<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year ended: DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ___________
Commission File No. 33-25253
TRIANGLE, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO 93-0969365
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
830 NORTHEAST LOOP 410, SUITE 305B
SAN ANTONIO, TEXAS 78209
(Address of Principal Executive Offices, Including Zip Code)
Registrant's Telephone Number, Including Area Code: (210) 821-5577
Securities Registered Pursuant to Section 12(b) of the Act: NONE.
Securities Registered Pursuant to Section 12(g) of the Act: NONE.
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 require ments for the past 90 days.
Yes No X
--- ---
On December 31, 1995, 56,063,090 shares of Common Stock, no par value, were
outstanding. The aggregate market value of the Common Stock held by non-
affiliates of the Registrant on that date was approximately $-0-.
Documents incorporated by reference: NONE.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes X No
--- ---
Exhibits are indexed on page 12.
<PAGE>
ITEM 1. BUSINESS.
GENERAL
Triangle, Inc. (the "Registrant" or the "Company") was organized as a
Colorado corporation on December 8, 1981, for the purpose of evaluating,
structuring and completing a merger with, or acquisition of, prospects
consist ing of private companies, partnerships or sole proprietorships. The
Registrant seeks to acquire a controlling interest in such entities in
contemplation of later completing an acquisition. The Registrant is not
limited to any operation or geographic area in seeking out opportunities.
Management has not identified any particular business or industry within
which the Registrant will seek an acquisition or merger. The Registrant has
not conducted, nor have others made available to it, market research
supporting the viability of the Registrant's proposed operations.
The Registrant previously had a Registration Statement on Form S-18
declared effective by the Securities and Exchange Commission on June 17,
1988. Due to the Underwriter's inability to sell the minimum number of Units
offered thereby within the specified offering period, the offering was
terminated and all funds collected were returned to subscribers by the Escrow
Agent without any deduction therefrom or interest thereon. By unanimous
written consent of the Board of Directors of the Registrant, the Registration
Statement was subsequent ly withdrawn and canceled.
Subsequently, the Registrant sold 20,316 Units at $10.00 per Unit, for
total proceeds of $203,160 in a public offering which closed on May 1, 1989.
Each Unit consisted of one thousand shares of the Registrant's no par value
Common Stock, one thousand Class A Common Stock Purchase Warrants (the "A
Warrants") and one thousand Class B Common Stock Purchase Warrants (the "B
Warrants"). Each A Warrant entitled the holder to purchase one share of
Common Stock at $.02 per share during the two year period commencing March 5,
1989. Each B Warrant entitled the holder to purchase one share of Common
Stock at $.04 per share during the two year period commencing March 5, 1989.
The A and B Warrants expired by their terms and are no longer outstanding.
The Registrant also sold 1,000,000 shares of Class B Common Stock at
$.01 per share to certain of its Officers and Directors for total proceeds of
$10,000. The Class B Common Stock was converted into Common Stock (at the
rate of fifteen [15] shares of Common Stock for each share of Class B Common
Stock surrendered for conversion) immediately prior to the acquisition/merger
of the Registrant with Enterprise Car Rental, Ltd. in August, 1989.
On August 28, 1989, the Registrant and Enterprise Car Rental, Ltd., a
British Columbia corporation ("Enterprise"), entered into an exchange
agreement whereby the Registrant acquired all of the outstanding shares of
Enterprise for 326,500,800 shares of its no par value common stock. Control
of the corporation was transferred to the Enterprise Board of Directors upon
the registration of the Registrant's existing Board of Directors. Enterprise
was engaged in the rental car business in the United States and Canada.
Subsequent to the acquisition, the Registrant advanced approximately
$120,000 to Enterprise to pay its existing debts and other outstanding
financed obligations.
On September 30, 1989, Enterprise and the Registrant canceled the prior
acquisition due to the insolvency of Enterprise and its inability to comply
with the terms of the exchange agreement. The Compromise and Settlement
Agreement provided for the return of the Registrant's shares to its treasury
(except for ten million shares) and a note for $150,000. Enterprise agreed
to indemnify and hold the Registrant harmless from the creditors and
shareholders of Enterprise. No payments have been made on the note due to
Enterprise's financial condition and is probably worthless. A new Board of
Directors replaced the prior Board on the effective date of the agreement.
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On November 21, 1995, the Registrant signed a letter of intent to
acquire Texas Quick Service, Inc. ("TQSI") in exchange for common stock of
the Registrant. Under the terms of the letter of intent, the Registrant plans
to acquire 100% of TQSI's stock in exchange for the Registrant issuing to
TQSI shareholders sufficient shares such that TQSI shareholders would own 90%
of the total shares outstanding of the Registrant upon completion of the
exchange. The parties have agreed that at the completion of the closing of
the transaction, the outstanding shares of common stock of the Registrant
will be reverse split on the basis of one for 100. TQSI is a holding company
with no operations and was formed to acquire the assets of Red Line Burgers,
Inc. as part of a Chapter 11 reorganization plan. Red Line Burgers, Inc.
owns, operates or franchises several hamburger restaurant chains in Texas and
is presently in reorganization under Chapter 11 of the U.S. Bankruptcy Code.
