UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT(DATE OF EARLIEST EVENT)
MARCH 4, 1997 (DECEMBER 20, 1996)
TRIANGLE IMAGING GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida 59-2493183
State or other jurisdiction I.R.S. Employer
of incorporation or organization Identification No.
4400 W. Sample Road, Coconut Creek, Florida 33073
(Address of Principal Executive Office) (Zip Code)
954-968-2080
(Registrant's telephone number including area code)
12 South Penataquit Avenue, Bay Shore, New York 11706 (Former name or
former address, if changed since last report)
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its current report dated December 20,
1996 on Form 8-K as set forth in the pages attached hereto:
Item 4 (b) - Changes in Registrants' Certifying Accountant
Item 7 (a) - Financial statements of business acquired
Item 7 (b) - Pro forma financial information
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Triangle Imaging Group, Inc.
By / S / Vito Bellezza_____
Vito Bellezza
President
Date: March 4, 1997
<PAGE>
Item 4. Changes in Registrants' Certifying Accountant
(b) On February 1, 1997, Triangle Imaging Group, Inc. engaged Mazars & Guerard,
LLP as its independent accountants.
<PAGE>
Item 7 (a)
Financial Statements of Business Acquired
<PAGE>
ENGINEERED BUSINESS SYSTEMS, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE NUMBER
Independent Auditors' Report 2
Balance Sheet 3
Statements of Operations 4
Statements of Changes in Stockholders' Equity 5
Statements of Cash Flows 6
Notes to Financial Statements 7 - 9
1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and
Board of Directors
Engineered Business Systems, Inc.
We have audited the accompanying balance sheet of Engineered
Business Systems, Inc. as of August 31, 1996 and the related statements of
operations, stockholders' equity, and cash flows for years ended August 31, 1996
and 1995. 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 financial position of Engineered
Business Systems, Inc. as of August 31, 1996, and the results of its operations
and its cash flows for the years ended August 31, 1996 and 1995 in conformity
with generally accepted accounting principles.
By / S / Mazars & Guerard, LLP
------------------------------
Mazars & Guerard, LLP
Certified Public Accountants
February 8, 1997
New York, New York
2
<PAGE>
ENGINEERED BUSINESS SYSTEMS, INC.
BALANCE SHEET
AUGUST 31, 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 729,740
Accounts receivable, net of allowance for doubtful
accounts of $25,000 368,913
Prepaid expenses 7,655
---------------------
TOTAL CURRENT ASSETS 1,106,308
EQUIPMENT 193,448
OTHER ASSETS 4,097
---------------------
$ 1,303,853
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 104,295
Deferred revenue 300,677
Income tax payable 86,915
---------------------
TOTAL CURRENT LIABILITIES 491,887
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 1,000,000 shares
authorized, 896 issued and outstanding 9
Additional paid in capital 739,990
Retained earnings 71,967
---------------------
TOTAL STOCKHOLDERS' EQUITY 811,966
---------------------
$ 1,303,853
=====================
3
The accompanying notes are an intergral part of the financial statements
<PAGE>
ENGINEERED BUSINESS SYSTEMS, INC.
