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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended June 30, 1997
[ ] Transition report pursuant to section 13 or 15(d) of the Exchange Act
of 1934
For the transition period from __________________________ to _________________
Commission file No. 33-75236
LONGPORT, INC.
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 23-2715528
------------------------------- ---------------------
(State or other jurisdiction of (IRS Employer ID No.)
Incorporation or organization)
791 South Chester Rd. Swarthmore, Pa. 19081
-------------------------------------------
(Address of principal executive offices)
610-328-5006
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(Registrants telephone number, including area code)
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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
-- --
As of June 30, 1997, 13,156,282 shares of common stock were outstanding.
<PAGE>
LONGPORT, INC.
FORM 10-QSB
INDEX
Part 1. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet
as of June 30, 1997 1-2
Consolidated Statements of
Operations for the three months
and six months ended June 30,
1997 and 1996 3-4
Consolidated Statements of Cash
Flows for the six months ended
June 30, 1997 and 1996 5-6
Notes to Financial Statements 7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 8-10
Part II. Other Information 11-12
<PAGE>
LONGPORT, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
ASSETS
CURRENT ASSETS:
CASH $7,649 2,925
ACCOUNTS RECEIVABLE:
TRADE 42,786 33,191
INTEREST AND OTHER 1,887 1,562
PREPAID EXPENSES -- --
INVENTORIES 3,727 3,400
NOTE RECEIVABLE 29,750 26,000
-------- --------
TOTAL CURENT ASSETS 85,799 67,078
--------
PROPERTY AND EQUIPMENT, AT COST:
MEDICAL EQUIPMENT 248,993 299,258
RESEARCH EQUIPMENT 50,240
COMPUTER EQUIPMENT 49,493 49,493
OFFICE FURNITURE AND EQUIPMENT 45,137 45,136
-------- --------
393,863 393,887
LESS: ACCUMULATED DEPRECIATION (323,448) (312,833)
-------- --------
NET PROPERTY AND EQUIPMENT 70,415 81,054
--------
OTHER ASSETS:
NOTES RECEIVABLE -- 17,500
INTANGIBLE ASSETS, NET OF ACCUMULATED
AMORTIZATION OF $97,025 27,500 34,167
--------
TOTAL OTHER ASSETS 27,500 51,667
--------
TOTAL ASSETS $183,714 $199,799
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
1
<PAGE>
LONGPORT, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $41,723 49,032
ACCRUED EXPENSES:
SALARIES AND PAYROLL TAXES 11,897 12,000
INTEREST 2,088 2,088
OTHER 10,625 10,300
NOTES PAYABLE -- 13,000
CURRENT PORTION OF LONG-TERM DEBT -- 51,255
---------- ----------
TOTAL CURRENT LIABILITIES 66,333 137,675
---------- ----------
LONG TERM DEBT NET OF CURRENT PORTION -- 543
---------- ----------
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
PREFERRED STOCK: $.001 PAR VALUE, 1,000,000
SHARES AUTHORIZED, NONE ISSUED OR
OUTSTANDING -- --
COMMON STOCK: $.001 PAR VALUE, 25,000,000
SHARES AUTHORIZED, 14,045,135 SHARES
ISSUED AND OUTSTANDING 14,045 12,855
TREASURY STOCK (3,600)
PAID IN CAPITAL 2,462,665 2,320,918
ACCUMULATED DEFICIT (2,355,729) (2,272,192)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 117,381 61,581
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $183,714 $199,799
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
LONGPORT, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
FOR THE THREE MONTHS ENDED
JUNE 30,
1997 1996
(UNAUDITED) (UNAUDITED)
---------------------------
NET REVENUES:
MEDICAL SUPPLY SALES $3,874 $3,215
MEDICAL EQUIPMENT SALES & RENTALS 4,675 12,000
MANAGEMENT FEES 26,240 30,500
---------- ----------
TOTAL REVENUES 34,789 45,715
---------- ----------
OPERATING EXPENSES:
COST OF MEDICAL SUPPLY SALES 1,275 728
COST OF MEDICAL EQUIPMENT RENTALS 700 1,500
GENERAL AND ADMINISTRATIVE 76,170 83,320
---------- ----------
TOTAL OPERATING EXPENSES 78,145 85,548
OPERATING INCOME (LOSS) (43,356) (39,833)
---------- ----------
OTHER INCOME (EXPENSE):
INTEREST INCOME -- 1,950
OTHER INCOME -- 20,207
GAIN/LOSS ON DISPOSAL OF ASSETS (3,900) 7,703
OTHER EXPENSE (691)
INTEREST EXPENSE (7,614)
---------- ----------
TOTAL OTHER INCOME (EXPENSE) (4,591) 22,246
---------- ----------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (47,947) (17,587)
PROVISION FOR INCOME TAXES -- (1,029)
---------- ----------
NET INCOME (LOSS) ($47,947) ($18,616)
========== ==========
NET LOSS PER SHARE OF COMMON STOCK ($0.00) ($0.00)
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 12,101,274 11,127,747
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
3
FOR THE SIX MONTHS ENDED
LONGPORT, INC. JUNE 30,
CONSOLIDATED STATEMENTS OF 1997 1996
OPERATIONS (UNAUDITED) (UNAUDITED)
- --------------------------------- ----------- -----------
NET REVENUES:
MEDICAL SUPPLY SALES $ 7,094 $ 6,122
MEDICAL EQUIPMENT SALES & RENTALS 12,670 23,824
MANAGEMENT FEES 51,740 61,000
