Board Games

The OTC Bulletin Board: a rung on your way up the Nasdaq ladder or the place where small-time players go to be small-time players?

To Will Mullin's way of thinking, his company's high-frequency portable scanner is technological silly putty. "Everyone who comes in contact with our product envisions a new use for it," says the 31-year-old president of Swarthmore, Pennsylvania-based Longport Inc.

Initially, Mullin says, Longport developed its scanner in the early 1990s for the wound-care market. "The underlying technology gave us several competitive advantages," says Mullin. "For instance, with a 20 MHz frequency, we were able to scan much clearer images than were possible at lower ends of the spectrum." Unlike the ultrasound technology used in obstetrics and gynecology, Mullin adds, Longport's device is portable and digital, meaning the equipment can be taken to the patients and the images can be sent via e-mail to achieve true telemedicine.

These attributes have created excitement beyond Longport's initial target market. Oncologists have used the scanner to measure the effects of radiology treatments on cancer patients. Sports medicine professionals want scanners on the field, and veterinarians see uses in barns, paddocks and pens.

After several years of development and one lawsuit, Longport finally began rolling out products in October. Because of limited marketing resources, the company's initial focus is on the wound-management market. But investors who bet on the company when it sold shares in a private placement in late 1993 and then began trading on the Over-The-Counter (OTC) Bulletin Board in 1994, have enjoyed pretty good returns. Initially traded at 35 cents per share, Longport's common stock has climbed to a price of about $3. Based on fundamentals such as future sales, Jim McGonigle, Longport's founder and CEO, thinks the company can eventually be a $50 stock...perhaps.

McGonigle's doubt stems not from the potential of the product or its markets but from Longport's trading venue, the OTC Bulletin Board. "Initially," says McGonigle, "I wanted to go all the way on the Bulletin Board, to blaze a trail for others and to show it could be done. But now I'm not so sure we can pull it off."


David R. Evanson's newest book about raising capital is called Where to Go When the Bank Says No: Alternatives for Financing Your Business(Bloomberg Press). Call (800) 233-4830 for ordering information. Art Beroff, a principal of Beroff Associates in Howard Beach, New York, helps companies raise capital and go public. Beroff is also a member of the National Advisory Committee for the SBA.

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This article was originally published in the January 2000 print edition of Entrepreneur with the headline: Board Games.

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