SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended March 31, 1998
[ ] Transition report pursuant to section 13 or 15(d) of the Exchange Act of
1934
For the transition period from to
---------------- --------------------
Commission file No. 33-75236
LONGPORT, INC.
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(Exact name of registrant as specified in its charter)
Delaware 23-2715528
- ------------------------------- -----------------
(State or other jurisdiction of IRS Employer ID No.
Incorporation or organization)
791 South Chester Rd. Swarthmore, Pa. 19081
- --------------------------------------------------------------------------------
(Address of principal executive offices)
610-328-5006
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(Registrants telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
As of March 31, 1998 15,391,282 shares of common stock were outstanding.
<PAGE>
LONGPORT, INC. AND SUBSIDIARY
FORM 10-QSB
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheet
as of March 31, 1998 1-2
Consolidated Condensed Statements of
Operations for the three months
ended March 31, 1998 and 1997 3
Consolidated Condensed Statements of
Cash Flows for the three months ended
March 31, 1998 and 1997 4-5
Notes to Consolidated Condensed
Financial Statements 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-8
Part II. Other Information and Signatures 9-10
<PAGE>
MARCH 31, 1998
LONGPORT, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
================================================================================
ASSETS
CURRENT ASSETS:
CASH $ 91,319
ACCOUNTS RECEIVABLE:
TRADE, NET OF ALLOWANCE FOR DOUBTFUL
ACCOUNTS OF $3,600 2,413
INTEREST AND OTHER 1,887
PREPAID EXPENSES 11,000
INVENTORIES 4,700
NOTE RECEIVABLE 15,000
---------
TOTAL CURRENT ASSETS 126,319
---------
PROPERTY AND EQUIPMENT, AT COST:
MEDICAL EQUIPMENT 353,158
COMPUTER EQUIPMENT 6,615
OFFICE FURNITURE AND EQUIPMENT 7,901
---------
367,674
LESS: ACCUMULATED DEPRECIATION (265,867)
---------
NET PROPERTY AND EQUIPMENT 101,807
---------
OTHER ASSETS:
INTANGIBLE ASSETS, NET OF ACCUMULATED
AMORTIZATION OF $85,833 21,667
---------
TOTAL OTHER ASSETS 21,667
---------
TOTAL ASSETS $ 249,793
=========
The accompanying notes are an integral part of these
consolidated condensed financial statements
1
<PAGE>
MARCH 31, 1998
LONGPORT, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
================================================================================
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 9,406
ACCRUED SALARIES AND PAYROLL TAXES 2,691
DEFERRED REVENUE 3,500
-----------
TOTAL CURRENT LIABILITIES 15,597
-----------
COMMITMENTS AND CONTINGENCIES --
STOCKHOLDER'S EQUITY:
PREFERRED STOCK: $.001 PAR VALUE
1,000,000 SHARES AUTHORIZED, NONE ISSUED
OR OUTSTANDING --
COMMON STOCK: $.001 PAR VALUE
25,000,000 SHARES AUTHORIZED, 15,391,282
SHARES ISSUED & OUTSTANDING 15,391
PAID IN CAPITAL 2,882,319
ACCUMULATED DEFICIT (2,658,514)
-----------
239,196
LESS TREASURY STORK, AT COST (30,000 COMMON SHARES) (5,000)
-----------
TOTAL STOCKHOLDER'S EQUITY 234,196
-----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 249,793
===========
The accompanying notes are an integral part of these
consolidated condensed financial statements
2
<PAGE>
FOR THE
THREE MONTHS ENDED
MARCH 31,
LONGPORT, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED 1998 1997
STATEMENTS OF OPERATIONS (UNAUDITED) (UNAUDITED)
================================================================================
NET REVENUES:
MEDICAL SUPPLY SALES $ 1,343 $ 3,220
MEDICAL EQUIPMENT RENTALS 2,400 7,995
MANAGEMENT FEES 25,500 25,500
LICENSE FEES 38,000 --
------------ ------------
TOTAL REVENUES 67,243 36,715
------------ ------------
OPERATING EXPENSES:
COST OF MEDICAL SUPPLY SALES 2,707 1,408
COST OF MEDICAL EQUIPMENT RENTALS 300 1,000
GENERAL AND ADMINISTRATIVE 235,877 87,400
------------ ------------
TOTAL OPERATING EXPENSES 238,884 89,808
------------ ------------
OPERATING INCOME (LOSS) (171,641) (53,093)
------------ ------------
OTHER INCOME (EXPENSE):
INTEREST INCOME -- 325
OTHER INCOME -- 45
INTEREST EXPENSE -- (422)
------------ ------------
TOTAL OTHER INCOME (EXPENSE) 0 (52)
------------ ------------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (171,641) (53,145)
PROVISION FOR INCOME TAXES -- 481
------------ ------------
NET LOSS $ (171,641) $ (53,626)
============ ============
NET LOSS PER SHARE OF COMMON STOCK:
BASIC $ (.01) $ --
DILUTED $ (.01) $ --
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
BASIC 14,984,671 13,071,635
DILUTED 14,984,671 13,071,635
The accompanying notes are an integral part of
these consolidated condensed financial statements
3
<PAGE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
LONGPORT, INC. AND SUBSIDIARY 1998 1997
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (UNAUDITED)
====================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
NET INCOME (LOSS) $(171,641) $ (53,626)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH (USED) BY
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 6,000 29,730
CHANGES IN ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ACCOUNTS RECEIVABLE 1,863 (7,708)
