U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 1999
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-25517
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NORTHPORT INDUSTRIES, INC.
-----------------------------------
(Name of Small Business Issuer in its Charter)
NEVADA 93-0947269
- ------------------------------- --------------------------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
Spur 239 & Alderete Road
Del Rio, Texas 78840
P. O. Box 1428
Del Rio, Texas 78841
-------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (830) 775-0734
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes____ No ___
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
August 17, 1999
Common - 5,309,402 shares
Preferred - 405,922 shares
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
Transitional Small Business Issuer Format Yes X No
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Consolidated Financial Statements of the Company required
to be filed with this 10-QSB Quarterly Report were prepared by management and
commence on the following page, together with related Notes. In the opinion
of management, the Consolidated Financial Statements fairly present the
financial condition of the Company.
<TABLE>
NORTHPORT INDUSTRIES, INC.
BALANCE SHEETS
June 30, 1999
<CAPTION>
<S> <C>
ASSETS
Current Assets
Cash $ 4,688.00
Accounts receivable $ 596,880.00
Inventory $ 365,105.00
Other $ 145,531.00
Total Current Assets $ 1,112,204.00
Property and Equipment, net of $163,566
accumulated depreciation $ 623,051.00
Patent $ 301,320.00
TOTAL ASSETS $ 2,036,575.00
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Current portion of installment debt $ 8,586.00
Bank Credit Line Payable $ 276,197.00
Note Payable- Del Rio Nat'l Bank $ 50,000.00
Accounts payable $ 329,181.00
Accrued expenses $ 114,349.00
Income Tax Payable $ 46,818.00
Total Current Liabilities $ 825,131.00
Long-Term installment debt $ 85,816.00
Due to Related Parties $ 18,057.00
Total Liabilities $ 929,004.00
Redeemable Common stock, 60,400 shares $ 159,792.00
Stockholders' Equity
Preferred stock, no par value,
12,500,000 shares authorized, 5,921
shares issued and outstanding $ 1,542.00
Common stock, $.001 p r value, 25,000,000
shares authorized, 5,200,002 shares issued
and outstanding $ 5,194.00
Paid in capital $ 1,539,199.00
Retained <deficit> $ (737,636.00)
Current Earnings $ 139,480.00
Total Stockholders' Equity $ 1,107,571.00
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 2,036,575.00
</TABLE>
<TABLE>
NORTHPORT INDUSTRIES, INC.
INCOME STATEMENT
SIX MONTHS ENDED JUNE 1999
UNAUDITED
<CAPTION>
<S> <C> <C>
REVENUES 1999 1998
$ALES
Sales of products $ 2,442,891.00 $2,131,655.00
License fee revenue $ - $ -
Total Revenue $ 2,442,891.00 $2,131,655.00
Cost of Sales $ 1,952,585.00 $1,493,052.00
Gross Margin <deficit> $ 490,306.00 $ 638,596.00
OPERATING EXPENSES
Selling $ 31,138.00 $ 32,328.00
General and administrative $ 213,622.00 $ 236,571.00
Depreciation $ 58,159.00 $ 30,411.00
Interest $ 5,840.00 $ 14,832.00
Bad debts $ - $ 139,623.00
Total operating expenses $ 308,759.00 $ 453,765.00
Net Income (loss) before Taxes$ 181,547.00 $ 184,831.00
Income Taxes $ 42,067.00
NET INCOME (LOSS) $ 139,480.00 $ 184,831.00
</TABLE>
<TABLE>
NORTHPORT INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
6 MONTHS ENDED JUNE 30,1999
<CAPTION>
1999
<S> <C>
Cash Flows Used By Operating
Activities
Net income (loss) $ 139,480.00
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation $ 56,836.00
Patent amortization $ 7,349.00
Redeemable shares accretion $ 21,721.00
Expenses offset by contribution
to equity
Stockholder salary
Stockholder loan interest
Stockholder services
Changes in net assets and liabilities
Accounts receivable $ (380,626.00)
Inventory $ (27,306.00)
Prepaid expenses $ (101,007.00)
Accounts payable $ 10,597.00
Accrued expenses $ 56,707.00
Income taxes payable $ 42,067.00
Net Cash Used By Operating Activities $ (174,182.00)
Cash Flows Used By Investing Activities
Purchases of property and equipment $ (148,651.00)
Deposits made $ (36,928.00)
Net Cash Used By Investing Activities $ (185,579.00)
Cash Flows From Financing Activities $ (359,761.00)
Sale of common stock
Collections of stock subscriptions
Advances (net) on bank credit line
Proceeds from advances by stockholders
Proceeds from new installment debt $ 326,197.00
Payments of installment debt $ 26,214.00
Net Cash From Financing Activities $ 352,411.00
Net increase (decrease) in cash $ (7,350.00)
Cash Balance
- at beginning of year $ 12,038.00
- at end of June 30, 1999 $ 4,688.00
</TABLE>
NORTHPORT INDUSTRIES, INC.
NOTE TO FINANCIAL STATEMENTS
6 MONTHS END-JUNE 30, 1999
NOTE 1 -BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Northport
Industries, Inc have been prepared in accordance with generally accepted
accounting principles and the rules of the Securities and Exchange Commission
(" SEC"). In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for interim periods are not necessarily of the
results to be expected for the full year.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
- ------------------
The Company will be adding two new significant customers within the next
12 months, W.E.T. Automotive Systems and Elastomeros Technicos Mundiales S.A.
de C.V. ("ETM").
