SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[X]  Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 For the fiscal year ended December 31, 2000 or

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the transition period from _______________ to ________________

Commission File No. 33-75236

                                 LONGPORT, INC.
                                 --------------
                 (Name of Small Business Issuer in its Charter)

             Delaware                                   23-2715528
             --------                                   ----------
  (State or other jurisdiction           (I.R.S. Employer Identification Number)
of incorporation or organization)

                             740 South Chester Road
                                     Suite A
                         Swarthmore, Pennsylvania 19081
                         ------------------------------
               (Address of principal executive offices) (Zip Code)


                    Issuer's telephone number: (800) 289-6863

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                          $.001 Par Value Common Stock
                         Common Stock Purchase Warrants
                         ------------------------------
                                (Title of Class)

<PAGE>


     Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 December 31, 2000, 18,033,715 shares of the Registrant's $.001 par
value Common Stock were outstanding. As of March 23, 2001, the market value of
the Registrant's Common Stock, excluding shares held by affiliates, was
$8,572,270 based upon a closing bid price of $.70 per share of Common Stock on
the Electronic Bulletin Board.

     Check if there is no disclosure contained herein of delinquent filers in
response to Item 405 of Regulation S-B, and will not be contained, to the best
of the Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X

     The Registrant's revenue for its most recent fiscal year was $280,556.

     The following documents are incorporated by reference into Part III, Items
9 through 12 hereof: None.

<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS
-------------------------------

Forward-Looking Statements

     Except for historical information, the matters set forth in this Report
include forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risks and uncertainties that may cause
actual results to differ materially. These risks and uncertainties are detailed
throughout the Report and will be further discussed from time to time in the
Company's periodic reports filed with the Commission. The forward-looking
statements included in the Report speak only as of the date hereof.

The Soft Tissue Ultrasound Scanner

     The Company has been assigned the patent pending and intellectual property
rights to a soft tissue ultrasound scanner ("Scanner") developed at the United
Medical and Dental Schools of Guy's and St. Thomas's Hospitals ("UMDS") located
in London, England. The Scanner was approved for marketing by the FDA in June
1999. The Scanner, which weighs 15 pounds and is similar in size to a lap top
computer, produces a high resolution image of the skin and underlying tissue up
to two centimeters below the skin. This allows clinicians to check the status of
a wound and the surrounding tissue without having to incise the patient or put a
probing device in 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.

     Ultrasound has been used for medical images for many years and has proven
to be a safe, effective imaging device. Using sound waves emitted at frequencies
well above the normal human ear response, echoed signals are converted into
graphic images and displayed on a monitor. Computer programs that support
ultrasound imaging use algorithms to document dimensions of areas being scanned.
These measurements provide a baseline that the clinician can use to compare to
other scans. The Scanner shares those characteristics which are common to all
ultrasound imaging equipment, but uses high frequency ultrasound at 20 MHz to
provide high resolution images at depths of up to 2 centimeters. This compares
to the 4 to 7 MHZ ultrasound frequency used to scan fetal images, and the up to
10 MHZ used by conventional ultrasound equipment. Traditional low-frequency
ultrasound equipment, which costs $150,000 to $350,000, is generally unable to
image thin structures like skin. The Company believes that the Scanner's ability
to produce high-resolution images of thin structures, such as skin, subcutaneous
tissue and superficial tendons, is unique.

     The depth used by the Scanner to produce a useable image depends on the
area being scanned and the clinical application. For instance, wounds on the
ankle require an image depth of only 2 to 4 millimeters, an area generally too
small to resolve using conventional imaging technology, but ideally suited to
the use of the Scanner. The Scanner provides a clinician with a clear picture,
at 65 by 200 microns, of the entire wound area. Consequently, the clinician need
not disturb the wound with invasive procedures that can cause additional damage.
Since wounds begin to heal from the inside, underneath the skin surface, the
ability to observe the entire wound, up to 2 centimeters deep, gives clinicians
a much better understanding of the patient's tissue. The ability to observe
minute changes just below the skin's surface during the early stages of
treatment gives clinicians a picture of the wound's status and allows them to
evaluate the treatment's success faster than current methods permit. The Scanner
uses a proprietary software program to allow clinicians to objectively measure
changes in the wound. The ability to track the healing process becomes critical
during the early stages of a treatment program. The Company believes that with
the Scanner, clinicians can identify the status of healing within days of
starting treatment, instead of waiting up to a month for changes to appear on
the wound surface. This helps clinicians quickly determine whether treatment
changes are required, helping to decrease the healing time.

Manufacture

     The Company uses SRA Development LTD, a London-based company, to
manufacture the Scanner components which are then assembled by Guardian
Manufacturing, Inc., a Florida company. The Company believes supply is adequate
to meet its needs. Nevertheless, the Company's business and financial results
will be negatively effected if it is unable to obtain prompt delivery times for
any Scanners ordered. Moreover, there is a significant risk of quality control
problems whenever a new product is being manufactured.

                                       1
<PAGE>


     To date, the Company has manufactured 50 Scanners, most of which have been
placed in physician offices, hospital and clinics at no charge for testing and
study. The Company has sold one Scanner. Most of the Company's revenue to date
has been generated by the Company's sale of license rights for the Scanners to
other companies.

Marketing

     In 1999, the Company entered into exclusive licensing agreements with four
companies to market the Scanner, for which it received up-front fees and lease
payments. Although these licensing agreements provide for exclusive territories,
the Company is free to market the Scanners directly to end users within the
licensee's territory. One company subsequently terminated its license agreement
and the three remaining companies are not required to pay any further fees to
the Company until the Scanners are made available to them.

     The Company is now focusing its initial marketing efforts on developing
strategic regional distribution relationships with larger firms and in
establishing individual distribution agreements with smaller firms in specific
geographic areas. No such relationships or agreements have been entered into.


     The Company intends to offer the Scanners either for sale of lease.
However, in order to lease the Scanners, the Company will be required to obtain
financing to cover its up-front manufacturing costs. The Company expects that
the Scanners will first be acquired for wound management, which is the process
of treating various types of wounds. Wound management is an expanding and
increasingly important area of concern for the medical profession. The cost of
treating chronic wounds has been estimated at $5 billion to $7 billion annually.
Healthcare providers in the US spent nearly $2 billion on wound management
products in 1998, with sales internationally in excess of $6 billion. The
combined segments are expected to grow to over $9 billion by the year 2002. Over
$90 billion per year is spent on treating America's diabetic population. With
more than 625,000 new cases per year, the Company believes there is value for a
device that accelerates diagnosis of diabetic wounds. Having a view of the wound
and surrounding tissue is expected to materially reduce the risks of
amputations, thereby increasing survival rates.

     In addition to wound care, the Company intends to concentrate its marketing
efforts on the dermatology and sports medicine markets.

Competition

     Diagnostic imaging solutions compete primarily on the basis of diagnostic
value, imaging performance, reliability, ease of use and price. The Company's
competitors include MRI producers, ultrasound manufacturers, and X-ray based
topography solutions. Any of these competitors could seek to modify their
imaging devices to produce higher resolutions at narrower depths. In fact, one
company, Cortex Technology, Inc., marketing under the name Dermascan, offers a
scanner which competes directly with the Company's Scanner. Moreover, current
and potential diagnostic imaging modalities such as those described below also
pose a significant competitive risk to the Company.

