000 of proceeds of
borrowings from directors and officers of the Company, $405,000 of proceeds of
borrowings from unaffiliated individuals and $29,206 from the exercise of stock
options partially offset by $350,000 of repayments of the borrowings.

          Interest on the borrowings is payable at prime plus one (6.00% at
December 31, 2004.) The notes are due one year after the date of issuance. In
February 2004, $350,000 of borrowings were repaid from the $500,000 post closing
installment of sale proceeds received from Cooper. Effective December 31, 2004,
$1,545,000 of borrowings were converted into 5,492,995 shares of common stock,
eliminating the need of the Company to pay interest expense. Of the remaining
$600,000 loan balance, $500,000 was repaid and $100,000 due to an officer was
used to purchase him 400,000 shares, par value $.0005 per share. The remaining
$600,000 balance was satisfied by a portion of the proceeds received from the
March 2005 share issuance.


                                      -17-



               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; and (2) patented exercise
systems used for physical therapy, sports medicine and rehabilitative medicine -
the Galileo(TM) and Leonardo(TM) product lines, as well as the Mini
VibraFlex(R). The healthcare division is continuing to work towards completion
of the premarket approval application ("PMA") process for its Orbasone(TM) pain
management system (ESWT or Extracorporal Shock Wave Therapy), 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 the Mini VibraFlex(R), the Mini VibraFlex(R) Plus and the
VibraFlex(R) 500. The Company also intends to introduce the VibraFlex Rx in the
near future to replace the Galileo 2000 in the physical therapy, sports medicine
and rehabilitation markets. 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.

          The Company has no current backlog of orders as of December 31, 2004.
There are no material commitments for capital expenditures as of December 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 $1,944,185 ($0.06 per share based on
31,235,286 weighted average shares) for the year ended December 31, 2004
compared to net loss of $1,349,156 ($0.05 per share based on 29,544,621 weighted
average shares) for the year ended December 31, 2003.

          Revenue for the year ended December 31, 2004 decreased $392,876 (or
24.9%) to $1,179,877 from $1,572,753 from the comparable period of fiscal 2003.
The decrease in revenue was primarily due to a decrease in XCT sales during
2004.

          Cost of revenue as a percentage of revenue was 44.8% and 32.4% for the
year ended December 31, 2004 and 2003, respectively, resulting in a gross margin
of 55.2% for the year ended December 31, 2004 compared to 67.6% for the
comparable period of 2003. The decrease in gross margin was due to a decrease in
XCT sales in 2004.

          Sales and marketing expense for the year ended December 31, 2004
increased $8,682 (or 1.2%) to $727,982 from $719,300 for the year ended December
31, 2003. The increase is due to the Company's efforts to continue to market its
product lines in 2004.

          General and administrative expense for the year ended December 31,
2004 decreased $188,930 (or 13.7%) to $1,193,740 from $1,382,670 for the year
ended December 31, 2003. The decrease was primarily due to a decrease in
professional fees and rent.


                                      -18-



          Research and development expense for the year ended December 31, 2004
increased $122,570 (or 46.6%) to $385,697 from $263,127 for the year ended
December 31, 2003. The increase was primarily due to increased expenses incurred
as a result of the Orbasone PMA process.

          Interest expense increased $237,475 (or 463.6%) to $288,705 for the
year ended December 31, 2004 from $51,230 for the year ended December 31, 2003.
Interest expense increased as a result of the difference in the conversion price
and fair value of the stock issued upon conversion of the notes payable and due
to an increase in the outstanding principal balances of the loans payable the
Company maintained during the twelve months ended December 31, 2004 as compared
to the twelve months ended December 31, 2003.

New Accounting Pronouncements

               In December 2004, the Financial Accounting Standards Board
("FASB") issued SFAS No. 123 (Revised 2004), "Share-Based Payment" ("SFAS No.
123R"). The revised accounting standard eliminates the ability to account for
share-based compensation transactions using the intrinsic value method in
accordance with APB Opinion No. 25 and requires instead that such transactions
be accounted for using a fair-value-based method. SFAS No. 123R requires public
entities to record noncash compensation expense related to payment for employee
services by an equity award, such as stock options, in their financial
statements over the requisite service period. SFAS No. 123R is effective as of
the beginning of the first interim or annual period that begins after December
15, 2005 for small business issuers. The Company does not plan to adopt SFAS No.
123R prior to its first quarter of fiscal 2006. The Company expects that the
adoption of SFAS No. 123R will have a negative impact on the Company's
consolidated results of operations. The company has historically provided pro
forma disclosures pursuant to SFAS No. 123 and SFAS No. 148 as if the fair value
method of accounting for stock options had been applied, assuming use of the
Black-Scholes options-pricing model. Although not currently anticipated, other
assumptions may be utilized when SFAS No. 123R is adopted.

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 December 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 $6,000 change
in annual interest expense.


                                      -19-



ITEM 7. FINANCIAL STATEMENTS

                              FINANCIAL STATEMENTS

                                      INDEX

                                                                            Page
                                                                            ----

Report of Independent Registered Public Accounting Firm                      21

Financial Statements:

Balance Sheet as of December 31, 2004                                        22

Statements of Operations for the years ended
   December 31, 2004 and 2003                                                23

Statements of Changes in Stockholders' Deficit
   for the years ended December 31, 2004 and 2003                            24

Statements of Cash Flows for the years ended
   December 31, 2004 and 2003                                                25

Notes to Financial Statements                                                26


                                      -20-



                        Report of Independent Registered
                             Public Accounting Firm

Stockholders and Board of Directors of
Orthometrix, Inc.:

We have audited the accompanying balance sheet of Orthometrix, Inc. (the
"Company") as of December 31, 2004 and the related statements of operations,
changes in stockholders' deficit, and cash flows for each of the two years ended
December 31,2004. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Orthometrix, Inc. as of
December 31, 2004, and the results of their operations and their cash flows for
each of the two years ended December 31, 2004 in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements for the year ended December 31, 2004 have
been prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company has suffered
recurring operating losses and has a net capital deficiency that raise
substantial doubt about its ability to continue as going concern. Management's
plans in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


