LONGPORT INC, POS AM, 1998-05-11

LONGPORT INC
POS AM, 1998-05-11
MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES

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Filed with the Securities and Exchange Commission on May 11, 1998
Securities Act Registration No. 33-75236
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

----------------------

POST EFFECTIVE AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933,
AS AMENDED

-----------------------

LONGPORT, INC.
-----------------------------------
(Exact Name Of Small Business Issuer
As Specified In Its Charter)

Delaware 5047 23-2715528
- --------------------------------------------------------------------------------
(State or other jurisdiction Primary Standard (IRS Employer
of incorporation or organi- Industrial Class- I.D. Number)
zation) ification Code No.)

791 South Chester Road
Swarthmore, Pennsylvania 19081
(800) 289-6863
------------------------------------------------------
(Address, including zip code, and telephone
number, including area code, of Registrant's principal
executive offices)

Kathleen C. Clark
15 Carolina Court
Wilmington, Delaware 19808
(302) 998-7758
--------------------------------------------------
(Name, address, including zip code, and telephone
number, including area code, of agent for service)

Copies of all communications to:

Gary A. Agron, Esq.
5445 DTC Parkway, Suite 520
Englewood, CO 80111
(303) 770-7254
(303) 770-7257 (fax)

Approximate date of commencement of the offering: As soon as practicable
after the effective date of the Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective Registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box: |_|

<PAGE>

The Registrant hereby amends the Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

(EXHIBIT INDEX LOCATED ON PAGE OF THIS FILING)

<PAGE>

LONGPORT, INC.

Cross Reference Sheet

Item Caption Location or Caption in Prospectus
- ---- ------- ---------------------------------

1. Forepart of Registration Outside Front Cover Page
Statement and Outside
Front Cover Page of
Prospectus

2. Inside Front and Outside Inside Front and Outside
Back Cover Pages of Back Cover Pages
Prospectus

3. Summary Information and Prospectus Summary; Risk Factors
Risk Factors

4. Determination of Offer- Risk Factors
ing Price

5. Dilution Dilution

6. Selling Security Holders Selling Security Holders

7. Plan of Distribution Plan of Distribution

8. Legal Proceedings Business - Litigation

9. Directors, Executive Management
Officers, Promoters
and Control Persons

10. Security Ownership of Principal Stockholders
Certain Beneficial
Owners and Management

11. Description of Description of Securities;
Securities

12. Interests of Named Legal Matters
Experts and Counsel

13. Disclosure of Commis- Undertakings
sion Position on
Indemnification for Securities

iii

<PAGE>

14. Organization Within Business: Certain Transactions
Last Five Years

15. Description of Business Risk Factors; Business

16. Management's Discussion Management's Discussion
and Analysis of Financial and Analysis of Financial
Condition and Results of Condition and Results of
Operations Operations

17. Description of Property Business-Properties

18. Certain Relationships Certain Transactions
and Related Transactions

19. Market for Common Equity Description of Securities
and Related Stockholder
Matters

20. Executive Compensation Management-Executive
Compensation

21. Financial Statements Financial Statements

22. Changes in and Disagree- Not Applicable
ments with Accountants
on Accounting and
Financial Disclosure

<PAGE>

Preliminary Prospectus Dated May 11, 1998. Subject to Completion

LONGPORT, INC.

1,185,714 Shares of Common Stock Underlying
1,185,714 Common Stock Purchase Warrants

This Prospectus covers the resale of 1,185,714 shares of the $.001 par
value Common Stock, ("Common Stock") of Longport, Inc. (the "Company")
underlying 1,185,714 Common Stock Purchase Warrants ("Warrants"). Each Warrant
entitles the holder to purchase one share of the Company's Common Stock at $3.00
per share at any time until June 30, 2000 unless extended by the Company. See
"Description of Securities - Warrants." The shares of Common Stock underlying
the Warrants constitute the "Offering" and will be offered in open market
transactions for sale from time to time by the "Selling Security Holders" who
currently own the Common Stock. See "Selling Security Holders" for a description
of the private placement transaction giving rise to the issuance of the Warrants
and underlying Common Stock and the Selling Security Holders' demand
registration rights. None of the Common Stock is being offered by the Company,
and no funds received from the sale of the Common Stock will be paid to the
Company. The Company may, however, receive funds upon exercise of the Warrants.
See "Use of Proceeds" and "Selling Security Holders."

The exercise price of the Warrants was established by the Company in 1993
based upon such factors as the Company's stockholders' equity, its business
prospects together with the level of competition in the Company's business. See
"Risk Factors - Determination of Exercise Price." The Common Stock is listed on
the Electronic Bulletin Board of the National Quotation Bureau ("Bulletin
Board") under the symbol "LPTI." On May 6, 1998, the closing bid price of the
Common Stock was $2.40 per share. See "Price Range of Common Stock."

Since the Common Stock is traded on the Bulletin Board rather than on
NASDAQ or a recognized exchange, it may be more difficult for purchasers to
dispose of, or to obtain accurate quotations as to the price of, the Common
Stock. The Common Stock is also considered under Securities and Exchange ("SEC")
regulations as "penny stock." The SEC regulations require that broker-dealers in
a "penny stock" transaction disclose certain matters including the delivery,
prior to the transaction, of a disclosure schedule form prepared by the SEC
relating to the penny stock market, the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market maker, it must disclose
this fact and the broker-dealer's presumed control over the market.
Broker-dealers must also send monthly statements disclosing recent price
information for the penny stock held in the account and information in the
limited market in penny stocks. See "Risk Factors - Penny Stock Regulations."

PURCHASE OF THE COMMON STOCK IS SPECULATIVE, INVOLVES A HIGH DEGREE OF RISK
AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. SEE "RISK FACTORS."

<PAGE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

Expenses of registering the Common Stock, estimated not to exceed $90,000,
will be paid by the Company.

The Company furnishes annual reports to its stockholders which includes
audited financial statements. The Company may furnish quarterly financial
statements to stockholders and such other reports as may be authorized, from
time to time, by the Board of Directors. See "Available Information."

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere in this Prospectus. The
securities being offered hereby involve a high degree of risk. This Prospectus
contains certain forward-looking statements which may involve certain risks and
uncertainties. The Company's actual results may differ materially from the
results anticipated in these forward-looking statements as a result of certain
factors set forth under "Risk Factors" and elsewhere in this Prospectus.

The Company

The Company was organized as a Delaware corporation in January, 1993, and
operated a wholly owned subsidiary, Longport Medical, Inc. ("LMI"), until
September, 1995. The Company originally marketed medical products for the
treatment of wounds such as wound dressings, pressure relief mattresses,
intermittent compression pumps, hyperbaric oxygen chambers ("HBOs"), and a
variety of other medical supplies. The Company also operated an outpatient wound
healing center at the Montclair Community Hospital, Montclair, New Jersey for
the treatment of recalcitrant wounds. The Company closed the facility in July,
1995. During 1995, the Company restructured its operations by developing a
program to manage wound care centers. As part of this restructuring, the Company
terminated its LMI and Montclair Center operations.

The Company manages wound care centers ("Centers") which treat on an
in-patient or out-patient basis a variety of wounds. Generally, the Company's
client is a hospital or a wound healing clinic to which the Company provides (i)
clinical oversight with respect to operating the Center and (ii) wound healing
programs. Under the Company's Management's Service Agreement ("MSA"), which is
entered into with the client, the Centers function as full service,
multi-disciplinary treatment facilities that offer comprehensive patient
evaluations and aggressive wound therapy. The Company's personnel provide
clinical management and general consulting for the opening and operation of the
Center, including ongoing on-site evaluation of the Center's operations after
the Center has opened. Under the MSA, the Company is paid a management fee
directly from the client without the Company's personnel performing direct
patient care.

The Company seeks to market its services to Centers located (i) in or
adjacent to existing hospitals, (ii) within physicians' offices that provide the
same level of services, and see the same number of patients, as the
hospital-based Centers, and (iii) within physicians' offices that provide
services to smaller patient populations. Once an MSA is executed with a Center,
the Company seeks to generate additional revenues by selling or leasing its
Topical Hyperbaric Oxygen ("HBO") products to the Center. The Company also
intends to offer its soft tissue ultrasound scanner(s) (Scanners") for sale or
lease to Centers and other users if and when the Company receives FDA marketing
permission. See "Soft Tissue Ultra-Sound Scanner."

The Company markets HBO products, that apply oxygen under pressure to wound
sites in order to reduce wound healing time, as part of its MSA and as a stand
alone treatment device. The Company rents and sells only "rigid" HBOs (sometimes
referred to as "Chambers"), which treat wound sites on extremities (primarily

<PAGE>

arms and legs) by delivering oxygen intermittently in a humid condition. The
Company formerly offered disposable HBOs ("Sacral Units"), which were soft sided
and delivered moist oxygen to the lower back and buttocks, primarily to treat
decubitus ulcers.

The Company has been assigned the patent and intellectual property right to
a soft tissue ultrasound scanner ("Scanner") developed by the United Medical and
Dental Schools of Guy's and St. Thomas's Hospitals ("UMDS") located in London,
England. The Scanner produces a high resolution image of the skin and the tissue
up to two centimeters below the skin. This type of imaging may allow a clinician
to check the status of a wound, and the surrounding tissue, without having to
incise the patient or put a probing device into the fragile wound bed. When used
with a coupling gel, the Scanner can penetrate certain types of wound dressings
and produce an image, thus avoiding risks of infection and protecting the wound
surface during the scanning process. The Scanner is expected to produce an image
with an axial resolution of 65 micons and a lateral resolution of 200 micons.
The image can then be analyzed through a proprietary image analysis program
designed at UMDS.

The Company's address is 791 South Chester Road, Swarthmore, Pennsylvania
19081 and its telephone number is (800) 289-6863.

The Offering

Securities Offered . . . . . . . . . . 1,185,714 shares of Common Stock
underlying 1,185,714 Common Stock
Purchase Warrants which Common Stock
will be sold from time to time by the
Selling Security Holders at current
market prices.

Common Stock Currently
Outstanding(1). . . . . . . . . . . . 15,111,282 shares

Common Stock Outstanding
After Offering(1) . . . . . . . . . . 15,111,282 shares

Risk Factors . . . . . . . . . . . . . Purchase of the Common Stock involves a
high degree of risk and should be
purchased only by persons who can afford
the loss of their entire investment. See
"Risk Factors."

(1) Does not include (i) 1,185,714 shares of Common Stock issuable upon exercise
of the Warrants; and (ii) 194,000 shares of Common Stock issuable upon exercise
of currently outstanding stock options. See "Capitalization" and "Description of
Securities".

<PAGE>

Summary Financial Data

The following summary financial data has been derived from the financial
statements of the Company and should be read in conjunction with such financial
statements.

Year Ended
----------
Income Statement Data December 31, 1996 December 31, 1997
- --------------------- ----------------- -----------------

Revenue............................... $ 172,171 $ 171,786

Net Income (Loss)..................... (357,429) (214,681)

Net Income (Loss) per Common
Share................................. (.03) (.02)

Weighted Average Number of Shares
Outstanding........................... 11,155,874 13,874,970

Balance Sheet Data December 31, 1997
------------------ -----------------

Working Capital....................................... $ 68,863
Total Assets.......................................... 151,184
Total Liabilities..................................... 12,847
Stockholders' Equity.................................. 138,337

<PAGE>

RISK FACTORS

Prospective investors should consider the following risk factors, together
with the other information contained in this Prospectus, in evaluating an
investment in the securities offered hereby. The following factors and other
information set forth in the Prospectus contain certain forward- looking
statements involving risks and uncertainties. The Company's actual results may
differ materially from the results anticipated in these forward-looking
statements as a result of certain factors set forth in this section and
elsewhere in this Prospectus.

Ongoing Operating Losses, Insignificant Revenues and Limited Working
Capital. The Company reported a net loss of $214,681 for the year ended December
31, 1997 on revenues of $171,786 and a net loss of $357,429 for the year ended
December 31, 1996 on revenues of $172,171. At December 31, 1997, the Company had
limited working capital of $68,863. As a result of its limited working capital,
the Company may find it difficult or impossible to expand its business
operations. Since inception, the Company has suffered aggregate net losses of
$2,486,873 and has never reported a profit.

Limited Operating History and Risks Inherent with a New Business. The
Company was formed in January 1993 and has had limited revenues and a limited
operating history. The Company continues to operate at a loss and there can be
no assurance that the Company's operations will be profitable in the forseeable
future, if ever. The Company's operations which include the management of
Centers and the sale or rental of medical equipment are subject to all of the
risks inherent in the establishment of a new business enterprise. The likelihood
of the success of the Company must be considered in light of the problems,
expenses, difficulties, complications and delays frequently encountered in
connection with a developing business.

Additional Financing May Be Required. The Company may seek additional
capital through either debt or equity financing, or both. There is no assurance
that the Company would be able to obtain any such additional financing. Further,
if the Company seeks equity financing, through a public or private offering of
its securities, the Company's current shareholders or any purchasers of the
securities may suffer an immediate dilutive effect, the extent of which is
unable to be determined at this time.

Intense Competition. The wound care industry is intensely competitive. The
Company competes in all aspects of its business with numerous medical equipment
and wound care related companies, most of whom have substantially greater market
share and financial and other resources than the Company.

Reliance on Patents and Intellectual Property Rights. The Company will rely
upon two patents assigned to it together with related intellectual property
rights in the development and marketing of its Scanner. There can be no
assurance that the Scanner patents or any other intellectual property rights
assigned to the Company will not be infringed upon or designed around by others.
See "Business - Technology Transfer Agreements."

<PAGE>

Costs and Difficulties in Connection with Compliance with Government
Regulations. Development and marketing of the Company's Scanner and certain
other operations of the Company are or may be regulated by the Federal Food and
Drug Administration ("FDA"). Compliance with regulations promulgated by the FDA
is costly and time consuming, and there can be no assurance that the Company
will be able to stay in compliance with current regulations or that future
regulations will not adversely affect the Company's operations. The Company's
development of the Scanner will require FDA permission to market and there can
be no assurance that such FDA marketing permission can be obtained. See
"Business - Government Regulation."

Need for Product Acceptance. The Company's ability to sell or lease
Scanners, if permission to sell is granted, is contingent upon acceptance of the
Scanner by physicians, nurses, patients and home health care providers. There
can be no assurance that the Company will be successful in obtaining any such
acceptance.

Heath Care Regulations. Health care is subject to laws and regulations of
federal, state and local governments and is an area of extensive and frequent
regulatory change. Laws and regulations often are adopted to regulate new and
existing products and services. Permits or licenses may be required for certain
business activities and may be restricted or otherwise difficult to obtain or
unavailable. Changes in laws or regulations or in the interpretation of existing
laws can have a dramatic effect on permissible activities and the relative costs
of doing business. It is possible that federal, state or local governments will
impose additional restrictions upon the Company's activities, and some of these
restrictions might have a material adverse effect on the Company's business and
results of operations. The Company is unable to predict the effect of any
additional laws or regulations which may be enacted. See "Business - Government
Regulation."

Technological Change. The ultrasound industry has experienced rapid
technological change, and the Company is unable to predict the pace of such
change in the future. There can be no assurance that technological change will
not cause the Company's Scanner to become obsolete or place the Scanner at a
significant competitive disadvantage.

Risks Associated with Health Care Reform Proposals. Numerous legislative
proposals have been introduced in the past and are proposed from time to time in
Congress and in state legislatures that could effect major changes in the U.S.
health care system nationally or at the state level. Among the proposals are
cost controls on hospitals, insurance market reforms to increase the
availability of group health insurance to small businesses, requirements that
businesses offer health insurance coverage to their employees and restrictions
on Medicare and Medicaid reimbursements. Certain proposals, such as cutbacks in
Medicare and Medicaid programs, containment of health care costs on an interim
basis by means that could include a freeze on prices by physicians, hospitals
and other health care providers, and permitting states greater flexibility in
the administration of Medicaid, could adversely affect the Company's future
operations. There can be no assurance that currently proposed or future health

<PAGE>

care legislation or other changes in the administration or interpretation of
governmental health care programs will not have a material adverse effect on the
Company's future operating results. See "Business - Government Regulation."

Dependence Upon Key Personnel. The Company's operations depend, in part,
upon its ability to attract, hire and retain qualified personnel. Competition
for such personnel is intense, and there can be no assurance that the Company
will be able to attract and retain such personnel. The Company is also dependent
upon the services of James R. McGonigle, its President. The loss of Mr.
Gonigle's services would have a material adverse effect on the Company's
business and future prospects. Mr. McGonigle does not have an employment
agreement with the Company nor does the Company have key man life insurance on
his life. See "Management."

No Dividends on Common Stock. The Company has not paid any dividends on its
Common Stock since its inception and does not anticipate paying any dividends in
the foreseeable future. The Company plans to retain earnings, if any, to finance
the development and expansion of its business. See "Description of Securities."

Limitation on Director Liability Under Delaware Law. Pursuant to the
Company's Certificate of Incorporation and under Delaware law, Directors of the
Company are not liable to the Company or its stockholders for monetary damages
for breach of fiduciary duty, except for liability in connection with a breach
of the duty of loyalty, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, for dividend payments or
stock repurchases illegal under Delaware law or for transactions in which a
director has derived an improper personal benefit.

Adverse Consequences Associated with Reservation of Substantial Shares of
Common Stock. The Company has reserved 194,000 shares of Common Stock for
issuance under stock options to employees, officers, directors and consultants
along with 1,185,714 shares upon exercise of the Warrants. The existence of
outstanding warrants and options may prove to be a hindrance to future financing
by the Company. In addition, the exercise of any such options or Warrants in the
future could dilute the net tangible book value of the Company's Common Stock.
Further, the holders of such options and Warrants may exercise them at a time
when the Company would otherwise be able to obtain additional equity capital on
terms more favorable to the Company. See "Description of Securities."

