FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997
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 number: 2-96392-A
TRIANGLE IMAGING GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida 59-2493183_____
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
4400 West Sample Road, Coconut Creek, Florida 33073
(Address of Principal Executive Office) (Zip Code)
954-968-2080
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has 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
The number of shares of registrant's Common Stock, $.001 par value, outstanding
as of March 31, 1997 was 5,660,166 shares.
<PAGE>
TRIANGLE IMAGING GROUP, INC. AND SUBSIDIARY
INDEX
Page
Number
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheet - March 31, 1997........................... 1
Consolidated Statement of Operations - For the Three Months Ended
March 31, 1997 and 1996............................................... 2
Consolidated Statement of Cash Flows - For the Three Months Ended
March 31, 1997 and 1996............................................... 3
Notes to Financial Statements....................................... 4-5
Item 2. Management's Discussion and Analysis....................... 6-7
PART II - OTHER INFORMATION................................................. 8
SIGNATURES.................................................................. 9
<PAGE>
Item 1. Financial Statements
TRIANGLE IMAGING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
March 31,
1997
------------------
CURRENT ASSETS:
Cash and cash equivalents $ 393,215
Accounts receivable, net of allowance for doubtful
accounts of $154,000 405,972
Prepaid expenses 18,179
------------------
TOTAL CURRENT ASSETS 817,366
EQUIPMENT 196,787
GOODWILL 1,896,372
OTHER ASSETS 5,152
------------------
$ 2,915,677
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 417,453
Deferred revenue 271,419
Due to stockholders 50,000
Current portion of note payable 275,000
------------------
TOTAL CURRENT LIABILITIES 1,013,872
NOTE PAYABLE 1,325,000
MINORITY INTEREST 203,531
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par, 1,000,000 shares authorized:
Class A, 10,000 shares issued and outstanding 10,000
Class B, 75,000 shares issued and outstanding 300,000
Common stock, $.001 par value,
authorized 50,000,000 shares: 5,660,166
issued and outstanding 5,661
Additional paid-in capital 1,794,185
Accumulated deficit (1,541,017)
Deferred compensation (195,555)
------------------
TOTAL STOCKHOLDERS' EQUITY 373,274
------------------
$ 2,915,677
==================
See notes to financial statements.
-1-
<PAGE>
TRIANGLE IMAGING GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three months ended
March 31,
-----------------------------------
1997 1996
---------------- ----------------
SALES $ 1,111,221 $ -
COST OF SALES 244,055 -
---------------- ----------------
GROSS PROFIT 867,166 -
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 694,591 5,447
NON-CASH IMPUTED COMPENSATION EXPENSE 13,375 13,250
AMORTIZATION OF GOODWILL 24,106 -
---------------- ----------------
INCOME (LOSS) FROM OPERATIONS 135,094 (18,697)
INTEREST EXPENSE 19,486 -
---------------- ----------------
INCOME (LOSS) BEFORE MINORITY INTEREST 115,608 (18,697)
MINORITY INTEREST 26,141 -
---------------- ----------------
NET INCOME (LOSS) $ 89,467 $ (18,697)
================ ================
NET INCOME PER SHARE $ 0.02 $ (0.01)
================ ================
WEIGHTED AVERAGE SHARES OUTSTANDING 5,533,332 3,580,498
================ ================
See notes to financial statements.
-2-
<PAGE>
TRIANGLE IMAGING GROUP, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
-----------------------------------
1997 1996
--------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 89,467 $ (18,697)
Adjustment to reconcile net income
(loss) to net cash
provided by operating activities:
Depreciation 25,256 -
Amortization of goodwill 24,106 -
Non-cash imputed compensation 13,375 13,250
Minority interest 26,141 -
Changes in assets and liabilities:
Increase in accounts receivable (36,104) -
Decrease in prepaid expenses 13,096 -
Increase in other assets (1,055) -
Increase in accounts payable
and accrued expenses 144,780 4,140
Decrease in deferred revenue (75,784) -
--------------- ----------------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 223,278 (1,307)
--------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (30,327) -
--------------- ----------------
CASH USED IN INVESTING ACTIVITIES (30,327) -
--------------- ----------------
NET INCREASE (DECREASE) IN CASH 192,951 (1,307)
CASH - BEGINNING OF PERIOD 200,264 1,371
--------------- ----------------
CASH - END OF PERIOD $ 393,215 $ 64
=============== ================
See notes to financial statements.
-3-
<PAGE>
PART 1 - FINANCIAL INFORMATION
TRIANGLE IMAGING GROUP, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements reflect all adjustments
which, in the opinion of management, are necessary for a fair presentation of
the financial position for the interim periods presented.
Certain financial information which is normally included in
financial statements prepared in accordance with generally accepted accounting
principles, but which is not required for interim reporting purposes has been
condensed or omitted. The accompanying financial statements should be read in
conjunction with the financial statements and notes thereto as of December 31,
1996 contained in the Company's Annual Report on Form 10-KSB.
2. EARNING (LOSS) PER SHARE
Per share information is computed based on the weighted
average number of shares outstanding during the period.
3. NON-CASH IMPUTED COMPENSATION EXPENSE
A total of 7,000 shares of common stock were issued for
services during the quarter ended March 31, 1997. Such shares have been valued
at their fair market value on the date of issuance resulting in a non-cash
charge to income of $3,080.