/s/ Radin, Glass & Co., LLP

New York, New York
February 3, 2005

----------


                                      -21-



                                ORTHOMETRIX, INC.
                                  BALANCE SHEET
                             AS OF DECEMBER 31, 2004

ASSETS
Current assets:
   Accounts receivable - trade                                     $    149,775
   Inventories                                                          120,460
   Prepaid expenses and other current assets                            107,796
                                                                   ------------
      Total current assets                                              378,031
Property and equipment, net                                              17,756
Other                                                                    11,658
                                                                   ------------
      Total Assets                                                 $    407,445
                                                                   ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable - trade                                        $    527,826
   Accrued expenses                                                     143,729
   Unearned service revenue                                               7,510
   Related party loans                                                  566,403
                                                                   ------------
      Total current liabilities                                       1,245,468
                                                                   ------------
Stockholders' deficit:
   Common stock - 35,710,939 shares issued and outstanding and
      45,000,000 shares authorized                                       17,854
   Additional paid-in capital                                        40,618,373
   Accumulated deficit                                              (41,474,250)
                                                                   ------------
      Total stockholders' deficit                                      (838,023)
                                                                   ------------
      Total Liabilities and Stockholders' Deficit                  $    407,445
                                                                   ============

                     See notes to the financial statements.


                                      -22-



                                ORTHOMETRIX, INC.
                            STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                          2004          2003
                                                      -----------   -----------
Revenue                                               $ 1,179,877   $ 1,572,753
Cost of revenue                                           528,809       508,969
                                                      -----------   -----------
   Gross profit                                           651,068     1,063,784
Sales and marketing expense                               727,982       719,300
General and administrative expense                      1,193,740     1,382,670
Research and development expense                          385,697       263,127
                                                      -----------   -----------
   Operating loss                                      (1,656,351)   (1,301,313)
Interest expense                                         (288,705)      (51,230)
Interest income                                               334           528
Other income                                                  537         2,859
                                                      -----------   -----------
Net loss                                              $(1,944,185)  $(1,349,156)
                                                      ===========   ===========
Basic and diluted weighted average shares              31,235,286    29,544,621
                                                      ===========   ===========
Basic and diluted loss per share                      $     (0.06)  $     (0.05)
                                                      ===========   ===========

                     See notes to the financial statements.


                                      -23-



                                ORTHOMETRIX, INC.
                 STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003



                                                                             Additional
                                                                   Common     Paid-In      Accumulated
                                         Shares        Total       Stock      Capital        Deficit
                                       ----------   -----------   -------   -----------   ------------

Balance as of December 31, 2002        29,544,621   $   506,690   $14,771   $38,672,828   $(38,180,909)
Warrants issued as compensation
   to non-employees in connection
   with notes payable                          --        57,348        --        57,348             --
Net Loss                                       --    (1,349,156)       --            --     (1,349,156)
                                       ----------   -----------   -------   -----------   ------------
Balance as of December 31, 2003        29,544,621      (785,118)   14,771    38,730,176    (39,530,065)
Warrants issued as compensation to
   non-employees in connection with
   notes payable                               --       332,622        --       332,622             --
Stock options and warrants issued as
   compensation to non-employees               --        31,650        --        31,650             --
Stock options and warrants exercised      356,323        29,206       178        29,028             --
Stock issued as compensation to
   employees                              317,000        65,937       159        65,778             --
Notes converted to stock                5,492,995     1,431,865     2,746     1,429,119             --
Net Loss                                       --    (1,944,185)       --            --     (1,944,185)
                                       ----------   -----------   -------   -----------   ------------
Balance as of December 31, 2004        35,710,939   $  (838,023)  $17,854   $40,618,373   $(41,474,250)
                                       ==========   ===========   =======   ===========   ============


                     See notes to the financial statements.


                                      -24-



                                ORTHOMETRIX, INC.
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003



                                                               2004          2003
                                                           -----------   -----------

Cash Flows From Operating Activities:
Net loss                                                   $(1,944,185)  $(1,349,156)
Adjustments to reconcile net loss to net cash used in
   operating activities:
   Stock issued as compensation to non-employees                65,937            --
   Stock options and warrants issued as compensation
      to non-employees                                          31,650            --
   Amortization expense                                        160,197        23,096
   Depreciation expense                                          5,611         9,871
   Fair value of stock at conversion                            47,789            --
Changes in assets and liabilities:
   Decrease in accounts receivable                             350,273       840,102
   Decrease in inventories                                       6,838       (69,150)
   Increase in prepaid expenses and other current assets       (56,749)      (22,440)
   Increase (decrease) in accounts payable                     165,495      (171,034)
   Increase (decrease) in accrued expenses                      57,359       (58,371)
   Decrease in unearned service revenue                         (4,693)         (782)
   Decrease in other liabilities                                (5,645)     (262,742)
                                                           -----------   -----------
      Net cash used in operating activities                 (1,120,123)   (1,060,606)
                                                           -----------   -----------
Cash Flows From Investing Activities:
   Purchase of property and equipment                           (3,204)      (16,317)
                                                           -----------   -----------
      Net cash used in investing activities                     (3,204)      (16,317)
                                                           -----------   -----------
Cash Flows From Financing Activities:
   Proceeds of borrowings from unrelated parties               405,000            --
   Proceeds of borrowings from related parties                 995,000     1,095,000
   Repayment of borrowings from related parties               (350,000)           --
   Exercise of stock options                                    29,206            --
                                                           -----------   -----------
      Net cash provided by financing activities              1,079,206     1,095,000
                                                           -----------   -----------
Net (decrease) increase in cash                                (44,121)       18,077
Cash at beginning of year                                       44,121        26,044
                                                           -----------   -----------
Cash at end of year                                        $        --   $    44,121
                                                           ===========   ===========
Supplemental disclosure of cash flow information
   Cash paid for interest                                  $    50,398   $    15,479
                                                           ===========   ===========
   Cash paid for income taxes                              $     2,574   $     9,175
                                                           ===========   ===========


                     See notes to the financial statements.