DECREASE IN OTHER RECEIVABLES 1,200 1,675
DECREASE IN PREPAID EXPENSES 8,500 --
(INCREASE) DECREASE IN INVENTORIES (2,500) 6
INCREASE (DECREASE) IN ACCOUNTS PAYABLE
AND ACCRUED EXPENSES 3,398 (1,502)
--------- ---------
NET CASH (USED) BY OPERATING ACTIVITIES (153,180) (31,425)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
PAYMENTS RECEIVED ON NOTES RECEIVABLE 3,750 5,000
--------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 3,750 5,000
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
PRINCIPAL PAYMENTS ON NOTES PAYABLE (648) --
ISSUANCE OF COMMON STOCK AND WARRANTS 205,000 24,000
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 204,352 24,000
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 54,922 (2,425)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 36,397 2,925
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 91,319 $ 500
========= =========
The accompanying notes are an integral part of these
consolidated condensed financial statements
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
LONGPORT, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 1998 1997
(UNAUDITED) (UNAUDITED)
=========================================================================================
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST -- $318
INCOME TAXES -- 237
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
COMMON STOCK ISSUED FOR MEDICAL EQUIPMENT $62,500 --
The accompanying notes are an integral part of these
consolidated condensed financial statements
5
</TABLE>
<PAGE>
LONGPORT, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying financial information of the Company is prepared in
accordance with the rules prescribed for filing condensed interim financial
statements and, accordingly, does not include all disclosures that may be
necessary for complete financial statements prepared in accordance with
generally accepted accounting principles. The disclosures presented are
sufficient, in management's opinion, to make the interim information
presented not misleading. All adjustments, consisting of normal recurring
adjustments, which are necessary so as to make the interim information not
misleading, have been made. Results of operations for the three months
ended March 31, 1998 are not necessarily indicative of results of
operations that may be expected for the year ending December 31, 1998. It
is recommended that this financial information be read with the complete
financial statements included in the Company's Form 10-KSB dated December
31, 1997 previously filed with the Securities and Exchange Commission.
2. As of December 31, 1997,the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share", which specifies
the method of computation, presentation and disclosure for earnings per
share. SFAS No.128 requires the presenatation 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 1998 and 1997 and the inclusion of stock options and
warrants would be antidilutive. Options and warrants to purchase 1,379,714
and 1,429,714 shares of common stock at March 31, 1998 and 1997,
respectively were not included in the computation of diluted earnings per
share because the Company had a net loss and their effect would be
antifilutive.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended March 31, 1998 vs. Three Months Ended March 31, 1997
- -----------------------------------------------------------------------
The Company experienced an increase in general and administrative expenses,
which led to a larger net loss for the current period. The Company's monthly
expenses are effectively unchanged from month to month, but the Company
experienced one time expenses related to the 1997 audit and development of
certain Scanner technology which increased such general and administrative
expenses. The Company's revenues were significantly higher during the current
period due to licensing fees generated through licensing arrangements primarily
for the Scanner. The Company grants an exclusive license for the Scanner for a
geographic area, and the licensees become the Company's primary marketer. The
Company then provides training, clinical assistance and management assistance as
needed. In exchange, the Company receives set license fees and a percentage of
the gross revenues generated by the licensee through sales of products and
services. The Company continues to receive fees from its wound care centers
("Centers") at West Jersey Health System's Camden hospital and West Hudson
Hospital, and equipment sales and rentals from those relationships.
Overall, the Company's revenues increased by 83.15% from the 1997 Quarter
to $67,243, compared to $36,715 for the 1997 Quarter. The increase resulted from
the Company's licensing agreements, which provided $38,000 of the revenues. The
Centers' revenues remained the same, but the Company experienced a small
decrease in revenues from equipment rentals and sales. The Company continues to
work with the Centers to increase patient populations and Management anticipates
additional Center clients before the end of 1998. The Company also generates
revenues from private patients, but this segment remains small and outside the
Company's main focus of securing additional healthcare providers as clients.
