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 September 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:
November 22, 1999
Common - 5,309,402 shares
Preferred - 405,922 shares
DOCUMENTS INCORPORATED BY REFERENCE
See Item 6.
Transitional Small Business Issuer Format Yes X No
--- ---
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
September 30, 1999
<CAPTION>
<S> <C>
ASSETS
Current Assets
Cash $ 7,589.00
Accounts receivable $ 1,217,606.00
Inventory $ 341,188.00
Other $ 389,889.00
Total Current Assets $ 1,956,272.00
Property and Equipment, net of $188,971
accumulated depreciation $ 602,054.00
Patent $ 293,970.00
TOTAL ASSETS $ 2,852,296.00
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Current portion of installment debt $ 6,401.00
Bank Credit Line Payable $ 1,054,111.00
Accounts payable $ 442,455.00
Accrued expenses $ 63,008.00
Income Tax Payable $ 35,267.00
Total Current Liabilities $ 1,601,242.00
Long-Term installment debt $ 76,685.00
Due to Related Parties $ 38,227.00
Total Liabilities $ 1,719,154.00
Redeemable Common stock, 60,400 shares $ 149,792.00
Stockholders' Equity
Preferred stock, no par value,
12,500,000 shares authorized, 5,921
shares issued and outstanding $ 1,542.00
Common stock, $.001 par 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 $ 175,051.00
Total Stockholders' Equity $ 1,133,142.00
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 2,852,296.00
</TABLE>
<TABLE>
NORTHPORT INDUSTRIES, INC.
INCOME STATEMENT
UNAUDITED
<CAPTION>
<S> <C> <C> <C> <C>
For the For the
Nine Months Ended Three Months Ended
September 30, September 30,
REVENUES 1999 1998 1999 1998
$ALES
Sales of products $3,679,341 $2,796,015 $1,236,450 $664,360
License fee revenue $ - $ - $ - $ -
Total Revenue $3,679,341 $2,796,015 $1,236,450 $664,360
Cost of Sales $2,987,622 $2,105,512 $1,035,037 $612,453
Gross Margin <deficit> $ 691,719 $ 690,503 $ 201,413 $ 51,907
OPERATING EXPENSES
Selling $ 46,551 $ 55,300 $ 15,413 $ 22,972
General and administrative $ 346,648 $ 345,366 $ 133,026 $108,795
Depreciation $ 76,286 $ 55,222 $ 18,127 $ 24,811
Interest $ 16,667 $ 15,677 $ 10,827 $ 845
Bad debts $ - $ 113,666 $ - $(25,957)
Total operating expenses $ 486,152 $ 585,231 $ 177,393 $131,466
Net Income (loss) before
Taxes $ 205,567 $ 105,272 $ 24,020 $(79,559)
Income Taxes $ 30,516
NET INCOME (LOSS) $ 175,051 $ 105,272 $ 24,020 $(79,559)
</TABLE>
<TABLE>
NORTHPORT INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
9 MONTHS ENDED SEPTEMBER 30,1999
<CAPTION>
1999 1998
<S> <C>
Cash Flows Used By Operating
Activities
Net income (loss) $ 175,051 $ 95,863
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation $ 76,216 55,427
Patent amortization $ 14,699
Redeemable shares accretion $ 31,721
Expenses offset by contribution
to equity
Stockholder salary
Stockholder loan interest
Stockholder services
License fee revenue (405,823)
Shares issued for services 140,000
Changes in net assets and liabilities
Accounts receivable $ (1,001,352) (147,286)
Inventory $ (3,389) 10,499
Prepaid expenses $ (305,009) (29,494)
Accounts payable $ 102,627 159,098
Accrued expenses $ 5,366 31,818
Income taxes payable $ 30,516
Net Cash Used By Operating Activities $ (873,554) (89,898)
Cash Flows Used By Investing Activities
Purchases of property and equipment $ (40,305) (76,745)
Deposits made $ (46,432)
Net Cash Used By Investing Activities $ (86,737) (76,745)
Cash Flows From Financing Activities
Sale of common stock 154,700
Collections of stock subscriptions 20,000
Advances (net) on bank credit line 986,015
Proceeds from advances by stockholders 12,000
Proceeds from new installment debt $
Payments of installment debt $ (30,173) (16,776)
Net Cash From Financing Activities $ 955,842 169,924
Net increase (decrease) in cash $ (4,449) 3,281
Cash Balance
- at beginning of year $ 12,038 33,796
- at end of September 30, 1999 $ 7,589 37,077
</TABLE>
NORTHPORT INDUSTRIES, INC.