                                      -25-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

1.   THE COMPANY AND GOING CONCERN CONSIDERATION:

     Orthometrix, Inc. ("OMRX" or the "Company") markets, sells, and services
     several musculoskeletal product lines used in pharmaceutical research,
     diagnostic and monitoring of bone and muscle disorders in sports medicine,
     rehabilitative medicine, physical therapy and pain management. Prior to
     April 11, 2002 the Company also developed, manufactured, sold and serviced
     a wide range of traditional bone densitometers used to assess bone mineral
     content and density, one of several factors used by physicians to aid in
     the diagnosis and monitoring of bone disorders, particularly osteoporosis.

     During the past two years, the Company has experienced aggregate losses
     from operations of $3,293,341 and has incurred total negative cash flow
     from operations of $2,180,729 for the same two-year period. 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 has recently
     completed a $1,740,000 share issuance that will significantly improve the
     Company's liquidity for the near future. 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.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     Fair Value of Financial Statements

     Statement of Financial Accounting Standards (SFAS) No. 107, as amended by
     SFAS No. 119, "Disclosures about Fair Value of Financial Instruments",
     requires that the Company disclose estimated fair values for its financial
     instruments. Fair value estimates are made at a specific point in time,
     based on relevant market information and information about the financial
     instrument. Because no market exists for a significant portion of the
     Company's financial instruments, fair values are based on judgments
     regarding future expected loss experience, current economic conditions,
     risk characteristics of various financial instruments and other factors.
     These estimates are subjective in nature and involve uncertainties and
     matters of significant judgment and therefore cannot be determined with
     precision.

     Management of the Company estimates that all financial instruments of OMRX,
     due to their short-term nature, have a fair value equal to their carrying
     value.


                                      -26-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     Revenue and Cost Recognition

     The Company primarily sells its products directly to customers and through
     third party dealers and distributors. Revenue is generally recognized at
     the time products are shipped and title passes to the customer. The Company
     estimates and records provisions for product installation and user training
     in the period that the sale is recorded.

     The Company offers one-year warranties on both hardware and software
     components of its bone densitometry systems (except for computer systems,
     if any, which are covered under their respective manufacturers' warranty).
     The provision for product warranties represents an estimate for future
     claims arising under the terms of the Company's various product warranties.
     The estimated future claims are accrued at the time of sale. To the extent
     that the Company provides warranty services for products that it does not
     manufacture the Company invoices the manufacturer for the costs of
     performing such warranty services.

     The Company has no obligations to provide any other services to any of its
     third party dealers or distributors or their customers.

     Stock-based Compensation

     Stock-based compensation related to employees and directors is accounted
     for in accordance with Accounting Principles Board Opinion Number 25
     "Accounting for Stock Issued to Employees". Stock-based compensation
     related to non-employees is accounted for in accordance with SFAS No. 123
     and SFAS No. 148 "Accounting for Stock-Based Compensation".

     Inventory

     Inventories are stated at the lower of cost or market; cost is determined
     principally by the first-in, first-out method.

     Property and Equipment

     Furniture and fixtures are recorded at cost and are depreciated using the
     straight-line method over three to seven years.

     The Company's demonstration systems used for marketing and customer service
     purposes are carried at the lower of cost or net realizable value until the
     time of sale. From time to time, the Company may judge it desirable for
     marketing purposes to provide a device to an appropriate entity. In such
     cases, the Company will carry the device at cost less amortization, with
     amortization calculated on a straight-line basis over thirty-six months or
     expense the device if appropriate.


                                      -27-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     Long-lived Assets

     Management evaluates on an ongoing basis whether events or changes in
     circumstances exist that would indicate that the carrying value of the
     Company's long-lived assets may not be recoverable. Should there be an
     indication of impairment in the value of its long-lived assets, management
     would estimate the future cash flows expected to result from the use of the
     assets and their eventual disposition and recognize a specific provision
     against such assets if the aggregate nominal estimated future undiscounted
     cash flows are less than the carrying value of the assets. In considering
     whether events or changes in circumstances exist, management assesses
     several factors, including a significant change in the extent or manner in
     which the assets are used, a significant adverse change in legal factors or
     in the business climate that could affect the value of the assets, an
     adverse action or assessment of a regulator, and a current period operating
     or cash flow loss combined with a history of operating or cash flow losses
     or a projection or forecast that demonstrates continuing losses associated
     with such assets.

     Income Taxes

     The Company accounts for deferred income taxes by recognizing the tax
     consequences of "temporary differences" by applying enacted statutory tax
     rates applicable to future years to differences between the financial
     statement carrying amounts and the tax basis of existing assets and
     liabilities. The effect of a change in tax rates on deferred taxes is
     recognized in income in the period that includes the enactment date. The
     Company realizes an income tax benefit from the exercise of certain stock
     options or the early disposition of stock acquired upon exercise of certain
     options. This benefit results in an increase in additional paid in capital.

     Advertising

     The Company expenses the cost of advertising as incurred. Advertising
     expenses of approximately $31,100 and $300 were incurred for the years 2004
     and 2003, respectively, and are included in sales and marketing expense.

     Research and Development

     Research and development costs are charged to operations as incurred.


                                      -28-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     Income (Loss) per Share

     Basic per share amounts are computed using the weighted average number of
     common shares outstanding. Diluted per share amounts are computed using the
     weighted average number of common shares outstanding, after giving effect
     to dilutive options, using the treasury stock method.

     Options to purchase 3,432,500 and 3,150,000, shares of common stock were
     outstanding at December 31, 2004, and 2003, respectively, but were not
     included in the computation of diluted income (loss) per share because
     their effect was anti-dilutive.

     Concentration of Credit Risk

     During 2004, approximately 48% of total sales was derived from the
     Company's four largest customers. During 2003, there were no significant
     customers. The Company generally sells on credit terms ranging from thirty
     to ninety days or against irrevocable letters of credit. Any financing of
     the end user is the decision of, and dependent on, the distributor in each
     territory. The Company sells to customers in various geographic territories
     worldwide.