     Low Frequency Ultrasound. Traditional ultrasound technology is used
regularly for a number of clinical applications. Several types of ultrasound
exist currently, including pulsed ultrasound, continuous wave "Doppler"
ultrasound and real-time ultrasound. Each variation is particularly suited to
certain applications. For instance, "Doppler" ultrasound is used to record
changes in a fetal heart while pulsed ultrasound can be used to resolve images
of the abdomen.

     Magnetic Resonance Imaging (MRI). Magnetic resonance imaging produces high
quality images inside the body. MRI is based on the principles of nuclear
magnetic resonance (NMR), a technique originally used by chemists and physicists
to obtain microscopic chemical and physical information about molecules.

                                       2
<PAGE>


     Conventional X-Ray. X-ray systems pass radiation through a patient to a
shielded photographic plate. Due to the health risks associated with exposure to
ionizing radiation, operating x-ray equipment requires a controlled environment
and trained professionals. Additionally, operating x-ray equipment requires film
and in many cases, board certified radiologists. Despite these barriers, x-ray
technologies is effective for a number of applications, including skeletal
examinations and mammography. X-rays cannot currently image thin tissue
structures.

Technology Transfer Agreements

     In December 1997 the Company entered into two Technology Transfer
Agreements (the "Agreements") with UMDS and Square Wave Systems, Ltd. ("SWS")
pursuant to which UMDS and SWS assigned all of their rights, title and interest
in patent applications (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 in June 1999 when the FDA granted 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 if approved. The Patents
were approved on June 6, 2000.

     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.

Technology Enhancement

     In June 1999, the Company entered into an agreement with HealthLink
International, Inc. under which HealthLink agreed to provide the Company $5
million over a five-year period to fund technology enhancements for the Scanner.
In April 1999 HealthLink also purchased 350,000 shares of the Company's common
stock. HealthLink subsequently terminated its business after paying a total of
$270,000 under the agreement. The Company repurchased its shares from HealthLink
for $472,500.

Employees

     The Company employs two full-time employees, together with Mr. McGonigle
who is the Company's Chief Executive Officer and Mr. Weeks who is the Company's
President and works for it on a part-time basis.

                                       3
<PAGE>


ITEM 2. DESCRIPTION OF PROPERTY
-------------------------------

     The Company leases approximately 3,000 square feet of office space at 740
South Chester Road, Suite A, Swarthmore, Pennsylvania on a 36-month lease
expiring in October 2002 for $3,161 per month.

ITEM 3. LEGAL PROCEEDINGS
-------------------------

     In September 1997, the Company was notified of a Medicare Hearing Officer's
decision that the Company was liable for repayment of Medicare benefits
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 was
heard by an Administrative Law Judge in January 1999 and November 1999. The
Judge ruled in favor of the Company on certain claims and against it on others.
The Company continues the appeal process and cannot predict the outcome.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------

     Not applicable.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
----------------------------------------------------------------

     The Company's Common Stock has traded on the Electronic Bulletin Board of
the National Quotation Bureau under the symbol "LPTI" since September 7, 1994.
On November 18, 1999, the common stock was also accepted for trading on the
Pacific Exchange under the symbol "LDS.P"

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

2000
----
March 31, 2000                          $  3.38        $  2.63
June 30, 2000                           $  2.81        $  1.44
September 30, 2000                      $  2.00        $   .94
December 31, 2000                       $  1.13        $   .38


1999
----
March 31, 1999                          $  1.80        $  1.20
June 30, 1999                           $  4.56        $  4.43
September 30, 1999                      $  2.88        $  2.63
December 31, 1999                       $  3.28        $  2.87


     As of March 15, 2001, the Company had approximately 1,500 record and
beneficial stockholders.

Transfer Agent and Warrant Agent

     Corporate Stock Transfer, Inc., 3200 Cherry Creek Drive South, Suite 430,
Denver, Colorado 80205, is the Company's transfer agent.

                                       4
<PAGE>


Dividends

     The Company paid a special $.01 dividend on its Common Stock in June 1999.
The Company had not paid dividends previously and does not intend to pay
dividends in the future. Earnings, if any, will be retained to finance growth.

Limitation on Liability

     The Company's Certificate of Incorporation provides that a director shall
not be personally liable to the Company or its stockholders for any action taken
or any failure to act to the full extent permitted by the Delaware law. The
effect of this provision is to eliminate the rights of the Company and its
stockholders, through stockholders' derivative suits on behalf of the Company,
to recover monetary damages from a director for breach of the fiduciary duty of
care as a director including breaches resulting from negligent or grossly
negligent behavior. This provision does not limit or eliminate the rights of the
Company or any stockholder to seek non-monetary relief such as an injunction or
rescission in the event of a breach of a director's duty of care or to seek
monetary damages for (i) a violation of criminal law, (ii) unlawful payment of
dividends or other distribution under Delaware law, (iii) a transaction in which
a director derived an improper personal benefit, (iv) willful misconduct, or (v)
reckless, malicious or wanton acts.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
-----------------------------------------------------------------

Results of Operations

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

     Revenues for 2000 were $280,556 compared to $1,887,826 for 1999. Revenues
from license fees and territorial license fees decreased from $1,494,000 in 1999
to $120,000 in 2000. This significant decrease in revenues is directly
attributed to a licensing agreement, which called for a one-time license fee of
$1,000,000 in 1999. The Company does not expect to generate significant revenues
in the future from license fees. Due to the termination of the Company's Scanner
enhancement agreement in May 2000, revenues from Scanner enhancements decreased
from $210,000 in 1999 to $60,000 in 2000. The Company believes the majority of
its future revenues will be from Scanner sales or leases.

     Total expenses increased to $2,797,881 in 2000 from $1,221,592 in 1999. The
main component of the increase in expenses in 2000 is from an expense associated
with the issuance of stock options to outside consultants of $940,755 that the
Company believes are important to the long-term future growth of the Company.
The Company valued the stock options using the Black-Scholes option-pricing
model.

     The Company increased its general and administrative expenses from
$1,108,147 in 1999 to $1,640,970 in 2000. This increase can be attributed to the
hiring of additional employees and consultants in order to help facilitate
commercialization of the Scanner. The Company also incurred over $100,000 of
legal and expert fees associated with the lawsuit against attorneys who
previously brought a lawsuit against the Company on behalf of Supra Medical
Corp.

     Research and Development expenses were $216,156 in 2000, compared to
$113,145 in 1999. The Company expects research and development expenses to
continue to increase as it begins to use the Scanner in different medical
applications. The Company also incurred expenses associated with two studies on
the Longport Digital Scanner. The Company believes there will be additional
costs associated with future studies of the Scanner in helping to evaluate the
market potential for the Scanner in specific medical disciplines.

     The Company experienced a net loss of $2,392,576 in 2000, compared to net
income of $707,393 for 1999. This significant change is the result of the
expense associated with the issuance of stock options in 2000 and the one-time
territorial license fee of $1,000,000 in 1999.

                                       5
<PAGE>


Strategy to Achieve Profitable Operations

     Management expects the revenues for 2001 to be derived from the sale and/or
lease of the Scanner. After receiving FDA marketing clearance in June 1999, the
Company has spent significant time and effort on the commercialization process
for the Scanner. Studies have begun and data continues to be collected in order
to gain "peer acceptance" for the Scanner. The Scanner now has been approved for
Medicare and private insurance reimbursement. The Company was granted a U.S.
Patent in June 2000 for the Scanner. The final areas of concern for
commercialization and then profitability are "peer acceptance" and production
and distribution.

