SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[ X ] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended June 30, 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.
----------------------------------------------------
(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 executiveoffices)
610-328-5006
------------
(Registrants telephone number,
including area code)
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
As of June 30, 1998, 15,421,282 shares of common stock were outstanding.
<PAGE>
LONGPORT, INC.
FORM 10-QSB
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheet
as of June 30, 1998 1-2
Consolidated Condensed Statements of
Operations for the three months
and six months ended June 30,
1998 and 1997 3-4
Consolidated Condensed Statements of Cash
Flows for the six months ended
June 30, 1998 and 1997 5-6
Notes to Condensed Consolidated
Financial Statements 7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 8-12
Part II. Other Information and Signatures 13-14
<PAGE>
LONGPORT, INC. AND SUBSIDIARY JUNE 30, 1998
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
CASH $ 3,747
ACCOUNTS RECEIVABLE:
TRADE, NET OF ALLOWANCE FOR DOUBTFUL
ACCOUNTS OF $3,600 5,896
INTEREST AND OTHER 1,887
PREPAID EXPENSES 5,500
INVENTORIES 3,400
NOTE RECEIVABLE 11,250
---------
TOTAL CURRENT ASSETS 31,680
---------
PROPERTY AND EQUIPMENT, AT COST:
MEDICAL EQUIPMENT 362,158
COMPUTER EQUIPMENT 6,615
OFFICE FURNITURE AND EQUIPMENT 7,901
---------
376,674
LESS ACCUMULATED DEPRECIATION (269,368)
---------
NET PROPERTY AND EQUIPMENT 107,306
---------
OTHER ASSETS:
INTANGIBLE ASSETS, NET OF ACCUMULATED
AMORTIZATION OF $30,833 19,167
---------
TOTAL OTHER ASSETS 19,167
---------
TOTAL ASSETS $ 158,153
=========
The accompanying notes are an integral part of these
consolidated condensed financial statements
1
<PAGE>
LONGPORT, INC. AND SUBSIDIARY JUNE 30, 1998
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
- --------------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 8,510
ACCRUED EXPENSES:
SALARIES AND PAYROLL TAXES 2,885
DEFERRED REVENUE 8,571
-----------
TOTAL CURRENT LIABILITIES 19,966
-----------
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,
15,421,282 SHARES ISSUED AND OUTSTANDING 15,421
PAID IN CAPITAL 2,906,289
ACCUMULATED DEFICIT (2,778,523)
-----------
143,187
LESS TREASURY STOCK, AT COST, (30,000 COMMON SHARES) (5,0000
-----------
TOTAL STOCKHOLDERS' EQUITY 138,187
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 158,153
===========
The accompanying notes are an integral part of these
consolidated condensed financial statements
2
<PAGE>
FOR THE THREE MONTHS ENDED
LONGPORT, INC. AND SUBSIDIARY JUNE 30,
CONSOLIDATED CONDENSED STATEMENTS OF 1998 1997
OPERATIONS (UNAUDITED) (UNAUDITED)
- --------------------------------------------------------------------------------
NET REVENUES:
MEDICAL SUPPLY SALES $ 4,408 $ 3,874
MEDICAL EQUIPMENT RENTALS 3,525 4,675
MANAGEMENT FEES 29,000 26,240
LICENSE FEES 45,429 --
------------ ------------
TOTAL REVENUES 82,362 34,789
------------ ------------
OPERATING EXPENSES:
COST OF MEDICAL SUPPLY SALES 697 1,275
COST OF MEDICAL EQUIPMENT RENTALS 2,625 700
GENERAL AND ADMINISTRATIVE 199,049 76,170
------------ ------------
TOTAL OPERATING EXPENSES 202,371 78,145
------------ ------------
OPERATING INCOME (LOSS) (120,009) (43,356)
------------ ------------
OTHER INCOME (EXPENSE):
OTHER EXPENSE -- (691)
GAIN (LOSS) ON DISPOSAL OF ASSETS -- (3,900)
------------ ------------
TOTAL OTHER INCOME (EXPENSE) -- (4,591)
------------ ------------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (120,009) (47,947)
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET LOSS ($ 120,009) ($ 47,947)
============ ============
NET LOSS PER SHARE OF COMMON STOCK:
BASIC $ (0.01) $ --
DILUTED $ (0.01) $ --
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
BASIC 15,387,326 13,766,496
DILUTED 15,387,326 13,766,496
The accompanying notes are an integral part of these
consolidated condensed financial statements
3
<PAGE>
FOR THE SIX MONTHS ENDED
LONGPORT, INC. AND SUBSIDIARY JUNE 30,
CONSOLIDATED CONDENSED STATEMENTS OF 1998 1997
OPERATIONS (UNAUDITED) (UNAUDITED)
- --------------------------------------------------------------------------------
NET REVENUES:
MEDICAL SUPPLY SALES $ 5,751 $ 7,094
MEDICAL EQUIPMENT RENTALS 5,925 12,670
MANAGEMENT FEES 54,500 51,740