     Management 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 at the date of the financial statements and the reported
     amounts of revenue and expenses during the reporting period. Estimates are
     used when accounting for the allowance for uncollectible receivables,
     potentially excess and obsolete inventory, depreciation and amortization,
     warranty reserves, income tax valuation allowances and contingencies, among
     others. Actual results could differ significantly from those estimates.

     Foreign Exchange Exposure

     The Company's purchases and sales of products and services are made
     primarily in U.S. dollars. As a result, the Company has minimal exposure to
     foreign exchange risk in the short-term. However, a portion of the
     Company's products are supplied by Stratec and sold along with the
     Company's products into foreign markets. Any significant and lasting change
     in the exchange rates between the U.S. dollar and the currencies of those
     countries could have a material effect on both the costs and sales of those
     products and services.

     Cash and Cash Equivalents

     The Company considers all highly liquid instruments with original
     maturities of three months or less at the time of purchase to be cash and
     cash equivalents.


                                      -29-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     Segment Reporting

     The Company has one reportable segment. The Company evaluates performance
     based on operating income, which is income before interest and
     non-operating items.

     Accounting Pronouncements

     In December 2004, the Financial Accounting Standards Board ("FASB") issued
     SFAS No. 123 (Revised 2004), "Share-Based Payment" ("SFAS No. 123R"). The
     revised accounting standard eliminates the ability to account for
     share-based compensation transactions using the intrinsic value method in
     accordance with APB Opinion No. 25 and requires instead that such
     transactions be accounted for using a fair-value-based method. SFAS No.
     123R requires public entities to record noncash compensation expense
     related to payment for employee services by an equity award, such as stock
     options, in their financial statements over the requisite service period.
     SFAS No. 123R is effective as of the beginning of the first interim or
     annual period that begins after December 15, 2005 for small business
     issuers. The Company does not plan to adopt SFAS No. 123R prior to its
     first quarter of fiscal 2006. The Company expects that the adoption of SFAS
     No. 123R will have a negative impact on the Company's consolidated results
     of operations. The company has historically provided pro forma disclosures
     pursuant to SFAS No. 123 and SFAS No. 148 as if the fair value method of
     accounting for stock options had been applied, assuming use of the
     Black-Scholes options-pricing model. Although not currently anticipated,
     other assumptions may be utilized when SFAS No. 123R is adopted.

3.   DISCONTINUED OPERATIONS AND CONTINGENCY

     On April 11, 2002, the Company sold its bone measurement business to
     CooperSurgical Acquisition Corp., ("Cooper") a wholly-owned subsidiary of
     the Cooper Companies, Inc. The Company was entitled to receive up to a
     maximum of $12.0 million for the sale (the "Asset Sale"). The Company
     received $3.5 million of the purchase price at the closing of the Asset
     Sale. An additional $1.0 million of the remaining purchase price (plus or
     minus any required purchase price adjustment) was to be released to the
     Company by Cooper during August 2002 upon submission to the Company by
     Cooper of a closing statement setting forth the value of the net assets and
     liabilities of the transferred business in the Asset Sale as of the closing
     date of the Asset Sale. In August 2002, Cooper submitted a closing
     statement to the Company and notified the Company of a downward adjustment
     to the purchase price based on Cooper's purported valuation of the net
     assets and liabilities of the transferred business. Based on its downward
     adjustment, Cooper paid approximately $405,000 to the Company on August 16,
     2002. The Company did not agree with Cooper's valuation of the applicable
     net assets and liabilities and, accordingly, did not agree with Cooper's
     downward purchase price adjustment. The Company and Cooper were unable to
     settle the disagreement and have engaged an independent accounting firm to
     provide a binding resolution of such disagreement. During June 2003 the
     arbitrator settled the disagreement in favor of the Company for $268,569.
     Accordingly, the Company received a total of $673,569 out of the potential
     $1,000,000 installment payable in connection with the Asset Sale to Cooper.
     The settlement from Cooper was received in July 2003. The remaining
     $500,000 installment of the purchase price was received on January 30,
     2004.


                                      -30-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

3.   DISCONTINUED OPERATIONS AND CONTINGENCY (CONTINUED)

     In addition, the Company was eligible to receive up to an additional $7.0
     million in earn-out payments based on the net sales of certain products
     over a three-year period from May 1, 2002 to April 30, 2005. No amounts
     have been earned through December 31, 2004 and the Company does not
     anticipate that it will receive any sales proceeds from the earn-out.

4.   DISTRIBUTION AGREEMENTS:

     STRATEC

     The Company and Stratec are parties to an exclusive agreement dated October
     1, 1999 with respect to the marketing, sales and service of pQCT systems in
     North America. Under the terms of the four-year distribution agreement, the
     Company may purchase products from Stratec at a fixed price to be adjusted
     from time to time by mutual consent. On October 1, 2004, the agreement with
     Stratec was renewed for one year, and will be renewed automatically on
     every October 1st for a one-year term until the Company elects to terminate
     the agreement.

     NOVOTEC

     The Company and Novotec are parties to an exclusive agreement dated October
     1, 1999 with respect to the marketing, sales and service of Galileo and
     Leonardo systems in North America. Under the terms of the four-year
     distribution agreement, the Company may purchase products from Novotec at a
     fixed price to be adjusted from time to time by mutual consent. On October
     1, 2004, the agreement with Novotec was renewed for one year, and will be
     renewed automatically on every October 1st for a one-year term until the
     Company elects to terminate the agreement.

     MIP

     The Company and MIP are parties to a product approval and licensing
     agreement dated February 12, 2002 with respect to the Orbasone system.
     Under the terms of the agreement, MIP granted the Company the exclusive and
     perpetual authority, right and license in North America to seek PMA
     approval for the Orbasone, and to assemble, manufacture, market, sell and
     service the Orbasone. The Orbasone has not yet been approved by the FDA for
     sale in the U.S. market.

5.   INVENTORIES:

     Inventories at December 31, 2004 consist of products kits, spare parts and
     sub-assemblies.