---------- ----------
TOTAL REVENUES 71,504 90,946
---------- ----------
OPERATING EXPENSES:
COST OF MEDICAL SUPPLY SALES 2,683 1,861
COST OF MEDICAL EQUIPMENT RENTALS 2,214 2,500
GENERAL AND ADMINISTRATIVE 162,701 170,734
---------- ----------
TOTAL OPERATING EXPENSES 167,598 175,095
OPERATING INCOME (LOSS) (96,094) (84,149)
---------- ----------
OTHER INCOME (EXPENSE):
INTEREST INCOME 325 3,900
OTHER INCOME -- 21,775
GAIN/LOSS ON DISPOSAL OF ASSETS (3,900) 7,703
INTEREST EXPENSE (318) (58,045)
OTHER EXPENSE (751)
---------- ----------
TOTAL OTHER INCOME (EXPENSE) (4,644) (24,667)
---------- ----------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (100,738) (108,816)
PROVISION FOR INCOME TAXES (482) (870)
---------- ----------
NET INCOME (LOSS) ($101,220) ($109,686)
========== ==========
NET LOSS PER SHARE OF COMMON STOCK ($0.01) ($0.01)
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 11,685,951 10,191,560
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
4
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
LONGPORT, INC. JUNE 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS 1997 1996
(UNAUDITED) (UNAUDITED)
- ---------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) ($101,220) ($109,686)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH (USED) BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 49,663 59,662
GAIN/LOSS ON EQUIPMENT DISPOSAL 3,600 (7,703)
ISSUANCE OF COMMON STOCK FOR SERVICES
AND TECHNOLOGY -- --
PROVISION FOR BAD DEBTS 3,600 --
CHANGES IN ASSETS AND LIABILITIES:
(INCREASE) IN ACCOUNTS RECEIVABLE (9,595) 11,153
(INCREASE) DECREASE IN OTHER RECEIVABLES (325) 297
(INCREASE) DECREASE IN PREPAID EXPENSES -- 4,599
(INCREASE) DECREASE IN INVENTORIES (327) (83)
(INCREASE) DECREASE IN DEPOSITS -- --
INCREASE IN ACCOUNTS PAYABLE AND
ACCRUED EXPENSES (7,447) (315,510)
--------- ---------
NET CASH (USED) BY OPERATING ACTIVITIES (62,051) (357,271)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (15,775) (15,000)
PROCEEDS FROM ASSET DISPOSAL 3,600 12,546
PAYMENTS ON NOTES RECEIVABLE 13,750 2,500
--------- ---------
NET CASH (USED) BY INVESTING ACTIVITIES 1,575 46
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM BORROWING -- --
PRINCIPAL PAYMENTS ON NOTES PAYABLE (55,200) (44,129)
ISSUANCE OF COMMON STOCK 120,400 398,853
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 65,200 354,724
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 4,724 (2,501)
CASH AND CASH EQUIVALENTS AT
BEGINING OF PERIOD 2,925 426
--------- ---------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $7,649 ($2,075)
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
5
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
LONGPORT, INC. JUNE 30,
CONSOLIDATED STATEMENTS OF CASH FLOWS 1997 1996
(UNAUDITED) (UNAUDITED)
- ------------------------------------------------ ----------- -----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST $318 $58,045
INCOME TAXES 481 870
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
COMMON STOCK ISSUED FOR DEBT RETIREMENT 4,800 327,076
COMMON STOCK RETURNED TO TREASURY IN
EXCHANGE FOR EQUIPMENT 3,600 --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
LONGPORT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying financial information of the Company is prepared in
accordance with the rules prescribed for filing condensed interim financial
statements and, accordingly, does not include all disclosures that may be
necessary for complete financial statements prepared in accordance with
generally accepted accounting principles. The disclosures presented are
sufficient, in management's opinion, to make the interim information
presented not misleading. All adjustments, consisting of normal recurring
adjustments, which are necessary so as to make the interim information not
misleading, have been made. Results of operations for the six months ended
June 30, 1997 are not necessarily indicative of results of operations that
may be expected for the year ending December 31, 1997. It is recommended
that this financial information be read with the complete financial
statements included in the Company's Form 10-KSB dated December 31, 1996
previously filed with the Securities and Exchange Commission.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of operations
For the three months ended June 30, 1997 vs. the three months ended June 30,
1996
Total Revenues for the three months ended June 30, 1997, were $34,789,
lower than the Total Revenues for same period in 1996, $45,715. The majority of
this reduction came from a decrease in supplies and equipment rentals, from
$12,000 for the three month period of 1996, to $4,675 for the three months ended
June 30, 1997. The Company's revenues from Management fees essentially remained
stable, $30,500 for the 1996 period as compared to $26,240 for the 1997 period.