Potential Depressive Effect on Market Price Due to Sales Under Rule 144. Of
the 15,111,282 shares of the Company's Common Stock currently outstanding, a
total of 13,925,568 shares have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and are "restricted securities" under
Rule 144 of the Securities Act. Ordinarily, under Rule 144, a person holding
restricted securities for a period of one year, may, every three months, sell in
ordinary brokerage transactions or in transactions directly with a market maker
an amount equal to the greater of one percent of the Company's then outstanding
Common Stock or the average weekly trading volume during the four calendar weeks
prior to such sale. Rule 144 also permits sales by a person who is not an
affiliate of the Company and who has satisfied a two-year holding period without

<PAGE>

any quantity limitation. Future sales under Rule 144 may have a depressive
effect on the market price of the Common Stock. The holders of 12,859,427
restricted shares of Common Stock may sell their shares under Rule 144 at any
time and the remaining 1,066,141 shares may be sold beginning in October, 1998.
See "Shares Eligible for Future Sales."

Penny Stock Regulations. The Company's Common Stock trades on the Bulletin
Board. As a result, an investor will find it more difficult to dispose of, or to
obtain accurate quotations as to the price of, the Company's Common Stock than
if the Common Stock were listed for trading on NASDAQ or a recognized exchange.
In addition, the Company's Common Stock is subject to a rule that imposes sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally with assets
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together
with their spouse). For transactions covered by this rule, the broker-dealer
must make a special suitability determination for the purchaser and have
received the purchaser's written consent to the transaction prior to sale.
Consequently, the rule affects the ability of broker-dealers to sell the
Company's Common Stock and may effect the ability of purchasers in this Offering
to sell such securities. See "Description of Securities."

In 1992, the SEC adopted regulations which define a "penny stock" to be any
equity security that has a market price (as defined) of less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. The Company's Common Stock is penny stock. For any transaction
involving a penny stock, unless exempt, the regulations require the delivery,
prior to the transaction, of a disclosure schedule form prepared by the SEC
relating to the penny stock market. The broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Finally, monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. These regulations impede the
development of a market in the Common Stock.

Determination of Exercise Price. The exercise price of the Warrants was
determined by the Company in 1993 based upon such factors as the Company's
stockholders' equity and business prospects together with the level of
competition in the Company's business and proposed business, but such exercise
price is not necessarily related to the Company's asset value, net worth or
other established criteria of value.

Continued Control of the Company by Current Officers, Directors and
Principal Stockholders. Even if all shares of Common Stock underlying the
Warrants are sold to investors, the principal stockholders, officers and
directors of the Company will beneficially own in excess of 45% of the Company's
outstanding voting stock. Accordingly, these individuals, and not the purchasers
of the shares of Common Stock underlying the Warrants, will, as a practical
matter, be able to elect all of the Company's directors and otherwise control
the affairs of the Company, regardless of the Company's financial performance.
See "Principal Stockholders."

<PAGE>

Authorization and Issuance of Preferred Stock. The Company's Articles of
Incorporation authorize the issuance of up to 1,000,000 shares of Preferred
Stock with such rights and preferences as may be determined from time to time by
the Board of Directors. Accordingly, under the Certificate of Incorporation, the
Board of Directors may, without stockholder approval, issue Preferred Stock with
dividend, liquidation, conversion, voting, redemption or other rights which
could adversely affect the voting power or other rights of the holders of the
Common Stock. The issuance of any shares of Preferred Stock having rights
superior to those of the Common Stock may result in a decrease of the value or
market price of the Common Stock and could further be used by the Board of
Directors as a device to prevent a change in control of the Company. Holders of
the Preferred Stock may have the right to receive dividends, certain preferences
in liquidation, and conversion rights. As of the date hereof, no shares of
Preferred Stock have been issued. See "Description of Securities - Preferred
Stock."

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
December 31, 1997.

Common Stock, $.001 par
value, 25,000,000 shares
authorized; 14,856,282 shares
issued and outstanding(1) . . . . . . . $ 14,856

Preferred Stock, $.001
par value, 1,000,000
shares authorized;
-0- shares issued and
outstanding . . . . . . . . . . . . . . --

Additional paid-in capital . . . . . . . 2,615,354
Accumulated deficit . . . . . . .. . . . (2,486,873)

Less Treasury Stock at Cost. . . . . . . (5,000)
------------

Total Stockholders' equity . . . . . . . 138,337
------------

Total capitalization . . . . . . . . . . $ 138,337
============

<PAGE>

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Common Stock
underlying the Warrants. Any funds received by the Company upon exercise of the
Warrants will be used for working capital.

PRICE RANGE OF COMMON STOCK

The Company's Common Stock has traded on the Bulletin Board of the National
Quotation Bureau under the symbol "LPTI" since September 7, 1994.

The following table sets forth for the quarters indicated the range of high
and low closing prices of the Company's Common Stock as reported by the National
Quotation Bureau, but does not include retail markup, markdown or commissions.

Price
--------------------------
By Quarter Ended: High Low
- ----------------- ---- ---

Fiscal 1996
March 31, 1996 $ .26 $ .06
June 30, 1996 $ .26 $ .06
September 30, 1996 $ .26 $ .06
December 31, 1996 $ .31 $ .06

Fiscal 1997
March 31, 1997 $ .31 $ .06
June 30, 1997 $ .31 $ .06
September 30, 1997 $ .50 $ .06
December 31, 1997 $ 2.00 $ .31

Fiscal 1998
March 31, 1998 $ 1.62 $ .88
June 30, 1998 (through May 6, 1998) $ 2.62 $ 1.56

As of May 6, 1998 there were 15,111,282 shares of Common Stock outstanding
held by approximately 325 record and beneficial stockholders.,

The Company has never paid cash dividends on its Common Stock and intends
to retain earnings, if any, for use in the operation and expansion of its
business. The amount of future dividends, if any, will be determined by the
Board of Directors based upon the Company's earnings, financial condition,
capital requirements and other conditions.

<PAGE>

SELECTED FINANCIAL DATA

The selected financial information set forth below has been derived from
the Company's audited financial statements and should be read in conjunction
with the financial statements and the notes thereto included elsewhere herein.

Year Ended
----------
Income Statement Data December 31, 1996 December 31, 1997
- --------------------- ----------------- -----------------

Revenue.................................. $ 172,171 $ 171,786

Net Income (Loss)........................ (357,429) (214,681)

Net Income (Loss) per Common
Share.................................... (.03) (.02)

Weighted Average Number of Shares 11,155,874 13,874,970
Outstanding..............................

Balance Sheet Data December 31, 1997
------------------ -----------------

Working Capital..................................... $ 68,863
Total Assets........................................ 151,184
Total Liabilities................................... 12,847
Stockholders' Equity................................ 138,337

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operation

Year Ended December 31, 1997 vs. Year Ended December 31, 1996

Total revenues for 1997 essentially equaled those of 1996, $171,786 and
$172,171, respectively. While revenues from medical supplies and equipment sales
and rentals decreased, revenues generated from wound center management fees
increased by 38.07%, $136,000 for 1997 and $98,500 for 1996. This change
reflects the shift in the Company's business away from a reliance on sales and
rentals to its management services segment. The Company expects this difference
to remain and increase in the future as it anticipates revenues from future MSAs
to outpace revenues from equipment sales and rentals.

The Company's total expenses were reduced to $365,357 in 1997 compared to
$394,954 in 1996. While the overall reduction is not significant, representing
only a 7.49% decrease, the shift in where the expenses were incurred reflect the

<PAGE>

changes the Company has undergone as a result of the assignment of the Scanner
rights. The Company's costs related to its supplies and equipment sales and
rentals have been reduced by 67.55%, $18,581 for 1997 vs. $57,267 for 1996.
General and administrative expenses essentially remained the same, but expenses
related to research and development increased from $669 for 1996 to $24,000 for
1997. This change better reflects the Company's commitment to the development of
the Scanner technology and how it may impact the management services portion of
the Company's business. The Company expects research and development expenses
related to the Scanner to increase over time.

The Company continues to experience a net loss, but it has reduced that
loss from $357,429 for 1996 to $214,681 for 1997, a 39.94% decrease. However,
part of the 1996 loss consisted of a one-time loss on asset disposals totaling
$127,741. If this loss is not considered, the Company's net loss between 1997
and 1996 remained essentially the same.

The Company's total liabilities were reduced from $138,218 as of December
31, 1996, to $12,847 as of December 31, 1997, a 90.70% decrease.

Year Ended December 31, 1996 vs. Year Ended December 31, 1995

Total revenues declined for the second year in a row. Revenues for 1996
were 69.19% lower than the revenue for 1995, $172,171 and $558,866,
respectively. This decrease can be attributed to the reorganization of the
Company and its operations. The 1995 figures included at least one full quarter
of revenues from a now discontinued operation. A significant difference between
the revenues figures comes from the fact that a majority of the 1995 revenues,
specifically those to medical supplies and sales and rentals, were never
collected, while the vast majority of the revenues for 1996 have already been
collected.

While the revenues attributed to management fees are significantly higher
in 1996, $98,500, as compared to 1995's revenues of $24,251, Management believes
this is not an adequate comparison since the first MSA was not executed until
July, 1995. Management expects revenues from MSAs to continue to climb through
1997.

Management's goals for 1996 were to control expenses, pay off the Company's
trade accounts, and reduce the Company's overall debt. Company expenses were
reduced from $1,453,310 in 1995 to $394,954 in 1996. This reduction can be
attributed in part to the closing of the Company wound centers and to
Management's efforts to reduce the expenses incurred in operating the Company
under its new structure.

Perhaps the Company's most significant reduction has been in accounts
payable, reduced from $431,598 as of December 31, 1995, to $49,032 as of
December 31, 1996, an 88.65% reduction.

The operating loss for 1996 is significantly lower, when compared to 1995,
$222,783 and $894,444 respectively, a 75.09% decrease. This change can be
attributed to the expense reductions described above.

<PAGE>

Trends

During 1997, the Company began new growth under its MSA plan. Management
focused its efforts on refining management of Centers and implementing wound
programs, while also concentrating efforts on reducing the Company's overall
debts. 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.

The Company anticipates an increase in revenues in 1998, mainly through
execution of additional MSAs and Scanner license agreements. The operation of a
service based company requires fewer expenditures, including those related to
the opening of additional Centers, since the Centers will be owned and operated
by unaffiliated third parties. In 1997, the Company entered into license
agreements for the marketing of Scanners pursuant to which the licensees pay a
monthly license fee and a portion of the revenues generated by the license.

The Company anticipates continued growth in revenues from the marketing of
its Scanners and the management of Centers over the next 12 months. Management
will seek to continue 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 with fewer capital needs.

The Company continues to experience cash flow problems, with little working
capital. The restructuring of operations, however, has lowered the monthly
expenditures, and reduced overall cash flow requirements.

Liquidity and Capital Resources

In 1997, the Company sold a total of 1,811,147 shares of its restricted
Common Stock to current and new shareholders. The shares were sold between $.12
and $.25 per share, netting the Company a total of $270,326.

The Company continues to manage the Centers at West Jersey Health System
and West Hudson Hospital. Each client has purchased and rented additional
supplies and equipment from the Company, providing revenues in excess of the
management fees. The Company anticipates continued growth from sales of its
products along with the addition of other MSAs for the opening and managing of
Centers over the next twelve months. These Centers would be owned and funded by
entities other than the Company, thus reducing the necessity of cash outlays to
purchase start-up materials and operate the Center.

The Statements made hereunder and throughout the Prospectus 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, product development,
commercialization and technology difficulties, the results of financing efforts,
legal circumstances, and other risks detailed herein and in other filings.

<PAGE>

BUSINESS

History

Wound Healing Centers

The Company also provides assistance with the Center's marketing campaign,
designing the physical layout of the Center, and setting up medical equipment
and supply purchasing contracts. The Company's level of involvement in the
Center's marketing campaign depends upon the capabilities of the Center's
internal departments, but can include helping the client create marketing
materials. The Company can assist in designing the layout of the Center, and
securing furniture, assisting in the establishment of medical supplies and in
equipment network, including medical billing systems. The Company does not
directly sell products to the Center, or its patients, and does not perform any
insurance or patient billing related to the Center's services. While the client
agrees to clinically operate the Center in accordance with the Company's
assessment and treatment protocols, the final decisions regarding the business
and operations of the Center are made by the client.

In support of its MSA, the Company developed a proprietary wound healing
manual ("Manual") with the assistance of a number of outside clinical
researchers and physicians experienced in wound treatment. These individuals
continue, along with the Company's clinical personnel, to review and update the
Manual when necessary. As part of the MSA, Centers receive a customized copy of
the Manual, training on the assessment and treatment protocols within the
Manual, and updates to the Manual.

<PAGE>

The Manual also contains protocols for the assessment and treatment of a
variety of wounds, from diabetic foot ulcers and decubitus ulcers (bed sores),
to post-surgical and other acute wounds. The Company's assessment protocols
require that all new patients undergo a complete history and physical, lab work,
vascular testing on extremity wounds, and other appropriate tests. The Company
seeks to provide clinicians with the most comprehensive wound care assessment
available, so that a treatment protocol can be patient-specific and altered
quickly to match changes in the wound during the healing process. The goal of
the Manual is to make the wound treatments more effective by providing the
physician with more information about the wound. The Company's assessment and
treatment protocols do not focus on a single tool, product or method. Rather,
the protocols use a full range of readily available commercial products and
supplies, with recommendations for use.

The Company's Centers are capable of treating patients suffering from a
wide range of wounds, including skin ulcerations due to diabetes, vascular
disease, burns and frostbite, post-surgical infections, decubitus ulcers,
amputations and infected stumps, and gangrenous lesions. The Company's
assessment protocols utilize numerous diagnostic tools, including an
Ultrasound/Duplex Imager, a Doppler, a Transcutaneous PO2 Monitor and a vascular
testing system. The Company's treatment protocols utilize numerous commercially
available techniques, compression therapy, and HBOs. The treatment protocols
also utilize specialty wound dressings, topical antibiotics, and pressure relief
devices in a comprehensive program designed to stimulate the body into the
healing process.

The Company also provides training for the Center's staff on the wound
assessment and treatment protocols contained within the Manual, including
training on any changes to the protocols that may be made in the future. The
Company's clinical staff will train the Center's staff on the use of the
assessment and treatment equipment, products and supplies to be utilized at the
Center, including HBO products. The training is designed to teach the assessment
and healing. The company considers personnel training to be an ongoing process,
so the MSA includes continuous on-site visits by the Company's clinical staff to
ensure compliance with the Company's protocols, and to be sure the Center's
staff understand the Company's protocols. The Center can also request on-site
visits, but beyond a specific number of visits, as specified in the MSA, the
Center is charged for the on-site visit.

All examinations and procedures rendered at a Center are eligible for
reimbursement to the client by Medicare, except for the HBO therapy. Each
treatment procedure and product or supply used has a reimbursement code and
scheduled fee under the Medicare regulations. The HBOs are used as an additional
treatment device in conjunction with the other available treatments, with
payment for this treatment coming from either private insurance carriers, if
applicable, or the patient. The Company receives payment directly under the MSA,
regardless of whether the Center or patient receives reimbursement from
Medicare, or other insurance carriers.

The Company executed its first MSA with the West Jersey Health System
("West Jersey") in July 1995 and its second MSA with West Hudson Hospital ("West
Hudson") in January 1996. The West Hudson MSA has an initial term of two years,
with a $10,000 start-up fee and the Company receives $5,000 per month. The

<PAGE>

Company receives a management fee of $3,500 per month under its West Jersey MSA.
The Company agreed to provide West Hudson with two HBOs as part of the
Agreement, with additional HBOs available for West Hudson to rent at $800 per
month each. West Hudson provided the funds necessary for initial testing of the
Company's soft tissue ultrasound scanner at the Center."

The Company maintains a General Liability policy and a Liability Umbrella
policy to provide coverage for the management services it provides under the
MSA. The multi-peril policy provides for a total of $3,000,000 in coverage per
occurrence. Management believes these policies provide adequate insurance
coverage based on the liability risks of the business.

HBOs

The Company markets Topical Hyperbaric Oxygen ("HBO") products, that apply
oxygen under pressure to wound sites in order to reduce wound healing time, as
part of its MSA and as a stand alone treatment device. The Company rents and
sells only "rigid" HBOs (sometimes referred to as "Chambers"), which treat wound
sites on extremities (primarily arms and legs) by delivering oxygen
intermittently in a humid condition. The Company formerly offered disposable
HBOs ("Sacral Units"), which were soft sided and delivered moist oxygen to the
lower back and buttocks, primarily to treat decubitus ulcers.

The Company owns Chambers, renting approximately 30% of its Chambers to
non-affiliated third parties. Rental rates for the Chambers average $60 per day
for individual patients and $500 per month for dealers. The Chambers are not
Medicare reimbursable, which means that Medicare will not reimburse the patient
or the provider for their use, thereby reducing the marketability of the
product. The revenues generated by the Chambers are predominately from the
rental of Chambers with monthly rental charges to independent dealers who, in
turn, market the Chambers to third parties. The Company also receives revenues
from hospitals and nursing facilities that rent or buy the Chambers directly
from the Company. The dealers, hospitals and nursing facilities are charged
regardless of their ability to obtain payment or reimbursement from Medicare or
the patient, although numerous private health insurance companies reimburse
patients for HBO costs.

Strategy

The Company seeks to market its services to Centers located (i) in or
adjacent to existing hospitals, (ii) within physicians' offices that provide the
same level of services, and see the same number of patients, as the
hospital-based Centers, and (iii) within physicians' offices that provide
services to smaller patient populations. Once an MSA is executed with a Center,
the Company seeks to generate additional revenues by selling or leasing its HBOs
to the Center. The Company also intends to offer its Scanners for sale or lease
to Centers and other users if and when the Company receives FDA marketing
permission. See "Soft Tissue Ultra-Sound Scanner."