                                      -31-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

6.   PROPERTY AND EQUIPMENT:

     Property and equipment consisted of the following as of December 31, 2004:

     Furniture and fixtures     $ 139,208
     Accumulated depreciation    (121,452)
                                ---------
                                $  17,756
                                =========

7.   STOCKHOLDERS' EQUITY (DEFICIT):

     Effective with stockholder approval received on June 2, 1999, the Company
     amended its Certificate of Incorporation increasing the number of
     authorized shares of Common Stock from 20,000,000 to 45,000,000. The
     Company has authorized 1,000,000 shares of preferred stock, par value
     $0.0005 per share, issuable in series with such rights, powers and
     preferences as may be fixed by the Board of Directors. At December 31, 2004
     and 2003, there was no preferred stock outstanding.

8.   COMPENSATION PROGRAMS:

     Stock Option Plan

     The Company has a stock-based compensation plan whereby stock options may
     be granted to officers, employees and non-employee consultants to purchase
     a specified number of shares of Common Stock. All outstanding options
     granted have an exercise price not less than 100% of the market value of
     the Company's Common Stock at the date of grant, are for a term not to
     exceed 10 years, and vest over a four year period at 25% per year.


                                      -32-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

8.   COMPENSATION PROGRAMS (CONTINUED):

     Stock Option Plan (Continued)

     The amended and restated 1994 Stock Option Plan includes 3,000,000 shares
     of Common Stock reserved for issuance. Options are issued to employees and
     non-employees at the discretion of the Board of Directors. During 2004,
     795,000 options were issued as compensation to employees. The Company has
     elected to follow APB Opinion No. 25, "Accounting for Stock Issued to
     Employees," in accounting for its employee stock options. Accordingly, no
     compensation expense is recognized in the Company's financial statements
     because the exercise price of the Company's employee stock options equals
     the market price of the Company's Common Stock on the date of grant.

     Under the 2000 Non-Employee Directors' Stock Option Plan (the "Board
     Plan"), which has 1,000,000 shares of common stock reserved for issuance to
     non-employee directors and consultants, each non-employee director receives
     options to acquire shares of Common Stock, vesting in four equal annual
     installments, commencing on the first anniversary of the date of grant, at
     an exercise price per share not lower than the market value on the date of
     grant. A grant to acquire 50,000 shares is effective on the date of the
     director's first election to the Board of Directors and a grant to acquire
     5,000 shares is effective on the date of the director's reelection to the
     Board of Directors. During 2004, 295,000 options were issued to
     non-employee directors and consultants.

     On October 6, 1998 and December 14, 1998, the Board of Directors approved
     the repricing of certain employee stock options. Approximately 673,750
     shares were repriced to $0.67 per share on October 6, 1998 and December 14,
     1998, representing a price that was not less than the market value at such
     dates. On December 14, 2000 the Board of Directors approved the repricing
     of certain options and accordingly, 1,524,500 shares were repriced to $.15
     per share. Subsequent to the option repricing on December 14, 2000, the
     company measured compensation expense using variable plan accounting.
     Compensation cost continues to be adjusted for increases or decreases in
     the intrinsic value over the term of the options or until they are
     exercised or forfeited, or expire. The effect of this change was not
     material in fiscal year 2004 or 2003.


                                      -33-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

8.   COMPENSATION PROGRAMS (CONTINUED):

     Stock Option Plan (Continued)

     The following is a summary of options related to the 1994 Stock Option Plan
     and the Board Plan as of December 31:



                                                                 Range of                   Range of
                                                                  Option                     Option
                                                                  Prices                     Prices
                                                     2004       Per Share        2003       Per Share
                                                  ---------   -------------   ---------   ------------

     Options outstanding at beginning of year     3,150,000   $ 0.02 - 0.67   2,958,500   $0.02 - 0.05
     Cancellations                                 (620,000)  $ 0.02 - 0.17    (198,000)  $0.02 - .531
     Granted                                      1,090,000   $0.055 - 0.30     389,500   $0.02 - 0.05
     Exercised                                     (187,500)  $0.02 - 0.531          --             --
                                                  ---------   -------------   ---------   ------------
     Options outstanding at end of year           3,432,500                   3,150,000
                                                  =========                   =========
     Options exercisable at end of year           2,195,438                   1,591,688
                                                  =========                   =========
     Options available for grant at end of year     380,000                     850,000
                                                  =========                   =========



                                      -34-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

8.   COMPENSATION PROGRAMS (CONTINUED):

     Stock Option Plan (Continued)

     The following table summarizes information about significant groups of
     stock options outstanding at December 31, 2004:



                         Options Outstanding                         Options Exercisable
              -----------------------------------------   -----------------------------------------
                                           Weighted                                    Weighted
                Weighted                    Average         Weighted                    Average
                Average                    Remaining        Average                    Remaining
Exercisable     Options     Exercise   Contractual Life     Options     Exercise   Contractual Life
   Prices     Outstanding     Price        in Years       Exercisable     Price        in Years
-----------   -----------   --------   ----------------   -----------   --------   ----------------

 $.02 -.05     1,121,250      $.048            8            467,000       $.048            8
  .055           495,000       .055            4            495,000        .055            4
  .06 -.13       620,000       .082            7            330,000        .078            7
  .15            856,250       .150            6            855,938        .150            6
  .17            175,000       .17             9                 --        .17             9
  .20             60,000       .20             9                 --        .20             9
  .30             45,000       .30            10                 --        .30            10
  .531            10,000       .531            5             10,000        .531            5
  .67             50,000       .670            7             37,500        .670            7


     Had compensation expense for the Company's 2004 and 2003 grants for the
     stock-based compensation plan been determined based on the fair value of
     the options at their grant dates consistent with SFAS 123 "Accounting for
     Stock-Based Compensation", the Company's net loss and loss per common share
     for 2004 and 2003 would approximate the pro forma amounts below:

                                                2004          2003
                                            -----------   -----------
     Net loss:
        As reported                         $(1,944,185)  $(1,349,156)
        Stock-based employee compensation       (65,752)      (41,396)
                                            -----------   -----------
        Pro forma                           $(2,009,937)  $(1,390,552)
                                            ===========   ===========
     Loss per share:
        As reported - Basic and diluted           (0.06)        (0.05)
        Pro forma - Basic and diluted             (0.06)        (0.05)

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes option pricing model with the following assumptions used
     for grants during each of the years ended December 31, 2004 and 2003:
     dividend yield of 0%, risk-free weighted average interest rate of 5%,
     expected volatility factor of 132% and an expected option term of 10 years.
     The weighted average fair value at date of grant for options granted during
     2004 and 2003 was $.17 and $0.05 per option, respectively.