This minor difference is the result of start up fees paid by West Hudson
Hospital in 1996. The Company's revenues from management fees has remained
stagnant due to the Supra Medical federal lawsuit. See Part II. Legal
Proceedings below. The Company continues to pursue new clients, but management
is cautious on its ability to secure new clients until the lawsuit is resolved.
During the three month period, ended June 30, 1996, the Company
incurred total operating expenses of $85,548, with $83,320 being General and
Administrative Expenses. For the same period in 1997, those figures dropped
slightly, with the largest drop coming in the General and Administrative
expenses, $76,170 for the period in 1997. The decrease in General and
Administrative Expenses comes from the Company's continuing effort to reduce its
expenditures to better reflect a services-oriented company.
The Company had a Total Other Income for the three months ended June
30, 1996, of $22,246, compared to Total Other Expenses for the same period in
1997 of $4,591. The difference between the periods has little significance in
that the items shown as income in 1996 were one time items that are not likely
to recur. These figures do not make a fair comparison. The Company's Operating
Loss for the three months ended June 30, 1996, was slightly lower than the
Operating Loss for the same period of 1997, $39,833 for 1996 compared to $43,356
for 1997. Management believes this figure better represents the current state of
the Company, as opposed to comparing the Net Loss between the periods. A larger
difference in Net Loss has been created by the unexpected decrease in Medical
Equipment rentals, but mainly by the significant differences in Other
Income/Expenses. The Company shows a Net Loss of $47,947 for the period in 1997,
compared to a Net Loss of $18,616 for the same period of 1996. Again, Management
continues to strive for new business, but has been hampered in its efforts due
to problems related to the Supra Medical lawsuit.
8
<PAGE>
For the six months ended June 30, 1997 vs. the six months ended June 30, 1996
The Company's Total Revenues for the six month period ended June 30,
1996, were $90,946, as compared to $71,504 for the same period in 1997. The
difference results from the loss of revenues connected with Medical equipment
rentals, $23,824 in 1996 compared to $12,670 for 1997, and Management Fees,
again related to start-up fees paid by West Hudson Hospital. Management Fees for
1997 were $51,740 as compared to $61,000 for 1996.
For the six month period ended June 30, 1996, the Company incurred
Total Operation Expenses of $175,095, compared to $167,701 in Operating Expenses
for the same period in 1997. This figure represents a minor decrease that cannot
be related to any specific item. The bulk of the Company's Operating Expenses
continue to come from General and Administrative Expenses, $162,701 for the six
months ended June 30, 1997. Management expects General and Administrative
Expenses to continue being the bulk of its Operating Expenses and does not
forsee any additional significant reductions, or increases, in the near future.
The Company decreased its Net Loss for the six month period ended June
30, 1997, when compared to the same period in 1996. The Net Loss for the period
in 1996 was $109,686, compared to $101,220 for the period in 1997. While
Management considers any reduction in Net Loss important, the reduction between
these periods is minimal and cannot necessarily be attributed to any items of
significance.
Strategy to Achieve Profitable Operations
Management anticipates lower Total Revenues for 1997, when compared to
1996, in part due to an inability to generate new clients because of the Supra
Medical lawsuit. The decrease in Equipment Rentals was unexpected and management
hopes to reverse that trend by the end of 1997. The Company anticipates
obtaining new clients, and continues its effort to market its services, but
remains cautious about new business until after the Supra Medical litigation has
been resolved. The Company continues to experience cash flow problems and has
little working capital, but has been able to reduce its overall debt. It is
Management's opinion that the Supra Medical lawsuit (See Part II. Legal
Proceedings.) has damaged the Company's financial picture or ability to achieve
profitable operations. Since the lawsuit raises issues about the Ultrasound
Scanner technology, potential clients and investors have been wary about dealing
with the Company. Management maintains its position that the accusations of
Supra Medical are false.
