U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended September 30,2000
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to ________________
Commission file number 000-30468
@ebs, inc. f/k/a TRIANGLE IMAGING GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Florida 59-2493183
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1800 N.W. 49th Street
Suite 100
Ft. Lauderdale, Florida 33309
(Address of principal executive offices)
954-229-5100
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 September 30, 2000 was 15,473,220 shares.
<PAGE>
@EBS, INC. AND SUBSIDIARIES
FORM 10-QSB
INDEX
Page
Number
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheet - September 30, 2000................. 3-4
Consolidated Statement of Operations - For the Nine
and Three Months Ended September 30, 2000 and 1999............... 5
Consolidated Statement of Cash Flows - For the Nine
and Three Months Ended September 30, 2000 and 1999............... 6
Notes to Financial Statements..................................... 7
Item 2. Management's Discussion and Analysis.............................. 8
PART II - OTHER INFORMATION................................................... 8
SIGNATURES.................................................................... 9
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
@EBS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
September 30, 2000
-------------------
CURRENT ASSETS
Cash and cash equivalents $ 37,818
Accounts receivable, net of allowance of $ 35,231 285,730
Other current assets 13,177
--------------
TOTAL CURRENT ASSETS 336,725
EQUIPMENT, LEASEHOLD IMPROVEMENTS & SOFTWARE,
net of accumulated depreciation and amortization
of $2,534,738 1,266,124
GOODWILL, net of accumulated amortization of $413,879 1,779,342
OTHER ASSETS 154,276
--------------
$ 3,536,467
==============
See notes to financial statements
- 3 -
<PAGE>
@EBS INC. AND SUBSIDIARIES
LIABILITIES AND STOCKHOLDERS' EQUITY
(UNAUDITED)
September 30, 2000
-------------------
CURRENT LIABILITIES
Liabilities not subject to compromise:
Accounts payable $ 70,094
Accrued expenses 74,125
Liabilities subject to compromise:
Accounts payable 1,795,228
Accrued expenses 520,698
Customer deposits 148,179
Deferred revenue 519,462
Current portion - related party payable 331,000
Notes payable 576,089
Current portion - QCC puts payable 630,000
-------------------
TOTAL CURRENT LIABILITIES 4,664,875
NOTES PAYABLE SUBJECT TO PUTS - subject to compromise 600,000
LONG TERM DEBT - RELATED PARTY - subject to compromise 211,000
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, Class E $1,000 par value, 12.5% cumulative
2,200 shares issued, redemption value $2,200,000 1,690,346
Common stock, $.001 par value, authorized 50,000,000 issued
and 15,473,220 outstanding 15,473
Additional paid-in capital 6,848,786
Accumulated deficit (9,246,763)
Common Stock Subject to Puts (1,230,000)
Deferred compensation (17,250)
-------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,939,408)
-------------------
$ 3,536,467
===================
See notes to financial statements
- 4 -
<PAGE>
@EBS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $ 682,749 $ 1,475,475 $ 2,475,824 $ 5,366,312
COST OF SALES 486,170 771,293 1,693,018 2,435,109
----------------- ----------------- -------------------- -----------------
GROSS PROFIT 196,579 704,182 782,806 2,931,203
EXPENSES
Selling, general and administrative expenses 560,491 1,359,467 1,916,082 3,404,362
Product Development 117,634 682,738 364,517 1,195,655
Stock based compensation expense 10,295 10,295 30,885 30,885
Amortization expense and goodwill write-off 36,552 36,552 109,656 108,019
Litigation expenses 53,220 - 142,266 -
----------------- ----------------- -------------------- -----------------
Total expenses 778,192 2,089,052 2,563,406 4,738,921
----------------- ----------------- -------------------- -----------------
LOSS FROM OPERATIONS (581,613) (1,384,870) (1,780,600) (1,807,718)
OTHER INCOME AND (EXPENSE):
Interest expense, net 26,387 17,636 115,162 145,200
Gains from Settlement of Lawsuit (475,000) - (475,000) (212,000)
----------------- ----------------- -------------------- -----------------
Total other income and expenses (448,613) 17,636 (359,838) (66,800)
----------------- ----------------- -------------------- -----------------
LOSS BEFORE INCOME TAX PROVISION (133,000) (1,402,506) (1,420,762) (1,740,918)
PROVISION FOR INCOME TAXES - - - -
----------------- ----------------- -------------------- -----------------
NET LOSS FROM CONTINUING OPERATIONS (133,000) (1,402,506) (1,420,762) (1,740,918)
NET LOSS $ (133,000) $ (1,402,506) $ (1,420,762) $ (1,740,918)
================= ================= ==================== =================
PREFERRED DIVIDENDS (173,795) 115,865 43,774 115,865
----------------- ----------------- -------------------- -----------------
NET GAIN/(LOSS) TO COMMON STOCKHOLDERS $ 40,795 $ (1,518,371) $ (1,464,536) $ (1,856,783)
================= ================= ==================== =================
NET INCOME PER SHARE:
BASIC $ 0.00 $ (0.11) $ (0.10) $ (0.13)
================= ================= ==================== =================
DILUTED $ 0.00 $ (0.11) $ (0.10) $ (0.13)
================= ================= ==================== =================
NUMBER OF SHARES USED IN COMPUTATION:
BASIC 14,026,644 14,366,790 14,011,644 13,779,912
================= ================= ==================== =================
DILUTED 14,026,644 14,366,790 14,011,644 13,779,912
================= ================= ==================== =================
</TABLE>
See notes to financial statements
- 5 -
<PAGE>