TQSI has agreed to complete an audit of its financial statements prior to the
closing of the transaction. The letter of intent requires such audit to
demonstrate TQSI has a minimum financial net worth of $200,000. See footnote
7 to the Financial Statements included in this report for an unaudited
summary of TQSI's financial position and results of operations as of December
31, 1995.
DESCRIPTION OF BUSINESS
The Registrant believes it currently has insufficient capital with which
to finance cash acquisitions of other business entities. Accordingly, the
Registrant will be incapable of acquiring the assets or business of other
entities except in those instances where the Registrant exchanges its common
stock with those held by the target company and/or the target company's
shareholders. Another possibility, although less likely, is that the
Registrant may give its common stock to a target in exchange for the target's
assets. Management expects that an exchange of the Registrant's common stock
in a merger or acquisition, if ever, would require the Registrant to issue a
substantial number of its common stock. Accordingly, the percentage of
common stock held by the Registrant's then-shareholders would be reduced as a
result of the increased number of common stock issued and outstanding
following any such merger or acquisition.
The Registrant expects to concentrate primarily on the identification
and evaluation of prospective merger or acquisition "target" entities
including private companies, partnerships or sole proprietorships. The
Registrant does not intend to act as a general or limited partner in
connection with partnerships it may merge with or acquire. Management has
not identified any particular area of interest within which the Registrant
will concentrate its efforts.
Management contemplates that the Registrant will seek to merge with or
acquire a target company with either assets or earnings, or both, and that
preliminary evaluations undertaken by the Registrant will assist in
identifying possible target companies. The Registrant has not established a
specific level of earnings or assets below which the Registrant would not
consider a merger or acquisition with a target company. Moreover, management
may identify a target company which is generating losses which it will seek
to acquire or merge with the Registrant. The merger with or acquisition of a
target company which is generating losses or which has negative shareholders'
equity may have a material adverse affect on the price of the Registrant's
common stock. There is no assurance, if the Registrant acquires a target
company with assets or earnings, or both, that the price of the Registrant's
common stock will increase.
PLAN OF ACQUISITION
The Registrant intends to follow a systematic approach to identify its
most suitable acquisition candidates.
First, management intends to concentrate on identifying any number of
preliminary prospects which may be brought to the attention of management
through present associations or by virtue of the very limited advertising
campaign the Registrant will conduct. Management will then apply certain of
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its broad criteria to the preliminary prospects. Essentially, this will
entail a determination by management as to whether or not the prospects are
in an industry which appears promising and whether or not the prospects
themselves have potential within their own industries. During this initial
screening process, management will ask and receive answers to questions
framed to provide appropriate threshold information, depending upon the
nature of the prospect's business. Such evaluation is not expected to be an
in-depth analysis of the target company's operations although it will
encompass to look at most, if not all, of the same areas to be examined once
one or more target companies are selected for an in-depth review. For
instance, at this stage management may look at a prospect's unaudited balance
sheet. Once a prospect is selected for an in-depth review, management will
review the prospect's audited financial statements. Nevertheless, management
anticipates this evaluation will provide a broad overview of the business of
the target company and should allow a large percentage of preliminary
prospects to be eliminated from further consideration.
Management expects to enter into further negotiations with target
company management following successful conclusion of financial and
evaluation studies. Negotiations with target company management will be
expected to focus on the percentage of the Registrant which target company
shareholders would acquire in exchange for their shareholdings in the target
company. Depending upon, among other things, the target company's assets and
liabilities, the Registrant's shareholders will in all likelihood hold a
lesser percentage ownership interest in the Registrant following any merger
or acquisition. The percentage ownership may be subject to significant
reduction in the event the Registrant acquires a target company with
substantial assets. Any merger or acquisition effected by the Registrant can
be expected to have a significant dilutive effect on the percentage of shares
held by the Registrant's then-shareholders.
The final stage of any merger or acquisition to be effected by the
Registrant will require the Registrant to retain the services of its counsel
and a qualified accounting firm in order to properly effect the merger or
acquisition. The Registrant may be expected to incur significant legal fees
and accounting costs during the final stages of a merger or acquisition.
Also, if the merger or acquisition is successfully completed, management
anticipates that certain costs will be incurred for public relations, such as
the dissemination of information to the public, to the shareholders and to
the financial community. If the Registrant is unable to complete the merger
or acquisition for any reason, the Registrant's capital may be substantially
depleted if legal fees and accounting costs have been incurred. Management
intends to retain legal and accounting services only on an as-needed basis in
the latter stages of a proposed merger or acquisition.