<PAGE>

Soft Tissue Ultrasound Scanner

The Company has been assigned the patent rights to a soft tissue ultrasound
scanner ("Scanner") developed by the United Medical and Dental Schools of Guy's
and St. Thomas's Hospitals ("UMDS") located in London, England. The Scanner
produces a high resolution image of the skin and the tissue up to two
centimeters below the skin. This type of imaging may allow a clinician to check
the status of a wound, and the surrounding tissue, without having to incise the
patient or put a probing device into the fragile wound bed. When used with a
coupling gel, the Scanner can penetrate certain types of wound dressings and
produce an image, thus avoiding risks of infection and protecting the wound
surface during the scanning process. The Scanner is expected to produce an image
with an axial resolution of 65 micons and a lateral resolution of 200 micons.
The image can then be analyzed through a proprietary image analysis program
designed at UMDS.

The image analysis system provides a mathematical "signature" of the skin
and tissue, and is capable of detecting small changes to the tissue, before such
changes become clinically evident to the naked eye. The image analysis may
permit clinicians to recognize the improvement, or deterioration, of a wound
earlier than present methods allow, so that treatments can be modified quickly.
The Scanner may provide clinicians with an opportunity to examine below the
patient's skin, to the subcutaneous tissue and tendons. The Company will be
required to file for marketing permission to sell or lease the Scanner with the
U.S. Food and Drug Administration ("FDA"). See "Government Regulation".

Competition

In connection with its managed Center business, the Company competes with
hospitals that manage their own wound care centers and with other wound center
management companies such as Curative Technologies, Inc. ("CTI"). CTI is a
larger, better capitalized and better known company that markets wound center
franchises under a plan similar to the Company's MSA. Hospitals also have the
capability of managing their own wound care centers by using their own staff and
equipment. Competitive factors in the wound care center management business
include the cost of setting up the wound care programs, the types of wounds
treated and the choice of wound therapies to be offered.

The medical products industry in which the Company competes with its HBOs
and its Scanners (if FDA marketing permission for the Scanner is obtained), is
intensely competitive, and most of the Company's competitors have financial,
marketing and other resources substantially greater than those of the Company.
Some of the Company's larger competitors enjoy an additional competitive
advantage by reason of their ability to offer product discounts for volume
purchases across product lines.

Marketing

The Company markets, through its own employees, its management of Centers
directly to hospitals and physicians that seek to provide or establish wound
care centers. The Company also markets on a non-exclusive basis through
non-affiliates who receives a commission for any MSA's brought to the Company.

<PAGE>

The Company has entered into agreements with four non-affiliates for the
marketing of HBO's and Scanners (if FDA marketing permission for the Scanner is
granted), Under the agreements, the Company is to receive monthly payments
ranging from $2,000 to $10,000, cancellable by either party on 60 days notice.
The Company is obligated to sell or lease the HBOs and Scanners to the marketing
companies and to provide limited geographical exclusivity. There can be no
assurance that the marketing agreements will not be cancelled in the near
future.

Government Regulations

The Company will require marketing permission from the FDA to market the
Scanners. The Federal Food, Drug and Cosmetic Act (the "FDA Act") requires the
Company to file a pre-marketing notice of intent to market with the FDA on all
medical devices. The notice seeks the FDA's permission to market the product.
Devices manufactured and marketed before 1976, and any devices substantially
equivalent to any such device, may not require FDA permission. Devices developed
after 1976, or devices that differ substantially from a legally marketed
predicate device, must receive the FDA's permission before marketing to the
public may begin. These devices are also subject to reviews by the FDA after the
pre-market review process, with devices that are potentially life- threatening
being subject to more stringent standards.

The Scanner is subject to FDA regulations regarding the introduction of
medical devices into commerce within the United States market. The research,
development, testing, production, and marketing of new medical products such as
the Scanner are subject to extensive governmental regulation in the United
States. Noncompliance with these regulations may result in recall or seizure of
products, total or partial suspension of production, refusal of the government
to allow clinical studies or commercial distribution of the device, civil
penalties or fines, and criminal prosecution.

Pursuant to the Federal Food, Drug and Cosmetic Act (the "FDA Act"), a
medical device will be classified as either a Class I, Class II or Class III
device. Class I devices are subject to general controls, including requirements,
and "Good Manufacturing Practices" (as such term is defined in the FDA Act). In
addition to general controls, Class II devices may be subject to special
controls that could include performance standards, postmarket surveillance,
patient registries, guidelines, recommendations and other actions as the FDA
deems necessary to provide reasonable assurance of safety and effectiveness.
Class III devices must meet the most stringent regulatory requirements and must
be approved before they can be marketed. Such premarket approval can involve
extensive pre- clinical testing to prove safety and effectiveness of the
devices.

All medical devices introduced to the market since 1976 are required by the
FDA, as a condition of marketing to secure either a 510(k) premarket clearance
or an approved Premarket Approval Application ("PMA"). A product qualifies for a
510(k) premarket notification clearance if it is substantially equivalent in
terms of safety, effectiveness, and intended use to another legally marketed
medical device. If a product is not substantially equivalent to such a device,

<PAGE>

the FDA must first approve a PMA application before it can be marketed. An
approved PMA application indicates that the FDA has determined the device has
been proven, through submission of clinical data and supporting information, to
be safe and effective for its labeled indications. The PMA process typically
takes more than a year and requires the submission of significant quantities of
clinical data and supporting information, while the process of obtaining a
510(k) clearance typically takes less than one year and involves the submission
of less clinical data and supporting information.

An entity must file with the FDA even if the device is simply a "new
device" to the particular entity, and is otherwise a well known device in the
marketplace. Since the Scanner, if it achieves commercial viability, will be
introduced into commerce within the United States for the first time by the
Company, it will be considered a "new device" under FDA regulations and will
require appropriate filings with the FDA. The FDA has already classified and
approved other diagnostic ultrasound devices, that the Company believes are
substantially equivalent to the Scanner, as Class II medical devices. The
Company expects that a 510(k) premarket notification clearance will be required
and, in conjunction with UMDS, has begun assembling the information needed to
complete all necessary filings, including the identification of the legally
marketed device that is the most equivalent to the Scanner. There can be no
assurance that the Scanner will be cleared by the FDA.

In order for the Company to utilize the Scanner in clinical studies prior
to FDA clearance for market entry, the Company must obtain an Investigational
Device Exemption ("IDE") form the FDA regulations. The IDE permits entities to
conduct clinical studies on a medical device that has not received FDA
permission for introduction into commerce. By definition, investigational
devices, for the purpose of an IDA, are broken into two groups, those that pose
a significant risk to patients and those that pose a nonsignificant risk to
patients. Those that pose a significant risk to patients must obtain an approval
from the FDA to conduct pre-market clinical studies. This process may require
the filing of significant quantifies of pre-study data and clinical study plans.
Those devices that pose a nonsignificant risk to patients must still have a
clinical study plan approved, but the oversight body can be an FDA recognized
Institutional Review Board ("IRB") that acts as the FDA's representative for the
purpose of approval and oversight of clinical studies.

The Company believes that under the parameters set forth in the FDA Act,
the Scanner, since it is a non-invasive device, poses a nonsignificant risk to
patients. Further, this would enable the Company to conduct any necessary
studies more quickly and at significantly reduced costs. Also, the receipt of a
clinical study approval will permit the Company to conduct clinical studies
while UMDS undergoes the FDA marketing permission process.

The Company is currently involved in negotiations for the utilization of an
IRB and is developing a formal clinical study plan. Upon agreement from an
institution, the Company will submit its clinical study plan and information on
the Scanner to the IRB who will then decide whether the device poses a
nonsignificant risk and whether it approves the clinical study plan. If the
Company receives approval from the IRB, the Company intends to conduct clinical
studies in conjunction with the operation of its Centers open at that time,
including the West Jersey and West Hudson Centers. The Company does not expect
to incur significant expenses in connection with the conducting of those
studies. The Company, however, cannot place a definitive time frame on when an
IRB will be selected or when the clinical plan will be presented, nor can the
Company assure that the clinical studies will be approved.

<PAGE>

The FDA has established manufacturing (and sterilization) standards for
medical device manufacturers, known as "Good Manufacturing Practices". These
standards require any manufacturing facility to be registered annually and
submit to regular inspections. Therefore, if the Company begins manufacturing
any devices, the manufacturing facility would have to comply with these
regulations. The Company does not intend to directly manufacture any medical
devices. Rather, the Company intends to out source any manufacturing operations
required in the future.

Technology Transfer Agreements

In December 1997, the Company entered into two Technology Transfer
Agreements (the "Agreements") with the United Medical and Dental Schools of St.
Guy's and St. Thomas's Hospitals ("UMDS") and Square Wave Systems, Ltd. ("SWS")
pursuant to which UMDS and SWS assigned all of their right, title and interest
in and to an international patent application and a South African patent
application (the "Patents") covering certain technology associated with the
Scanner. The Agreements provide the Company with the exclusive and world wide
rights to the use of the Scanner technology underlying the Patents for medical
applications only. UMDS and SWS retained the rights to all other uses for the
Patents. However, in the case of the fractal analysis software, a software
component of the Scanner which is used to analyze, determine and graphically
display the fractal nature of a reflected image generated from a Scanner, the
Company's rights are limited to the use of software solely in a high frequency
ultra sound skin scanner. In consideration of the assignment of the technology
pursuant to the Agreements, the Company agreed to pay to UMDS and SWS, in the
aggregate, 3% of the Company's gross revenues for the five year period
commencing at such time as the FDA grants marketing permission to the Company
with respect to the Scanner. The Company also agreed to pay all costs associated
with maintaining and renewing the Patents and all costs associated with
obtaining FDA marketing permission for the Scanner.

In the event the Company defaults under the payment or any other terms of
the Agreements, UMDS and SWS are granted the right to market the technology
underlying the Patents and the Scanner in direct competition to the Company.

There can be no assurance that the Patents will afford protection against
competitors with similar technology, that the Patents will not be infringed upon
or designed around by others, that others will not obtain patents that the
Company will need to license or design around, that the Patents will not
inadvertently infringe upon the patents of others, or that others will not
manufacture and distribute similar scanners upon expiration of the Patents.
There can also be no assurance that the Patents will not be invalidated or that
the Company will have adequate funds to finance the high cost of prosecuting or
defending patent validity or infringement issues.

<PAGE>

Employees

The Company has three employees, including Mr. McGonigle, its President, a
clinical services employee and an administration employee. The clinical services
employee is a director of the Company and the administration employee is Mr.
McGonigle's daughter.

Facilities

The Company leases approximately 1,000 square feet of office space at 791
South Chester Road, Swarthmore, Pennsylvania on a 12 month lease expiring
December 31, 1998 for $550 per month,.

Litigation

The Company is the Plaintiff in an action entitled Longport, Inc., et al v.
Rosner, Bresler, Goodman & Buckholz, et al., Civil Action No. 002989, filed in
1997 in the Philadelphia Court of Common Pleas. The action alleges wrongful use
of civil proceedings and civil conspiracy against the defendants, and seeks
compensatory and punitive damages.

In September 1997, the Company was notified of a Medicare Hearing Officer's
decision that the Company is liable for repayment of Medicare Benefit
overpayments of $269,120. The overpayments are from calendar years 1994 and
1995. The Company has appealed the Hearing Officer's decision and the appeal
will be heard by an Administrative Law Judge. The Company has not been notified
of a hearing date, and is unable to predict the outcome of the appeal, although
the Company believes that there were no medicare benefit overpayments in 1994
and 1995 and intends to vigorously defend its position.

MANAGEMENT

Executive Officers and Directors

The following table sets forth certain information regarding the current
executive officers and directors of the Company:

Officer or
Director
Name Age Office Since
---- --- ------ -----

James R. McGonigle 54 Chairman of the 1993
Board of Directors,
Chief Executive
Officer, President and
Chief Accounting Officer

<PAGE>

Bonita Weyrauch 47 Director of Clinical Sales 1998
and Director

Peter E. Cavanaugh 33 Director 1993

Directors hold office for a period of one year from their election at the
annual meeting of stockholders and until their successors are duly elected and
qualified. Officers of the Company are elected by, and serve at the discretion
of, the Board of Directors. None of the above individuals has any family
relationship with any other. The Board of Directors has no audit, nominating or
compensation committee. No director has received or currently receives any
compensation for services as a director.

Background

The following is a summary of the business experience of each officer and
director of the Company:

James R. McGonigle founded the Company and has served as its Chairman,
Chief Executive Officer and President since its inception in January, 1993. From
1985 to 1992 Mr. McGonigle was the founder and president of Supra Medical Corp.
(formally Topox, Inc.)("Supra") a publicly held company specializing in the
development of proprietary medical technologies in the fields of skin care and
diagnostics.

Bonita Weyrauch is licensed in Pennsylvania and New Jersey as a registered
nurse and has practiced nursing since 1970. She joined the Company in July, 1993
and is responsible for providing wound care treatment protocols to personnel at
the Company's two Centers. Ms. Weyrauch graduated in 1988 from Delaware County
Community College with an Associate Degree in Nursing.

Peter E. Cavanaugh was Vice President and General Counsel of the Company
from December 1993 until February 1997. In 1993, Mr. Cavanaugh was admitted to
practice by the Bar Associations of both Pennsylvania and New Jersey. From
March, 1992, until May, 1993, Mr. Cavanaugh was employed as a law clerk at the
Law Offices of Tybout, Redfearn & Pell in Wilmington, Delaware and from 1986
until 1992, Mr. Cavanaugh was employed by the Pennsylvania Manufacturers
Association Insurance Company in the legal and claims departments. Since
February 1997 he has practiced law with the Law Firm of White and Williams.

Executive Compensation

The following table discloses all compensation awarded to, received by, and paid
to the Chief Executive Officer of the Company for the years ended December 31,
1995, 1996 and 1997. No executive officer's annual compensation exceeded
$100,000 in any such year.

Summary Compensation Table

Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------- -----------------------------------

(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name
and
Prin- Other All
cipal Annual Restricted Other
Posi- Compen- Stock Options/ LTIP Compen-
tion Year Salary($) Bonus($) sation($) Award(s)($) SARS(#) Payoutsation($)
- ---- ---- --------- -------- --------- ----------- ------- ---------------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. 1997 $51,000(1) -0- -0- -0- -0- -0- -0-
McGonigle 1996 42,000 -0- -0- -0- -0- -0- -0-
Chief 1995 10,250 -0- -0- -0- -0- -0- -0-
Exec.
Officer

</TABLE>

(1) The Company currently pays Colpat, Inc., a consulting firm wholly owned by
Mr. McGonigle, $6,000 per month for Mr. Gonigle's services.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information concerning stock
ownership by all persons known to the Company to own beneficially 5% or more of
the outstanding shares of the Company's Common Stock, by each director and
officer, and by all directors and officers as a group. All shares of Common
Stock are owned beneficially and of record.

Number of
Name Shares Owned Percent of Class
- ---- ------------ ----------------

James R. McGonigle (1) 1,865,893 12.3%

Bonita Weyrauch (2) 322,558 2.1%

Peter Cavanaugh (3) 223,571 1.5%

John H. Carbutt (4) 812,777 5.3%

Michie Proctor and 2,669,174 17.6%
Joyce Proctor (5)

The First Baptist Church 1,280,977 8.5%
of Southwest Broward

<PAGE>

John Mills 1,192,000 7.9%

All officers and directors
as a group (three persons)(6) 2,512,022 16.3%

(1) Includes 942,000 shares held by James R. McGonigle, 547,143 shares held by
Wound Healing Systems, Inc., a corporation controlled by Mr. McGonigle, 376,750
shares held by Colpat, Inc. a corporation controlled by Mr. McGonigle and
100,000 Warrants also held by Colpat, Inc.
(2) Includes an option to purchase 94,000 shares at $.10 per share at any time
until July 18, 1998.
(3) Includes an option to purchase 100,000 shares at $.10 per share at any time
until July 18, 1998.
(4) Includes 436,098 shares held by John H. Carbutt, 200,000 Warrants held by
Mr. Carbutt and 176,679 shares held by Jagapata, Ltd., a corporation controlled
by Mr. Carbutt.
(5) Includes 2,118,258 shares held by Michie Proctor, 450,916 shares held by
Michie Proctor and Joyce Proctor and 100,000 Warrants held by Michie and Joyce
Proctor.
(6) Includes shares, Warrants to purchase shares and options to purchase shares
held by the Company's officers and directors which are exercisable within 60
days from the date hereof.

SELLING SECURITY HOLDERS

In November 1993, the Company sold 1,185,714 Units of its securities at
$.35 per Unit in a private placement to the Selling Security Holders listed
below. Each Unit consisted of one share of Common Stock and one Warrant
entitling the holder to purchase one share of Common Stock at $3.00 per share at
any time until December 31, 1994. The Common Stock and Warrants were initially
registered in July 1994. This Prospectus updates the July 1994 prospectus and
covers the resale of 1,185,714 shares of Common Stock underlying the 1,185,714
Warrants held by the following persons.

Name of Selling Number of
Security Holder Shares Offered
- --------------- --------------
Colpat, Inc.(1) 100,000
Kathleen C. Clark 142,857
Brian K. Nedblaski and Colleen V. Nedblaski 142,857
Patricia L. McGonigle 100,000
John H. Carbutt 200,000
Ann R. McGonigle 300,000
Michie Proctor and Joyce Proctor 200,000
---------
TOTALS 1,185,714
=========

(1) Colpat, Inc. is a corporation controlled by James R. McGonigle, an officer
and director of the Company, and by virtue of such control, Mr. McGonigle may be
considered the beneficial owner of such securities held by Colpat, Inc.

<PAGE>

CERTAIN TRANSACTIONS

Management is of the opinion that each transaction described below between
the Company and its officers, directors and stockholders was on terms at least
as fair to the Company as had the transaction been concluded with an
unaffiliated party.