     The "peer acceptance" can occur in many different ways and this is an
ongoing process. The Company has initiated several United States-based studies
in various disciplines, which it believes will lead to articles being published
about the Scanner and its advantages. It is these so-called "white papers" which
the medical community tends to want to see prior to purchasing new products. The
Company believes that one of the primary advantages to its Scanner is that it
has numerous applications in the field of medicine. It is the different medical
"disciplines" or "specialties" that allows the Company to have one primary
product, but have several different markets and multiple applications.

     The production and distribution of the Scanner are the final areas the
Company is faced with as it begins full commercialization of the Scanner. The
Company presently has two manufacturers that can produce Scanners, however, both
companies have a lead-time of approximately sixty days for delivery of a unit.
The Company does not expect to be profitable in 2001 as it ramps up its
production and marketing for the Scanner. The Company expects to be ready to
fully market the Scanners in the third quarter of 2001.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Revenue for 1999 was $1,887.826 compared to $347,776 for 1998. While
revenue from wound clinic management fees increased nearly 50%, revenue from
licensing and marketing fees increased to $1,494,000 in 1999, from $219,500 in
1998. The Company also realized $210,000 of Scanner enhancement revenue in 1999,
under its former Scanner enhancement agreement with HealthLink International,
Inc.

     Total expenses decreased to $1,221,592 in 1999 from $2,431,472 in 1998 and
research and development expenses in 1999 decreased to $113,445 from $997,159 in
1998. These decreases resulted from a reduction in research and development on
the Scanner in 1999. The Company received 510k marketing permission for the
Scanner from the FDA in 1999.

     The Company reported a net profit of $707,393 in 1999, compared to a net
loss of $2,085,306 for 1998. This turnaround is attributed to the increase in
license and marketing fees and a decrease in total expenses.

     The Company does expect to realize additional revenue from license and
marketing fees or Scanner enhancement revenue, and expects that future revenue
will be generated from the rental of Scanners. One of the Company's licensees
terminated its license agreement with the Company in 1999.

Liquidity and Capital Resources

     As of December 31, 2000, the Company had $268,553 in cash and cash
equivalents and no long-term debt. The Company's working capital decreased from
$2,717,723 at December 31, 1999 to $559,131 at December 31, 2000. The Company
experienced a decrease in cash from operating activities of $937,938 due
primarily to a net loss of $2,392,576. This was partially offset by non-cash
expenses for depreciation of $221,552, stock issued for services of $173,310 and
compensation expense for issuance of stock options of $767,445. The Company
expects that additional cash will need to be raised in order to produce and
market the Company's Scanners. The timing of raising additional financing will
be directly related to when the Company begins to fully commercialize the
scanner. At this time, the Company believes that full commercialization will
begin in the third quarter of 2001.

     Cash flows from investing activities consumed $666,381, largely due to
capital expenditures of $462,025. The Company also invested $200,000 in a
publicly traded company during the year. Cash flows from financing activities
consumed $547,500, which was used to repurchase shares of the Company's common
stock and which was partially offset by $95,000 received from sales of the
Company's common stock.

                                       6
<PAGE>


Longport International LTD

     The Company formed Longport International, LTD, a wholly-owned subsidiary,
in 1999 to be the marketing arm of the Company for business generated outside
North America. Longport International began building new Scanners using our
second manufacturer, SRA Development LTD ("SRA"). The Company received delivery
of the first Scanner produced by SRA on August 22, 2000. Longport International,
together with its manufacturer, SRA Development LTD, has successfully addressed
the relevant Essential Requirements of the European Medical Devices Directorate
(93/42/EEC) for its high-resolution ultrasound imaging technology. This,
together with adherence to the ISO-9001 subset BS-EN-46001 manufacturing quality
standard enables a CE mark to be placed on the Company's ultrasound system,
which is to be marketed under the name EPISCAM. One Scanner has been sold to
date by Longport International.





                                       7
<PAGE>


ITEM 7. FINANCIAL STATEMENTS
----------------------------



                         LONGPORT, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



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

  Consolidated Balance Sheet as of December 31, 2000                         F-3

  Consolidated Statements of Operations for the years ended
   December 31, 2000 and 1999                                                F-5

  Consolidated Statements of Changes in Stockholders' Equity
   for the years ended December 31, 2000 and 1999                            F-6

  Consolidated Statements of Cash Flows for the years ended
   December 31, 2000 and 1999                                                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 Subsidiaries as of December 31, 2000, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
years ended December 31, 2000 and 1999. 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
Subsidiaries as of December 31, 2000 and the consolidated results of their
operations and their cash flows for the years ended December 31, 2000 and 1999
in conformity with generally accepted accounting principles.




                                            /s/ Angell & Deering
                                            --------------------
                                            Angell & Deering
                                            Certified Public Accountants

Denver, Colorado
January 25, 2001


                                       F-2
<PAGE>


                         LONGPORT, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000



                                     ASSETS
                                     ------

Current Assets:
  Cash and cash equivalents                                         $   268,553
  Accounts receivable:
   Trade, net of allowance for doubtful
     accounts of $3,600                                                  87,039
   Employees                                                              3,200
  Inventories                                                           235,193
  Prepaid expenses and other                                             13,378
  Deposits                                                               61,201
  Marketable securities                                                  88,236
                                                                    -----------

         Total Current Assets                                           756,800
                                                                    -----------

Property and Equipment, at cost:
  Medical equipment                                                     933,171
  Production equipment                                                   42,191
  Computer equipment                                                     39,719
  Office furniture and equipment                                         21,382
                                                                    -----------
                                                                      1,036,463
  Less accumulated depreciation                                        (292,929)
                                                                    -----------

         Net Property and Equipment                                     743,534
                                                                    -----------

Other Assets:
  Deposits                                                                4,336
  Account receivable, net of current portion                            318,750
  Intangible assets, net of accumulated amortization of $62,460          75,492
                                                                    -----------

         Total Other Assets                                             398,578
                                                                    -----------

         Total Assets                                               $ 1,898,912
                                                                    ===========


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

                                       F-3

<PAGE>


                         LONGPORT, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000
                                   (Continued)


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

Current Liabilities:
  Accounts payable                                                  $    82,451
  Accrued expenses                                                       15,218
  Accrued Medicare obligation                                           100,000
                                                                    -----------

         Total Current Liabilities                                      197,669
                                                                    -----------

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,
   18,033,715 shares issued and outstanding                              18,034
  Paid in capital                                                     8,244,586
  Accumulated deficit                                                (6,428,447)
  Accumulated other comprehensive loss                                 (132,930)
                                                                    -----------

         Total Stockholders' Equity                                   1,701,243
                                                                    -----------

         Total Liabilities and Stockholders' Equity                 $ 1,898,912
                                                                    ===========


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

                                       F-4


<PAGE>
<TABLE>
<CAPTION>


                           LONGPORT, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


                                                            2000            1999
                                                        ------------    ------------
Net Revenues:
  <S>                                                   <C>             <C>
  Wound clinic management fees                          $     74,000    $    162,000
  License and marketing fees                                 120,000       1,494,000
  Scanner enhancement revenue                                 60,000         210,000
  Other                                                       26,556          21,826
                                                        ------------    ------------

     Total Revenues                                          280,556       1,887,826
                                                        ------------    ------------

Operating Expenses:
  General and administrative                               1,640,970       1,108,147
  Stock compensation expense                                 940,755            --
  Research and development expense                           216,156         113,445
                                                        ------------    ------------