LICENSE FEES 83,429 --
------------ ------------
TOTAL REVENUES 149,605 71,504
------------ ------------
OPERATING EXPENSES:
COST OF MEDICAL SUPPLY SALES 3,404 2,683
COST OF MEDICAL EQUIPMENT RENTALS 2,925 2,214
GENERAL AND ADMINISTRATIVE 434,926 162,701
------------ ------------
TOTAL OPERATING EXPENSES 441,255 167,598
------------ ------------
OPERATING INCOME (LOSS) (291,650) (96,094)
------------ ------------
OTHER INCOME (EXPENSE):
INTEREST INCOME -- 325
OTHER EXPENSE -- (751)
GAIN (LOSS) ON DISPOSAL OF ASSETS -- (3,900)
INTEREST EXPENSE -- (318)
------------ ------------
TOTAL OTHER INCOME (EXPENSE) -- (4,644)
------------ ------------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (291,650) (100,738)
PROVISION FOR INCOME TAXES -- (482)
------------ ------------
NET LOSS ($ 291,650) ($ 101,220)
============ ============
NET LOSS PER SHARE OF COMMON STOCK:
BASIC ($ 0.02) ($ 0.01)
DILUTED ($ 0.02) ($ 0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
BASIC 15,172,193 13,420,428
DILUTED 15,172,193 13,420,428
The accompanying notes are an integral part of these
consolidated condensed financial statements
4
<PAGE>
FOR THE SIX MONTHS ENDED
JUNE 30,
LONGPORT, INC. AND SUBSIDIARY 1998 1997
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (UNAUDITED)
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) ($291,650) ($101,220)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH (USED) BY
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 12,000 49,663
GAIN ON EQUIPMENT DISPOSAL -- 3,600
PROVISION FOR BAD DEBTS -- 3,600
CHANGES IN ASSETS AND LIABILITIES:
(INCREASE) IN ACCOUNTS RECEIVABLE (1,620) (9,595)
(INCREASE) DECREASE IN OTHER RECEIVABLES 1,200 (325)
DECREASE IN PREPAID EXPENSES 14,000 --
(INCREASE) IN INVENTORIES (1,200) (327)
INCREASE (DECREASE) IN ACCOUNTS PAYABLE
AND ACCRUED EXPENSES 7,120 (7,447)
--------- ---------
NET CASH (USED) BY OPERATING ACTIVITIES (260,150) (62,051)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (9,000) (15,775)
PROCEEDS FROM ASSET DISPOSAL -- 3,600
PAYMENTS RECEIVED ON NOTES RECEIVABLE 7,500 13,750
--------- ---------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (1,500) 1,575
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
PRINCIPAL PAYMENTS ON NOTES PAYABLE -- (55,200)
ISSUANCE OF COMMON STOCK 229,000 120,400
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 229,000 65,200
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (32,650) 4,724
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 36,397 2,925
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,747 $ 7,649
========= =========
The accompanying notes are an integral part of these
consolidated condensed financial statements
5
<PAGE>
FOR THE SIX MONTHS ENDED
LONGPORT, INC. AND SUBSIDIARY JUNE 30,
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS 1998 1997
(UNAUDITED) (UNAUDITED)
- --------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST $ -- $ 318
INCOME TAXES -- 481
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
COMMON STOCK ISSUED FOR MEDICAL EQUIPMENT $62,500 $ --
COMMON STOCK ISSUED FOR DEBT RETIREMENT -- 4,800
COMMON STOCK RETURNED TO TREASURY IN
EXCHANGE FOR EQUIPMENT -- 3,600
The accompanying notes are an integral part of these
consolidated condensed financial statements
6
<PAGE>
LONGPORT, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying financial information of the Company is prepared in
accordance with the rules prescribed for filing condensed interim financial
statements and, accordingly, does not include all disclosures that may be
necessary for complete financial statements prepared in accordance with
generally accepted accounting principles. The disclosures presented are
sufficient, in management's opinion, to make the interim information
presented not misleading. All adjustments, consisting of normal recurring
adjustments, which are necessary so as to make the interim information not
misleading, have been made. Results of operations for the six months ended
June 30, 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 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 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 June 30, 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
antidilutive.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of operations
The three months ended June 30, 1998 vs. the three months ended June 30, 1997.