NOTE TO FINANCIAL STATEMENTS
9 MONTHS END-SEPTEMBER 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.
NOTE 2 -CREDIT LINE
The Company secured a new revolving credit line from the CIT Group of New York
on July 19, 1999. This line bears interest at prime + 1 3/4%, plus 3/4% for
the factoring and allows the Company to factor up to 80% of all customer
account receivable less than 90 days old. The Company is allowed to borrow
50% on its inventory up to $250,000.00. The CIT Group/Commercial Services is
the largest and oldest factoring company in the United States with annual
factoring volume exceeding $14 billion.
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, Inc. ("W.E.T.") 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, based upon estimates given to the Company by its
customers, based upon their 1999 needs; no assurance can be given that these
results will occur. 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 Even Flo Corporation ("Even Flo").
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., 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
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 has a revolving line of credit with the
CIT Group of New York, which it signed in July, 1999. This line bears
interest at prime + 1 3/4%, plus 3/4% for the factoring. Pursuant to this
line of credit, the bank will advance the Company up to 80% of current
accounts receivable less than 90 days old. The Company is allowed to borrow
50% on its inventory up to $250,000.
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 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 (see
Part I, Item 3) 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.
For further information, see the Company's 10-SB Registration
Statement, as amended, which has been previously filed with the Securities and
Exchange Commission and is incorporated herein.
Results of Operations.
- ----------------------
Sales
- -----
Consolidated sales for the 9-month period ended September 30, 1999,
increased $883,326 or 31% to $3,679,341 from $2,796,015 for the 9-month period
ending September 30, 1998.
Sales of child transportation and safety products accounted for 90%
of the growth. This amounted to $794,993 for the 9-month period ended
September 30, 1999. This was all due to greater releases from EvenFlo. The
Automotive segment had a 10% growth or $88,326.
Gross Profit
- ------------
Gross profit for the 3-month period ended September 30, 1999 was
$124,750 or 9.5% as a percentage of consolidated sales as compared to $83,706
or 8% for the period ended September 30, 1999. This is an increase of 1.5% of
consolidated sales.
Selling, General and Administrative Expenses
- --------------------------------------------
Selling, general and administrative expenses for the 9-month period
ended September 30, 1999, were $393,199 or 10.6% as a percentage of
consolidated sales as compared to $400,666 or 14% in the period ended
September 30, 1998. The percentage of cost decreased by 3.4% of consolidated
sales.
Interest Expense
- ----------------
Interest on debt for the 9-month period ended September 30, 1999, was
$16,667 compared to $15,677 in the 9-month period ended September 30,1998. The
percentage of interest decreased compared to total sales.
Income Tax
- ----------
The Company had an income tax provision of $30,516 for the 9-month
period ended September 30, 1999, as compared to zero income taxes for the 9-
month period ended September 30, 1998. As of December 31, 1998, the Company
had accumulated losses for income tax purposes of approximately ($639,464.)
These losses are available to reduce taxable income in future years. Only a
portion of this loss may be used in 1999.
Net Income
- ----------
Northport profit for the 9-month period ended September 30, 1999 was
$175,051 or $0.033 per share as compared to $105,272 or $0.020 per share for
the 9-month period ended September 30, 1998.
Liquidity.
- ----------
At September 30, 1999, the Company had $1,956,272 in current assets,
with total current liabilities of $1,601,242. Total stockholder's equity was
$1,133,142.
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. However, the Company has filed a
Definitive Information Statement to authorize the Board of Directors to set
the voting powers, designations, preferences, limitations, restrictions and
relative rights of any class or series of authorized preferred stock by
resolution of the Board of Directors; to adopt ratify and approve prior
amendments to the Articles of Incorporation respecting the presently
outstanding preferred stock; and to approve the prior issuance of the
outstanding classes of preferred stock, retroactively.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10-SB Registration Statement, as amended, which has been
previously filed with the Securities and Exchange Commission and is
incorporated herein.
(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: 11/15/99 By:/s/Robert L. Michelini
------------------------
Robert L. Michelini, Director
and President
Date: 11/15/99 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: 11/15/99 By:/s/Robert L. Michelini
------------------------
Robert L. Michelini, Director
and President
Date: 11/15/99 By:/s/Matt Baumgartner
------------------------
Matt Baumgartner, Director
Secretary
Date: 11/15/99 By:/s/Len Baker
---------------------------
Len Baker, Treasurer, Assistant
Secretary
Date: 11/15/99 By:/s/Fernando Gonzales Garza
---------------------------
Fernando Gonzales Garza
Director
Date: 11/15/99 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 7589
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0
1542
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</TABLE>