     Total Operating Expenses                              2,797,881       1,221,592
                                                        ------------    ------------

     Operating Income (Loss)                              (2,517,325)        666,234
                                                        ------------    ------------

Other Income (Expense):
  Interest income                                             57,972          43,088
  Other income                                                76,459             577
                                                        ------------    ------------

     Total Other Income (Expense)                            134,431          43,665
                                                        ------------    ------------

Income (Loss) Before Provision for Income Taxes           (2,382,894)        709,899

Provision for income taxes                                     9,682           2,506
                                                        ------------    ------------

 Net Income (Loss)                                      $ (2,392,576)   $    707,393
                                                        ============    ============

Net Income (Loss) Per Share of Common Stock:
 Basic                                                  $       (.13)   $        .04
 Diluted                                                $       (.13)   $        .04

Weighted Average Number of Common Shares Outstanding:
  Basic                                                   18,060,652      17,314,674
  Diluted                                                 18,060,652      18,177,573


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

                                         F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                           LONGPORT, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                   FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999




                                                                  Common Stock                       Current Years
                                                                  ------------            Paid in    Comprehensive
                                                             Shares        Amount         Capital     Income (Loss)
                                                          -----------    -----------    -----------    -----------
(Loss)
<S>                                                       <C>           <C>            <C>            <C>
Balance at December 31, 1998                               16,160,949    $    16,161    $ 4,771,932
Issuance of common stock                                    1,497,000          1,497      2,459,503
Issuance of common stock upon exercise of stock options     1,050,000          1,050        933,950
Purchase and retirement of treasury stock                    (473,500)          (474)      (315,254)
Cash dividends                                                   --             --             --
Other comprehensive income (loss), net of tax:
  Translation adjustment                                         --             --             --      $      (632)
Net income                                                       --             --             --          707,393
                                                                                                       -----------
    Total Comprehensive Income                                   --             --             --      $   706,761
                                                          -----------    -----------    -----------    ===========
Balance at December 31, 1999                               18,234,449         18,234      7,850,131
Issuance of common stock                                       20,000             20         19,980
Issuance of common stock upon exercise of stock options       100,000            100         74,900
Repurchase common stock                                      (400,000)          (400)      (547,100)
Return of common stock for payment of note receivable
 and accounts receivable                                      (65,250)           (65)       (93,935)
Issuance of common stock for services                         144,516            145        173,165
Compensation from issuance of stock options                      --             --          767,445
Other comprehensive income (loss), net of tax:
  Unrealized (loss) on marketable securities                     --             --             --      $  (111,764)
  Translation adjustment                                         --             --             --          (20,534)
Net loss                                                         --             --             --       (2,392,576)
                                                                                                       -----------
    Total Comprehensive Income (Loss)                            --             --             --      $(2,524,874)
                                                          -----------    -----------    -----------    ===========
Balance at December 31, 2000                               18,033,715    $    18,034    $ 8,244,586
                                                          ===========    ===========    ===========


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

                                                          F-6
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                           LONGPORT, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                   FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


                                                                                                       Accumulated
                                                                                Treasury Stock            Other
                                                           Accumulated          --------------        Comprehensive
                                                             Deficit         Shares         Amount        Income
                                                          -----------    -----------    -----------    -----------
(Loss)
<S>                                                       <C>                <C>        <C>             <C>
Balance at December 31, 1998                              $(4,572,179)       (30,000)   $    (5,000)          --
Issuance of common stock                                         --             --             --             --
Issuance of common stock upon exercise of stock options          --             --             --             --
Purchase and retirement of treasury stock                        --           30,000          5,000           --
Cash dividends                                               (171,085)          --             --             --
Other comprehensive income (loss), net of tax:
  Translation adjustment                                         --             --             --             (632)
Net income                                                    707,393           --             --             --

    Total Comprehensive Income                                   --             --             --             --
                                                          -----------    -----------    -----------    -----------
Balance at December 31, 1999                               (4,035,871)          --             --             (632)
Issuance of common stock                                         --             --             --             --
Issuance of common stock upon exercise of stock options          --             --             --             --
Repurchase common stock                                          --             --             --             --
Return of common stock for payment of note receivable
 and accounts receivable                                         --             --             --             --
Issuance of common stock for services                            --             --             --             --
Compensation from issuance of stock options                      --             --             --             --
Other comprehensive income (loss), net of tax:
  Unrealized (loss) on marketable securities                     --             --             --         (111,764)
  Translation adjustment                                         --             --             --          (20,534)
Net loss                                                   (2,392,576)          --             --             --

    Total Comprehensive Income (Loss)                            --             --             --             --
                                                          -----------    -----------    -----------    -----------
Balance at December 31, 2000                              $(6,428,447)          --      $      --      $  (132,930)
                                                          ===========    ===========    ===========    ===========


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

                                                      F-6(con't)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                   LONGPORT, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                           FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


                                                                             2000           1999
                                                                         -----------    -----------
Cash Flows From Operating Activities:
<S>                                                                      <C>            <C>
  Net income (loss)                                                      $(2,392,576)   $   707,393
  Adjustments to reconcile net income (loss) to net cash
   (used) by operating activities:
    Depreciation and amortization                                            221,552         41,551
    Provision for bad debts                                                     --            3,750
    Common stock issued for services                                         173,310           --
    Compensation from issuance of stock options                              767,445           --
    Changes in assets and liabilities:
     Accounts receivable                                                     318,940       (757,851)
     Other receivables                                                         6,444         (6,444)
     Prepaid expenses and other                                              137,194       (181,822)
     Inventories                                                            (216,880)         7,154
     Accounts payable and accrued expenses                                    46,633        114,533
                                                                         -----------    -----------

      Net Cash (Used) By Operating Activities                               (937,938)       (71,736)
                                                                         -----------    -----------

Cash Flows From Investing Activities:
  Capital expenditures                                                      (462,025)      (483,809)
  License rights                                                                --          (87,952)
  Note receivable                                                            (50,000)          --
  Investment in marketable securities                                       (200,000)          --
  Employee advances                                                           45,644        (48,844)
  Deposits                                                                      --           (3,161)
                                                                         -----------    -----------

      Net Cash (Used) By Investing Activities                               (666,381)      (623,766)
                                                                         -----------    -----------

Cash Flows From Financing Activities:
   Issuance of common stock                                                   95,000      3,396,000
   Repurchase common stock                                                  (547,500)      (310,728)
   Dividends paid                                                               --         (171,085)
                                                                         -----------    -----------

      Net Cash Provided (Used) By Financing Activities                      (452,500)     2,914,187
                                                                         -----------    -----------

Effect of exchange rate changes on cash and cash equivalents                 (20,534)          (632)
                                                                         -----------    -----------

      Net Increase (Decrease) in Cash and Cash Equivalents                (2,077,353)     2,218,053

      Cash and Cash Equivalents at Beginning of Year                       2,345,906        127,853
                                                                         -----------    -----------

      Cash and Cash Equivalents at End of Year                           $   268,553    $ 2,345,906
                                                                         ===========    ===========

Supplemental Disclosure of Cash Flow Information:
  Cash paid during the year for:
   Interest                                                              $      --      $      --
   Income taxes                                                                9,682          2,506

Supplemental Disclosure of Noncash Investing and Financing Activities:
  Repayment of note receivable and accounts receivable
   through return of the Company's common stock                          $    94,000    $      --
  Unrealized loss on marketable securities                                   111,764           --

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

                                                 F-7
</TABLE>
<PAGE>


                         LONGPORT, INC. AND SUBSIDIARIES
                   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. Also, the Company
               has developed a soft tissue ultrasound scanner (the "Scanner").
               The Scanner is used in numerous wound care and other medical
               applications.

