U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB/A
[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.
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(Name of Small Business Issuer in its Charter)
NEVADA 93-0947269
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(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
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(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
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(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:
March 23, 2000
Common - 5,309,402 shares
Preferred - 405,922 shares
DOCUMENTS INCORPORATED BY REFERENCE
See Item 6.
Transitional Small Business Issuer Format Yes X No
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
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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 bank financing. The Company has a secured
revolving credit line from the CIT Group of New York, effective July 19, 1999,
with no present expiration date. This line bears interest at prime + 1 3/4 %,
plus 3/4% for the factoring and allows the Company to factor up to 85% of all
customer account receivable less than 90 days old. The Company is allowed to
borrow 50% on its inventory up to $250,000. As of March 23, 2000, receivables
which were less than 90 days old amounted to $1,580,256.
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.
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Sales
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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
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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
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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
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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
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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
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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.
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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.
The Company has a secured 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 85% of all
customer account receivable less than 90 days old. Present accounts
receivable within 90 days amount to $1,580,256. The Company has not
identified any other sources of long term cash or financing and its present
long term liquidity is dependent upon this line of credit. Without other
liquid sources or funds for operations, the growth of the Company may be
severely limited.
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
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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.
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: 3/27/2000 By:/s/Robert L. Michelini
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Robert L. Michelini, Director
and President
Date: 3/27/2000 By:/s/Matt Baumgartner
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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: 3/27/2000 By:/s/Robert L. Michelini
------------------------
Robert L. Michelini, Director
and President
Date: 3/27/2000 By:/s/Matt Baumgartner
------------------------
Matt Baumgartner, Director
Secretary
Date: 3/27/2000 By:/s/Fernando Gonzales Garza
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Fernando Gonzales Garza
Director
Date: 3/27/2000 By:/s/Bradley D. Osgood
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Bradley D. Osgood, Director
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