Overall, Management does anticipate growth in revenues through the end
of 1997. Management will continue to work on keeping the Company's expenses and
total debt down. The Company continues to explore the possibility of additional
debt or equity financing, but can make no assurances that financing can be
effectuated.
9
<PAGE>
Liquidity and Capital Resources
The Company's cash flow problems and low working capital continues to
affect the Company on a broad basis. During 1997, the Company has had to sell
shares of its Common Stock to private investors, convert unsecured notes to
shares of restricted Common Stock to reduce the Company's debts. Management
expects to continue these practices when deemed in the best interest of the
Company and its shareholders. Through these practices, Management has been able
to reduce the Company's total liabilities as of June 30, 1997 to $66,333, with
no long term debt, compared to debts of $231,450, as of June 30, 1996, excluding
long term debt. The Company does not expect to incur any significant short-term
or long-term debts within the next twelve months.
In January of 1997 a non-affiliated individual purchased a total of
100,000 shares, of the Company's restricted Common Stock at $.12 per share,
netting the Company $12,000. In April, 1997, a current shareholder purchased
700,000 shares of the Company's restricted Common Stock at $.12 per share,
netting the Company $84,000. The bulk of this money was used to pay legal fees
and pay off the Company's sole secured Noteholder. The Company also reached an
Agreement with its last remaining unsecured noteholder in April, 1997. The
noteholder was currently owed $10,000 and agreed to take a payment of $5,200 and
convert the remaining amount owed into 40,000 shares of the Company's restricted
Common Stock at $.12 per share.
The Company continues to service the Wound Center operations at West
Jersey Health System's Camden facility and the West Hudson Hospital. The
revenues from these agreements are reflected in the Company's Management Fee
revenues in the financial statements. The Company looks to generate growth in
sales of its products along with the addition of other management contracts over
the next twelve months. These Wound Centers would be owned and funded by
entities other than the Company, thus reducing the necessary cash outlays
required to own and operate a center. Product lines will also continue to be
expanded. In addition, the Company continues to explore the possibility of debt
financing and public or private placements of its common stock.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
The Statements made under the Management's Discussion and Analysis of
Financial Condition and Results of Operations, and other statements within this
document, that are not based on historical facts, are forward looking statements
that involve risks and uncertainties, including but not limited to, market
acceptance risks, the effect of economic conditions, the impact of competition
and pricing, product development, commercialization and technology difficulties,
the results of financing efforts, and other risks detailed in the Company's
Securities and Exchange Commission filings.
10
<PAGE>
Part II
Other Information
Item 1. Legal Proceedings
There are no changes in Longport, Inc. v. Supra Medical Corp. et al.,
civil action number 95-14754, as reported in Form 10-KSB for the period ended
December 31, 1996.
The matter Supra Medical Corp. v. James R. McGonigle, et al., civil
action no. 96- 3737, is scheduled for trial on October 6, 1997. UMDS, Mary
Dyson, David Morton, Hugh Lewis d/b/a Square Wave Systems, Ltd., and Supra
Medical International, Inc., have secured new counsel at the demand of Longport.
Management perceived a conflict arising and determined that it was in the
Company's best interest to seperate the defendants. New counsel sought a 60-day
continuance of the trial to conduct discovery, but this request was denied. The
court extended the time for completion of pre-trial discovery, but refused to
continue the trial date.
Management maintains its position that the Plaintiff's Complaint is
baseless and frivolous, and if the Company prevails, intends to review its
options concerning legal action against the Plaintiff and its counsel for
recovery of the monies expended in defense of this matter, plus damages the
Company may incur as a result of this litigation.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits None.
b) Reports on Form 8-K None.
11
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Longport, Inc.
Dated: August 14, 1997 --------------------------------
James R. McGonigle
President/Chief Accounting Officer
--------------------------------
Peter E. Cavanaugh
Vice President
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUN-30-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<CASH> $7,649
<SECURITIES> 0
<RECEIVABLES> $42,786
<ALLOWANCES> 0
<INVENTORY> 3,727
<CURRENT-ASSETS> 85,799
<PP&E> 393,863
<DEPRECIATION> (323,448)
<TOTAL-ASSETS> 183,714
<CURRENT-LIABILITIES> 66,333
<BONDS> 0
0
0
<COMMON> 14,045
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 183,714
<SALES> 3,874
<TOTAL-REVENUES> 34,789
<CGS> 1,275
<TOTAL-COSTS> 78,145
<OTHER-EXPENSES> (4,591)
<LOSS-PROVISION> (47,947)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (47,947)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47,947)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