The Company's overhead expenses (i.e., salaries, rent, etc.) remained
essentially level, but the Company experienced a large increase in
administrative expenses, $235,877 for 1998, compared to $87,400 for 1997. This
was caused by expenses related to the 1997 audit, production costs of a
television segment on the Scanner technology and expenses related to the
acquisition of the worldwide rights to the Scanner technology and the
technology's development. Most of these expenses are non-recurring. The increase
in expenses impacted the Company's current net loss of $171,641, compared to
$53,626 in 1997.
7
<PAGE>
Liquidity and Capital Resources
The Company's total liabilities as of March 31, 1998 were $15,597, compared
to $137,259 as of March 31, 1997. The Company's assets increased from $183,084
as of March 31, 1997 to $249,793 as of March 31, 1998. Stockholders' equity
increased from $45,825 as of March 31, 1997 to $234,196 as of March 31, 1998.
As of March 31, 1998, the Company has no long-term debt or outstanding
secured or unsecured notes. The Company raised capital through the private sale
of $229,000 of restricted Common Stock through May 1, 1998. The Common Stock was
sold at prices ranging from $.50 per share to $.80 per share.
The Company anticipates growth from management fees, and sales and rentals
of equipment during 1998. Any new Center contracts or license agreements will
mirror the relationships already established. The Company intends to continue
its practice of acting as a management consultant to healthcare providers and
licensees, for a set monthly fee. In addition, the Company continues to explore
the possibility of debt financing and public or private placements of its Common
Stock but cannot provide any assurances that any such financing can be secured.
The Company learned that Medicare Region D is challenging payments made to
the Company's closed subsidiary, Longport Medical, Inc., during 1995 and 1994.
All amounts paid are being challenged and Management does not yet know how much,
if any, will need to be repaid to Medicare.
Other Matters
Management expects revenues for 1998 to exceed revenues for 1997 due to the
Company's recent acquisition of the worldwide patent and property rights to the
Scanner technology, which allows for revenues to develop from consulting service
and license agreements and rental and sales of equipment. Scanner revenues, if
any, will be contingent upon the Company receiving FDA permission to market the
Scanner, of which there can be no assurance. The Company continues to negotiate
with other healthcare providers to provide consulting services and to execute
new license agreements.
Cash flow problems continue to exist but have stabilized. While the Company
continues to operate without significant working capital, it carries no
significant debt, and monthly operating expenses have not increased.
The statements made herein and other statements within this Report, that
are not based on historical facts, are forward looking statements that involve
risks and uncertainties, including but not limited to, market acceptance risks,
the effect of economic conditions, the impact of competition and pricing,
product development, commercialization and technology difficulties, the results
of financing efforts and other risks detailed in the Company's Securities and
Exchange Commission filings.
8
<PAGE>
Part II
Other Information
Item 1. Legal Proceedings
-----------------
The Company initiated a lawsuit against the lawyers that represented Supra
Medical in the Court of Common Pleas, Philadelphia County. The suit alleges that
Supra Medical and its counsel brought the Federal Court action solely for the
purpose of harassing Longport and trying to force the Company into Bankruptcy.
The suit specifically alleges Wrongful and Malicious Prosecution, among other
items. The lawsuit is in the initial stages and nothing of significance has
taken place.
Item 2. Changes in Securities
---------------------
None.
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits None.
b) Reports on Form 8-K None.
9
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, hereunto duly
authorized.
Longport, Inc.
Dated: May 11, 1998 /s/ James R. McGonigle
-----------------------------------
James R. McGonigle
President/Chief Accounting Officer
/s/ Peter E. Cavanaugh
-----------------------------------
Peter E. Cavanaugh
Vice President
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 91,319
<SECURITIES> 0
<RECEIVABLES> 6,013
<ALLOWANCES> 3,600
<INVENTORY> 4,700
<CURRENT-ASSETS> 126,319
<PP&E> 367,674
<DEPRECIATION> 265,867
<TOTAL-ASSETS> 249,793
<CURRENT-LIABILITIES> 15,597
<BONDS> 0
0
0
<COMMON> 15,391
<OTHER-SE> 218,805
<TOTAL-LIABILITY-AND-EQUITY> 249,793
<SALES> 1,343
<TOTAL-REVENUES> 67,243
<CGS> 2,707
<TOTAL-COSTS> 238,884
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (171,641)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (171,641)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