The Company's operations have undergone a significant transformation as
management has become more focused on the development of the Scanner technology.
This development has been the driving force behind the dramatic increase in
General and Administrative expenses. This has also been a driving force behind
the Company's increased revenues, which more than doubled from the three month
period for 1997. The Company's revenues from Management Fees, through the wound
centers at West Jersey Health System's Camden hospital and West Hudson Hospital,
have been far eclipsed by the Licensing Fees that are related to the Company's
general wound healing programs, including the Scanner and the Topical Hyperbaric
Oxygen products. The Company's regular expenses, such as salaries and general
office expenses remain essentially unchanged from month to month, with the
increase coming from expenses related to the development and refinement of the
scanner.
Overall, the Company's revenues more than doubled from the same period of
1997, $82,362 for 1998, compared to $34,789 for 1997. The increase resulted from
the introduction of Licensing Fees as a revenue producing avenue for the
Company. Unfortunately, there was no similar revenue stream for licensing fees
in 1997, so these figures cannot be adequately compared. However, the revenues
for management fees and product sales and rentals remain essentially static.
This reflects management's push towards the licensing relationship as a better
means for the Company to generate revenues with fewer direct expenses, and
better opportunities to reach more patients.
The Company's expenses have increased rather dramatically between the two
periods, nearly tripling from the figure for 1997, $78,145 for 1997 versus
$202,371 for 1998. Management asserts that these figures are not proper
comparisons regarding the Company's performance since the level of activity
directed towards the Scanner has changed as a result of the Company's securing
full patent and intellectual property rights after June 30, 1997. The Company's
expenses related to daily business activities has not increased, as evidenced by
the static nature of the cost of medical supplies and equipment rentals. The
increases in General and Administrative expenses are directly related to the
Scanner's development.
The Company's stability and focus can be seen in the comparison of three
figures in its balance Sheet: Medical Equipment, Total Current Liabilities, and
Stockholders' Equity. Medical equipment has better than doubled since June 30,
1997, reflecting the purchase of additional Scanners for research projects. The
Company now has Scanners at the West Jersey and West Hudson Wound Healing
Centers, and multiple Scanner committed to various research projects. Management
plans to continue producing prototype Scanners for research projects as needed.
8
<PAGE>
The Company's Current Liabilities have been reduced to one third of its
level as of June 30, 1997. Management does not expect to incur significant
liabilities in the future. As for the stockholders' equity, it continues to
climb, $138,167 for 1998 versus $117,381 for 1997.
9
<PAGE>
The six months ended June 30, 1998 vs. the six months ended June 30, 1997
Comparison of the Company's operations for the six month period essentially
follows that of the three month period comparison described above. The Company
has better than doubled revenues for the six month period in 1998, as compared
to 1997. However, since the increase can be attributed to the revenues from
Licensing Fees, which did not exist in 1997, the figures are not proper for
comparison. The same holds true for the expenses, which also more than doubled
for 1998, as compared to 1997. This increase is directly related to the research
and development of the scanner technology. These figures do not make a fair
comparison, since the Company did not obtain the additional rights to the
technology until after June 30, 1997, and thus did not have as great a focus on
the development of the technology as presently.