          Principles of Consolidation
          ---------------------------
               The consolidated financial statements include the accounts of the
               Company and its wholly owned subsidiaries. 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 consist of the following at December 31, 2000:

               Raw materials                  $ 65,120
               Finished goods                  170,073
                                              --------

               Total                          $235,193
                                              ========

          Marketable Securities
          ---------------------
               Marketable securities consist of common stock. Marketable
               securities are stated at market value as determined by the most
               recently traded price of each security at the balance sheet date.
               All marketable securities are defined as trading securities or
               available-for-sale securities under the provisions of Statement
               of Financial Accounting Standards ("SFAS") No. 115, "Accounting
               for Certain Investments in Debt and Equity Securities."

               Management determines the appropriate classification of its
               investments in marketable securities at the time of each purchase
               and re-evaluates such determination at each balance sheet date.
               Securities that are bought and held principally for the purpose
               of selling them in the near term are classified as trading
               securities and unrealized holding gains and losses are included
               in earnings. Debt securities for which the Company does not have
               the intent or ability to hold to maturity and equity securities
               are classified as available-for-sale. Available-or-sale
               securities are carried at fair value, with the unrealized gains
               and losses, net of tax, reported as a separate component of
               stockholders' equity. The cost of investments sold is determined
               on the specific identification or the first-in, first-out method.

          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 SUBSIDIARIES
                   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
               Production equipment                             5
               Computer equipment                              3-5
               Office furniture and equipment                  4-7

               Depreciation of property and equipment charged to operations is
               $208,590 and $27,886 for the years ended December 31, 2000 and
               1999, 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
               -----------                            --------------------
               License rights                                   10
               Scanner rights                                    5

          Revenue Recognition
          -------------------
               The Company recognizes revenue from product sales upon shipment
               to the customer, net of an allowance for sales returns. Revenue
               from medical services are recognized as the Company performs the
               services.

          Advertising
          -----------
               The Company advertises primarily through print media and on the
               Internet. The Company's policy is to expense advertising costs,
               including production costs, as incurred. Advertising expense was
               $8,696 and $31,400 for the years ended December 31, 2000 and
               1999, respectively.

          Stock-Based Compensation
          ------------------------
               The Company adopted 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
          -----------------
               When facts and circumstances indicate that the cost of long-lived
               assets may be impaired, an evaluation of the recoverability is
               performed by comparing the carrying value of the assets to the
               projected future cash flows. Upon indication that the carrying
               value of such assets may not be recoverable, the Company
               recognizes an impairment loss by a charge against current
               operations.

          Foreign Currency Translation
          ----------------------------
               The Company's international operations use their local currency
               as their functional currency. Assets and liabilities are
               translated at exchange rates in effect at the balance sheet date
               and income and expense accounts at the average exchange rates
               during the year. Resulting translation adjustments are recorded
               as a separate component of accumulated other comprehensive
               income.

                                       F-9

<PAGE>


                         LONGPORT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       Summary of Significant Accounting Policies (Continued)
         ------------------------------------------------------
          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 Income (Loss) Per Share of Common Stock
          -------------------------------------------
               The Company adopted 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 by dividing net income
               (loss) for the year by the weighted-average number of common
               shares outstanding during the period. Diluted earnings per share
               is calculated by dividing net income (loss) for the year by the
               weighted average number of common shares outstanding during the
               period, increased by the dilutive potential common shares
               ("dilutive securities") that were outstanding during the period.
               Dilutive securities include outstanding stock options and
               warrants. Dilutive securities relating to stock options and
               warrants are included in the calculation of diluted earnings per
               share using the treasury stock method. A reconciliation of the
               numerators and denominators of the basic and diluted earnings per
               share calculations for the years ended December 31, 2000 and 1999
               is presented in Note 4.

          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.       Marketable Securities
         ---------------------
               Marketable securities are carried on the balance sheet at their
               market value.

                                                          Unrealized     Market
                                                 Cost     Gain (Loss)    Value
                                                 ----     -----------    -----
               As of December 31, 2000:
                Available-for-sale securities:
                 Equity securities             $200,000    $111,764     $88,236
                                               --------    --------     -------

                 Total                         $200,000    $111,764     $88,236
                                               ========    ========     =======

3.       Income Taxes
         ------------
               The components of the provision for income taxes are as follows:

                                                          2000           1999
                                                          ----           ----
               Current:
                Federal                                $   --          $   --
                State                                     9,682           2,506
                                                       --------        --------
                Total                                     9,682           2,506
                                                       --------        --------


                                      F-10

<PAGE>
<TABLE>
<CAPTION>


                              LONGPORT, INC. AND SUBSIDIARIES
                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.       Income Taxes (Continued)
         -----------------------                          2000           1999
                                                          ----           ----
               Deferred:
               Federal                                     --             --
               State                                       --             --
                                                       --------       --------
                Total                                      --             --
                                                       --------       --------

               Total Provision For Income Taxes        $  9,682       $  2,506
                                                       ========       ========

               The provision (benefit) for income taxes reconciles to the amount
               computed by applying the federal statutory rate to income before
               the provision (benefit) for income taxes as follows:

                                                           2000          1999
                                                           ----          ----
               Federal statutory rate                      (34)%          34%
               State income taxes, net of federal benefits  (6)            6
               Net operating loss carryover                 --           (40)
               Valuation allowance                          40            --
                                                           ----          ----

               Total                                        -- %          --%
                                                           ====          ====

               The following is a reconciliation of the provision for income
               taxes to income before provision for income taxes computed at the
               federal statutory rate of 34%.

                                                               2000               1999
                                                               ----               ----
              <S>                                          <C>                <C>
               Income taxes at the federal statutory rate   $(810,184)         $ 241,366
               State income taxes, net of federal benefits   (142,974)            42,594
               Nondeductible expenses                          99,551             18,752
               Net operating loss carryover                      --             (300,206)
               Valuation allowance                            863,289               --
                                                            ---------          ---------

               Total                                        $   9,682          $   2,506
                                                            =========          =========

               Significant components of deferred income taxes as of December
               31, 2000 are as follows:


               Net operating loss carryover                                   $2,572,000
               Reserve for bad debts                                               2,000
               Other                                                               1,000
                                                                              ----------

               Total Deferred Tax Asset                                        2,575,000
                                                                              ----------

               Depreciation                                                      (14,000)
               Stock option compensation                                        (147,000)
                                                                              ----------

               Total Deferred Tax Liability                                     (161,000)
                                                                              ----------

               Less valuation allowance                                       (2,414,000)
                                                                              ----------

               Net Deferred Tax Asset                                         $     --
                                                                              ==========


                                           F-11
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                 LONGPORT, INC. AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.       Income Taxes (Continued)
         ------------------------
               The Company has assessed its past earnings history and trends,
               sales backlog, budgeted sales, and expiration dates of
               carryforwards and has determined that it is more likely than not
               that no deferred tax assets will be realized. The valuation
               allowance of $2,414,000 is maintained on deferred tax assets
               which the Company has not determined to be more likely than not
               realizable at this time. The net change in the valuation
               allowance for deferred tax assets was an increase of $944,000.
               The Company will continue to review this valuation on a quarterly
               basis and make adjustments as appropriate.