In January 1996, the Company agreed to a consulting agreement with Colpat,
Inc., an affiliate owned and controlled by the Company's Chief Executive Officer
and President, James R. McGonigle, pursuant to which Colpat provides Mr.
McGonigle's services to the Company for $6,000 per month through 1998.

In August 1996, the Company's President, Mr. McGonigle, converted a $5,000
note due him from the Company into 41,667 shares of the Company's Common Stock
at $.12 per share.

In 1996, two of the Company's principal stockholders purchased certain
accounts payable and notes due from the Company totaling $228,594. The Company
issued 2,223,140 shares of its Common Stock at $.103 per share to the
stockholders in cancellation of these liabilities.

In June 1997, the Company sold six HBOs to Wound Healing Systems, Inc.
("WHS"), a company owned by James R. McGonigle. As payment, WHS returned 30,000
shares of the Company's Common Stock to the Company. The net book value ($5,000)
of the HBOs sold was recorded as the value of the stock received (treasury
stock).

In December 1997, the Company elected to forego repayment of two notes
receivable of $5,500 each from a former officer and a current officer. The
$5,500 notes receivable ($11,000 in total) were expensed as compensation.

DESCRIPTION OF SECURITIES

Common Stock

The Company is authorized to issue 25,000,000 shares of Common Stock $.001
par value per share, of which 15,111,282 shares are currently issued and
outstanding. All shares are equal to each other with respect to lien rights,
liquidation rights and dividend rights. There are no preemptive rights to
purchase additional shares by virtue of the fact that a person is a stockholder
of the Company. Stockholders do not have the right to cumulate their votes for
the election of directors. The outstanding shares of Common Stock are validly
issued, fully paid and non-assessable, and each share is entitled to one vote on
each matter submitted to a vote of stockholders.

Preferred Stock

The Company is authorized to issue 1,000,000 shares of Preferred Stock,
$0.001 par value (the "Preferred Stock"). The Preferred Stock may, without
action by the stockholders of the Company, be issued by the Board of Directors

<PAGE>

from time to time in one or more series for such consideration and with such
relative rights, privileges and preferences as the Board may determine.
Accordingly, the Board has the power to fix the dividend rate and to establish
the provisions, if any, relating to voting rights, redemption rate, sinking
fund, liquidation preferences and conversion rights for any series of Preferred
Stock issued in the future. As of the date hereof, no shares of Preferred Stock
have been issued.

It is not possible to state the actual effect of any authorization of
Preferred Stock upon the rights of holders of Common Stock until the Board
determines the specific rights of the holders of any series of Preferred Stock.
The Board's authority to issue Preferred Stock also provides a convenient
vehicle in connection with possible acquisitions and other corporate purposes,
but could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock. Accordingly, the issuance of
Preferred Stock may be used as an "anti-takeover" device without further action
on the part of the stockholders of the Company, and may adversely affect the
holders of the Common Stock. See "Risk Factors - Authorization and Issuance of
Preferred Stock."

Warrants

The Company has issued an aggregate of 1,185,714 Warrants, entitling the
holders to purchase one share of Common Stock for each Warrant at $3.00 per
share at any time until June 30, 2000 unless extended by the Company. The
Warrants are not redeemable nor do they confer upon the holders any voting or
other rights as stockholders of the Company. The Common Stock underlying the
Warrants are being registered hereby for sale from time to time by the Selling
Security Holders.

Stock Transfer and Warrant Agent

The Company utilizes Corporate Stock Transfer, Inc., Denver, Colorado as
the transfer agent and warrant agent for its Securities.

Dividend Policy

The Company has never paid cash dividends on its Common Stock, and intends
to retain earnings, if any, for use in the operation and expansion of its
business. The amount of future dividends, if any, will be determined by the
Board of Directors based upon the Company's earnings, financial condition,
capital requirements and other conditions.

SHARES ELIGIBLE FOR FUTURE SALES

Of the 15,111,282 shares of the Company's Common Stock currently
outstanding, a total of 13,925,568 shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are "restricted
securities" under Rule 144 of the Securities Act. Ordinarily, under Rule 144, a
person holding restricted securities for a period of one year, may, every three
months, sell in ordinary brokerage transactions or in transactions directly with
a market maker an amount equal to the greater of one percent of the Company's

<PAGE>

then outstanding Common Stock or the average weekly trading volume during the
four calendar weeks prior to such sale. Rule 144 also permits sales by a person
who is not an affiliate of the Company and who has satisfied a two-year holding
period without any quantity limitation. Future sales under Rule 144 may have a
depressive effect on the market price of the Common Stock. The holders of
12,859,427 restricted shares of Common Stock may sell their shares under Rule
144 at any time and the remaining 1,066,141 shares may be sold beginning in
October 1998.

PLAN OF DISTRIBUTION

The shares of Common Stock underlying the Warrants will be offered for sale
by the Selling Security Holders in open market transactions at prevailing market
prices from time to time on the Bulletin Board. An investor will find it more
difficult to dispose of, or to obtain accurate quotations as to the price of,
the Company's Common Stock than if the Common Stock was listed for trading on
NASDAQ or on a recognized exchange.

The Company will pay the costs of registering the Common Stock underlying
the Warrants, estimated not to exceed $90,000.

LEGAL MATTERS

Gary A. Agron, Esq., Englewood, Colorado, has represented the Company in
connection with the Offering.

EXPERTS

The financial statements of the Company for the years ended December 31,
1996 and 1997, included herein, have been audited by Angell & Deering. The
financial statements have been so included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the SEC a Registration Statement on Form SB-2
under the 1933 Act with respect to the Units offered hereby. This Prospectus,
which is part of the Registration Statement, does not contain all the
information set forth in such Registration Statement and the exhibits and
schedules thereto, certain items of which are omitted in the Registration
Statement and the exhibits and schedules thereto, certain items of which are
omitted in accordance with the rules and regulations of the SEC. For further
information with respect to the Company, reference is hereby made to the
Registration Statement and such exhibits and schedules filed as a part thereof,
which may be inspected without charge at the public reference section of the SEC
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at the regional offices of the SEC located at 7 World Trade Center, New York,
New York 19948 and at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of all or any portion of the Registration
Statement may be obtained from the Public Reference Section of the SEC upon
payment of prescribed fees and from the SEC's Website at www.sec.gov.

<PAGE>

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected at the public reference facilities of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material
can be obtained at prescribed rates from the Commission at such address. Such
reports, proxy statements and other information can also be inspected at the
Commission's regional offices and Website at the addresses indicated above.

<PAGE>

No dealer, salesman or other person 1,185,714 Shares of Common Stock
has been authorized to give any Underlying 1,185,714 Common
information or to make any Stock Purchase Warrants
representations other than contained in
this Prospectus, and if given or made,
such information or representations must
not be relied upon as having been
authorized. This Prospectus does not
constitute an offer to sell, or the
solicitation of an offer to buy, the
securities other than the registered
securities to which it relates. This
Prospectus does not constitute an offer
to sell or a solicitation of an offer to
buy such securities in any jurisdiction
to any person to whom it is unlawful to LONGPORT, INC.
make such an offer or solicitation in
such jurisdiction. Neither the delivery
of this Prospectus nor any sale
hereunder shall, under the
circumstances, create any implication
that there has been no change in the
affairs of the Company since the date
hereof or that the information contained
herein is correct as of any time
subsequent to its date.

-------------

TABLE OF CONTENTS
Page
Prospectus Summary................... 1 ---------------
Risk Factors......................... 4
Capitalization....................... 8 PROSPECTUS
Use of Proceeds...................... 9
Price Range of Common Stock.......... 9 ---------------
Selected Financial Data.............. 10
Management's Discussion and
Analysis of Financial Condition
and Results of Operations.......... 10
Business............................. 13
Management........................... 20
Principal Stockholders............... 22
Selling Security Holders ......... 23
Certain Transactions................. 24
Description of Securities............ 24
Shares Eligible for Future Sale...... 25
Plan of Distribution................. 26
Legal Matters........................ 26
Experts.............................. 26
Available Information................ 26
Index to Financial Statements........ F-1
Financial Statements................. F-2

Until __________, 1998 (25 days __________, 1998
after the date of this Prospectus), all
dealers effecting transactions in the
registered securities, whether or not
participating in this distribution, may
be required to deliver a Prospectus.
This is in addition to the obligation of
dealers to deliver a Prospectus when
acting as underwriters and with respect
to their unsold allotments or
subscriptions.

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements Page
- -------------------- ----
Independent Auditors' Report F-2

Consolidated Balance Sheet as of December 31, 1997 F-3

Consolidated Statements of Operations for the years ended
December 31, 1997 and 1996 F-5

Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 1997 and 1996 F-6

Consolidated Statements of Cash Flows for the years ended
December 31, 1997 and 1996 F-7

Notes To Consolidated Financial Statements F-8

F-1

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Longport, Inc.

We have audited the accompanying consolidated balance sheet of Longport, Inc.
and Subsidiary as of December 31, 1997, and the related consolidated statements
of operations, changes in stockholders' equity and cash flows for the years
ended December 31, 1997 and 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Longport, Inc. and
Subsidiary as of December 31, 1997 and the consolidated results of its
operations and its cash flows for the years ended December 31, 1997 and 1996 in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $214,681 during the year ended December 31,
1997. As discussed in Note 1 to the financial statements, the Company's
significant operating losses raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also discussed in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Angell & Deering
Certified Public Accountants

Denver, Colorado
February 24, 1998

F-2

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997

ASSETS
------

Current Assets:
Cash and cash equivalents $ 36,397
Accounts receivable:
Trade, net of allowance for doubtful accounts of $3,600 4,276
Other 1,200
Interest 1,887
Inventories 2,200
Prepaid expenses 19,500
Current portion of note receivable 16,250
---------

Total Current Assets 81,710
---------

Property and Equipment, at cost:
Medical equipment 290,658
Computer equipment 6,615
Office furniture and equipment 7,901
---------
305,174
Less accumulated depreciation (262,367)
---------

Net Property and Equipment 42,807
---------

Other Assets:
Note receivable, net of current portion above 2,500
Intangible assets, net of accumulated amortization of $83,333 24,167
---------

Total Other Assets 26,667
---------

Total Assets $ 151,184
=========

The accompanying notes are an integral
part of these consolidated financial statements.

F-3

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(Continued)

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities:
Accounts payable $ 5,526
Accrued income taxes 3,173
Deferred revenue 3,500
Current portion of long-term debt 648
-----------

Total Current Liabilities 12,847
-----------

Long-term debt, net of current portion above --
-----------

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,
14,856,282 shares issued and outstanding 14,856
Paid in capital 2,615,354
Accumulated deficit (2,486,873)
-----------
143,337
Less treasury stock, at cost (30,000 common shares) (5,000)
-----------

Total Stockholders' Equity 138,337
-----------

Total Liabilities and Stockholders' Equity $ 151,184
===========

The accompanying notes are an integral
part of these consolidated financial statements.

F-4

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

1997 1996
---- ----
Net Revenues:
Medical supply sales $ 18,786 $ 28,190
Medical equipment rentals 17,000 45,481
Wound clinic management fees 136,000 98,500
------------ ------------

Total Revenues 171,786 172,171
------------ ------------

Operating Expenses:
Cost of medical supply sales 13,133 5,979
Cost of medical equipment rentals 5,448 51,288
General and administrative 322,776 337,018
Research and development expense 24,000 669
------------ ------------

Total Operating Expenses 365,357 394,954
------------ ------------

Operating Income (Loss) (193,571) (222,783)
------------ ------------

Other Income (Expense):
Interest income 325 3,900
Other income 4,488 --
Loss on disposal of assets (21,407) (127,741)
Interest expense (5,412) (58,118)
------------ ------------

Total Other Income (Expense) (22,006) (181,959)
------------ ------------

Income (Loss) Before Provision for
Income Taxes and Extraordinary Gain (215,577) (404,742)

Provision for income taxes 3,759 1,548
------------ ------------

Income (Loss) Before Extraordinary Gain (219,336) (406,290)

Extraordinary Gain - Extinguishment of Debt 4,655 48,861
------------ ------------

Net Loss $ (214,681) $ (357,429)
============ ============
Net Loss Per Share of Common Stock:
Basic:
Loss before extraordinary gain $ (.02) $ (.03)
Extraordinary gain -- --
------------ ------------

Net Loss $ (.02) $ (.03)
============ ============
Diluted:
Loss before extraordinary gain $ (.02) $ (.03)
Extraordinary gain -- --
------------ ------------

Net Loss $ (.02) $ (.03)
============ ============
Weighted Average Number of
Common Shares Outstanding:
Basic 13,874,970 11,155,874
Diluted 13,874,970 11,155,874

The accompanying notes are an integral
part of these consolidated financial statements.

F-5

LONGPORT, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

Common Stock Paid in Accumulated Treasury Stock
Shares Amount Capital Deficit Shares Amount
------ ------ ------- ------- ------ ------

<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 8,116,995 $ 8,117 $ 1,760,240 $(1,914,763) -- $ --

Issuance of common stock for
cash at $.10 to $.12 per
share 2,303,333 2,303 260,697 -- -- --

Conversion of accounts payable
to common stock at $.10 to
$.51 per share 2,267,544 2,268 276,308 -- -- --

Conversion of notes payable
and accrued interest to
common stock at $.12 to
$.15 per share 167,263 167 23,673 -- -- --

Net Loss -- -- -- (357,429) -- --
----------- ----------- ----------- ----------- ----------- -----------

Balance at December 31, 1996 12,855,135 12,855 2,320,918 (2,272,192) -- --

Issuance of common stock for
cash at $.12 to $.25 per
share 1,811,147 1,811 270,326 -- -- --

Conversion of accrued expenses
to common stock at $.12 per
share 100,000 100 11,900 -- -- --

Conversion of note payable
to common stock at $.12 per
share 40,000 40 4,760 -- -- --

Issuance of common stock
upon exercise of stock option
at $.15 per share 50,000 50 7,450 -- -- --

Common stock returned to the
Company in exchange for
equipment at $.17 per
share -- -- -- -- (30,000) (5,000)

Net Loss -- -- -- (214,681) -- --
----------- ----------- ----------- ----------- ----------- -----------

Balance at December 31, 1997 14,856,282 $ 14,856 $ 2,615,354 $(2,486,873) (30,000) $ (5,000)
=========== =========== =========== =========== =========== ===========

The accompanying notes are an integral
part of these consolidated financial statements.

F-6

</TABLE>

LONGPORT, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

1997 1996
---- ----
Cash Flows From Operating Activities:
<S> <C> <C>
Net loss $(214,681) $(357,429)
Adjustments to reconcile net loss to net cash
(used) by operating activities:
Depreciation and amortization 41,972 107,421
Repayment of notes receivable in consideration
for services provided 11,000 --
Provision for bad debts 18,171 (3,600)
Loss on disposal of assets 21,407 127,741
Gain on extinguishment of debt (4,655) (48,861)
Changes in assets and liabilities:
Decrease in accounts receivable 10,744 40,990
(Increase) in other receivables (1,525) (1,276)
(Increase) decrease in prepaid expenses (19,500) 4,813
Decrease in inventories 1,200 3,396
Decrease in deposits -- 579
Decrease in accounts payable and accrued expenses (44,566) (73,387)
--------- ---------

Net Cash (Used) By Operating Activities (180,433) (199,613)
--------- ---------

Cash Flows From Investing Activities:
Capital expenditures (20,132) (20,000)
Payments on notes receivable 13,750 2,500
--------- ---------

Net Cash (Used) By Investing Activities (6,382) (17,500)
--------- ---------

Cash Flows From Financing Activities:
Principal payments on notes payable (59,350) (43,388)
Issuance of common stock 279,637 263,000
--------- ---------

Net Cash Provided By Financing Activities 220,287 219,612
--------- ---------

Net Increase in Cash and Cash Equivalents 33,472 2,499

Cash and Cash Equivalents at Beginning of Year 2,925 426
--------- ---------

Cash and Cash Equivalents at End of Year $ 36,397 $ 2,925
========= =========

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $ 4,500 $ 5,770
Income taxes 586 2,920

Supplemental Disclosure of Noncash Investing and Financing Activities:
Conversion of notes payable and accrued
interest into common stock $ 4,800 $ 23,840
Common stock issued for payment of accrued expenses 12,000 --
Conversion of accounts payable into common stock -- 278,576
Sale of equipment for treasury stock 5,000 --

The accompanying notes are an integral
part of these consolidated financial statements.

F-7

</TABLE>

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies
------------------------------------------
Description of Business
-----------------------
Longport, Inc. (the "Company") was incorporated January 22, 1993. The
Company was formed to market and distribute wound care products. In
1995, the Company began managing wound healing centers under
management services contracts.

Basis of Presentation
---------------------
The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the
amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The
Company's continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its obligations on a
timely basis, to obtain additional financing as may be required, and
to increase sales to a level where the Company becomes profitable.
Additionally, the Company has experienced extreme cash liquidity
shortfalls from operations.

The Company's continued existence is dependent upon its ability to
achieve its operating plan. Management's plan consists of the
following:

1. In 1995 and 1996, the Company restructured its operations to
begin opening and managing wound healing centers under
management services contracts. The Company intends to become
a services based Company and continue to reduce its general
and administrative expenses.
2. Sale of certain assets of the Company.
3. Obtaining additional equity capital through the sale of
common stock.
4. Potential exercise of outstanding common stock purchase
warrants and options.

If management cannot achieve its operating plan because of sales
shortfalls or other unfavorable events, the Company may find it
necessary to dispose of assets, or undertake other actions as may be
appropriate.

Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary. All significant intercompany
accounts and transactions have been eliminated.

Cash and Cash Equivalents
-------------------------
For purposes of the statements of cash flows, the Company considers
all highly liquid investments with a maturity of three months or less
at the date of purchase to be cash equivalents.

