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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 March 31, 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.
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(Exact name of registrant as specified in its charter)
Delaware 23-2715528
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(State or other jurisdiction of (IRS Employer ID No.)
Incorporation or organization)
791 South Chester Rd. Swarthmore, Pa. 19081
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(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 March 31, 1997, 13,156,282 shares of common stock were outstanding.
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<PAGE>
FORM 10-QSB
INDEX
Part 1. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet
as of March 31, 1997 1-2
Consolidated Statements of
Operations for the three months
ended March 31, 1997 and
1996 3
Consolidated Statements of Cash
Flows for the three months ended
March 31, 1997 and 1996 4-5
Notes to Financial Statements 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-9
Part II. Other Information 10
Signatures 11
<PAGE>
LONGPORT, INC. MARCH 31, 1997
CONSOLIDATED BALANCE SHEET (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
CASH $ 500
ACCOUNTS RECEIVABLE:
TRADE, NET OF ALLOWANCE FOR DOUBTFUL
ACCOUNTS OF $3,600 40,899
INTEREST AND OTHER 1,887
PREPAID EXPENSES --
INVENTORIES 3,394
NOTE RECEIVABLE 21,500
---------
TOTAL CURRENT ASSETS 68,180
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PROPERTY AND EQUIPMENT, AT COST:
MEDICAL EQUIPMENT 263,993
COMPUTER EQUIPMENT 49,493
OFFICE FURNITURE AND EQUIPMENT 45,137
RESEARCH EQUIPMENT 34,465
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393,088
LESS: ACCUMULATED DEPRECIATION (325,662)
---------
NET PROPERTY AND EQUIPMENT 67,426
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OTHER ASSETS:
NOTES RECEIVABLE 17,500
INTANGIBLE ASSETS, NET OF ACCUMULATED
AMORTIZATION OF $93,667 29,978
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TOTAL OTHER ASSETS 47,478
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TOTAL ASSETS $ 183,084
=========
The accompanying notes are an integral part of these
consolidated financial statements
1
<PAGE>
LONGPORT, INC. MARCH 31, 1997
CONSOLIDATED BALANCE SHEET (UNAUDITED)
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LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 47,530
ACCRUED EXPENSES:
SALARIES AND PAYROLL TAXES 12,000
INTEREST 2,088
DEFERRED REVENUE 10,300
NOTES PAYABLE 13,000
CURRENT PORTION OF LONG TERM DEBT 51,798
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TOTAL CURRENT LIABILITIES 136,716
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LONG-TERM DEBT, NET OF CURRENT PORTION 543
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COMMITMENTS AND CONTINGENCIES --
STOCKHOLDER'S 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, 13,055,135
SHARES ISSUED & OUTSTANDING 13,055
PAID IN CAPITAL 2,357,157
ACCUMULATED DEFICIT (2,324,387)
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TOTAL STOCKHOLDER'S EQUITY 45,825
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 183,084
===========
The accompanying notes are an integral part of these
consolidated financial statements
2
<PAGE>
FOR THE THREE MONTHS ENDED
LONGPORT, INC. MARCH 31,
CONSOLIDATED STATEMENTS OF 1997 1996
OPERATIONS (UNAUDITED) (UNAUDITED)
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NET REVENUES:
MEDICAL SUPPLY SALES $3,220 $5,066
MEDICAL EQUIPMENT RENTALS 7,995 9,420
MEDICAL EQUIPMENT SALES -- 245
MANAGEMENT FEES 25,500 25,500
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TOTAL REVENUES 36,715 40,231
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OPERATING EXPENSES:
COST OF MEDICAL SUPPLY SALES 1,408 1,133
COST OF MEDICAL EQUIPMENT RENTALS 1,000 1,043
GENERAL AND ADMINISTRATIVE 87,400 137,908
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TOTAL OPERATING EXPENSES 89,808 140,084
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OPERATING INCOME (LOSS) (53,093) (99,853)
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OTHER INCOME (EXPENSE):
INTEREST INCOME (325) 1,950
OTHER INCOME (45) 1,568
INTEREST EXPENSE 318 (5,412)
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TOTAL OTHER INCOME (EXPENSE) (52) (1,894)
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INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (53,145) (101,747)
PROVISION FOR INCOME TAXES 481
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NET LOSS ($53,626) ($101,747)
==============================
NET LOSS PER SHARE OF COMMON STOCK ($0.00) ($0.01)
==============================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 11,971,275 9,245,084
==============================
The accompanying notes are an integral part of these
consolidated financial statements
3
FOR THE THREE MONTHS ENDED
MARCH 31,
LONGPORT, INC. 1997 1996
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (UNAUDITED)
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CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) ($53,626) ($101,747)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH (USED) BY
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 29,730 27,277