10
<PAGE>
Strategy to Achieve Profitable Operations
Management expects the revenues for 1998 to continue to grow over and above
those for 1997, directly as a result of the licensing relationships it now
promotes. This will likely correspond with increasing expenses related to the
development of the Scanner, and the eventual filing for FDA Medical Device
marketing clearance. The Company anticipates obtaining future licensing and
consulting service clients, which should lead to additional revenues from the
rental and sales of equipment to those clients. The Company continues to
negotiate with other healthcare providers to provide consulting services.
Management continues negotiating for business relationships for the marketing of
the Scanner technology, in anticipation of filing for FDA clearance to
commercially market the Scanner.
Cash flow problems essentially no longer exist. While the Company shows
little cash on its Balance Sheet, the revenues currently coming in permit the
Company to meet its regular obligations, including salaries. The Company seeks
outside sources for additional Capital as needed to fund research projects or
significant portions of the Scanner development projects. Otherwise, the Company
utilizes the cash remaining on a monthly basis to support onging research and
marketing activities. Management intends to negotiate future relationships that
will not damage the Company's current cash flow, or incur significant expenses.
See Liquidity and Capital Resources and Part II. Legal Proceedings.
Overall, the Company anticipates growth in revenues in 1998. Management
looks to create new relationships that will increase revenues, while controlling
the Company's expenses and debt. The Company continues to explore the
possibility of additional debt or equity financing to provide additional
capital, for the development of the Scanner technology and the expansion of the
business, but can make no assurances that financing can be obtained.
Liquidity and Capital Resources
As of June 30, 1998, the Company's Current Liabilities were $19,996, with
no long term debt. The Company has sold additional shares of its Common Stock to
private investors, who were already shareholders. Management anticipates that it
will have to sell additional shares of restricted Common Stock to fund any
expansions of the business and the development of the Scanner technology.
Management does not expect to incur any significant short-term or long-term
debts within the next twelve months.
The Company did raise capital through the private sale of stock to current
shareholders through June 30,1998. Between January 1 and March 31, the Company
sold 410,000 shares, all at $.50 per share, netting the Company $205,000. In
March the Company also issued 125,000 shares to Hugh Lewis as payment for three
(3) new scanners. In April, the Company sold 30,000 shares at $.80 per shares,
netting the Company $24,000.
The Company anticipates growth from additional license agreements,
management fees, and sales and rentals of equipment during 1998. New license
agreements and Wound Healing Centers contracts will essentially mirror the
11
<PAGE>
agreements the Company now has in place. The Company intends to continue its
practice of acting as a management consultant to healthcare providers, 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 whether
any amounts will need to be repaid to Medicare.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
The Statements made under the Management's Discussion and Analysis of
Financial Condition and Results of Operations, and other statements within this
document, that are not based on historical facts, are forward looking statements
that involve risks and uncertainties, including but not limited to, market
acceptance risks, the effect of economic conditions, the impact of competition
and pricing, product development, commercialization and technology difficulties,
the results of financing efforts, and other risks detailed in the Company's
Securities and Exchange Commission filings.
12
<PAGE>
Part II
Other Information
Item 1. Legal Proceedings
The Company continues in its pursuit of recovery for damages against the
attorneys who brought the federal lawsuit against the Company on behalf of Supra
Medical Corp. There have been no significant events to report during this three
month period.
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.
13
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Longport, Inc.
Dated: August 26, 1998 /s/ James R. McGonigle
------------------------------------
James R. McGonigle
President/Chief Accounting Officer
/s/ Peter E. Cavanaugh
-----------------------------------
Peter E. Cavanaugh
Vice President
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,747
<SECURITIES> 0
<RECEIVABLES> 9,496
<ALLOWANCES> 3,600
<INVENTORY> 3,400
<CURRENT-ASSETS> 31,680
<PP&E> 376,674
<DEPRECIATION> (269,368)
<TOTAL-ASSETS> 158,153
<CURRENT-LIABILITIES> 19,966
<BONDS> 0
0
0
<COMMON> 15,421
<OTHER-SE> 122,766
<TOTAL-LIABILITY-AND-EQUITY> 158,153
<SALES> 5,751
<TOTAL-REVENUES> 149,609
<CGS> 3,404
<TOTAL-COSTS> 441,255
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (291,650)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (291,650)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