@EBS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Nine months ended
September 30,
---------------------------
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $(1,420,762) $(1,856,783)
------------ ------------
Adjustments to reconcile net income(loss)
to net cash used in operating activities:
Depreciation 157,356 155,974
Amortization 523,777 108,019
Stock based compensation 30,885 30,885
Accounts receivable 226,535 (74,675)
Other current assets - (205)
Accounts payable and accrued expenses 414,826 487,335
Deferred revenue 192,901 40,316
Gains from settlement of lawsuit (475,000) (212,000)
------------ ------------
NET CASH USED BY OPERATIONS (349,482) (1,321,134)
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets (37,924) -
Development & purchase of software (358,895) -
Purchase of leasehold improvements & equipment (7,248) (365,447)
------------ ------------
NET CASH USED BY INVESTING ACTIVITIES (404,067) (365,447)
------------ ------------
CASH PROVIDED BY FINANCING ACTIVITIES:
Proceeds from sale of common stock 307,264 1,436,810
Preferred dividends paid and accrued (207,011) -
Proceeds from sale of preferred stock - 632,700
Funds provided by new financing 699,947 -
Repayment of debt (146,500) (327,535)
Payment of note payable subject to puts - (155,000)
Value of options issued for convertible note 20,000 -
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 673,700 1,586,975
------------ ------------
NET INCREASE (DECREASE) IN CASH (79,849) (99,606)
CASH - beginning of the period 117,667 229,423
------------ ------------
CASH - end of the period $ 37,818 $ 129,817
============ ============
See notes to financial statements
- 6 -
<PAGE>
@EBS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
These financial statements have not been reviewed in accordance with Statement
of Auditing Standards, SAS, #71.
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
of @ebs, inc. f/k/a 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 nine and three
month periods ended September 30, 2000 are not necessarily indicative
of the results that may be expected for the year ending December 31,
2000. 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, 1999.
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.
3. STOCKHOLDERS' EQUITY
During the quarter ended September 30, 2000 the Company issued
1,423,820 shares of common stock as payment of preferred stock
dividends.
4. PLAN OF REORGANIZATION
On September 1, 2000, the Company voluntarily filed for
Chapter 11 Bankruptcy protection in the United States Court Southern
District of Florida. The parent, Electronic Business Services,
00-25402, and its subsidiary QuickCredit Corporation, 00-25401, filed
on that date for protection to reorganize. On October 18, 2000, the
other subsidiary, Electronic Business System, Inc., 00-26436, filed
voluntarily for Chapter 11 protection with the same court.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Nine Months Ended September 30, 2000 vs. Nine Months Ended September 30, 1999
Sales for the nine months ended September 30, 2000 were $2,475,824 or 46% lower
than sales of $5,366,312 for the nine month period of September 30, 1999. The
decrease in sales was primarily due to the high level of interest rates that has
caused a reduction across all product lines within EBS, in particular the
outsourcing services and customer file reviews. Sales within QCC decreased due
to reductions in the retail business. Cost of sales as a percentage of sales
increased 23% for the nine months ended September 30, 2000 from 45% to 68%.
Selling, general and administrative expenses for the nine months ended September
30, 2000 were $1,916,081 compared to $3,404,362 for the same period in 1999.
This decrease is due to continued efforts to downsize the organization.
Development costs decreased from $1,195,655 during the nine months ended
September 30, 1999 to $364,517 during the same nine month period in 2000.
Non-cash imputed compensation of $30,885 was the same for both nine month
periods ended September 30.
Amortization of goodwill was $109,656 for the nine month period ended September
30, 2000 compared to $108,019 for the nine month period ended September 30,
2000, an increase of $1,637.
The loss from operations for the nine month period ended September 30, 2000 was
$1,780,600 which represents a difference of $27,118 from the loss from
operations of $1,807,718 for the nine months ended September 30, 1999. Net loss
was $1,464,536 for the nine months ended September 30, 2000 compared to net loss
of $1,856,783 for the comparable 1999 period.
PART II - Other Information
Item 3. Bankruptcy and Receivership
During the quarter ended September 30, 2000, the Company and
its subsidiaries each filed separate voluntary petitions under
Chapter 11 of the United States Bankruptcy code.
Item 4. Legal Proceedings
On October 31, 2000, the plaintiffs Vito and Judith Bellezza
filed a lawsuit in the United States District Court against
the directors, former director and Company officers alleging
that the Bellezza's were denied their right to publicly trade
their common stock in EBS during parts of 1999 and the first
half of 2000. Furthermore, they alleged that the Company had
failed to live up to the April 30, 1999 settlement agreement
the Bellezza's had with the Company.
On August 28, 2000, the lawsuit previously filed by Quest
Communication, originally filed on March 12, 1999 was
dismissed.
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.
@EBS, INC.
Dated: November 15, 2000 By: /s/Harold S. Fischer
--------------------------------
Harold S. Fischer, President, Chief
Executive Officer and Director
9