The Company in the next 12 months expects to grow from $3,366,892 to over
$6,000,000 in revenues. The cut and sew division will continue to grow over
the next twelve months from $1,543,280 to $2,500,000 in revenues; this growth
will be primarily additional business from the Evenflo. The Company
anticipates that the automotive division will grow from $1,543,280 to
$3,000,000 in revenues; this growth will be in electric harnesses for heated
seats for cars. W.E.T. Automotive Systems, a new customer and the largest
supplier of heated seats to the automotive industry, with approximately 80% of
the North American market, will be the entity the Company will be supplying
with electric harnesses. Another new customer is ETM; the Company will be
producing both rubber and plastic parts for use by Volkswagen. In addition,
the Company will be wrapping gear shift handles and sewing gear shift boots
for May & Scofield, for end use by Chrysler and Saturn; and, Regal Plastics
for end use by General Motors. Management expects that the remainder of the
growth will be from sewing high fashion luggage and bags for the Linda Jones
Collection and Martha Elizabeth.
During the next 12 months, the Company's foreseeable cash
requirements will be met by internal cash flow from profits and bank or
commercial financing. The Company has a loan based on 70% of receivables and
50% of finished goods inventory, and currently has no plans to raise
additional funds over the next 12 months.
The Company plans on continuing to do research in the "JOH Rubber" area,
primarily in the composite polymoric material in either thermosetting or
thermoplastic. The nature of the research is confidential and can not be
discussed in a public document. The new technology, if successful, will
provide a better sealing, lighter weight, lower noise and less costly product
for automotive power trains.
The Company will also be developing, with Evenflo, a booster seat for
children weighing between 40 to 80 pounds. This product will be developed to
meet the new automotive safety requirements for juveniles.
The Company also plans on upgrading its auto CAD (computer aided design)
system at an approximate cost of $25,000, in addition to improving its
manufacturing plant at a cost of $250,000.
The Company has the option to purchase the facility in Allende within the
next 14 months, or until the end of February 2000; however, there are no plans
at this time to purchase this facility. The purchase price under the option
is $850,000, with all lease monies paid being credited to the purchase price.
The Company is investigating the possibility of purchasing its own
embroidery equipment at an approximate cost of $25,000.
The Company also expects its work force to grow by 10% over the next 12
months.
The Company is consolidating its three facilities in Ciudad Acuna into
one 60,000 (approximately) square foot building. This will give the Company
approximately 9,000 additional square feet at a lower monthly rate. The
Company also believes that there will be additional cost savings realized by
this move in the more efficient utilization of indirect personnel.
Results of Operations.
- ----------------------
At June 30, 1999, the Company had $2,036,575 in assets and $929,004 in
liabilities. The Company had $2,442,891 revenues for the six months ended
June 30, 1999, with $1,952,585 in cost of goods sold with $308,759 in
expenses for a net income after taxes of $139,480; compared to revenues of
$2,131,655 for the six months ended June 30, 1998, with $1,493,059 in cost of
goods sold with in $453,765 expenses for a net income of $184,831.
Liquidity
- ---------
At June 30, 1999, the Company had $1,112,204 in current assets, with
total current liabilities of $825,131. Total stockholder's equity was
$1,107,571.
Mexican law requires, in addition to federal payroll taxes,
termination pay for employees who are laid off. Such payment is based on a
formula including pay rate and years of service. The Company has not set up a
reserve for such payments, contending that they are unlikely to ever be due.
If an employee quits, he or she is not entitled to any such termination pay.
The Company estimates its maximum theoretical exposure to such a liability, as
if all employees had been laid off on December 31, 1998, at $150,000.
Year 2000
- ---------
The Company has been advised by BusinessVision Management Systems,
Inc., who is the supplier of the Company's management systems and accounting
software, that it is Year 2000 compliant in all areas.
BusinessVision Management Systems has not agreed to pay for any
expenses that might be caused if the Company is not compliant. They have
provided the Company with a letter informing the Company that they have
developed an "update" that ensures that all BusinessVision products are Year
2000 compliant in all areas. The Company has installed the "update."
The Company can give no assurance that third parties with whom it
does business (e.g., banks and utilities) will ensure Year 2000 compliance in
a timely manner or that, if they do not, their computer systems will not have
an adverse effect on the Company. However, the Company does not believe that
Year 2000 compliance issues of such third parties will result in a material
adverse effect on its financial condition or results of operations.
The Company has received compliance letter from its bank and all of
its major suppliers respecting Year 2000 compliance. Management does not
believe that Year 2000 compliance issues will have any material adverse effect
on it financial condition or results of operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the Company's security holders
during the first quarter of the calendar year covered by this Report or
during the two previous calendar years.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
NORTHPORT INDUSTRIES, INC.
Date: 8/26/99 By:/s/Robert L. Michelini
------------------------
Robert L. Michelini, Director
and President
Date: 8/27/99 By:/s/Matt Baumgartner
------------------------
Matt Baumgartner, Director
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
NORTHPORT INDUSTRIES, INC.
Date: 8/26/99 By:/s/Robert L. Michelini
------------------------
Robert L. Michelini, Director
and President
Date: 8/27/99 By:/s/Matt Baumgartner
------------------------
Matt Baumgartner, Director
Secretary
Date: 8/27/99 By:/s/Len Baker
---------------------------
Len Baker, Treasurer, Assistant
Secretary
Date: 8/27/99 By:/s/Fernando Gonzales Garza
---------------------------
Fernando Gonzales Garza
Director
Date: By:/s/Bradley D. Osgood
---------------------------
Bradley D. Osgood, Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001081112
<NAME> NORTHPORT INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
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1542
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<CGS> 1952585
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<INCOME-PRETAX> 181547
<INCOME-TAX> 42067
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