Inventories
-----------
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out pricing method. Inventories
consists entirely of finished goods.

Property and Equipment
----------------------
Depreciation of the primary asset classifications is calculated based
on the following estimated useful lives using the straight-line
method.

F-8

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (Continued)
------------------------------------------------------
Property and Equipment (Continued)
----------------------------------

Classification Useful Life in Years
-------------- --------------------
Medical equipment 3-5
Computer equipment 5
Office furniture and equipment 5-10

Depreciation of property and equipment charged to operations is
$31,972 and $88,921 for the years ended December 31, 1997 and 1996,
respectively.

Intangible Assets
-----------------
Intangible assets are being amortized using the straight-line method
based on the following estimated useful lives.

Description Useful Life in Years
----------- --------------------
Patents 4
Goodwill 10
Scanner rights 5

Revenue Recognition
-------------------
The Company recognizes revenue from product sales upon shipment to the
customer. Revenue from medical services are recognized as the Company
performs the services.

Stock-Based Compensation
------------------------
During the year ended December 31, 1996, the Company adopted Statement
of Financial Accounting Standard (SFAS) No. 123, "Accounting for
Stock-Based Compensation". The Company will continue to measure
compensation expense for its stock-based employee compensation plans
using the intrinsic value method prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees".

Long-Lived Assets
-----------------
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", the Company reviews for the
impairment of long-lived assets, certain identifiable intangibles, and
associated goodwill, whenever events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable.
An impairment loss would be recognized when the estimated future cash
flows is less than the carrying amount of the asset. No impairment
losses have been identified by the Company.

Income Taxes
------------
Deferred income taxes are provided for temporary differences between
the financial reporting and tax basis of assets and liabilities using
enacted tax laws and rates for the years when the differences are
expected to reverse.

Net (Loss) Per Share of Common Stock
------------------------------------
As of December 31, 1997, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share", which

F-9

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (Continued)
------------------------------------------------------
Net (Loss) Per Share of Common Stock (Continued)
------------------------------------------------
specifies the method of computation, presentation and disclosure for
earnings per share. SFAS No. 128 requires the presentation of two
earnings per share amounts, basic and diluted.

Basic earnings per share is calculated using the average number of
common shares outstanding. Diluted earnings per share is computed on
the basis of the average number of common shares outstanding plus the
dilutive effect of outstanding stock options using the "treasury
stock" method.

The basic and diluted earnings per share are the same since the
Company had a net loss for 1997 and 1996 and the inclusion of stock
options and warrants would be antidilutive. Options and warrants to
purchase 1,379,714 and 1,579,714 shares of common stock at December
31, 1997 and 1996, respectively were not included in the computation
of diluted earnings per share because the Company had a net loss and
their effect would be antidilutive.

Estimates
---------
The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles requires the
Company's management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. Long-Term Debt
--------------
Obligation Under Capital Lease
------------------------------
15% installment note with monthly principal and interest
payments of $186, due in 1998, collateralized by equipment. $648
----

Total Long-Term Debt 648
Less current portion of long-term debt 648
----

Long-Term Debt $ --
====

Installments due on debt principal, including the capital lease, at
December 31, 1997 are as follows:

Year Ending December 31, 1998 $648
====

3. Income Taxes
------------
The Company has made no provision for income taxes because of
financial statement and tax losses. As of December 31, 1997 the
Company had net operating loss carryforwards of approximately
$2,300,000. The net operating loss carryforwards expire in the years
2008 through 2012.

At December 31, 1997 and 1996, the Company had a deferred tax asset of
approximately $715,000 and $660,000, respectively, resulting from net
operating loss carryforwards, which has been offset in its entirety by
a valuation allowance. The net change in the valuation allowance for
deferred tax assets was an increase of $55,000 related to benefits
from net operating loss carryforwards.

4. Warrants and Options
--------------------
Options
-------
The Company has granted stock options to employees, consultants and
other individuals. The outstanding agreements expire in July 1998. The
following table contains information on all of the Company's stock
options for the years ended December 31, 1997 and 1996.

F-10

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Warrants and Options (Continued)
--------------------------------
Options (Continued)
-------------------
Number of Option Price
Shares Per Share
------ ---------
Options outstanding at
December 31, 1995 594,000 $.10 to $1.00
Granted 150,000 $.15
Exercised -- --
Canceled (350,000) $.50 to $1.00
--------- -------------

Options outstanding at
December 31, 1996 394,000 $.10 to $.50
Granted -- --
Exercised (50,000) $.15
Canceled (150,000) $.15 to $.50
--------- ------------

Options outstanding at
December 31, 1997 194,000 $.10
========= ============

Warrants
--------
In November 1993, the Company sold 1,185,714 "Units" consisting of one
share of the Company's common stock and one common stock purchase
warrant for $.35 per unit. The Warrants entitle the holder to purchase
one share of the Company's common stock for $3.00 at anytime until
June 30, 1998. All 1,185,714 warrants are outstanding as of December
31, 1997.

5. Stock-Based Compensation Plans
------------------------------
The Company adopted Financial Accounting Standard No. 123, "Accounting
for Stock- Based Compensation" (SFAS 123) during the year ended
December 31, 1996. In accordance with the provisions of SFAS 123, the
Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees, " and related interpretations in accounting for its plans
and does not recognize compensation expense for its stock-based
compensation plans other than for options granted to non-employees.

The Company did not grant any employee stock options in 1997 or 1996.

The following table summarized information about stock based
compensation plans outstanding at December 31, 1997:

Options Outstanding and Exercisable by Price Range as of December 31,
1997:

Options Outstanding Options Exercisable
------------------------- ----------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life-Years Price Exercisable Price
------ ----------- ---------- ----- ----------- -----

$ .10 194,000 .55 $.10 194,000 $.10

F-11

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Preferred Stock
---------------
The authorized preferred stock of the Company consists of 1,000,000
shares, $.001 par value. The preferred stock may be issued in series
from time to time with such designation, rights, preferences and
limitations as the Board of Directors of the Company may determine by
resolution. The rights, preferences and limitations of separate series
of preferred stock may differ with respect to such matters as may be
determined by the Board of Directors, including without limitation,
the rate of dividends, method and nature of payment of dividends,
terms of redemption, amounts payable on liquidation, sinking fund
provisions (if any), conversion rights (if any), and voting rights.
Unless the nature of a particular transaction and applicable statutes
require approval, the Board of Directors has the authority to issue
these shares without shareholder approval.

7. Commitments and Contingencies
-----------------------------
Leases
------
The Company leases telephone equipment under a long-term leasing
arrangement. The Company's office facilities were leased under a
short-term lease which expired in March 1997. The Company currently
leases its office facilities on a month-to-month basis. The following
is a schedule of future minimum lease payments at December 31, 1997
under the Company's capital lease (together with the present value of
minimum lease payments) which has an initial noncancellable lease term
in excess of one year:

Year Ending Capital
December 31, Leases
------------ ------

1998 $1,116
------

Total Future Minimum Lease Payments 1,116

Less Amount Representing Interest (468)
------

Present Value of Future Capital Lease Obligations $ 648
======

Rental expense charged to operations was $7,188 and $3,125 for the
years ended December 31, 1997 and 1996, respectively.

Leased equipment under capital leases as of December 31, 1997 is as
follows:

Equipment $ 6,549
Less accumulated amortization (2,489)
-------

Net Equipment Under Capital Leases $ 4,060
=======

Medicare Hearings
-----------------
In September 1997, the Company was notified of a Medicare Hearing
Officer's decision that the Company is liable for repayment of
Medicare Benefit Overpayments of $269,120. The Overpayments are from
calendar years 1994 and 1995. The Company has appealed the Hearing
Officer's decision. The Appeal will be heard by an Administrative Law
Judge. The Company has not been notified of a hearing date. The
Company is unable to predict the outcome of the Appeal. However,
Management believes that there were no Medicare Benefit Overpayments
in 1994 and 1995 and will vigorously defend its position.

F-12

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Commitments and Contingencies (Continued)
-----------------------------------------
Medicare Hearings (Continued)
-----------------------------
Payment of any judgement or settlement in connection with the Medicare
Benefit Overpayments Appeal together with the costs of defending the
Appeal, could adversely affect the Company's results or operations and
financial condition.

8. Related Party Transactions
--------------------------
The Company has entered into transactions with related entities, as
follows:

The Company borrowed $16,464 from Wound Healing Systems, Inc. ("WHS"),
a corporation controlled by the Company's President in August 1994
under a one year promissory note at 12% interest which had a balance
due of $3,000 as of December 31, 1996. The note was paid in full in
1997.

In 1996, the Company's President paid off the remaining $5,000 balance
of a Company note payable. Accordingly, the Company owed its President
$5,000 which was subsequently converted into 41,667 shares of the
Company's common stock ($.12 per share).

In 1996, two stockholders of the Company purchased certain accounts
payable and notes payable from creditors of the Company totalling
$228,594. The Company issued 2,223,140 shares of its common stock to
the stockholders as payment of these liabilities.

In June 1997, the Company sold six Hyperbaric Oxygen Chambers to WHS.
As payment WHS returned 30,000 shares of the Company's common stock to
the Company. The net book value ($5,000), of the chambers sold was
recorded as the value of the stock received (treasury stock).

In 1997, the Company elected to forgo repayment of two notes
receivable of $5,500 each from a former officer and a current officer.
The $5,500 notes receivable ($11,000 in total) have been expensed as
compensation.

The Company owed Healing Systems, Inc. ("Healing") $7,155. Healing
agreed to accept $2,500 as payment in full resulting in a gain on
forgiveness of debt of $4,655. Healing's President is a major
stockholder of the Company.

In January 1997, the Company's Vice President converted $12,000 of
accrued salary into 100,000 shares of the Company's common stock.

9. Loss on Disposal of Assets
--------------------------
Included in the loss on disposal of assets for the year ended December
31, 1996 is a $116,174 loss from the return of the Company's office
building to the mortgageholder in August 1996.

10. Extraordinary Gain
------------------
Included in the extraordinary gain are settlements of certain accounts
payable and notes payable for less than the amounts owed resulting in
a gain of $4,655 and $48,861 for the years ended December 31, 1997 and
1996, respectively.

F-13

<PAGE>

LONGPORT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Concentration of Credit Risk and Major Customers
------------------------------------------------
The Company provides credit, in the normal course of business, to
hospitals, distributors, and others in the health care industry. The
Company's customers are located primarily in Pennsylvania and New
Jersey. The Company performs periodic credit evaluations of its
customers' financial condition and generally require no collateral.
The Company maintains reserves for potential credit losses.

Revenues from major customers, as a percentage of total revenue, for
the year ended December 31, 1997 and 1996 were as follows:

1997 1996
---- ----
Customer A 6.3% 12.7%
Customer B 24.4% 25.5%
Customer C 34.9% 41.5%
Customer D 18.6% --

12. Fair Value of Financial Instruments
-----------------------------------
Disclosures about Fair Value of Financial Instruments for the
Company's financial instruments are presented in the table below.
These calculations are subjective in nature and involve uncertainties
and significant matters of judgment and do not include income tax
considerations. Therefore, the results cannot be determined with
precision and cannot be substantiated by comparison to independent
market values and may not be realized in actual sale or settlement of
the instruments. There may be inherent weaknesses in any calculation
technique, and changes in the underlying assumptions used could
significantly affect the results. The following table presents a
summary of the Company's financial instruments as of December 31,
1997:
1997
----------------------------
Carrying Estimated
Amount Fair Value
------ ----------
Financial Assets:
Cash and cash equivalents $36,397 $36,397
Note receivable 18,750 18,750

Financial Liabilities:
Long-term debt 648 648

The carrying amounts for cash and cash equivalents, receivables,
accounts payable and accrued expenses approximate fair value because
of the short maturities of these instruments. The fair value of
long-term debt, including the current portion, approximates fair value
because the interest rate implicit in the obligation under the capital
lease.

13. Subsequent Event (Unaudited)
---------------------------
In May 1998, the Company extended the expiration date of the warrants
to purchase 1,185,714 shares of the Company's common stock from June
30, 1998 to June 30, 2000 (Note 4).

F-14

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. Indemnification of Directors and Officers.
-----------------------------------------

The Registrant's Certificate of Incorporation provides as follows: [INSERT]

ITEM 25. Other Expenses of Issuance and Distribution (1).
-----------------------------------------------

Securities Registration Fee. . . . . . . .$ 1,370
NASD Filing Fee. . . . . . . . . . . . . -0-
Blue Sky Filing and Legal Fees . . . . . . 10,000
Printing Expenses. . . . . . . . . . . . . 5,000
Legal Fees and Expenses. . . . . . . . . . 45,000
Accounting Fees. . . . . . . . . . . . . . 25,000
Miscellaneous. . . . . . . . . . . . . . . 3,630
-----

TOTAL. . . . . . . . . . . . . . . . . . .$ 90,000
=========

(1) All expenses except the Securities Registration Fee and NASD Filing Fee are
estimated.

ITEM 26. Recent Sales of Unregistered Securities.
---------------------------------------

(a) The Registrant has sold the following unregistered securities during the
prior three year period:

Date Name Number of Shares Consideration
---- ---- ---------------- -------------

05/17/95 United Medical and Dental 100,000 Marketing rights
Schools valued at $50,000

06/05/95 Frederick L. Richardson 20,000 $10,000

06/09/95 W. Keith Schmidt 1,000 $500

07/13/95 Guardian 6,341 $3,170

08/28/95 Wound Healing Systems, Inc. 50,000 Equipment valued
at $25,000

09/01/95 Mary Dyson 50,000 Services rendered
valued at $25,000

09/01/95 Steve Young 50,000 Services rendered
valued at $25,000

09/13/95 Mary Dyson 100,000 $25,000

10/06/95 Steven Young 8,000 Services rendered
valued at $4,000

10/06/95 Dr. Frederick Richardson 50,000 Services rendered
valued at $15,000

10/06/95 Mary Dyson 12,000 Services rendered
valued at $6,000

II-1

<PAGE>

11/07/95 Hugh Lewis 10,000 Services rendered
valued at $5,000

11/07/95 John Lynch 10,000 Services rendered
valued at $5,000

11/22/95 Wound Healing Systems, Inc. 100,000 $15,000

11/24/95 Kathleen C. Clark 186,721 $28,008

11/27/95 Eric Logan 74,688 $11,203

11/27/95 Jim Weyrauch 37,344 $5,602

11/27/95 Colpat, Inc. 100,000 Services rendered
valued at $15,000

11/29/95 Janet Delamater 37,344 $5,602

11/29/95 Gary Davidson 112,033 $16,805

11/30/95 John Carbutt 336,098 $50,415

12/13/95 John Cavanaugh 45,109 $6,766

12/14/95 Leonard Parker 74,688 $11,203

12/15/95 Michie Proctor 224,065 $33,610

12/31/95 William B. Mullin 50,000 Services rendered
valued at $3,750

12/31/95 Peter Cavanaugh 100,000 Accrued salary
valued at $7,500

01/26/96 First Baptist Church 200,000 $20,000

02/26/96 Medistat Scientific Corp. 125,000 $63,322

03/05/96 Gary Davidson 70,000 $7,000

03/05/96 First Baptist Church 200,000 $20,000

II-2

<PAGE>

03/05/96 First Baptist Church 355,381 $35,538

03/05/96 Michie Proctor 1,742,163 $174,216

04/05/96 First Baptist Church 200,000 $20,000

06/05/96 Edward Morett 100,000 $12,000

06/07/96 Ron Garling 100,000 $12,000

06/10/96 David Hutchinson 125,000 $15,000

06/11/96 Rosenblum Profit & Pension 125,000 $15,000

07/19/96 James London 100,000 $12,000

08/09/96 John T. Mills 100,000 $12,000

08/09/96 John T. Mills IRA 100,000 $12,000

08/15/96 James R. McGonigle 200,000 $24,000

08/26/96 John Delamater 20,000 $3,000

09/03/96 Patricia McGonigle 100,000 $12,000

09/23/96 First Baptist Church 125,596 $18,839

09/23/96 Charlie Hammel 100,000 $12,000

09/26/96 Eric Lippert 100,000 $12,000

10/15/96 John T. Mills 100,000 $12,000

11/07/96 Thomas Mills 100,000 $12,000

11/07/96 Rosenblum Pension & P/S 125,000 $15,000

12/27/96 Michael Ulrich 100,000 $12,000

03/11/96 John Delamater 25,000 $2,500

01/17/97 Walter R. Dyson 101,141 $12,137

01/31/97 Peter Heineman 100,000 $12,000

01/31/97 Bonita Weyrauch 100,000 Services rendered
valued at $12,000

04/14/97 John T. Mills 200,000 $24,000

II-3

<PAGE>

05/02/97 John T. Mills 500,000 $60,000

05/15/97 Gregory M. Lehman 40,000 $4,800

05/19/97 Joseph T. Clark 100,000 $12,000

06/06/97 Walter R. Dyson 150,000 $18,000

09/16/97 Gary R. Davidson 40,000 $6,000

10/10/97 Charles F. Hammel 70,000 $10,500

10/15/97 Ann R. McGonigle 100,000 $15,000

10/31/97 Martin Rosenblum 50,000 $7,500

11/06/97 John T. Mills 70,000 $10,500

11/06/97 John T. Mills IRA 30,000 $4,500

11/14/97 Eric Saltsberg 50,000 $12,500

11/19/97 William J. Ford 50,000 $12,500

11/19/97 Thomas Mills 200,000 $50,000

11/19/97 Frank R. Maresca, Jr. 50,000 $12,500

01/01/98 Thomas and Lynn Scott 50,000 $25,000

02/11/98 Thomas and Rosemary Mills 80,000 $40,000

03/17/98 Hugh Lewis 125,000 $47,333

03/20/98 John T. Mills 80,000 $40,000

03/27/98 George Kearns
and Edward Coslett 100,000 $50,000

04/08/98 Joseph R. Westwood 100,000 $50,000

04/14/98 Ella Marie S. Fortenbach 30,000 $24,000

With respect to the sales made, the Registrant relied on Section 4(2) of
the Securities Act of 1933, as amended (the "1933 Act"), and/or Regulation D,
Rule 506. No advertising or general solicitation was employed in offering the
securities. The securities were offered to a limited number of individuals and
the transfer thereof was appropriately restricted by the Registrant. All
stockholders were personal friends or business associates of the Registrant's
officers and directors, were capable of analyzing the merits and risks of their
investment and acknowledged in writing that they were acquiring the securities
for investment and not with a view toward distribution or resale and that they
understood the speculative nature of their investment.

