Form 10-QSB
Securities and Exchange Commission
Washington DC 20549
|X| Quarterly Report Pursuant to Section 13 or 15(D)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1998
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 April 6, 1998 was 11,419,513 shares.
Triangle Imaging Group, Inc.
Index
Part I
Financial Information
Item 1
Financial Statements
Consolidated Balance Sheet
March 31, 1998
Consolidated Statement of Operations
For the Three Months Ended March 31, 1998 and 1997
Consolidated Statement of Cash Flows
For the Three Months Ended March 31, 1998 and 1997
Notes to Financial Statements
Item 2
Management's Discussion and Analysis
Part II
Other Information
Signatures
Part I
Financial Information
Item 1
Financial Statements
<TABLE>
Triangle Imaging Group, Inc. and Subsidiary
Consolidated Balance Sheet
(Unaudited)
Assets
March 31, 1998
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents 1,203,158
Accounts receivable, net of allowance for doubtful
accounts of $130,000 1,073,578
Prepaid expenses 38,489
Deferred tax asset 156,000
TOTAL CURRENT ASSETS 2,471,225
EQUIPMENT 169,323
GOODWILL 1,618,039
DEFERRED TAX ASSET 130,000
OTHER ASSETS 915,654
TOTAL ASSETS 5,304,241
Liabilities and Stockholders' Equity
CURRENT LIABILITIES:
Accounts payable and accrued expenses 519,019
Deferred revenue 313,413
Due to stockholders 50,000
Deferred tax liability 34,000
Current portion of note payable 375,000
TOTAL CURRENT LIABILITIES 1,291,432
NOTE PAYABLE 1,025,000
DEFERRED TAX LIABILITY 133,000
STOCKHOLDERS' EQUITY:
Preferred stock, Class A, $1.00 par, 1,000,000
shares authorized, 10,000 shares issued and
outstanding 10,000
Common stock, $.001 par value,
authorized 50,000,000 shares: 9,919,513
issued and outstanding 9,920
Additional paid-in capital 3,300,317
Accumulated deficit (318,628)
Stock subscription receivable (25,050)
Deferred compensation (121,750)
TOTAL STOCKHOLDERS' EQUITY 2,854,809
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 5,304,241
See notes to financial statements.
</TABLE>
<TABLE>
Triangle Imaging Group, Inc. and Subsidiary
Consolidated Statement of Operations
(Unaudited)
Three months ended
March 31,
<S> <C> <C>
1998 1997
SALES $ 1,687,365 $ 1,111,221
COST OF SALES 275,781 244,055
GROSS PROFIT 1,411,584 867,166
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 942,770 694,591
NON-CASH IMPUTED COMPENSATION EXPENSE 49,640 13,375
AMORTIZATION OF GOODWILL 21,665 24,106
INCOME FROM OPERATIONS 397,509 135,094
INTEREST EXPENSE 19,752 19,486
INCOME BEFORE MINORITY INTEREST AND
INCOME TAX PROVISION 377,757 115,608
MINORITY INTEREST - 26,141
NET INCOME BEFORE INCOME TAX PROVISION 377,757 89,467
PROVISION FOR INCOME TAXES 107,000 -
NET INCOME $ 270,757 $ 89,467
NET INCOME PER SHARE:
Basic $ 0.03 $ 0.02
Diluted $ 0.02 $ 0.01
NUMBER OF SHARES USED IN COMPUTATION:
Basic 9,668,160 5,533,332
Diluted 12,096,077 7,155,275
See notes to financial statements.