CHANGES IN ASSETS AND LIABILITIES
(INCREASE) IN ACCOUNTS RECEIVABLE (7,708) 17,116
(INCREASE) DECREASE IN OTHER RECEIVABLES 1,675 (903)
(INCREASE) DECREASE IN PREPAID EXPENSES -- 2,300
(INCREASE) DECREASE IN INVENTORIES 6 (84)
INCREASE (DECREASE) IN ACCOUNTS PAYABLE
AND ACCRUED EXPENSES (1,502) (277,579)
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NET CASH (USED) BY OPERATING ACTIVITIES (31,425) (333,620)
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CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES -- 15,000
PAYMENTS ON NOTES RECEIVABLE 5,000 2,500
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NET CASH (USED) BY INVESTING ACTIVITIES 5,000 17,500
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CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM BORROWING -- --
PRINCIPAL PAYMENTS ON NOTES PAYABLE -- (3,298)
ISSUANCE OF COMMON STOCK AND WARRANTS 24,000 324,853
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NET CASH PROVIDED BY FINANCING ACTIVITIES 24,000 321,555
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,425) 5,435
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 2,925 426
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $500 $5,861
===========================
The accompanying notes are an integral part of these
consolidated financial statements
4
FOR THE THREE MONTHS ENDED
LONGPORT, INC. MARCH 31,
CONSOLIDATED STATEMENT OF CASH FLOWS 1997 1996
(UNAUDITED) (UNAUDITED)
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST $318 $2,806
INCOME TAXES 237 --
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
COMMON STOCK ISSUED FOR DEBT
RETIREMENT -- 273,076
The accompanying notes are an integral part of these
consolidated financial statements
5
<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 to make the interim information not
misleading, have been made. Results of operations for the three months
ended March 31, 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 Annual Report on Form 10-KSB
for the year ended December 31, 1996 previously filed with the Securities
and Exchange Commission.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company was formed in January, 1993, primarily to market Topical Hyperbaric
Oxygen products. During 1993 and 1994, the Company developed plans to open its
own Wound Healing Center at the Montclair Community Hospital. Also, during 1993
the Company expanded its marketing efforts to include a full array of wound care
related products, through its subsidiary, Longport Medical, Inc. ("LMI"). The
Company consistently experienced receivables problems on the business generated
by LMI and ceased LMI's operations in 1995 due to these problems. The Company
also closed the Montclair Center in 1995 due to increasing costs. The Company's
current operations focus on providing consulting services and clinically
managing wound healing centers for healthcare facilities. The Company has
experienced losses since formation, but during 1996, and the first three months
of 1997, greatly reduced its monthly expenses and overall debt. The Company
expects to expand its management services operation in 1997 by obtaining
additional Service Agreements.
Results of Operations
For the three months ended March 31, 1997 versus the three months ended March
31, 1996.
Total Revenues for the period ended March 31, 1997 were 8.74% lower
than the Total Revenues for the same period of 1996, $36,715 and $40,23,
respectively. The Company's sales have continued to remain low as the management
continues in its efforts to reduce the Company's debts. The revenues from
management fees were exactly the same between the two quarters, $25,500. The
Company continues to search for new clients, and expects revenues from
management fees to grow during 1997. The Company expects increases in equipment
sales and rentals secondary to new clients. The Company, however, continues to
be hampered by the litigation filed against it by Supra Medical. See Item 1.
Litigation below.
The Company continued to focus on decreasing its Operating Expenses,
with a 35.89% decrease in Total Operating Expenses for the period ended March
31, 1997, as compared to the same period for 1996, $89,808 and $140,084,
respectively. This decrease essentially took place in the General and
Administrative expenses, which decreased from $137,908 for 1996 to $87,400 for
the same period in 1997. The decrease can be attributed to cost cutting measures
implemented throughout the Company and the current period figure includes
payments made by the Company on old debts. The Company intends to continue its
efforts to decrease Total Operating Expenses, focusing on general and
administrative expenses.
The Operating and Net Losses for the period ended March 31, 1997, were
lower than those figures for the same period of 1996. The decrease reflects the
continued efforts of management to reduce monthly expenses and streamline the
operations. The Operating Loss for the period ended March 31, 1997 was $53,093
as compared to $99,853 Operating Loss for the same period of 1996. The Company
sustained a Net Loss of $53,626 for the period ended March 31, 1997, as compared
to a Net Loss of $101,747 for the same period of 1996. This represents a 47.29%
decrease.