STATEMENTS OF OPERATIONS
Year ended August 31,
--------------------------------------
1996 1995
----------------- -----------------
SALES $ 3,322,186 $ 3,860,711
COST OF SALES 747,539 1,001,694
----------------- -----------------
GROSS PROFIT 2,574,647 2,859,017
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,939,760 2,126,809
----------------- -----------------
INCOME FROM OPERATIONS 634,887 732,208
INTEREST INCOME 17,783 2,252
----------------- -----------------
INCOME BEFORE INCOME TAXES 652,670 734,460
INCOME TAX PROVISION 182,000 7,000
----------------- -----------------
NET INCOME $ 470,670 $ 727,460
================= =================
4
The accompanying notes are an intergral part of the financial statements
<PAGE>
ENGINEERED BUSINESS SYSTEMS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------------------- Paid-in Retained Treasury Stockholders'
Shares Amount Capital Earnings Stock Equity
-------------- ------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE - August 31, 1994 100 $ 1 $ 299,999 $ 242,050 $ (124,000) $ 418,050
Issuance of common stock 944 9 439,991 - - 440,000
Net income - - - 727,460 - 727,460
-------------- ------------- -------------- -------------- -------------- --------------
BALANCE - August 31, 1995 1,044 10 739,990 969,510 (124,000) 1,585,510
Retirement of stock (148) (1) - (159,499) 124,000 (35,500)
Dividend - - - (1,208,714) - (1,208,714)
Net income - - - 470,670 - 470,670
-------------- ------------- -------------- --------------- -------------- --------------
BALANCE - August 31, 1996 896 $ 9 $ 739,990 $ 71,967 $ - $ 811,966
============== ============= ============== =============== ============== ==============
</TABLE>
5
The accompanying notes are an integral part of the financial statements.
<PAGE>
ENGINEERED BUSINESS SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended August 31,
-------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 470,670 $ 727,460
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 101,022 124,549
Other (1,520) 849
Changes in assets and liabilities:
Decrease in accounts receivable 159,252 138,355
Decrease in prepaid expenses 7,434 31,650
Decrease (increase) in other assets 5,000 (5,000)
(Decrease) in accounts payable and accrued expenses (377,739) (469,498)
(Decrease) in customers deposits - (379,044)
Increase in income taxes payable 74,915 12,000
(Decrease) increase in deferred revenue (131,403) 47,157
-------------- --------------
(262,541) (624,380)
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 307,631 228,478
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (55,720) (99,227)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in investment in subsidiary 20,662 (43,796)
Payment of note payable-stockholders - (420,000)
Issuance of common stock - 440,000
Retirement of stock (35,500) -
-------------- --------------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (14,838) (23,796)
-------------- --------------
NET INCREASE IN CASH 237,073 105,455
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 492,667 387,212
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 729,740 $ 492,667
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for:
Interest $ - $ 17,604
============== ==============
Taxes $ 28,634 $ 2,104
============== ==============
Noncash activity:
Payment of dividend $ 1,208,714 $ -
============== ==============
</TABLE>
6
The accompanying notes are an intergral part of the financial statements
<PAGE>
ENGINEERED BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1996 AND 1995
1. BUSINESS
Engineered Business Systems, Inc. (the "Company") was organized as a
Florida corporation in 1989 and is engaged in the business of
developing, marketing and supporting various software packages
primarily for business use.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Research and development - Research and development costs are
expensed as incurred. These costs primarily consist of fees
paid for the development of the Company's software. The
current accounting rule, "Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed," does not
materially affect the Company.
b. Equipment - Equipment is stated at cost and is depreciated
over the estimated useful lives of the assets using various
accelerated methods which approximates economic depreciation.
c. Revenue recognition - Revenue from software sales is generally
recognized upon execution of a sales contract, the delivery of
the software and completion of the major portion of the
contract requirement.
d. Cash and cash equivalents - The Company classifies as cash
equivalents highly liquid temporary investments with an
original maturity of three months or less when purchased.
e. Accounting estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires 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 amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
f. Basis of presentation - Effective for the year ended August
31, 1996, the Company's advances to its wholly - owned
subsidiary, Checknet Corporation ("Checknet"), of $1, 584,714
were contributed to Checknet's capital. Also effective
August 31, 1996, the Company dividended to its
stockholders its investment in Checknet. The financial
statements reflect only the financial position and results of
operations of the Company for the years ended August 31, 1996
and 1995.
7
<PAGE>
3. CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist of cash and trade
receivables. At times the cash in one bank may exceed the FDIC $100,000
insured limit. The Company minimizes the risk by placing its cash with
a high credit quality financial institution. In regards to trade
receivables, the risk is relatively limited due to a large customer
base.