               At December 31, 2000, the Company had federal and state net
               operating loss carryforwards of approximately $6,300,000 and
               $4,400,000, respectively. Such carryforwards expire in the years
               2008 through 2020 and 2005 through 2010 for federal and state
               purposes, respectively.

4.       Net Income (Loss) Per Share of Common Stock
         -------------------------------------------
               The schedule below summarizes the elements included in the
               calculation of basic and diluted net income (loss) per share for
               the years ended December 31, 2000 and 1999. For the years ended
               December 2000 and 1999 options and warrants to purchase 3,175,714
               and 1,685,714 common shares, respectively, were excluded from the
               calculations of diluted net (loss) per share, as their effect
               would have been antidilutive.

                                                                        2000           1999
                                                                        ----           ----
              <S>                                                  <C>             <C>
               Net income (loss)                                    $(2,392,576)    $   707,393
                                                                    ===========     ===========

               Weighted-average common shares outstanding:
                 Weighted average common shares outstanding -
                   Basic                                             18,060,652      17,314,674

               Dilutive securities                                         --           862,899
                                                                    -----------     -----------

               Weighted-average common shares outstanding -
                   Diluted                                           18,060,652      18,177,573
                                                                    ===========     ===========

               Net income (loss) per common share:
                   Basic                                            $      (.13)    $       .04
                   Diluted                                          $      (.13)    $       .04

5.       Stock Options and Warrants
         --------------------------
          Stock Option Plan
          -----------------
               The Company adopted a stock option plan (the "Plan"), effective
               as of November 15, 1999 which provides for the grant of
               non-qualified stock options. A total of 1,000,000 shares of
               common stock have been reserved for issuance under the Plan.

               Options under the Company's Plan are issuable only to eligible
               officers, directors, key employees and consultants of the
               Company. The Plan is administered by a committee selected by the
               Board of Directors, which determines those individuals who shall
               receive options, the time period during which the options may be
               exercised, the number of shares of common stock that may be
               purchased under each option, and the option price. Unless sooner
               terminated, the Plan shall remain in effect until December 31,
               2009.

                                              F-12
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                               LONGPORT, INC. AND SUBSIDIARIES
                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.       Stock Options and Warrants (Continued)
         --------------------------------------
          Stock Option Plan (Continued)
          -----------------------------
               The per share exercise price of the common stock may not be less
               than the fair market value of the common stock on the date the
               option is granted. The stock options are subject to anti-dilution
               provisions in the event of stock splits, stock dividends and the
               like.

               No stock options are transferrable by an optionee other than by
               will or the laws of descent and distribution, and during the
               lifetime of an optionee, the option is only exercisable by the
               optionee. The exercise date of an option granted under the Plan
               must not be later than ten years from the date of grant. Any
               options that expire unexercised or that terminate upon an
               optionee's ceasing to be employed by the Company will become
               available once again for issuance.

               The following table contains information on the stock options
               under the Company's Plan for the years ended December 31, 2000
               and 1999. The outstanding options expire from September 2002 to
               December 2002.

                                                             Number of     Weighted Average
                                                              Shares        Exercise Price
                                                             --------       --------------
               Options outstanding at December 31, 1998          --            $    --
                 <S>                                         <C>                   <C>
                 Granted                                      500,000               3.00
                 Exercised                                       --                 --
                 Cancelled                                       --                 --
                                                             --------          ---------

               Options outstanding at December 31, 1999       500,000               3.00
                 Granted                                      800,000               1.50
                 Exercised                                       --                 --
                 Cancelled                                   (700,000)              3.00
                                                             --------          ---------

               Options outstanding at December 31, 2000       600,000          $    1.00
                                                             ========          =========

            Options
            -------
               The Company has granted stock options to employees, consultants
               and other individuals. The outstanding agreements expire from
               September 2001 through November 2001. The following table
               contains information on all of the Company's non Plan stock
               options for the years ended December 31, 2000 and 1999.

                                                            Number of        Weighted Average
                                                             Shares           Exercise Price
                                                             ------           --------------
               Options outstanding at December 31, 1998     1,350,000              $ .88
                 Granted                                      300,000               2.00
                 Exercised                                 (1,050,000)               .89
                 Cancelled                                   (100,000)              1.00
                                                           ----------              -----

               Options outstanding at December 31, 1999       500,000               1.50
                 Granted                                    2,430,000               1.86
                 Exercised                                   (100,000)               .75
                 Cancelled                                 (1,440,000)              2.64
                                                           ----------              -----

               Options outstanding at December 31, 2000     1,390,000              $1.38
                                                           ==========              =====


                                            F-13
</TABLE>
<PAGE>


                         LONGPORT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.       Stock Options and Warrants (Continued)
         --------------------------------------
               On September 29, 2000, the Board of Directors approved a
               repricing of all employee stock options granted under the Plan.
               All of the options under the Plan had an exercise price of $3.00
               and the exercise price was reduced to $1.00. In addition, the
               term of the options were reduced from ten years to two years. The
               Company also reduced the exercise price of all of its non Plan
               options to $1.00. The non Plan options were previously
               exercisable at $4.00 to $8.00 with three to five year terms and
               the option terms were all reduced to one year at the time of
               repricing the options.

               The Board of Directors would not typically consider reducing the
               exercise price of previously granted options. However, these
               options were repriced due to the occurrence of certain events
               beyond the reasonable control of the employees and consultants of
               the Company which significantly reduced the incentive these
               options were intended to create. The fair market value of the
               common stock was $.94 on the date of the repricing. Options to
               purchase approximately 1,540,000 shares were affected by this
               repricing.

          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 entitled the
               holder to purchase one share of the Company's common stock for
               $3.00 at anytime until June 30, 2001. The Company reduced the
               exercise price of the warrants to $1.00 in September 2000. All
               1,185,714 warrants are outstanding as of December 31, 2000.

          Pro Forma Disclosures
          ---------------------
               The Company adopted SFAS No. 123, "Accounting for Stock-Based
               Compensation". In accordance with the provisions of SFAS No. 123,
               the Company applies APB Opinion No. 25, "Accounting for Stock
               Issued to Employees," and related interpretations in accounting
               for employee stock options and does not recognize compensation
               expense for its stock options other than for options granted to
               non-employees. If the Company had elected to recognize
               compensation expense based upon the fair value at the grant date
               of employee stock options consistent with the methodology
               prescribed by SFAS No. 123, the Company's net income and earnings
               per share would be reduced as follows:

                                                            2000         1999
                                                            ----         ----
               Net income (loss):
                 As reported                             $(2,392,576)  $707,393
                 Pro forma                               $(5,873,311)  $430,801

               Net income (loss) per share of common
               stock:
                 As reported                             $      (.13)  $    .04
                 Pro forma                               $      (.33)  $    .02

               These pro forma amounts may not be representative of future
               disclosures since the estimated fair value of stock options is
               amortized to expense over the vesting period and additional
               options may be granted in future years. The fair value for these
               options was estimated at the date of grant using the
               Black-Scholes option pricing model with the following assumptions
               for the years ended December 31, 2000 and 1999.