ITEM 27. Exhibits.
--------

Exhibit No. Title
- ----------- -----
3.1 Certificate of Incorporation of Registrant(1)
3.2 Bylaws of Registrant(1)
4.1 Form of Common Stock Purchase Warrant(1)
5.2 Opinion Re: Legality and Consent - Gary A. Agron
10.1 Agreement of Sale between Registrant and Leiti regarding
Registrant's purchase of 791 South Chester Road, Swarthmore,
Pennsylvania(1)
10.2 Sales Agreement between Registrant and Wound Healing Systems,
Inc. regarding 20 Topical Hyperbaric Chambers(1)
10.3 Sales Agreement between Registrant and Wound Healing Systems,
Inc. regarding 23 Topical Hyperbaric Chambers(1)
10.4 Memorandum of Understanding between Registrant and Baker Medical,
Inc.(1)
10.5 Memorandum of Understanding between Registrant and Southeastern
Medical Supply, Inc.(1)

II-4
<PAGE>

10.6 Joint Venture Agreement between Registrant and Wellison
International, Inc.(1)
10.7 Patent Assignment between Registrant and Stivala(1)
10.8 Transfer Agreement between Registrant and Mazzolla(1)
10.9 Transmittal Letter regarding Wound Healing Research(1)
10.10 Licensing and Purchase Option Agreement between Registrant and
Healing System, Inc.(1)
10.11 Memorandum of Understanding between Registrant and Robert
Crousore Hess and Fernando Laguda(1)
10.12 Sale Agreement between Registrant and Robert D. Crousore
(Hess)(1)
10.13 Sale Agreement between Registrant and Fernando G. Laguda(1)
10.14 Sale and Release Agreement between Registrant and Fernando G.
Laguda(1)
10.15 Lease Agreement between Registrant and Montclair Community
Hospital(1)
10.16 Rental Agreement between Registrant and Integrated Therapy
Products, Inc.(1)
10.17 Revenue Sharing Agreement between Registrant and American Home
Medical Services, Inc.(1)
10.18 Employment Agreement between Registrant and Angelo R. Bergano,
M.D.(1)
10.19 Form of Subscription Agreement - November, 1993 Private
Placement(1)
10.20 Form of Loan Agreement - April, 1994 Loans
10.21 Form of Promissory Note - April, 1994 Loans
10.25 Research and Licensing Agreement (UMDS)(3)
10.30 Services Agreement (West Jersey Health System)(3)
10.32 Agreement with R. D. Bowers Associates
10.33 Agreement with Professional Home Care Services
10.34 Agreement with Austin Medical, Inc.
10.35 Letter of Understanding with GWR Medical, LLP
10.36 Technology Transfer Agreement (VMOS)
10.37 Technology Transfer Agreement (SWS)
21.1 Subsidiaries of Registrant(1)
23.1 Consent of Angell & Deering
23.2 Consent of Gary A. Agron (See 5.2, above)
99.1 Deed Regarding 791 South Chester Road, Swarthmore,
Pennsylvania(1)
99.2 Deed of Correction(1)

(1) Previously filed.
(2) Incorporated by Reference to the Registration's Quarterly Report on
Form 10-QSB for the quarter ended March 31, 1995
(3) Incorporated by reference to the Registrant's Annual Report on Form
10-KSB for the year ended December 31, 1997.

ITEM 28. Undertakings.
------------

The Registrant hereby undertakes that:

II-5

<PAGE>

(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

(b) Subject to the terms and conditions of Section 13(a) of the
Securities Exchange Act of 1934, it will file with the Securities and Exchange
Commission such supplementary and periodic information, documents and reports as
may be prescribed by any rule or regulation of the Commission heretofore or
hereafter duly adopted pursuant to authority conferred in that section.

(c) For the purposes of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide public offering thereof.

(d) Any post-effective amendment filed will comply with the applicable
forms, rules and regulations of the Commission in effect at the time such
post-effective amendment is filed.

(e) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(f) It will file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.

II-6

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Swarthmore, Pennsylvania, on May 8, 1998.

LONGPORT, INC.

By /s/ James R. McGonigle
-----------------------------
James R. McGonigle
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
the dates indicated.

Signature Title
- --------- -----

/s/ James R. McGonigle Chairman of the May 8, 1998
- ------------------------- Board of Directors,
James R. McGonigle Chief Executive Officer,
President and Chief Financial
Officer (Principal Accounting
Officer)

/s/ Bonita Weyrauch Director of Clinical May 8, 1998
- ------------------------- Services and Director
Bonita Weyrauch

/s/ Peter Cavanaugh Director May 8, 1998
- -------------------------
Peter Cavanaugh

II-7

<PAGE>

EXHIBIT INDEX

Exhibit No. Title
- ----------- -----

5.2 Opinion re: Legality and Consent - Gary A. Agron

10.32 Agreement with R. D. Bowers Associates

10.33 Agreement with Professional Home Care Services

10.34 Agreement with Austin Medical, Inc.

10.35 Letter of Understanding with GWR Medical, LLP

10.36 Technology Transfer Agreement (VMDS)

10.37 Technology Transfer Agreement (SWS)

23.1 Consent of Angell & Deering

II-8

Longport, Inc.
May 8, 1998
Page 1

Exhibit 5.2

Law Office of Gary A. Agron
5445 DTC Parkway
Suite 520
Englewood, Colorado 80111
Telephone (303) 770-7254
Facsimile (303) 770-7257

May 8, 1998

Longport, Inc.
791 South Chester Road
Swarthmore, Pennsylvania 19081

Re: Registration Statement of Form SB-2

Ladies and Gentlemen:

We are counsel for Longport, Inc., a Delaware corporation (the "Company")
in connection with its registration of 1,185,714 shares of Common Stock ("Common
Stock") underlying 1,185,714 Common Stock Purchase Warrants ("Warrants") under
the Securities Act of 1933, as amended, through a post effective amendment to a
Registration Statement on Form SB-2, File No. 33-75236 ("Registration
Statement") as to which this opinion is a part. The original Registration
Statement was declared effective by the Securities and Exchange Commission (the
"Commission").

In connection with rendering our opinion as set forth below we have
reviewed and examined originals or copies identified to our satisfaction of the
following:

(1) Articles of Incorporation, and amendments thereto, of the Company as
filed with the Secretary of State of the State of California.

(2) Corporation minutes containing the written deliberations and
resolutions of the Board of Directors and shareholders of the Company.

(3) The Registration Statement and the Preliminary Prospectus contained
within the Registration Statement.

(4) The other exhibits to the Registration Statement.

We have examined such other documents and records, instruments and
certificates of public officials, officers and representatives of the Company,
and have made such investigations as we have deemed necessary or appropriate
under the circumstances.

<PAGE>

Longport, Inc.
May 8, 1998
Page 2

Based upon the foregoing and in reliance thereon, it is our opinion that
the Warrants and Common Stock issuable upon exercise of the Warrants offered
under the Registration Statement will, upon the purchase, receipt of full
payment, issuance and delivery in accordance with the terms of the offering
described in the Registration Statement, be fully and validly authorized,
legally issued, fully paid and non-assessable.

We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use under the caption "Legal Matters" in the
Prospectus constituting a part thereof.

Very truly yours,

Gary A. Agron

Exhibit 10.32

Exclusive Licensing Agreement
-----------------------------

Whereas Longport, Inc. is the owner of the patent rights to a new medical
technology which Longport calls the "soft tissue diagnostic scanner," developed
in part by Dr. Mary Dyson; and

Whereas Longport, Inc. expects the full marketing of this product to be
initiated in the United States sometime during 1998, and requires a national
marketing presence to market the technology to hospitals, clinics, physician
groups and other potential professional medical users; and

Whereas National Health and Safety Corporation currently has under contract
more than 280,000 physicians and surgeons, 3,300 hospitals and in-patient
treatment facilities, and thousands of other potential users of the technology,
and also has a national network of more than 400 brokers who can, when trained,
represent the technology to potential professional markets nationwide; and

Whereas R. D. Bowers Associates can provide national sales capabilities to
Longport Inc. through both its relationship with National Health and Safety
Corporation and numerous other contacts outside of National Health & Safety.

Therefore, R. D. Bowers Associates, National Health and Safety Corporation, and
Longport, Inc. agree as follows:

1. Longport agrees to license to R. D. Bowers Associates the exclusive marketing
rights for all of North America to market to and through its network of contacts
(at its option, including but not limited to National Health and Safety
Corporation) the entire line of medical products manufactured and/or marketed by
Longport, Inc. Longport also agrees to license to R.D. Bowers and Associates the
non-exclusive rights to market the Longport product to Pacific rim countries,
although the marketing efforts may need to be coordinated with other marketing
agents. These exclusive marketing rights shall not in any way preclude Longport
from directly marketing its technology to any customer base in or outside the
United States.

2. R. D. Bowers Associates agrees to pay Longport according to the following
payment schedule in return for the ongoing exclusive rights as described above:

a. $10,000 on January 15, 1998.

b. An additional $20,000 by February 1, 1998.

C. Quarterly payments of $30,000 on the following dates:

<PAGE>

April 1, 1998
July 1, 1998
October 1, 1998

d. A total of $60,000 each fiscal quarter commencing in 1999.

3. The term of this exclusive licensing agreement shall be for two years, with
and automatic annual renewal of one year at $30,000/month unless either party
shall notify the other party in writing at least 60 days prior to the completion
of this agreement on December 31, 1999.

4. R. D. Bowers Associates agrees to use its best efforts to market Longport
technology and products both in the North American and the international
marketplace and to coordinate its marketing efforts closely with the business
plans of Longport, Inc.

5. National Health and Safety Corporation agrees to cooperate with R. D. Bowers,
Associates and to provide its best efforts to market Longport technology and
products to North American and International markets, and to coordinate its
marketing activities with R.D. Bowers Associates and Longport, Inc.

6. RDBA and Longport agree to work in good faith with each other to develop and
execute a business and marketing plan during the next 3 months, achieving the
following overall goals within the next 12 months:

a. To identify and secure ongoing financial investment necessary to
manufacture Longport equipment and other products including the scanner.
The financing will also enable Longport/RDBA to secure a reasonable
full-time staff, headed by Dr. Mary Dyson and to complete the approval
process from the FDA.

b. To prepare a marketing plan which will act as a blueprint for the
national marketing and promotion of the Longport technology.

c. To commence presentation and demonstrations of the Longport technology
to prospective hospitals, clinics and other sites, generating revenues for
both companies.

d. To design and print marketing materials effective in the sales and
marketing of the Longport technology.

e. To recruit and train a national network of brokers to market the
Longport technology within carefully defined and quality controlled
guidelines.

f. To apply for and make significant measurable progress toward obtaining
the full approval of the FDA for the commercial marketing of the scanner
technology within the United States.

<PAGE>

7. RDBA shall function as a joint venture between RDBA and Longport in the
marketing of the Longport technology. All marketing costs will be paid by RDBA
all costs of equipment manufacturing, training and customer service will be paid
by Longport, and all net operating profits will be equally shared between RDBA
and Longport.

Agreed to on the 9th day of December, 1997.

For R.D. Bowers Associates

/s/ R. R. Bowers Pres
- ------------------------------ ----

For Longport, Inc.

/s/ James R. McGonigle Pres
- ------------------------------ ----

For National Health and Safety Corporation

/s/ Roger H. Fotts V.P.
- ----------------------------- ----

<PAGE>

OPTION AGREEMENT

Longport, Inc. agrees to provide to R.D. Bowers Associates an option to expand
the exclusive marketing license dated December 9, 1997 to include all products
and applications of the ultra-sound "scanner" technology, including but not
limited to early cancer detection applications as announced by Longport, Inc. on
November 18, 1997 press release.

Under this otion, R.d. Bowers Associates would increase its quarterly payments
from $30,000 to $150,000 per quarter. Longport, Inc. agrees to pay for all costs
of manufacturing, FDA approvals and all other necessary government compliance
and approvals, technical upgrades to the technology and Longport, Inc. overhead
costs.

This option will terminate at the close of business on December 18, 1997 unless
activated by that time by R.D. Bowers Associates.

/s/ R.D. Bowers 12/9/97
- ----------------------------- -------
r. D. Bowers Associates date

/s/ James R. McGonigle 12/9/97
- ----------------------------- -------
Longport, Inc. date

Exhibit 10.33

Longport Inc.
[Longport logo omitted] 791 South Chester Road
Swarthmore, PA 19081

REPRESENTATIVE AGREEMENT BETWEEN
LONGPORT, INC & PROFESSIONAL HOME CARE SERVICES

THE DURATION of this agreement shall be for two (2) years at 90 day intervals,
commencing on the first day of December, 1997. The agreement can be cancelled by
either party; cancellation for just cause will be given by a sixty (60) day
notice. The agreement can be renewed after two years without any changes in
amounts. All changes will be agreed upon by both parties.

THE COST will be at $2,000.00 per month to be paid by PHCS to LONGPORT, INC. on
the first day of each month for the duration of this contract.

In exchange for the monthly fee PHCS will be given exclusivity in the state of
Mississippi.

LONGPORT, INC. will provide to PHCS:

one (1) topical hyperbaric oxygen camber for inservice purposes
one (1) research scanner within sixty (60) days
one (1) proprietary wound care manual with protocol
on site training for the soft tissue ultrasound scanner
conduct local seminar once a year on wound care
topical hyperbaric oxygen chamber rentals at $300.00 each/month
read all patient scans and provide written interpretation of scans
latex sleeves at $12.00/each
disposable hyperbaric oxygen chambers at $45.00/each

The purpose of this agreement is to allow PHCS to develop Longport, Inc's
proprietary wound healing program in Mississippi.

The profit split for wound care centers will be as follows:

60% Longport, Inc. and 40% PHCS until the set up cost is recuperated, then,

50% Longport, Inc and 50% PHCS

Upon termination of this agreement PHCS will return all equipment within ten
(10) days of the date of termination. Termination of the representative
agreement will not exclude PHCS from any profits from business procured by PHCS
for Longport, Inc. during the exclusive representative agreement.

(800) 28-WOUND - (610) 328-5006 - FAX: (610) 328-7017

<PAGE>

- -page 2-
PHCS/Longport, Inc.

PROFESSIONAL HOME CARE SERVICES LONGPORT, INC.

BY: BY:
---------------------------- ------------------------

DATE: DATE:

Exhibit 10.34

LONGPORT, INC.
791 S. CHESTER ROAD
SWARTHMORE, PA 19081

EXCLUSIVE LICENSING AGREEMENT

PARTIES: LONGPORT, INC. (LPTI) & AUSTIN MEDICAL INC. (AMI)

DURATION: THREE YEARS: 180 DAY INTERVALS, THE AGREEMENT CAN BE
CANCELLED BY EITHER PARTY.
*RENEWABLE AFTER THREE YEARS FOR SAME AMOUNT.
*CHANGES AGREEABLE WITH BOTH PARTIES
*CANCELLATION FOR JUST CAUSE GIVEN BY SIXTY (60) DAYS
WRITTEN NOTICE. NOTIFICATION BY CERTIFIED OR REGISTERED MAIL.

COST: $2,000.00 PER MONTH TO BE PAID BY AMI TO LPTI FOR EXCLUSIVITY IN
EASTERN PA (EXCLUDING DELAWARE AND PHILADELPHIA COUNTIES)
AND CENTRAL NEW YORK.

CONDITIONS: LPTI TO PROVIDE ONE (1) TOPICAL OXYGEN CHAMBER FOR DEMONSTRATION
IMMEDIATELY AND ONE (1) RESEARCH SCANNER WITHIN SIXTY (60) DAYS.
*PROVIDE WOUND CARE HEALING MANUALS, PROTOCOLS, ETC.,
CONSIDERED PROPRIETARY.
*PROVIDE ON-SITE TRAINING FOR RESEARCH SCANNER.
*PROVIDE LOCAL SEMINAR ON WOUND CARE AT LEAST YEARLY.
*PROVIDE TOPICAL OXYGEN CHAMBERS AT $300.00 EACH/MONTH.
*PROVIDE OVERREAD INTERPRETATION ON PATIENT SCANS AS NEEDED.

PURPOSE: AMI TO DEVELOP LPTI'S PROPRIETARY WOUND HEALING PROGRAM.
*PROFIT SPLIT FOR WOUND CARE CENTERS:
60% LPTI, AND 40% AMI UNTIL SET-UP COST IS RECOUPED, THEN;
50% LPTI, AND 50% AMI.

TERMINATION: WHEN THE AGREEMENT IS TERMINATED, AMI AGREES TO RETURN ALL
EQUIPMENT WITHIN TEN (10) DAYS OF THE TERMINATION.
*TERMINATION OF LICENSING AGREEMENT WILL NOT EXCLUDE AMI FROM
ANY PROFITS FROM BUSINESS PROCURRED BY AMI FOR LPTI, DURING THE
EXCLUSIVE LICENSING AGREEMENT.

/s/ P.J. Mutz 3-31-98 James R. McGonigle 3-31-98
- ------------------------- ------- ------------------- -------
(accepted for Austin (date) (accepted for (date)
Medical, Inc.) Longport, Inc.)