                                      -35-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

8.   COMPENSATION PROGRAMS (CONTINUED):

     401(k) Plan

     Pursuant to the Orthometrix, Inc. Retirement Savings Plans, eligible
     employees may elect to contribute a portion of their salary on a pre-tax
     basis. With respect to employee contributions of up to 7% of salary, the
     Company makes a contribution at the rate of 25 cents on the dollar.
     Contributions are subject to applicable limitations contained in the
     Internal Revenue Code. Employees are at all times vested in their own
     contributions; Company matching contributions vest gradually over six years
     of service. The Company's policy is to fund plan contributions as they
     accrue. Contribution expense was $13,623 and $5,428 for the years ended
     December 31, 2004 and 2003, respectively.

9.   INCOME TAXES:

     The Company did not record a provision for income tax expense for the years
     ended December 31, 2004 and 2003 since any provision would be offset by the
     Company's NOL carryforwards.

          Income tax expense (benefit) differs from the statutory federal income
          tax rate of 34% for the years ended December 31 as follows:

                                       2004    2003
                                       ----   -----
          Statutory income tax rate     (34%) (34.0%)
          Valuation allowance          42.0    42.0
          State income taxes, net of
             Federal benefit           (8.0)   (8.0)
                                       ----    ----
                                        0.0%    0.0%
                                       ====    ====

     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. Significant components of the Company's
     deferred tax assets and liabilities as of December 31 are summarized below:

                                                2004
                                            -----------
     Deferred tax assets and liabilities:
        Accrued liabilities                 $     3,581
     Valuation allowance                         (3,581)
                                            -----------
        Net current deferred tax assets              --
                                            -----------
        Net operating loss carryforwards     (7,100,094)
     Valuation allowance                     (7,100,094)
                                            -----------
     Net noncurrent deferred tax assets              --
                                            -----------
        Total deferred tax assets           $        --
                                            -----------


                                      -36-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

9.   INCOME TAXES (CONTINUED):

     Realization of the deferred tax asset is dependent on the Company's ability
     to generate sufficient taxable income in future periods. Based on the
     historical operating losses and the Company's existing financial condition,
     in 2004 and 2003, 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.

     The Company has utilizable federal and state net operating loss
     carryforwards of approximately $16,904,985 at December 31, 2004 for income
     tax purposes, which expire in 2008 through 2023.

10.  COMMITMENTS AND CONTINGENCIES:

     Legal Proceedings

     In the normal course of business, the Company is named as defendant in
     lawsuits in which claims are asserted against the Company. In the opinion
     of management, the liabilities if any, which may ultimately result from
     such lawsuits, are not expected to have a material adverse effect on the
     financial position, result of operations or cash flows of the Company.

     Leases

     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:

     2005      29,500
     2006      30,816
     2007      31,584
     2008      18,424
             --------
             $110,324
             ========


                                      -37-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

11.  RELATED PARTY TRANSACTIONS:

     TRANSACTIONS WITH CERTAIN DIRECTORS AND OFFICERS

     During 2004, the Company borrowed $995,000 from several directors and
     officers of the Company and issued notes bearing interest at prime plus one
     (6% as of December 31, 2004) which mature one year from date of issuance.
     In addition, the Company borrowed $405,000 from unaffiliated individuals
     under the same terms and conditions.

     For all of the notes, 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 to $5,000,000 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. As additional compensation, the Company granted the note holders
     five-year warrants to purchase up to 1,360,000 shares of common stock at
     $0.05 per share.

     As of December 31, 2004, $376,910 of the remaining proceeds received were
     allocated to the warrants based on the application of the Black-Scholes
     option pricing model, with the remaining proceeds of $223,090 allocated to
     the notes payable. The value allocated to the warrants is being amortized
     to interest expense over the term of the notes. At December 31 2004, the
     unamortized discount on the notes payable is $33,597. During 2004 and 2003,
     the Company recorded interest expense of $288,705 and $51,230,
     respectively.

     In December 2004, the Board of Directors authorized the Company to offer to
     the holders of certain promissory notes issued by the Company the right to
     convert such notes into shares of the Company's common stock, par value
     $.0005 per share. In a letter dated December 15, 2004, the Company offered
     the holders of such notes the right to convert $2,145,000 of such notes
     into shares of common stock at $0.2813 per share, which price is equal to
     80% of the weighted average price of the common stock during the period
     commencing November 15, 2004 and ending December 15, 2004. The promissory
     notes would mature at various intervals through January 2006. Each of the
     note holders were given the right to accept the Company's offer by
     returning such holder's note (marked "cancelled") to the Company.

     Holders of such notes elected to convert $1,545,000 of notes (the "Total
     Conversion Amount") to Common Stock. Of the Total Conversion Amount,
     $1,235,000 were notes held by either officers, directors or affiliates of
     the Company. (Of the remaining $600,000 of outstanding notes, $455,000 are
     held by officers and directors of the Company.) The notes that were
     converted did not have a beneficial conversion feature.

     Effective December 31, 2004, the Company converted the entire principal
     amounts (i.e., $1,545,000) of the promissory notes described above into
     5,492,995 shares of common stock. The difference between the fair value
     price of the common stock on the date of conversion as compared to the
     conversion price is $47,789 and is recorded as interest expense and paid in
     capital.


                                      -38-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

11.  RELATED PARTY TRANSACTIONS (CONTINUED):

     In December 2003, the Company granted an entity affiliated with an officer
     of the Company warrants to purchase up to 240,000 shares of common stock at
     $0.05 per share as compensation for consulting services rendered. The value
     of the warrants were based on the application of the Black-Scholes option
     pricing model and valued at $11,665. The value of the warrants was recorded
     as consulting expense and as additional paid-in-capital.