</TABLE>
<TABLE>
Triangle Imaging Group, Inc. and Subsidiary
Consolidated Statement of Cash Flows
(Unaudited)
Three months ended
March 31,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 270,757 $ 89,467
Adjustment to reconcile net
income to net cash provided
by operating activities:
Depreciation 31,419 25,256
Amortization of goodwill 21,665 24,106
Non-cash imputed compensation 49,640 13,375
Minority interest 26,141
Changes in assets and liabilities:
Increase in accounts receivable (295,023) (36,104)
Decrease in prepaid expenses 13,096
Decrease in deferred tax asset 107,000
Increase in other assets (285,321) (1,055)
Increase in accounts payable
and accrued expenses 114,765 144,780
Decrease in deferred revenue (77,512) (75,784)
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (62,610) 223,278
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (46,253) (30,327)
CASH USED IN INVESTING ACTIVITIES (46,253) (30,327)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 396,411 -
Decrease in stock subscription
receivable 501,250 -
Payment of debt (100,000) -
Cost of purchasing and
retiring stock (10,649) -
CASH PROVIDED FROM INVESTING ACTIVITIES 787,012 -
NET INCREASE IN CASH 678,149 192,951
CASH - BEGINNING OF PERIOD 525,009 200,264
CASH - END OF PERIOD $ 1,203,158 $ 393,215
See notes to financial statements.
</TABLE>
Triangle Imaging Group, Inc. and Subsidiary
Notes to Financial Statements
(Unaudited)
1
Basis of Presentation
The accompanying unaudited consolidated financial statements of Triangle
Imaging Group, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation (consisting of normal
recurring accruals) have been included. 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. Operating results for
the three month period ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1997.
2
Earnings Per Share
Basic earnings per share are computed on the weighted average number of
common shares actually outstanding during the period. Diluted earnings
per share considers potential shares issuable upon exercise or
conversion of other outstanding instruments where dilution would
result. The earnings per share for the prior period have been restated
to conform with the Company's adoption of FAS No. 128.
3
Stockholders' Equity
On March 24, 1998, the CEO of the Company notified the Company of his
intent and converted 10,000 shares of Class A Preferred Stock into
1,500,000 shares of common stock.
Item 2
Management's Discussion and Analysis of Financial Condition
Three Months Ended March 31, 1998 Compared to the Three Months Ended March
31, 1997
Triangle Imaging Group's, Inc. (the "Company") total revenues for the first
quarter of 1998 were $1,687,365, which is an increase of 52% over the
Company's first quarter 1997 revenues of $1,111,221. Management believes the
increase resulted from increased software revenues, reoccurring revenues, and
the sale of services, which can be attributed an increase in the Company's
sales force as well as low interest rates, record high home resales and
increased consumer spending and debt accumulation.
Reoccurring revenues in the CRIS(TM) and ACES(TM) product lines constituted
47% of the Company's revenues in the first quarter 1998. Revenues from the
ACES(TM) product line contributed 13% of the reoccurring revenues for the
first quarter 1998 while the remaining 34% of revenues contributed to
reoccurring revenues were derived from the CRIS(TM) product line. Reoccurring
revenues consist of annual software maintenance contracts, technical support
revenues, software purchased on a per report basis and monthly software
rental programs. New sales of CRIS(TM) products constituted 3% of the
Company's revenues for first quarter 1998 and new sales of ACES(TM)
products comprised 18% of the revenues. Outsourcing revenues accounted
for approximately 31% of the Company's revenues in first quarter 1998.
Other income, including interest income, comprised the remaining 1% of
revenues for the first quarter 1998.
The cost of revenues was $275,781 in first quarter 1998, which was a 5%
cost of revenues decrease from the Company's first quarter 1997 costs of
$244,055. Gross profit, $1,411,584, as a percentage of revenues was 84%
in first quarter 1998 as compared to the 79%, or $867,166, for the first
quarter 1997. The decrease in costs and increase in gross profit
resulted primarily from an increase in operational efficiency and
management's increased involvement in and control of profit margins.
Selling, general and administrative expenses were $942,770 in first quarter
1998 compared to $694,591, a 35% increase of $248,179 and a cost of revenues
decrease of 7%. Management believes that the monetary increase in selling,
general and administrative expenses was due to the increased expenses
associated with increased sales as well as continued and increased investment
in its product lines while the decrease as a percentage of revenues was due
to greater operational efficiencies. Non-cash imputed compensation for the
first quarter 1998 was $49,640, a 271% increase compared to $13,375 for
first quarter 1997. The increase was due to the Company's issuance of
stock, during calendar year 1997, to consultants for services necessary
for the dynamic growth of the company. The non-cash imputed compensation
also allowed additional funds to be invested in the company's existing
and developing product lines.