4. EQUIPMENT
Equipment at August 31, 1996 consisted of the following:
Estimated
useful lives
----------------
Computer hardware 5-7 $ 411,859
Computer software 5 133,193
Office furniture 7 51,578
Office equipment 5-7 107,754
----------------
704,384
Less: Accumulated depreciation 510,936
----------------
$ 193,448
================
5. DEFERRED REVENUE
At August 31, 1996, deferred revenue of $300,677 represents the
unearned portion of sales related to software maintenance
agreements. Deferred revenue is recognized as income on a
straight - line basis over the service contract terms which are
generally for renewable twelve month periods.
6. INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the
financial statement and tax basis of assets and liabilities, and for
the expected future tax benefit to be derived from tax loss and tax
credit carry forwards. SFAS No. 109 additionally requires the
establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets.
8
<PAGE>
The Company files for tax purposes a consolidated tax return as the
parent of Checknet Corporation. Income taxes have been provided as if
the Company filed its tax return on a separate basis.
The provision for income taxes differs from the amount computed by
applying the statutory federal income tax rate to income before income
taxes as follows:
<TABLE>
<CAPTION>
Year Ended August 31,
-------------------------------------------
1996 1995
------------------- ------------------
<S> <C> <C>
Pre-tax income $ 652,670 $ 734,460
=================== ==================
Tax at Federal statutory rate 228,000 257,000
Effect of permanent differences (41,000) -
State tax (net of Federal benefit) 10,000 1,000
Elimination of valuation allowance
recorded against prior years' deductible
temporary differences - (236,000)
Tax benefit of graduated rates (15,000) (15,000)
------------------- ------------------
Provision for income taxes $ 182,000 $ 7,000
=================== ==================
</TABLE>
7. COMMITMENTS
The Company leases office space in Coconut Creek, Florida. At August
31, 1996, the future minimum lease payments under the operating leases
are as follows:
Years Amount
----- ------
1997 $ 64,000
1998 47,000
8. STOCKHOLDERS' EQUITY
In November 1995, two stockholders exercised their warrants and
purchased 750 shares of the Company's common stock for $420,000. Such
amount was offset against amounts owed to them as of August 31, 1995
for accrued compensation. Such shares were reflected as if the shares
were issued as of August 31, 1995.
In November 1995 the Company issued 194 shares to two employees for
services of $20,000 rendered prior to September 1994. Such shares were
reflected as if the shares were issued as of August 31, 1995.During the
year ended August 31, 1996, 44 shares of treasury stock and 104 shares
of common stock were retired. These retirements were reflected as an
adjustment to retained earnings.
9. SUBSEQUENT EVENT
On December 2, 1996, 95% of the Company was acquired by Triangle
Imaging Group, Inc., for $896,000 in cash, a note payable to the
Company's shareholders for $1.6 million and 500,000 restricted shares
of common stock of the acquiring entity.
9
<PAGE>
Item 7 (b)
Pro Forma Financial Information
<PAGE>
TRIANGLE IMAGING GROUP, INC. AND ENGINEERED BUSINESS SYSTEMS, INC.
UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
The accompanying pro forma consolidated financial statements have been
prepared to show the effects of the December 2, 1996 acquisition of Engineered
Business Systems, Inc. ("EBS") by Triangle Imaging Group, Inc. (the "Company").
The following unaudited consolidated balance sheet presents the
financial position of the Company at December 31, 1996 which includes the
acquisition of EBS.
The unaudited pro forma consolidated statement of operations for the
year ended December 31, 1996 reflects the combined results of the Company for
its fiscal year ended December 31, 1996 and EBS for the year ended December 31,
1996, as if the acquisition had occurred on January 1, 1996, adjusted to reflect
interest on the acquisition debt and amortization of goodwill.
The unaudited pro forma consolidated statement of operations does not
necessarily represent actual results that would have been achieved had the
companies been together as of January 1, 1996, nor may it be indicative of
future operations. These unaudited pro forma consolidated financial statements
should be read in conjunction with the Company's and EBS's historical financial
statements and notes thereto.