     In January 2004, the Company granted a Director of the Company a warrant to
     purchase up to 50,000 shares of Common Stock at $0.05 per share in
     connection with the renewal for one year of an expired note. 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.

     In November 2004, the Company granted a consultant warrants to purchase up
     to 75,000 shares of Common Stock at $0.36 per share for consulting services
     in lieu of his monthly retainer. The value of the warrants were based on
     the application of the Black-Scholes option pricing model valued at
     $23,670. The value of the warrants was recorded as consulting expense and
     as additional paid-in capital.

     In December 2004, the Company granted an Officer 317,000 shares of common
     stock at $0.26 per share for services rendered. The value of the stock was
     based on a 20% discount valued at $65,937. The value of the stock was
     recorded as consulting expense, common stock, and additional paid-in
     capital.

     TRANSACTIONS WITH BIONIX

     The Company and Bionix, a company of which Reynald G. Bonmati, the
     President and Chairman of the Board of the Company is President, were
     parties to three exclusive four-year sub-distribution agreements pursuant
     to which the Company has the right to purchase and sell certain systems and
     products from Bionix at a fixed percentage discount from
     contractually-stated selling prices. Under two separate sub-distribution
     agreements, dated October 1, 1999, the Company had the right to purchase
     and sell the pQCT and Galileo systems and products. Under the third
     sub-distribution agreement, dated February 17, 2000, the Company had the
     right to purchase and sell the Genestone 190 systems and products. During
     fiscal year 2002, the Company purchased from Bionix systems and products
     equal to approximately $4,500. Following the asset sale to Cooper, the
     Company focused exclusively on its musculoskeletal products and all Bionix
     rights from MIP were assigned to the Company for one dollar. Such rights
     also include the exclusive and perpetual authority, right and license in
     North America to seek PMA approval for the Orbasone, and to assemble,
     manufacture, market, sell and service the Orbasone. The Orbasone systems
     and products have not yet been approved by the U.S. Food and Drug
     Administration for sale in the U.S.


                                      -39-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

12.  SUPPLEMENTAL SALES AND CUSTOMER INFORMATION:

     During 2004, approximately 48% of total sales was derived from the
     Company's four largest customers. During 2003, there were no significant
     customers. The Company's largest customers are medical device distributors.

     The Company's sales consisted of domestic sales to customers and export
     sales to customers in the following geographic territories:

                                 2004                 2003
                          ------------------   ------------------

     Pacific Rim          $       --      --%  $      175     .01%
     Europe/Middle East        3,000     .26           --      --
     Latin America             8,257     .70           --      --
     Canada                   13,597    1.15      238,000   15.14

     Export Sales                 --      --           --      --
     Domestic Sales        1,155,023   97.89    1,334,578   84.85
                          ----------   -----   ----------   -----
                          $1,179,877   100.0%  $1,572,753   100.0%
                          ==========   =====   ==========   =====

13.  QUARTERLY FINANCIAL DATA (UNAUDITED):



                                                         2004 Quarters
                              -------------------------------------------------------------------
                                 First         Second        Third         Fourth        Total
                              -----------   -----------   -----------   -----------   -----------

Revenue                       $   168,387   $   274,468   $   391,226   $   345,796   $ 1,179,877
Gross Profit                       94,679       185,643       227,739       143,007       651,068
Operating loss                   (385,313)     (272,248)     (297,927)     (700,863)   (1,656,351)
Net loss                         (424,225)     (309,028)     (360,817)     (802,326)   (1,944,185)

Weighted average shares:
Basic and diluted              29,544,621    29,825,944    29,825,944    31,235,286    31,235,286
Basic and diluted per share   $     (0.01)        (0.01)        (0.01)        (0.03)        (0.06)




                                                         2003 Quarters
                              -------------------------------------------------------------------
                                 First         Second        Third         Fourth        Total
                              -----------   -----------   -----------   -----------   -----------

Revenue                       $   500,160   $   361,319   $   420,056   $   291,218   $ 1,572,753
Gross Profit                      345,871       240,305       282,537       195,071     1,063,784
Operating loss                   (306,186)     (372,103)     (309,971)     (313,053)   (1,301,313)
Net loss                         (312,098)     (381,108)     (320,838)     (335,112)   (1,349,156)

Weighted average shares:
Basic and diluted              29,544,621    29,544,621    29,544,621    29,544,621    29,544,621
Basic and diluted per share         (0.02)        (0.01)        (0.01)        (0.01)        (0.05)



                                      -40-



                                ORTHOMETRIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

14.  SUBSEQUENT EVENTS (UNAUDITED)

     On February 25, 2005, the Company entered into a Securities Purchase
     Agreement with Rock Creek Investment Partners, L.P. Pursuant to such
     agreement, the Company sold 2,321,429 of the Company's common shares of
     beneficial interest, par value $.0005 per share, for an aggregate purchase
     price of $650,000, to Rock Creek Investment Partners, L.P.

     On March 3, 2005 the Company entered into a Securities Purchase Agreement
     with Psilos Group Partners II SBIC, L.P. Pursuant to such agreement, the
     Company sold 4,000,000 of the Company's common shares of beneficial
     interest, par value $.0005 per share, for an aggregate purchase price of
     $1,000,000, to Psilos Group Partners II SBIC, L.P. Albert S. Waxman, a
     director of Orthometrix, is a partner of Psilos Group Partners II SBIC,
     L.P.

     On March 4, 2005, of the remaining $600,000 loan balance, $500,000 was
     repaid and $100,000 due to an officer was used to purchase him 400,000
     shares, par value $.0005 per share.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
     FINANCIAL DISCLOSURE

NONE

ITEM 8A: CONTROLS AND PROCEDURES

The Company's principal executive officer and principal financial officer have,
within 90 days of the filing date of this annual report, evaluated the
effectiveness of the Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a - 14(c)) and have determined that such disclosure
controls and procedures are adequate. There have been no significant changes in
the Company's internal controls or in other factors that could significantly
affect such internal controls since the date of evaluation. Accordingly, no
corrective actions have been taken with regard to significant deficiencies or
material weaknesses.