7
<PAGE>
Strategy to Achieve Profitable Operations
Management believes that the Company's new structure places it in a
good position to begin expanding as a services oriented operation. In 1996, the
Company continued to refine its Management Services Program to open wound
centers and implement wound programs. The Company entered into its first
Services Agreement in July, 1995, and secured a second client in January, 1996.
Both of these contracts remain active through the first quarter of 1997. The
Company believes that healthcare facilities, mainly hospitals, will be
attempting to open more outpatient operations to make up for lost revenues due
to lower inpatient populations. Management has identified the wound market as
one of the healthcare industries growth segments, with the costs of treating
chronic wounds being currently estimated at $5 to $7 billion annually.
Management believes the Company can expand and become profitable by entering
into Service Agreements with additional healthcare facilities to help them
manage wound treatment costs.
The Company anticipates increasing overall revenues in 1997, but
expects that expenses for 1997 will begin to level off, as compared to present
figures. There may be some increases as a result of new business. The operation
of a services based company requires fewer expenditures overall and there will
be fewer expenses related to the opening of additional wound centers, since they
will be owned and operated by unaffiliated third parties.
While, the Company continues to experience cash flow problems and has
little working capital, the restructuring has greatly reduced the monthly
expenditures and lessened the overall cash flow problem. The Company expects
further relief from this problem as it enters into additional Management
Services Agreements to open wound centers.
The Company anticipates continued growth in revenues from the marketing
of its wound healing services program and the management of new Wound Healing
Centers over the next 12 months. Management will continue to work to reduce the
levels of overall debt and monthly expenses, so that the expenses incurred on a
regular basis better reflect a services-based operation that requires less
capital than a product-based seller. In addition, the Company is exploring the
possibilities of debt or equity financing, but can make no assurance that such
financing, either debt or equity, can be effectuated.
8
<PAGE>
Liquidity and Capital Resources
The Company's problems with cash flow and low working capital has
affected the Company's ability to pay off its debts. During 1996, and into 1997,
the company has had to sell shares of its restricted Common Stock to private
investors, convert unsecured notes to shares of the restricted Common Stock, and
convert trade debt and accounts into shares of restricted Common Stock, in an
attempt to reduce its debt. The Company previously borrowed funds from
unaffiliated parties to sustain operations, but did not incur any such debts
during 1996, or the first three month of 1997. The Company does not expect to
incur any new significant debt or long term commitments in the near future.
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 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.
Commitments
The Company's only significant long term commitment, as to the use of
cash, is the commitment to pay for the Scanners to be utilized at Company
managed Centers. The plans for payment on the commitment to UMDS were disclosed
as part of the 10-KSB for the period ended December 31, 1996.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
The Statements made under Item 2, Management's Discussion and Analysis
of Financial Condition and Results of Operations, and other statements within
this document, that are not 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.
9
<PAGE>
Part II
Other Information
Item 1. Legal Proceedings
The Company continues to fight the legal action filed against it by
Supra Medical Corporation entitled Supra Medical Corporation v. James R.
McGonigle, et al., Civil Action No. 96-3737. As of the current date, Supra
Medical's counsel has been granted permission to withdraw as counsel for Supra
Medical. The Court has given Supra Medical until May 13, 1997 to have a new
counsel enter an appearance. If Supra fails to have a new counsel enter an
appearance, the Court may dismiss the lawsuit. For additional details refer to
the 10-KSB for the period ended December 31, 1996.
There are no material changes in the matter Longport, Inc. v. Supra
Medical Corp, from the details disclosed in the Form 10-KSB for the period ended
December 31, 1996.
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.
10
<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: May 12, 1996 /s/ James R. McGonigle
------------------------
James R. McGonigle
President
(Chief Accounting Officer)
/s/ Peter E. Cavanaugh
------------------------
Peter E. Cavanaugh
Vice President and General Counsel
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> $500
<SECURITIES> 0
<RECEIVABLES> $40,899
<ALLOWANCES> 0
<INVENTORY> 3,394
<CURRENT-ASSETS> 68,180
<PP&E> 393,088
<DEPRECIATION> (325,662)
<TOTAL-ASSETS> 183,084
<CURRENT-LIABILITIES> 136,716
<BONDS> 0
0
0
<COMMON> 13,055
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 183,084
<SALES> 3,220
<TOTAL-REVENUES> 36,715
<CGS> 2,408
<TOTAL-COSTS> 89,808
<OTHER-EXPENSES> (52)
<LOSS-PROVISION> (53,145)
<INTEREST-EXPENSE> (325)
<INCOME-PRETAX> (53,145)
<INCOME-TAX> 481
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (53,626)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