<PAGE>
TRIANGLE IMAGING GROUP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 200,264
Accounts receivable 393,834
Prepaid expenses 31,275
---------------
TOTAL CURRENT ASSETS 625,373
EQUIPMENT (Net) 191,716
GOODWILL (Net) 1,945,573
OTHER ASSETS 4,097
---------------
$ 2,766,759
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 261,953
Deferred revenue 330,389
Due to stockholders 50,000
Current portion of note payable 200,000
---------------
TOTAL CURRENT LIABILITIES 842,342
NOTE PAYABLE 1,400,000
MINORITY INTEREST 43,790
STOCKHOLDERS' EQUITY
Preferred stock, Class A, no par,
authorized 1,000,000 shares: 100,000 shares
issued and outstanding 10,000
Preferred stock, Class B, no par,
authorized 1,000,000 shares: 75,000 shares
issued and outstanding 300,000
Common Stock 3,755
Additional paid-in capital 1,759,326
Retained earnings (accumulated deficit) (1,580,339)
Treasury stock - at cost (12,115)
---------------
TOTAL STOCKHOLDERS' EQUITY 480,627
---------------
$ 2,766,759
===============
<PAGE>
TRIANGLE IMAGING GROUP, INC. AND ENGINEERED BUSINESS SYSTEMS , INC.
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
December 31, 1996 Pro-Forma Adjustments
----------------------------------- ---------------------------- Adjusted
Triangle EBS Dr. Cr. Pro-Forma
---------------- ---------------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
SALES $ - $ 3,322,105 $ 3,322,105
COST OF SALES - 689,565 689,565
---------------- ---------------- ----------------
GROSS PROFIT - 2,632,540 2,632,540
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 123,443 2,022,061 2,145,504
AMORTIZATION EXPENSES - - (1) 93,500 93,500
---------------- ---------------- ----------------
INCOME (LOSS) FROM OPERATIONS (123,443) 610,479 393,536
LITIGATION SETTLEMENT (35,000) - (5) 35,000 -
INTEREST INCOME (EXPENSE) (10,418) 11,557 (2) 112,500 (111,361)
---------------- ---------------- ----------------
INCOME (LOSS) BEFORE PROVISION FOR (168,861) 622,036 282,175
INCOME TAXES AND MINORITY INTEREST
PROVISION FOR INCOME TAXES - 172,000 (6) 172,000 -
MINORITY INTEREST - - (4) 22,000 22,000
---------------- ---------------- ----------------
NET INCOME (LOSS) $ (168,861) $ 450,036 $ 260,175
================ ================ ================
NET INCOME PER SHARE $ 0.07
================
NUMBER OF SHARES USED IN COMPUTATION 3,972,456
================
</TABLE>
<PAGE>
TRIANGLE IMAGING GROUP, INC. AND ENGINEERED BUSINESS SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
On December 2, 1996, the Company purchased 760 shares of the issued and
outstanding capital stocks of EBS (95% of the capital stock) for a purchase
price of $2,496,115 of which $896,115 in cash was paid at closing, $1,600,000
was paid by the delivery of the Company's promissory note (which bears interest
at a minimum rate of 8% and maximum rate of 9% per annum) and 500,000 shares of
the Company's common stock.
The acquisition has been accounted for under the purchase method of accounting
with the excess of the purchase price over net assets acquired allocated to
goodwill.
A. The following pro forma adjustments are included in the accompanying
unaudited pro forma consolidated statement of operations for the year
ended December 31, 1996 which has been prepared to reflect the December
2, 1996 acquisition as if it had occurred on January 1, 1996:
(1) To amortize goodwill recorded in the acquisition over a period of
20 years.
(2) To record interest on the acquisition debt.
(3) To adjust income tax provision.
(4) To record allocation of minority interest.
(5) Eliminate Litigation Settlement
(6) Adjust income tax expense to reflect utilization of the
Company's net operating loss carryforwards.