                                      F-14

<PAGE>
<TABLE>
<CAPTION>


                                          LONGPORT, INC. AND SUBSIDIARIES
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.       Stock Options and Warrants (Continued)
         --------------------------------------
          Pro Forma Disclosures (Continued)
          ---------------------------------
                                                       2000           1999
                                                       ----           ----
               Risk-free interest rate                 6.12%          5.93%
               Expected life                           2.26 years     4.25 years
               Expected volatility                   148.91%        164.27%
               Expected dividend yield                    0%             0%

               The Black-Scholes option valuation model was developed for use in
               estimating the fair value of traded options which have no vesting
               restrictions and are fully transferable. In addition, option
               valuation models require the input of highly subjective
               assumptions including the expected stock price volatility.
               Because the Company's employee stock options have characteristics
               significantly different from those of traded options, and because
               changes in subjective input assumptions can materially affect the
               fair value estimates, in management's opinion, the existing
               models do not necessarily provide a reliable single measure of
               the fair value of its employee stock based compensation plans.

               The weighted average fair value price of options granted in 2000
               and 1999 was $1.28 and $2.22, respectively.

               The following table summarizes information about the Company's
               stock based compensation plan at December 31, 2000:

               Options Outstanding and Exercisable by Price Range as of December
               31, 2000:

                                    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
                 ------          -----------      ----------           -----           -----------          -----
                  <S>             <C>                <C>               <C>               <C>               <C>
                  $1.00            600,000           1.77              $1.00             600,000            $1.00
                  =====            =======           ====              =====             =======            =====

         Compensation Expense
         --------------------
               The Company recorded compensation expense of $673,019 for the
               year ended December 31, 2000 for the value of options granted to
               consultants of the Company. In addition, the Company recorded
               compensation expense of $94,426 for the year ended December 31,
               2000 from the repricing of stock options and warrants. The
               valuation of the options granted to employees is based on the
               difference between the exercise price and the market value of the
               stock on the measurement date. The valuation of the options
               granted to non-employees is estimated using the Black-Scholes
               option pricing model.

               The Company also recorded compensation expense of $173,310 for
               the year ended December 31, 2000 for the value of stock issued to
               consultants for services provided to the Company.

6.       Accumulated Other Comprehensive Income
         --------------------------------------
               The Company has adopted SFAS No. 130, "Reporting Comprehensive
               Income". This statement requires that all components of
               comprehensive income be reported in the financial statements in
               the period in which they are recognized. The components of
               comprehensive income for the Company include net income,
               unrealized gain (loss) on marketable  securities and foreign

                                      F-15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                         LONGPORT, INC. AND SUBSIDIARIES
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.       Accumulated Other Comprehensive Income (Continued)
         --------------------------------------------------
               currency translation adjustments. Components of other
               comprehensive income consist of the following:

                                                                Unrealized                          Accumulated
                                                                Gain (loss)         Foreign            Other
                                                               on Marketable       Currency        Comprehensive
                                                                Securities        Translation      Income (Loss)
                                                                ----------        -----------      -------------

               <S>                                              <C>               <C>                 <C>
               Balance at December 31, 1998                      $    --           $    --            $    --
               1999 change                                            --                (632)              (632)
                                                                 ---------         ---------          ---------

               Balance at December 31, 1999                           --                (632)              (632)
               2000 Change                                        (111,764)          (20,534)          (132,298)
                                                                 ---------         ---------           ---------

               Balance at December 31, 2000                      $(111,764)        $ (21,166)         $(132,930)
                                                                 =========         =========          ==========

7.       Preferred Stock
         ---------------
               The authorized preferred stock of the Company consists of
               1,000,000 shares, no 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.

8.       Commitments and Contingencies
         -----------------------------
          Leases
          ------
               The Company leases office equipment, a vehicle and office
               facilities under long-term leasing arrangements. The Company's
               office facilities lease contains a two-year renewal option. The
               following is a schedule of future minimum lease payments at
               December 31, 2000 under the Company's operating leases which have
               an initial noncancellable lease term in excess of one year:

                Year Ending                                   Operating
                December 31,                                    Leases
                ------------                                    ------
                    2001                                       $41,557
                    2002                                        34,771
                                                               -------

                      Total Future Minimum Lease Payments      $76,328
                                                               =======

               Rental expense charged to operations was $72,903 and $36,316 for
               the years ended December 31, 2000 and 1999, respectively.

          Technology Enhancement and Marketing Agreement
          ----------------------------------------------
               The Company entered into a Technology Enhancement and Marketing
               Agreement (the "Agreement") with a Corporation in June 1999. The
               Corporation has agreed to fund $5,000,000 for research for
               biomedical technology enhancements to the Company's digital

                                      F-16
</TABLE>
<PAGE>


                         LONGPORT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.       Commitments and Contingencies (Continued)
         -----------------------------------------
          Technology Enhancement and Marketing Agreement (Continued)
          ----------------------------------------------------------
               scanner technologies. The Agreement is effective June 1, 1999 and
               the Corporation shall provide the funding in increments of
               $30,000 a month for the first year, $60,000 a month for the
               second year, $120,000 a month for the third and fourth years and
               $100,000 a month for the fifth year until a total of $5,000,000
               is paid under the Agreement.

               The Agreement was terminated in May 2000 and no further amounts
               are to be received under the Agreement.

          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 was heard by an
               Administrative Law Judge on January 5, 1999 and again on November
               2, 1999. The Administrative Law Judge reviewed approximately
               forty out of approximately 410 cases. The Administrative Law
               Judge dismissed some cases, ruled in favor of the Company on
               certain cases and ruled against the Company on other cases. The
               Company continues to be in the Appeals process. The Company is
               unable to predict the outcome of the Appeal.

               As of December 31, 2000, the Company has accrued a liability of
               $100,000 as a result of the above proceedings. The $100,000
               accrual is the Company's best estimate of the potential liability
               based on all of the facts and circumstances currently known.

          Purchase Commitment
          -------------------
               In September 2000, the Company entered into an agreement to
               purchase fifty scanners for approximately $497,000 and has made
               advance deposits of $61,200 leaving a balance due of
               approximately $435,800 when the scanners are received in 2001.

9.       Concentration of Credit Risk and Major Customers
         ------------------------------------------------
               Financial instruments which potentially subject the Company to
               concentrations of credit risk consist principally of temporary
               cash investments and accounts receivable. The Company places its
               cash equivalents and short term investments with high credit
               quality financial institutions and limits its credit exposure
               with any one financial institution. The Company's cash in its
               banks exceed the federally insured limits.

               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 the eastern
               United States. The Company performs periodic credit evaluations
               of its customers' financial condition and generally requires no
               collateral. The Company maintains reserves for potential credit
               losses, and such losses have not exceeded management's
               expectations. The Company's revenue is generated from a single
               product, the Scanner, which subjects the Company to significant
               financial exposure. If future sales change the Company's
               operations could be materially adversely affected.

               Revenues from major customers, as a percentage of total revenue,
               for the years ended December 31, 2000 and 1999 were as follows:

                                      F-17
<PAGE>


                         LONGPORT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.       Concentration of Credit Risk and Major Customers (Continued)
         ------------------------------------------------------------

                                                         2000             1999
                                                         ----             ----
               Customer A                                11.7%              *
               Customer B                                13.0%              *
               Customer C                                  *              59.3%
               Customer D                                22.4%            11.1%
               Customer E                                17.9%              *
               Customer F                                17.9%              *

               * Less than 10%

10.      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, 2000:

                                                        Carrying      Estimated
                                                         Amount      Fair Value
                                                         ------      ----------
              Financial Assets:
               Cash and cash equivalents                $268,553      $268,553
               Marketable securities                      88,236        88,236

               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 marketable securities is determined by the most recently
               traded price of each security at the balance sheet date.