Exhibit 10.35

February 13, 1998

Mr. Jim McGonigle
Longport Inc.
791 South Chester Road
Swarthmore, PA 19081

Dear Jim,

As agreed, I have drafted the below Letter of Understanding for your
review.

LETTER OF UNDERSTANDING
BETWEEN
GWR MEDICAL, L.L.P. AND LONGPORT INC.

On February 6, 1998 Paul A. Geary, Jr., Joseph Westwood and Pat McHugh,
representing GWR Medical, L.L.P. (GWR) and Jim McGonigle representing Longport
Inc. (LPI), with Patricia L. McGonigle present, hold discussions as follows.
Whereas, LPI has an unique, high frequency ultrasound scanner (HFUS) which they
want help to market the Medical Marketplace and, whereas GWR Is currently
manufacturing and marketing THBO Products Into the Wound Care Medical
Marketplace and has a strong national distribution organization capable of
marketing the LPI high frequency ultrasound scanners; the parties concluded that
is in their mutual Interest to form an Alliance subject to the below terms and
conditions:

1. TERM. Ninety (90) days, beginning February 1, 1998. Both parties agree to
work together, In good faith, to advance the business Interests of the Alliance.
It is expected that the 90 day period is a minimum and that the parties will
continue to work together, provided it is In their mutual beat interests.

2. GWR will have the exclusive rights to market LPI's high frequency ultrasound
scanner into the THBO marketplace.

3. In consideration of above, LPI will be paid $2,000 per month not for the
month of February, 1998 due by February 28, 1998; $3,000 for the month of March,
1998 due March 15, 1998; and $4,000 for the month of April, 1998 due April 15,
1998.

4. LPI agrees to make available to GWR on an "As Needed" basis, subject to
coordination by both entities, a high frequency ultrasound scanner during the
month of February at no additional cost Beginning March 1, 1998 LPI agrees to
make available to GWR for their use in training and marketing the device, a high
frequency ultrasound scanner at no cost.

<PAGE>

5. You advised that LPI is developing a five (6) minute Medical Documentary an
the HFUS to be aired on PBS television as a videotape production. You offered to
provide GWR an opportunity to customize this videotape for GWR's use. GWR will
develop an "Introduction" and a "Closing" message, which are subject to LPI's
approval, which will not be unreasonably withhold. LPI will furnish GWR with, a)
a copy of the 5 minute Medical Documentary of the HFUS (minus an Introduction or
a Closing), and b) the right to add their Approved "Introduction and "Closing"
messages to their customized tape. GWR will only be entitled to exercise this
right if both parties agree to continue the term of this Alliance Agreement
beyond April 30, 1998.

6. If you agree with this letter of Understanding Agreement please sign in the
proper signature block below the two (2) originals, and return both to me. After
receipt, I will sign and return one original to you.

- ---------------------------------- --------------------------------
Paul A. Geary, Jr. Jim McGonigle
Managing Partner President

GWR Medical, L.L.P. Longport Inc.

Exhibit 10.36

TECHNOLOGY TRANSFER AGREEMENT

THIS TECHONOLOGY TRANSFER AGREEMENT ("Agreement") is made this _____day of
September, 1997, by and among United Medical and Dental Schools of St. Guy's and
St. Thomas's Hospitals ("UMDS"), Dr. Mary Dyson, and Longport, Inc.
("Longport").

WHEREAS, UMDS entered into a written agreement with Longport, Inc.
("Longport") dated May 19, 1995, together with and addendum thereto, pursuant to
which Longport agreed to support research by UMDS to develop a high frequency
ultrasound skin scanner and UMDS agreed to grant to Longport certain rights to
sell commercially viable scanners developed by UMDS as a result of such
research;

WHEREAS, UMDS and Dr. Mary Dyson (collectively "UMDS Parties"), in
conjunction with Hugh Lewis d/b/a Square Wave, Ltd., developed a high frequency
ultrasound skin scanner ("UMDS Scanner");

WHEREAS, Quality Medical Imaging, Ltd. (a corporation registered in the
United Kindgom, hereafter "QMI"), UMDS, and Hugh Lewis applied for a patent
pertaining to the UMDS Scanner, entitled "Apparatus for Ultrasonic Tissue
Investigation," bearing International Application No. PCT/GB96/00566 ("the
Patent Application");

WHEREAS, QMI has sold and assigned its rights and interests in the Patent
Application to UMDS;

<PAGE>

WHEREAS, Supra Medical Corp. has filed a civil action in the United States
District Court for the Eastern District of Pennsylvania, captioned Supra Medical
Corp. v. James R. McGonigle, et al., Civil Action No. 96-3737, against, among
others, UMDS Dr. Mary Dyson and Longport (the "Supra Action");

WHEREAS, the parties to the Supra Action desire to settle and dismiss the
action;

WHEREAS, as a part of that settlement and resolution, UMDS is willing to
transfer to Longport, and Longport is willing to receive from UMDS, such rights,
with certain execptions set forth herein, as UMDS may own in and to the
technology embodied in the UMDS Scanner;

NOW, THEREFORE, in consideration of the promises and agreements set forth
herein, UMDS, Dr. Mary Dyson and Longport agree as follows:

1. UMDS hereby quitclaims, assigns and transfers to Longport its entire,
right, title and interest in and to the Intellectual Porperty Rights in the UMDS
Scanner, except for the Fractal Analysis Software and Third-Party Technology
used in the UMDS Scanner.

2. As used herein:

"Intellectual Property Rights" shall mean patents, patent applications,
copyrights, trade secrets, and know how, but shall expressly exclude any rights
under trademark.
-----------Longport
-----------UMDS
-----------Dr. Dyson

-2-

<PAGE>

"Fractal Analysis Software" shall mean a series of software modules used
within the UMDS Scanner that was developed by a unit of UMDS other than the
Tissue Repair Research Unit and that analyze, determine and graphically display
the fractal nature of a reflected image.

"Thirt-Party Technology" shall mean computer hardware and software used in
the UMDS Scanner that is developed and commercially marketed by third parties,
including without limitation "off-the-shelf" hardware and operating system
software.

3. UMDS hereby assigns and transfers to Longport its right, title, and
interest in and to the Patent Application and in a certain patent issued by The
Republic of Sourth Africa regarding the same invention having reference number
9504751.0, lodged on 11/3/96.

4. Longport shall be solely responsible for renewing and prosecuting the
Patent Application, including paying any and all costs associated with renewing
and prosecuring the Patent Application, and for renewing or maintaining any
other patent or patent applciation applicable ot he UMDS Scanner;

5. UMDS hereby grants to Longport an exclusive paid-up right and license
throughout the world to use, reproduce and distribute solely in object code form
the Fractal Analysis Software solely for use in high frequency ultrasound skin
scanner products, without any further payments beyond the payments described
herein. Longport shall not use the Fractal Analysis Software for any purpose
other than in high frequency ultrasound skin scanners without the prior written
consent of UMDS.

-----------Longport
-----------UMDS
-----------Dr. Dyson

-3-

<PAGE>

6. Longport acknowledges and agrees that, subject ot the exclusive license
granted to Longport in Paragraph 5, ownership of the Fractal Analysis Software
shall remain with UMDS. In addition, UMDS shall retain the right to use the
Fractal Analysis Software in high frequency ultrasound skin scanners as well as
other products or applications as UMDS may determine.

7. UMDS, Dr. Stephen Young and Mr. Paul Wilson shall have the right to
retain such UMDS Scanners as they currently have in their possession, and to
continue to use them for research, to improve or modify them, and to build other
UMDS Scanners for their noncommercial use.

8. UMDS shall not directly or indirectly market or sell any UMDS Scanners
to others in competition with Longport.

9. UMDS hereby represents to Longport, and Longport acknowledges, that Dr.
Steven Young and Mr. Paul Wilson are not employees of UMDS, and that UMDS cannot
control their activities. UMDS shall, however,notify them of this Agreement and
encourage them not to market or sell UMDS Scanners in competition with Longport.
Longport agrees that UMDS shall have no liability hereunder for the activities
of Dr. Young or Mr. Wilson that are independent of UMDS.

-----------Longport
-----------UMDS
-----------Dr. Dyson

-4-

<PAGE>

10. Any and all agrements between UMDS and Longport, Inc., including
without limitation the agreement and addendum of May 19, 1995 set forth herein
above, will be terminated and concluded in their entirety upon each party's
executing this Technology Transfer Agreement, the fulfillment of all of the
conditions set forth herein, and the Court's approval of the Release and
Settlement Agreement, of which this Technology Transfer Agreement is a part;
thereafter neither party will have any further rights or obligations pursuant to
any previously existing contract(s) between Longport and the UMDS Parties, or
either of them, whatsoever.

11. In consideration of all of the agreements set forth herein, Longport
shall, for five (5) years, commencing with Longport's fiscal year following the
year in which the United States Food and Drug Administration classifies and
approves the UMDS Scanner (or such other high frequency ultrasound skin, scanner
that incorporates any of the Intellectual Property Rights in the UMDS Scanner
and that is marketed by Longport in lieu of the UMDS Scanner) in accordance with
the 1976 Medical Device Amendments to the Food, Drug and Cosmetic Act, pay to
UMDS one percent (1%) of Longport's annual gross revenues stated in its audited
financial statements. Longport shall make each such payment to UMDS upon the
sooner of thirty (30) days after preparation of its audited financial statement
or ninety (90) days after the conclusion of its fiscal year.

12. Longport shall bear sole responsibility to make whatever applications
may be required to obtain classification and approval of the UMDS Scanner in
accordance with the 1976 Medical Device Amendments to the Food, Drug and
Cosmetic Act and to pay any and all costs associated therewith.

-----------Longport
-----------UMDS
-----------Dr. Dyson

-5-

<PAGE>

13. If Longport fails to make any payment to UMDS in accordance with
Paragraph 11 above, and Longport fails to cure such failure within thirty (30)
days of written notice thereof from UMDS, then the UMDS Parties shall,
notwithstanding the transfer of Intellectual Property Rights to the UTMDS
Scanner herein, have the right to market and sell UMDS Scanners directly and
indirectly in competition with Longport.

14. If Longport acquires or obtains, by any means, any other company, or
the assets or property of any other entity, Longport will remain obligated to
pay UMDS full consideration calculated in accordance with this Agreement at
Paragraphs 11 above and 15 below.

15. In the event that Longport acquires assets and Paragraph 14 above
applies, or is acquired by or merged into another company or entity (whether by
transfer of shares or the sale of assets) (the "Acquiring Party"), or transfers
to a third party the Intellectual Property Rights in the UMDS Scanner, then
Longport, as the case may be, shall: a) promptly notify UMDS of such acquisition
and/or technology transfer; b) require by written agreement that the Acquiring
party or such third party honor and fully comply with the terms of this
Agreement; and c) create a subsidiary, or require by written agreement that the
Acquiring Party or such third party create a subsidiary consisting solely of
Longport or its scanner technology for the remainder of the five-year term
during which Longport is obligated to make payments to UMDS in accordance with

-----------Longport
-----------UMDS
-----------Dr. Dyson

-6-

<PAGE>

Paragraph 11 above, without transferring or diluting the income and/or assets of
Longport for the remainder of such term. The payment obligations of Longport
with respect to such subsidiary shall be only as to revenues received from the
use of such acquired assets or by such subsidiary in the business in which high
frequency ultrasound is used.

16. Longport shall use its best efforts to maximize the use of the UMDS
Scanner in medical care. Upon request, it will advise Dr. Mary Dyson of those
efforts. Dr. Dyson shall maintain in confidence, and shall not disclose to any
third party, any information included within such reports from Longport that
constitutes proprietary and confidential information of Longport, and that is
not in the public domain or previously known by Dr. Dyson.

17. Longport shall not use the names of, or otherwise refer to, UMDS (or
its constituent hospitals), its current or past officers, employees or agents or
any of them, in any advertising or promotional materials or in any manner which
may be construed as an endorsement of Longport or the UMDS Scanner or the manner
in which it is or may be used in medical diagnosis or care, without the prior
express written consent of UMDS. Should Longport wish to similarly use the name
of Dr. Mary Dyson in any such manner, separately from the name of UMDS, it may
only do so subject to Dr. Dyson's written approval.

18. In further consideration fo the agreeement set forth herein, UMDS
shall, within thirty (30) days of the date of this Agreement, return any and all
stock certificates representing shares in Longport, Inc., issued in the name of
UMDS, which UMDs now holds.

-----------Longport
-----------UMDS
-----------Dr. Dyson

-7-

<PAGE>

19. ALL OF THE RIGHTS AND LICENSES ASSIGNED OR LICENSED BY UMDS TO LONGPORT
IN THIS AGREEMENT ARE TRANSFERRED OR LICENSED SOLELY ON AN "AS IS" BASIS. UMDS
WARRANTS TO LONGPORT THAT, EXCEPT FOR SUCH RIGHTS IN THE UMDS SCANNER AS ARE
OWNED BY HUGH LEWIS, UMDS OWNS THE RIGHTS LICENSED TO LONGPORT IN THIS
AGREEMENT. UMDS MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO
THE INTELLECTUAL PROPERTY RIGHTS IN THE UMDS SCANNER OR THE FRACTAL ANALYSIS
SOFTWARE, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR PARTICULAR PURPOSE. WITHOUT LIMITING THE FOREGOING, UMDS MAKES
NO WARRANTY THAT THAT THE UMDS SCANNER, THE INTELLECTUAL PROPERTY RIGHTS
THEREIN, OR THE FRACTAL ANALYSIS SOFTWARE DO NOT INFRINGE OR VIOLATE THE
PROPRIETARY RIGHTS OF A THIRD PARTY.

20. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT FOR
MATTERS TO BE INDEMNIFIED HEREUNDER, IN NO EVENT SHALL ANY PARTY BE LIABLE FOR
ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT OR PUNITIVE DAMAGES, EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT
SHALL THE LIABILITY OF UMDS OR DR. MARY DYSON EXCEED THE SUMS RECEIVED FROM
LONGPORT PURSUANT TO PARAGRAPH 11 HEREUNDER..

21. Longport agrees, at its expense, to carry and maintain in force
Commercial General Liability Insurance (including products liability and
contractual liability coverages) with minimum limits of $1 million combined
single limit and combined bodily injury and property damage per occurrence,
which policy of insurance shall include UMDS as an additional insured. Longport
shall also defend and hold UMDS, its officers, directors, employees and agents
harmless from any losses, damages, injuries, suits, claims, actions or
proceedings, (hereafter "Claim") arising from a claim or allegation that the
UMDS Scanner (or the rights granted herein to Longport) (a) violates any
applicable safety or regulatory standard, or (b has caused injury or damage
(including death) to the person or property of another arising from defects in

-----------Longport
-----------UMDS
-----------Dr. Dyson

-8-
<PAGE>

materials, design or construction thereof, or (c) infringes any patents,
utility models, copyrights, trade secrets, or any other intellectual property
rights of a third party, provided that (a) Longport's idemnification obligation
hereunder shall apply only to the amounts by which the costs of defense, losses,
damages, and injuries incured by UMDS exceed, in any calendar year, the
royalties actually received by UMDS from Longort under this Agreement during
such calendar year, and (b) Longport is promptly notified of any Claim, given
all reasonable assistance required, and permitted to direct the defense. Absent
a conflict which renders joint representation unfeasible, Longport shall retain
legal counsel to represent UMDs and Dr. Mary Dyson. Longport shall have no
liability for settlement or costs incurred without its ocnsent.

22. UMDS hereby acknowledges receipt from Longport prior to September 9,
1997, the sum of 3993 Pounds for payment of the renewal fee for the Patent
Application.

23. This Agreement is expressly conditional upon (a) the execution and
delivery by all parties to the Supra action of the Release and Settlement
Agreement to which this Agreement is an addendum, and (b) the dismissal with
prejudice of the Supra Action.

24. This Technology Transfer Agreement contains the entire agreement
between UMDs and Longport, and the terms hererof are contractual and not a mere
recital. Any amendments, modifications or revisions to the terms of this
Technology Transfer Agreement must be set forth in a further writing, signed by
or on behalf of both UMDs and Longport.

-----------Longport
-----------UMDS
-----------Dr. Dyson

-9-

<PAGE>

25. The undersigned state that they have carefully read this Technology
Transfer Agreement in consultation with their respective attorneys. The
undersigned further represent, covenant, and warrant that in executing this
agreement on behalf of any entity, they are authorized to act on behalf of that
entity, and have signed the agreement with the full knowledge and approval of
the party for whom they have signed the agreement.

26. This Agreement may be signed in counterparts, each of which shall be
deemed to be an original, but all of which, taken together, shall constitute but
one and the same instrument.

27. This Agreement is being made and entered into solely for the benefit of
the parties hereto, and the parties do not intend hereby to create any rights in
favor of any other person as a third party beneficiary of this Agreement or
otherwies.

28. The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiations. If the parties
are unable to resolve the dispute by negotiations, and unless the sum in dispute
is less than twenty-five thousand dollars ($25,000)or unless the parties
otherwise agree to exempt such dispute from the requirement for mandatory
arbitration, such dispute shall be settled by binding arbitration, conducted on

-----------Longport
-----------UMDS
-----------Dr. Dyson

<PAGE>

a confidential basis, under the then current Commercial Arbitration Rules of the
American Arbitration Association ("th Association") strictly in accordance with
the terms of this Agreement and the substantive law of the Commonwealth of
Pennsylvania. The arbitration shall be held at a mutually agreeable location in
Philadelphia, Pennsylvania, and conducted in accordance with the Federal Rules
of Evidence by one arbitrator, which arbitrator shall be chosen from a list of
attorneys who are members of the Association's commercial arbitration panel. The
arbitrator chosen to arbitrate the dispute must be knowledgeable about
technology licensing. If the parties cannot promptly, within thirty (30) days,
agree on the selection of the arbitrator, the arbitrator(s) will be chosen
pursuant to the Commercial Arbitration Rules of the Association, no costs of the
arbitration, including the fees to be paid to the arbitrator(s), shall be shall
equally by the parties to the dispute. The Judgment upon the award rendered by
the arbitrator may be entered and enforced in any court of vompetent
jurisdiction. Neither party shall be precluded hereby from seeking provisional
remedies in the courts of any jurisdiction including, but not limited to,
temporary restraining orders and preliminary injunctions, to protect its rights
and interest, but such shall not be sought as a means to avoid or stay
arbitration. The arbitrator is not empowered to award any consequential,
incidental, punitive, or exemplary damages. The parties acknowledge that they
have voluntarily agreed to arbitrate their disputes in accordance with the
foregoing and each party hereby irrevocably waives any damages in excess of
compensatory damages.