                                      -41-



                                    PART III

ITEMS 9, 10, 11, AND 12

The information required under these items is contained in the Company's Proxy
Statement relating to its 2005 Annual Meeting of Stockholders, which Proxy
Statement will enclose this Form 10-K and is being filed with the Securities and
Exchange Commission within 120 days after the close of the Company's fiscal year
end. This information is incorporated herein by reference.

ITEM 13. EXHIBITS

       2.1   Asset Purchase Agreement with Cooper Surgical Acquisition Corp. and
             Orthometrix, Inc. (D)

       3.1   Restated Certificate of Incorporation of Orthometrix, Inc. (E)

       3.2   By-laws of Orthometrix, Inc. as amended (F)

     +10.1   Assignment and Assumption Agreement dated as of April 12, 2002
             among Bionix, LLC, Orthometrix, Inc. and M.I.P. GmbH. (A)

     +10.2   Assignment and Assumption Agreement dated as of April 12, 2002
             among Bionix, LLC, Orthometrix, Inc. and Stratec Medizintechnik,
             GmbH. (A)

     +10.3   Assignment and Assumption Agreement dated as of April 12, 2002
             among Bionix, LLC, Orthometrix, LLC and Novotec Maschinen GmbH. (A)

      10.4   $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. (B)

      10.5   $50,000 Promissory Note, dated April 1, 2004, between Orthometrix,
             Inc. and David E. Baines. (C)

      10.6   $50,000 Promissory Note, dated April 28, 2004, between Orthometrix,
             Inc. and First Global Services Corp. (C)

      10.7   $25,000 Promissory Note, dated June 30, 2004, between Orthometrix,
             Inc. and Ralph G. Theodore and Ellen H. Theodore JTWROS. (C)


                                      -42-



ITEM 13. EXHIBITS
     (Continued)

     10.8    $50,000 Promissory Note, dated October 18, 2004, between
             Orthometrix, Inc. and Farooq Kathwari.

     10.9    $20,000 Promissory Note, dated November 8, 2004, between
             Orthometrix, Inc. and John Utzinger.

     10.10   $50,000 Promissory Note, dated December 6, 2004, between
             Orthometrix, Inc. and Reynald Bonmati.

     10.11   Securities Purchase Agreement, dated February 25, 2005, between
             Orthometrix, Inc. and Rock Creek Investment Partners, L.P.

     10.12   Securities Purchase Agreement, dated March 3, 2005, between
             Orthometrix, Inc. and Psilos Group Partners II SBIC, L.P.

     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-QSB dated May 15, 2003 and is incorporated herein by
          reference

     (B)  This Exhibit was previously filed as an Exhibit to the Company's
          Report on Form 10-QSB dated March 25, 2004 and is incorporated herein
          by reference.

     (C)  This Exhibit was previously filed as an Exhibit to the Company's
          Report on Form 10-QSB dated May 17, 2004, as is incorporated herein by
          reference.

     (D)  This Exhibit was previously filed as an Exhibit to the Company's
          Report on Form 8-K dated April 15, 2002, as is incorporated herein by
          reference.


                                      -43-



ITEM 13. EXHIBITS
     (Continued)

     (E)  This Exhibit was previously filed as an Exhibit to the Company's
          Report on Form 10-Q dated November 13, 1997, and is incorporated
          herein by reference.

     (F)  This Exhibit was previously filed as an Exhibit to the Company's
          Registration Statement on Form S-I (Registration No. 33-93220),
          effective August 1, 1995, and is incorporated herein by reference.


                                      -44-



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

     1.   Audit Fees - The aggregate fees for the years ended December 31, 2004
          and 2003 for professional services rendered by Radin, Glass & Co., LLP
          for the audit of annual financial statements and review of financial
          statements included in any Form 10-QSB or services that are normally
          provided by the accountant in connection with statutory and regulatory
          filings or engagements are approximately $30,250 in 2003 and $28,500
          in 2004.

     2.   Audit-Related Fees - The registrant did not pay any audit-related fees
          during the years ended December 31, 2004 and 2003 that are not
          reported under paragraph 1 above.

     3.   Tax Fees - The registrant did not pay any fees during the years ended
          December 31, 2004 and 2003 for professional services rendered by the
          principal accountant for tax compliance, tax advice, and tax planning.

     4.   All Other Fees - The registrant did not pay any other fees during the
          years ended December 31, 2004 and 2003 other than those reported in
          paragraphs 1 through 3 above.


                                      -45-



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of White
Plains, New York, on the 24th day of March, 2005.

                                         ORTHOMETRIX, INC.


                                         By: /s/ Reynald Bonmati
                                             -----------------------------------
                                             Name: Reynald G. Bonmati
                                             Title: President

                                POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints
Reynald G. Bonmati as true and lawful attorney-in-fact and agent of the
undersigned, with full power of substitution and resubstitution, for and in the
name, place and stead of the undersigned, in any and all capacities, to sign any
and all amendments to this Annual Report and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Commission, and
hereby grants to such attorneys-in-fact and agents full power and authority to
do and perform each and every act and thing requisite or desirable to be done,
as fully to all intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report has been signed below by the following persons on behalf of the
Registrant, Orthometrix, Inc., in the capacities and on the dates indicated.

           Signature               Capacity In Which Signed            Date
----------------------------   --------------------------------   --------------


/s/ Reynald G. Bonmati             Chairman of the Board and      March 24, 2005
----------------------------   President (Principal Executive
Reynald G. Bonmati                  Officer); and Director


/s/ Neil H. Koenig                  Chief Financial Officer       March 24, 2005
----------------------------   (Principal Financial Officer and
Neil H. Koenig                   Principal Accounting Officer)


                                      -46-



           Signature               Capacity In Which Signed            Date
----------------------------   --------------------------------   --------------


/s/ Michael W. Huber                       Director               March 24, 2005
----------------------------
Michael W. Huber


/s/ William Orr                            Director               March 24, 2005
----------------------------
William Orr


/s/ Albert S. Waxman                       Director               March 24, 2005
----------------------------
Albert S. Waxman


                                      -47-`