11.      Subsequent Event
         ----------------
               In January 2001, the Company received a litigation settlement of
               approximately $665,000. The settlement was received from a
               lawsuit previously filed by the Company, which related to prior
               lawsuits concerning the Company's rights to certain scanner
               technology. The $665,000 will be recognized as income in the
               first quarter of 2001.


                                      F-18

<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------------------------------------------------

     None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT
--------------------------------------------------------------------------------

     The name, age and position of each of the Company's executive officers and
directors are set forth below:

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

James R. McGonigle      56           Chairman of the                   1993
                                     Board of Directors,
                                     Chief Executive Officer, and
                                     Chief Accounting Officer

James M. Weeks          43           President                         2000

Peter E. Cavanaugh      35           Director                          1993

Lee S. Cohen            51           Director of Sports                1999
                                     Medicine and Director


     Directors hold office for a period of one year from their election at the
annual meeting of shareholders 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 receives 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 and
Chief Executive Officer since its inception in January 1993. From 1987 to 1992
Mr. McGonigle was the founder and President of Supra Medical Corp. Supra was a
publicly held company specializing in the development of proprietary medical
technologies in the fields of skin care and diagnostics.


                                       8
<PAGE>


     James M. Weeks has been an independent manufacturer's representative
specializing in medical products, since May 1996. From October 1994 to May 1996
he was Operations Manager for Unimedix, Inc., a New Jersey-based medical
distributor. He has over 20 years experience in the medical industry and earned
a Bachelor's degree in physics from the State University of New York.

     Peter E. Cavanaugh was Vice President and General Counsel of the Company
from December 1993 until February 1997. 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, he was employed by the
Pennsylvania Manufacturers Association Insurance Company in the legal and claims
departments. From February 1997 until August 1997, he practiced law with the law
firm of White and Williams. He is currently associate counsel for Nuclear
Electric Insurance, Ltd.

     Lee S. Cohen, DPM, Director of Sports Medicine, joined the Company in
October 1998. Dr. Cohen acts as the Podiatric Consultant to the Philadelphia
Eagles, 76ers, the New York Jets and the L.P.G.A. in addition to numerous other
sports affiliates. Dr. Cohen currently holds patents on seven foot care
products, some of which are used in the National Football League and Major
League Baseball. Dr. Cohen received his Doctor of Podiatric Medicine from
Pennsylvania College of Podiatric Medicine and his BA from Temple University.

Executive Compensation

     The following table discloses all compensation paid to the Company's Chief
Executive Officer for the years ended December 31, 1998 and 1999. No executive
officer's annual compensation exceeded $100,000 in either year. James M. Weeks,
the Company's President, devotes approximately 10% of his time to the Company's
affairs and does not currently receive any compensation from the Company. The
Company issued to him 50,000 shares of its common stock and paid him $9,000 in
cash for prior services rendered.

<TABLE>
<CAPTION>

                                         Summary Compensation Table

(a)           (b)    (c)         (d)        (e)               (f)         (g)        (h)         (i)

Name &                                      Other             Restricted
Principal                                   Annual            Stock       Options/   LTIP         All Other
Position      Year   Salary($)   Bonus($)   Compensation($)   Awards($)   SARS(#)    Payouts($)   Compensation($)
--------      ----   ---------   --------   ---------------   ---------   -------    ----------   ---------------
<S>           <C>     <C>          <C>         <C>              <C>         <C>        <C>            <C>
James R.      1999    -0-(1)       -0-         -0-              -0-         -0-        -0-            -0-
McGonigle     2000    -0-(1)       -0-         -0-              -0-         -0-        -0-            -0-
Chief Exec.
Officer

</TABLE>

(1)  The Company paid Colpat, Inc., a consulting firm wholly owned by Mr.
     McGonigle, $8,000 per month for Mr. McGonigle's services in 1999 and 2000.
     The current consulting fee is $6,000 per month.

                                       9
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

     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)                   1,740,893                     9.6%

Peter Cavanaugh (2)                        210,571                     1.2%

Lee S. Cohen (3)                           210,000                     1.2%

Michie Proctor and                       2,669,174                    14.8%
Joyce Proctor (4)

The First Baptist Church                 1,280,977                     7.1%
of Southwest Broward

All officers and directors
as a group (four persons) (5)            2,161,464                    11.8%

----------
* Less than 1%

(1)  Includes 767,000 shares held by James R. McGonigle, 497,143 shares held by
     Wound Healing Systems, Inc., and 376,750 shares held by Colpat, Inc.
     corporations controlled by Mr. McGonigle, and 100,000 common stock purchase
     warrants held by Colpat, Inc.

(2)  Includes 25,000 stock options exercisable at $1.00 per share until
     September 2001.

(3)  Includes 200,000 stock options exercisable at $1.00 per share until
     September 2001.

(4)  Includes 2,118,258 shares held by Michie Proctor, 450,916 shares held by
     Michie Proctor and Joyce Proctor and 100,000 common stock purchase warrants
     held by Michie and Joyce Proctor.

(5)  Includes shares, common stock purchase warrants and stock options held by
     the Company's officers and directors, which are exercisable within 60 days
     from the date hereof.


                                       10
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

     In January 1996, the Company entered into a consulting agreement with
Colpat, Inc., a company owned and controlled by the Company's Chief Executive
Officer, James R. McGonigle, pursuant to which Colpat provides Mr. McGonigle's
services to the Company for $8,000 per month. For the year 2001, the consulting
fee was reduced to $6,000 per month.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

(a)  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)
         10.25      Research and Licensing Agreement (UMDS)(1)
         10.30      Services Agreement (West Jersey Health System)(2)
         10.32      Agreement with R. D. Bowers Associates (1)
         10.33      Agreement with Professional Home Care Services (1)
         10.34      Agreement with Austin Medical, Inc. (1)
         10.35      Letter of Understanding with GWR Medical, LLP (1)
         10.36      Technology Transfer Agreement (VMOS) (1)
         10.37      Technology Transfer Agreement (SWS) (1)
         10.38      Agreement with HealthLink International, Inc.
         21.1       Subsidiaries of Registrant(1)
         99.1       Deed Regarding 791 South Chester Road, Swarthmore,
                    Pennsylvania(1)
         99.2       Deed of Correction(1)

     ----------
     (1)  Incorporated by reference to the Registrant's Registration Statement
          on Form SB-2, File No. 33- 75236 and Post Effective Amendment No. 1
          thereto.

     (2)  Incorporated by reference to the Registrant's Annual Report on Form
          10-KSB for the year ended December 31, 1997.


(b)  Reports on Form 8K

     None.


                                       11
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused the Report to be signed on its behalf by the
undersigned, thereunto duly authorized, in Swarthmore, Pennsylvania, on April 9,
2001.

                                          LONGPORT, INC.



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

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


      Signature                         Title                          Date
      ---------                         -----                          ----

/s/ James R. McGonigle      Chairman of the Board of Directors,    April 9, 2001
----------------------      Chief Executive Officer and
James R. McGonigle          Chief Financial Officer
                            (Principal Accounting Officer)


/s/ James M. Weeks          President                              April 9, 2001
----------------------
James M. Weeks


/s/ Peter Cavanaugh         Director                               April 9, 2001
----------------------
Peter Cavanaugh


/s/ Lee S. Cohen            Director                               April 9, 2001
----------------------
Lee S. Cohen



                                       12