The Company's net income in first quarter 1998 includes a 12% increase in
non-cash expenses of approximately $71,305 and a provision for income
taxes of $107,000 as compared to non-cash expenses of $63,622 for first
quarter 1997. Such expenses were 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. The increase of the non-cash
expenses was again primarily attributable increased monetary cost of
revenues. While the Company currently holds a $984,000 net operating
loss carry forward, of which $657,000 is available for the 1998 fiscal
year, the creation of a provision for income taxes is required due to
the current high level of earned income.
Interest expense was $19,752 in first quarter 1998, compared to $19,486 in
the first quarter 1997, reflecting interest paid on a promissory note of
$1,600,000. The promissory note, which is an 8.25%, plus $25,000 per month
of principle, note with a $775,000 balloon payment due 2/1/00, is held by
the selling shareholders of EBS, created during the sale of stock to
Triangle Imaging Group, Inc. Minority interest for the first quarter 1998
was eliminated by the Company acquiring the remaining 5% of the outstanding
shares of Engineered Business Systems Inc. The acquisition completed on
December 31, 1997 involved the Company purchasing the remaining 5% of the
shares of Engineered Business Systems, Inc. from three minority interest
holders with a combination of cash and stock.
The Company's net gain before any income tax provision for first quarter 1998
was $377,757, a 322% increase from the net gain before any income tax
provision for first quarter 1997 of $89,467. The Company's final net income
after tax provisions increase of 202% was $270,757 for the first quarter 1998
as compared to the final net income after tax of $89,467 for the first
quarter 1997. The increase in the net gains in first quarter 1998 is
primarily attributable to a combination of all the factors discussed above.
Liquidity and Capital Resources
The Company has funded the vast majority of its working capital and capital
expenditure requirements with cash provided from operations. The primary
source of cash receipts is from payments for CRIS(TM), ACES(TM), and
outsourcing revenues and accounts receivables. The management of the company
believes cash flows from continuing operations will be sufficient to fund
expenditures into the foreseeable future.
At March 31, 1998, the Company had working capital of $1,203,158 an increase
of 206% from the working capital balance of $393,000 as of March 31, 1997.
The March 31, 1998 working capital was derived from and accumulation of
$335,000 from operating cash flows as well as an accumulation of $868,158
raised through the sale of private placement shares of common stock. The
increase is due to the improved cash flow from the increased revenues of
EBS and the issuance of additional private stock and common stock options.
Part II
Other Information
Item 6
Exhibit and Reports on Form 8-K
A. Exhibits
None.
B. Report on Form 8-K
None.
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: _________________ By: _____________________________________
/s/ Vito A. Bellezza
Chairman of the Board, Chief Executive Officer,
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Company's consolidated financial statements for the fiscal
quarter to March 31, 1998 as presented in the Company's Form 10Q for
such period and is qualified by reference to such financial statements.
</LEGEND>
<CIK> 0000764763
<NAME> TRIANGLE IMAGING GROUP, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,203,158
<SECURITIES> 0
<RECEIVABLES> 1,203,578
<ALLOWANCES> 130,000
<INVENTORY> 0
<CURRENT-ASSETS> 2,471,255
<PP&E> 169,323
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,304,241
<CURRENT-LIABILITIES> 1,291,432
<BONDS> 0
0
10,000
<COMMON> 9,920
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,304,241
<SALES> 1,666,173
<TOTAL-REVENUES> 1,687,365
<CGS> 275,781
<TOTAL-COSTS> 275,781
<OTHER-EXPENSES> 1,014,075
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,752
<INCOME-PRETAX> 377,757
<INCOME-TAX> 107,000
<INCOME-CONTINUING> 270,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 270,757
<EPS-PRIMARY> .03
<EPS-DILUTED> .02
</TABLE>