4. ACQUISITION
On December 2, 1996, 95% of the stock of Engineered Business
Systems, Inc. ("EBS") was acquired by the Company for $896,000 in cash, a note
payable to EBS's shareholders for $1,600,000 and 500,000 restricted shares of
the Company's common stock with certain piggy back registration rights and
restrictions. EBS's shareholders also have certain anti-dilution provisions and
selling rights tied to the President's personal stock holdings, which expire
upon the earlier of the a) registration of the restricted shares and the payment
of all obligations to the EBS shareholders or b) on January 2, 2000 and payment
of all obligations to EBS's shareholders. The acquisition of EBS has been
accounted for as a purchase and accordingly, the assets acquired and liabilities
assumed have been recorded at their estimated fair values which approximates
book value. The following table summarizes this acquisition:
-4-
<PAGE>
Purchase Price, including acquisition costs $ 2,620,915
Liabilities assumed 454,159
Assets acquired (1,146,561)
Goodwill $ 1,928,513
Accumulated amortization on goodwill at March 31, 1997 was
$32,141.
The following schedule combines the unaudited pro forma
results of operations of the Company and EBS for the three months ended March
31, 1996 as if the acquisition had occurred on January 1, 1996 and includes such
adjustments which are directly attributable to the acquisition. It should not
be considered indicative of the results that would have been achieved had the
acquisition not occurred or the results that would have been obtained had the
acquisition actually occurred on January 1, 1996.
Net sales $ 830,546
Net income 71,153
Net income per share .01
Shares used in computation 5,533,332
5. MINORITY INTREST
Pursuant to terms of employment agreements, 10% of the stock in
EBS has been issued with the unearned portion recorded as deferred compensation.
-5-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Prior to December 2, 1996, the Company's primary focus was to search for and
identify acquisition candidates for the purpose of merging with or acquiring
promising young companies in need of an infusion of cash and/or superior
management. On December 2, 1996, the Company completed the acquisition of 95%
of the stock of Engineered Business Systems, Inc. ("EBS"), in a leveraged
transaction. Total value of the transaction was approximately $3 Million.
Results of Operations
Total revenues for the three months ended March 31, 1997 were $1,111,221, which
is an increase over the Company's revenues of $0 for the three months ended
March 31, 1996. The increase resulted entirely from the acquisition of EBS on
December 2, 1996 and the results of EBS's operations for the three month period.
Cost of sales was $244,055 for the three months ended March 31, 1997, which
again was an increase over the Company's three months ended March 31, 1996 cost
of sales of $0. Gross profit as a percentage of revenue was 78% for the three
months ended March 31, 1997. The increase resulted entirely from the
acquisition of EBS on December 2, 1996, and the results of EBS's operations for
the three month period.
Selling, general and administrative expenses for the three months ended March
31, 1997 were $694,591 as compared to $5,447 for the three months ended March
31, 1996. Management believes that the increase in selling, general and
administrative expenses was due to the acquisition of EBS and the expenses
related to its operations, compared to the minimal operating expenses associated
with a non-revenue producing company. Non-cash imputed compensation for the
three months ended March 31, 1997 was $13,375, as compared to $13,250 for the
three months ended March 31, 1996.
For the three months ended March 31, 1997, the Company's net income included a
non-cash expense of $49,362. Such expense was incurred as a result of
depreciation and amortization of assets acquired with the acquisition of EBS as
well as the goodwill created in the acquisition.
Interest expense was $19,486 for the three months ended March 31, 1997, compared
to $0 for the three months ended March 31, 1996, reflecting interest paid on an
8% promissory note of $1,600,000. The promissory note is held by the selling
shareholders of EBS, created during the sale of EBS to the Company. Minority
interest for the three months ended March 31, 1997 was $26,141, reflecting
interest due to holders of 15% of EBS Stock.
As a result of all the above factors, net income for the three months ended
March 31, 1997 was $89,467 as compared to a net loss of $18,697 for the three
months ended March 31, 1996.
-6-
<PAGE>
Liquidity and Capital Resources
The Company has funded its working capital and capital expenditure requirements
from cash provided from operations and from the proceeds of the sales of
Preferred Stock. The primary source of cash receipts is from payments of
accounts receivable and sales.
As of March 31, 1997, the Company had cash of $393,000.
To date, inflation has not had a material effect on the Company's business.
The Company believes that the effects of future inflation may be minimized by
controlling costs and increasing efficiency.
-7-
<PAGE>
PART II - Other Information
Item 6. Exhibit and Reports on form 8-K
A. Exhibits
None.
B. Report on Form 8-K
None.
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TRIANGLE IMAGING GROUP, INC.
Dated: 5/15/97 By:/s/ Vito Bellezza
-----------------
Vito Bellezza
President, Chairman of the Board,
Chief Financial Officer, Chief Executive
Officer and Director
-9-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000764763
<NAME> TRIANGLE IMAGING GROUP, INC.
<MULTIPLIER> 1
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 393,215
<SECURITIES> 0
<RECEIVABLES> 405,972
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 817,366
<PP&E> 196,787
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,915,677
<CURRENT-LIABILITIES> 1,013,872
<BONDS> 1,325,000
0
310,000
<COMMON> 5,661
<OTHER-SE> 57,613
<TOTAL-LIABILITY-AND-EQUITY> 373,274
<SALES> 1,111,221
<TOTAL-REVENUES> 1,111,221
<CGS> 244,055
<TOTAL-COSTS> 244,055
<OTHER-EXPENSES> 758,213
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,486
<INCOME-PRETAX> 89,467
<INCOME-TAX> 0
<INCOME-CONTINUING> 89,467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89,467
<EPS-PRIMARY> .02
<EPS-DILUTED> 0
</TABLE>