29. This Agreement has been drafted jointly and is not to be construed
against one party more strictly than against another.

-----------Longport
-----------UMDS
-----------Dr. Dyson
[The remainder of this page in purposely blank.]

-11-

<PAGE>

IN WITNESS THEREOF, an dintending to be fully bound hereby, we have set
here unto our hand in seal.

WITNESSED BY: LONGPORT, INC.

/s/ James R. McGonigle [ SEAL ]
- ------------------------------- ------------------------------------
James R. McGonigle, President

Dated:
------------------------

[S E A L]
UNITED MEDICAL & DENTAL
SCHOOLS OF BUY'S AND ST. THOMAS'S
HOSPITALS

/s/ Harry T. Musselwhite
- ------------------------------ -----------------------------------
Harry T. Musselwhite, Secretary

Dated:
------------------------
/s/ C. Chantler
-----------------------------------
Professor C. Chantler (Principal)

/s/ R. Ashley
-----------------------------------
Professor F. Ashley (Dental Dean)

/s/ J. M. Blott /s/ Dr. Mary Dyson [SEAL]
- ----------------------------- -----------------------------------
Dr. Mary Dyson, in her own capacity

Dated:
-----------------------

-12-

Exhibit 10.37

** CONFIDENTIAL **
TECHNOLOGY TRANSFER AGREEMENT

THIS TECHNOLOGY TRANSFER AGREEMENT ("Agreement") is made this 18th day of
December, 1997, by and among Square Wave Systems, Ltd. ("SWS"), Hugh Lewis d/b/a
Square Wave Technology ("Lewis/SWT") and Longport, Inc. ("Longport").

WHEREAS, in conjunction with UMDS, Lewis/SWT and SWS developed a high
frequency ultrasound skin scanner ("UMDS Scanner"). (For the purposes of the
document, nothing shall be implied in this name, other than the identity of
those developing it; rather, it is further defined below);

WHEREAS, Quality Medical Imaging, Ltd. (a corporation registered in the
United Kingdom, hereafter "QMI"), UMDS, Lewis/SWT and SWS applied for a patent
pertaining to the UMDS Scanner, entitled "Apparatus for Ultrasonic Tissue
Investigation," bearing International Application No. PCT/GB96/00566 ("the
Patent Application");

WHEREAS, OMI has sold and assigned its rights and interests in the Patent
Application to UMDS and UMDS has assigned said rights to Longport in a separate
agreement;

WHEREAS, Supra Medical Corp. has filed a civil action in the United States
District Court for the Eastern District of Pennsylvania, captioned Supra Medical

<PAGE>

Corp. v James R. McGonigle, et al, Civil Action No. 96-3737, against, among
others, UMDS Dr. Mary Dyson, Lewis/SWT and SWS and Longport (the "Supra
Action");

WHEREAS, the parties to the Supra Action desire to settle and dismiss the
action and Longort and its counsel have successfully obtained a release for Hugh
Lewis from that action as part of the consideration for this Agreement;

WHEREAS, as a part of that settlement and resolution, SWS and Lewis/SWT are
willing to trnasfer both the technology defined in paragraph 5 below and any and
all interests in presently exisitng UMDS scanner patents as Lewis/SWT and SWS
may own in and to the technology embodied in the UMDS Scanner and as set forth
herein to Longport, and Longport is willing to receive from Lewis/SWT and SWS,
such rights, with certain exceptions set forth herein;

NOW, THEREFORE, in consideration of the promises and agreements set forth
herein, Lewis/SWT and SWS and Longport agree as follows:

1. Lewis/SWT and SWS hereby quitclaims, assigns and transfers to Longport
all rights they have to any patents covering the UMDS Scanner.

2. "Third-Party Technology" shall mean computer hardware and software used
in the UMDs Scanner and it development, that is developed and commercially
marketed by third parties, including with limitation "off-the-shelf" hardware
and operating system software.

-2-

<PAGE>

3. Lewis/SWT and SWS hereby also assign and transfers to Longport all
rights, title, and interest in and to the Patent Application and in a certain
patent issued by The Republic of South Africa regarding the same invention
having reference number 9504751.0, loged on 11/3/96.

4. Longport shall be solely responsible for renewing and prosecuting the
Patent Application, including paying any and all costs associated with renewing
and prosecuting the Patent Application, and for renewing or maintaining any
other patent or patent application applicable to the UMDS Scanner;

DEFINITION OF LEWIS/SWT AND SWS SCANNER TECHNOLOGY
--------------------------------------------------

The following defines the Lewis/SWT/SWS Scanner Technology ("SWS Scanner
Technology"):

5. All of the designs and know how to build and use the UMDS scanner along
with the scanner control software, electronics, designs, circuit diagrams, pcb
layouts, programmable ic codes (firmware), mechanical designs, bills of
materials and manufacturing know how, including the original source code and
development environment configuration settings into form of "coputer files" but
not any third party tools to view or modify designs (By way of non-exclusive
example, windows 95 and Orcad Design tools). All of the above referenced
material is marked as "copyrighted" by Lewis/SWT and SWS and are deemed
proprietary trade secrets. All said material shall be marked and maintained as
"confidential" at all times. This material is presently in the possession of
Hugh Lewis and copies of same will be made available to Longport at any time
upon request. Longport will at all times maintain the secrecy and
confidentiality of said materials as well.)

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6. Lewis/SWT and SWS hereby also grants to Longport an exclusive paid-up
right and license throughout the world to use, produce and distribute the SWS
scanner technology defined in paragraph 5 herein, solely for use in high
frequency medical ultrasound skin scanner products, without any further payments
beyond the payments described herein. Longport shall not use the SWS scanner
technology for any purpose other than in high frequency medical ultrasound skin
scanners without the prior written consent of LEWIS/SWT and SWS.

7. Longport acknowledges and agrees that, subject to the exclusive license
granted to Longport in Paragraph 6, ownership of the SWS scanner technology
discussed in paragraph 5 shall remain with Lewis/SWT and SWS. In addition,
Lewis/SWT and SWS shall retain the right to use said SWS scanner technology in
any products or service other than high frequency medical ultrasound skin
scanners. This covenant not to compete includes any indirect use by Lewis/SWT or
SWS through a third party or entity.

8. Lewis/SWT and SWS shall not directly or indirectly market or sell any
UMDS Scanners to others in competition with Longport.

9. Any and all agreements or letters of intent between Longport, Inc., and
Lewis/SWT and SWS are void and this agreement now supercedes and controls.

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10. In consideration of all of the agreements set forth herein, Longport
shall, for five (5) years, commencing with Longport's fiscal year following the
year in which the United States Food and Drug Administration classifies and
approves the Lewis/SWT and SWS Scanner technology (or such other high frequency
ultrasound skin scanner that incorporates any of the Intellectual Property
Rights in the UMDS Scanner and that is marketed by Longport in lieu of the UMDS
Scanner) in accordance with the 1976 Medical Device Amendments to the Food, Drug
and Cosmetic Act, pay to Lewis/SWT and SWS a grand total of two percent (2%) (to
be shared between them as they deem fit) of Longport's annual gross revenues
stated in its audited financial statements. Longport shall make each such
payment to Lewis/SWT and SWS upon the sooner of thirty (30) days after
preparation of its audited financial statement or ninety (90) days after the
conclusion of its fiscal year,

11. Longport shall bear sole responsibility to make whatever applications
may be required to obtain classification and approval of the UMDS Scanner in
accordance with the 1976 Medical Device Amendments to the Food, Drug and
Cosmetic Act and to pay any and all costs associated therewith. Moreover,
Longport shall use its "best efforts" to obtain said approval at the earliest
possible date. Upon written request, Longport shall advise Lewis/SWT and SWS of
its efforts regarding FDA approval. Moreover, Longport will permit Hugh Lewis to
inspect and copy documents relative to said FDA applications so long as Hugh
Lewis acknowledges that said information is the confidential property of
Longport.

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12. If Longport acquires or obtains, by any means, any other company, or
the assets or property of any other entity, Longport will remain obligated to
pay Lewis/SWT and SWS full consideration calculated in accordance with this
Agreement at Paragraphs 10 above and 13 below.

13, In the event that Longport acquires assets and Paragraph 12 above
applies, or is acquired by or merged into another company entity (whether by
transfer of shares or the sale of assets) (the "Acquiring Party"), or transfers
to a third party the Intellectual Property Rights in the UMDS Scanner or SWS
scanner technology, then Longport, as the case may be, shall: a) promptly notify
Lewis/SWT and SWS of such acquisition and/or technology transfer; b) require by
written agreement that the Acquiring party or such third party honor and fully
comply with the terms of this Agreement; and c) create a subsidiary, or require
by written agreement that the Acquiring Party or such third party create a
subsidiary consisting solely of that business Longport is involved in relating
to the promotion of its scanner technology for the remainder of the five-year
term during which Longport is obligated to make payments to Lewis/SWT and SWS in
accordance with Paragraph 10 above, without transferring or diluting the income
and/or assets of Longport for the remainder of such term. The payment
obligations of Longport with respect to such subsidiary shall be only as to
revenues received from the use of such acquired assets or by such subsidiary in
the business in which high frequency ultrasound is used.

14. If Longport fails to make any payment to Lewis/SWT and SWS in
accordance with Paragraph 10 above, and Longport fails to cure such failure
within thirty (30) days of written notice thereof from Lewis/SWT and SWS, then

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the Lewis/SWT and SWS Parties shall, notwithstanding the transfer and license of
Intellectual Property Rights to the UMDS Scanner herein, have the right to
market, manufacture and sell UMDS Scanners directly and indirectly in
competition with Longport.

15. Longport shall use its "best efforts" to maximize the use of the UMDS
Scanner in medical care. Upon request, it will advise Hugh Lewis of the status
of those efforts. Lewis/SWT and SWS shall maintain in confidence, and shall not
disclose to any third party, any information included within such reports from
Longport that constitutes proprietary and confidential information of Longport,
and that is not in the public domain or previously known by Lewis/SWT and SWS.

16. ALL OF THE RIGHTS AND LICENSES ASSIGNED OR LICENSED BY LEWIS/SWT SWS TO
LONGPORT IN THIS AGREEMENT ARE TRANSFERRED OR LICENSED SOLELY ON AN "AS IS"
BASIS. LEWIS/SWT AND SWS WARRANTS TO LONGPORT THAT, EXCEPT FOR SUCH RIGHTS IN
THE UMDS SCANNER AND SWS SCANNER TECHNOLOGY AS ARE OWNED BY UMDS, LEWIS/SWT AND
SWS OWNS THE RIGHTS LICENSED TO LONGPORT IN THIS AGREEMENT. LEWIS/SWT AND SWS
MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE INTELLECTUAL
PROPERTY RIGHTS IN THE UMDS SCANNER AND SWS SCANNER TECHNOLOGY, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR

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<PAGE>

PARTICULAR PURPOSE. WITHOUT LIMITING THE FOREGOING, LEWIS/SWT AND SWS MAKES NO
WARRANTY THAT THE UMDS SAANNER OR SWS SCANNER TECHNOLOGY, THE INTELLECTUAL
PROPERTY RIGHTS THEREIN, DO NOT INFRINGE OR VIOLATE THE PROPRIETARY RIGHTS OF A
THIRD PARTY.

17. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT FOR
MATTERS TO BE INDEMNIFIED HEREUNDER, IN NO EVENT SHALL ANY PARTY BE LIABLE FOR
ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT OR PUNITIVE DAMAGES, EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT
SHALL THE LIABILITY OF LEWIS/SWT AND SWS EXCEED THE SUMS RECEIVED FROM LONGPORT
PURSUANT TO PARAGRAPH 10 HEREUNDER.

18. Longport agrees, at its expense, to carry and maintain in force
Commercial General Liability Insurance (including products liability and
contractual liability coverages) with minimum limits of $1 million combined
single limit and combined bodily injury and property damage per occurrence,
which policy of insurance shall include Lewis/SWT and SWS as an additional
insured. Longport shall also defend and hold Lewis/SWT and SWS, its officers,
directors, employees and agents harmless from any losses, damages, injuries,
suits, claims, actions or proceedings (hereafter "Claim") arising from a claim
or allegation that the UMDS Scanner, SWS Scanner Technology (or the rights
granted herein to Longport) (a) violates any applicable safety or regulatory

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<PAGE>

standard, or (b) has caused injury or damage (including death) to the person or
property of another arising from defects in materials, design or construction
thereof, or (c) infringes any patents, utility models, copyrights, trade
secrets, or any other intellectual property rights of a third party, provided
that (a) Longport's indemnification obligation hereunder shall apply only to the
amounts by which the costs of defense, losses, damages, and injuries incurred by
Lewis/SWT and SWS exceed, in any calendar year, the royalties actually received
by Lewis/SWT and SWS from Longport under this Agreement during such calendar
year, and (b) Longport is promptly notified of any Claim, given all reasonable
assistance required, and permitted to direct the defense. Absent a conflict
which renders joint representation unfeasible, Longport shall retain legal
counsel to represent UMDS SWS and Lewis/SWT. Longport shall have no liability
for settlement or costs incurred without its consent. Longport shall provide a
copy of the above-referenced insurance documentation to Lewis/SWT and SWS upon
request.

19. This Agreement is expressly conditional upon (a) the execution and
delivery by all parties to the Supra Action of the Release and Settlement
Agreement to which this Agreement is an addendum, and (b) the dismissal with
prejudice of the Supra Action.

20. This Technology Transfer Agreement contains the "entire agreement"
between Lewis/SWT, SWS and Longport, and the terms hereof are contractual and
not a mere recital. Any amendments, modifications or revisions to the terms of

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this Technology Transfer Agreement must be set forth in a further writng, signed
by or on behalf of Lewis/SWT, SWS and Longport.

21. The undersigned state that they have carefully read this Technology
Transfer Agreement and that in executing this agreement on behalf of any entity
they represent, they are authorized to act on behalf of that entity they
represent, they nd have signed the agreement with the full knowledge and
approval of the party for whom they have signed the agreement.

22. This Agreement may be signed in counterparts, each of which shall be
deemed to be an original, but all of which, taken together, shall constitute but
one and the same instrument.

23. This Agreement is being made and entered into solely for the benefit of
the parties hereto, and the parties do not intend hereby to create any rights in
favor of any other person as a third party beneficiary of this Agreement or
otherwise.

24. The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiations. If the parties
are unable to resolve the dispute by negotiations, and unless the sum in dispute
is less than twenty-five thousand dollars ($25,000) or unless the parties
otherwise agree to exempt such dispute from the requirement for mandatory
arbitration, such dispute shall be settled by binding arbitration, conducted on
a confidential basis, under the then current Commercial Arbitration Rules of the
American Arbitration Association ("the Association") strictly in accordance with

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with the terms of this Agreement and the substantive law of the Commonwealth of
Pennsylvania. The arbitration shall be held at a mutually agreeable location in
Philadelphia, Pennsylvania, and conducted in accordance with the Federal Rules
of Evidence by one arbitrator, which arbitrator shall be chosen from a list of
attorneys who are members of the Association's commercial arbitration panel. The
arbitrator chosen to arbitrate the dispute must be knowledgeable about
technology licensing. If the parties cannot promptly, within thirty (30) days,
agree on the selection of the arbitrator, the arbitrator(s) will be chosen
pursuant to the Commercial Arbitration Rules of the Association. The costs of
the arbitration, including the fees to be paid to the arbitrator(s), shall be
shared equally by the parties to the dispute. The Judgment upon the award
rendered by the arbitrator may be entered and enforced in any court of competent
jurisdiction. Neither party shall be precluded hereby from seeking provisional
remedies in the courts of any jurisdiction including, but not limited to,
temporary restraining orders and preliminary injunctions, to protect its rights
and interest, but such shall not be sought as a means to avoid or stay
arbitration. The arbitrator is not empowered to award any consequential,
incidental, punitive, or exemplary damages. The parties acknowledge that they
have voluntarily agreed to arbitrate their disputes in accordance with the
foregoing and each party hereby irrevocably waives any damages in excess of
compensatory damages.

25. This Agreement has been drafted jointly and is not to be construed
against one party more strictly than against another.

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IN WITNESS THEREOF, and intending to be fully bound hereby, we have set
here unto our hand in seal.

WITNESSED BY: LONGPORT, INC.

/s/ James R. McGonigle
- ----------------------------- ----------------------------------
Dated: December 18, 1997 James R. McGonigle, President

WITNESSED BY: SQUARE WAVE SYSTEMS

/s/ Hugh Lewis [SEAL]
- ----------------------------- ----------------------------------
Dated: 18th December 1997 Hugh Lewis on behalf of himself
and SWS and SWT

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Exhibit 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use, in Post Effective Amendment No. 1 to the
Registration Statement on Form SB-2, of our report dated February 24, 1998,
relating to the consolidated financial statements of Longport, Inc. and
Subsidiary for the years ended December 31, 1997 and 1996 and the reference to
our firm under the caption "Experts" in the Prospectus contained in said
Registration Statement.

Angell & Deering
Certified Public Accountants

Denver, Colorado
May 7, 1998