Management anticipates that it should not be necessary to raise
additional funds within the next 12 months to meet expenditures required for
operation. However, if after 12 months the Registrant has not generated and
successfully concluded a merger or acquisition, the Registrant may have to
seek additional financing in order to continue operations.
COMPETITION
The Registrant will remain an insignificant participant among the firms
which engage in mergers with and acquisitions of privately-financed entities.
There are many established venture capital and financial concerns which have
significantly greater financial and personnel resources and technical
expertise than the Registrant. In view of the Registrant's combined limited
financial resources and limited management availability, the Registrant will
continue to be at a significant competitive disadvantage compared to the
Registrant's competitors.
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EMPLOYEES
The Registrant currently has no employees. The Registrant employs, from
time to time, services of outside consultants to assist it in evaluation of
the prospective target companies. The Registrant also employs, from time to
time, part-time secretarial services.
ITEM 2. PROPERTIES.
The Registrant maintains its offices in space provided by the
Registrant's President and Chairman of the Board of Directors, Mr. R. K.
Ellis. The office is located at 830 N.E. Loop 410, Suite 305B, San Antonio,
Texas 78209. Its telephone number is (210) 821-5577. The Registrant's
President is not being paid a monthly rental, but is reimbursed for
out-of-pocket expenses for telephone use, etc.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings, and the Registrant is not aware
of any threatened legal proceedings to which the Registrant is a party.
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS
(a) PRINCIPAL MARKET OR MARKETS. The Company's stock is currently not
trading in any of the over the counter markets nor is the Company listed on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ").
(b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK AND WARRANTS. As of
April 19, 1996, there were seventy five (75) record holders of the Company's
Common Stock.
(c) DIVIDENDS. The Company has paid no cash dividends on its Common
Stock and has no present intention of paying cash dividends in the
foreseeable future. It is the present policy of the Board of Directors to
retain all earnings to provide for the growth of the Company. Payment of
cash dividends in the future will depend upon, among other things, the
Company's future earnings, requirements for capital improvements and
financial condition.
ITEM 6 SELECTED FINANCIAL DATA
The following table sets forth certain selected financial data with
respect to the Company, and is qualified in its entirety by reference to the
financial statements and notes thereto filed herewith:
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<TABLE>
<CAPTION>
FISCAL YEARS ENDING DECEMBER 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990 1989
------- -------- -------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Net Income (Loss) $(5,216) $(33,944) $(10,929) $ (330) $(4,622) $(154,955)
Net Income (Loss)
per Common Share $ (a) $ (a) $ (a) $ (a) $ (a) $ (a)
Total Assets $ 116 $ 123 $ 1,672 $ 187 $ 337 $ 487
Short-Term
Obligations $ 9,767 $ 8,283 $ 15,543 $10,448 $10,268 $ 5,796
Dividends per Share None None None None None None
</TABLE>
_______________
(a) Less than $.01 loss per share
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial condition and
results of operations during the periods included in the accompanying
financial statements.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1995, the Company's current liabilities exceeded
current assets by $10,704 and the Company has sustained substantial losses
since inception aggregating $224,028. The Company's ability to continue as a
going concern is dependent on its ability to obtain additional equity
financing. The Company intends to seek additional equity financing through
searching for a suitable merger candidate and the sale of common stock to its
officers and directors. There is no assurance that a suitable merger
candidate will be found with sufficient funding available. The lack of cash
assets will in all likelihood place the Registrant at a disadvantage in
seeking out business opportunities and consequently will need to continue to
rely on advances from its Board of Directors.
YEAR ENDED DECEMBER 31, 1995 VS. YEAR ENDED DECEMBER 31, 1994
During the fiscal year ended December 31, 1995, the Registrant was
mainly inactive and its activities consisted primarily in engaging legal
counsel and accountants to prepare its prior reports for filing with the
Securities and Exchange Commission on behalf of the Registrant. Management
expects to incur losses until such time as a merger or acquisition has been
completed.
Management does not expect inflation or changing prices to have any
effect on the Registrant's financial condition.
YEAR ENDED DECEMBER 31, 1994 VS. YEAR ENDED DECEMBER 31, 1993
During the fiscal year ended December 31, 1994, the Registrant was
mainly inactive and its activities consisted primarily in engaging legal
counsel and accountants to prepare its prior reports for filing with the
Securities and Exchange Commission on behalf of the Registrant. Management
expects to incur losses until such time as a merger or acquisition has been
completed.
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Management does not expect inflation or changing prices to have any
effect on the Registrant's financial condition.
YEAR ENDED DECEMBER 31, 1993 VS. YEAR ENDED DECEMBER 31, 1992
During the fiscal year ended December 31, 1993, the Registrant was
mainly inactive and its activities consisted primarily in engaging legal
counsel and accountants to prepare its prior reports for filing with the
Securities and Exchange Commission on behalf of the Registrant. Management
expects to incur losses until such time as a merger or acquisition has been
completed.
Management does not expect inflation or changing prices to have any
effect on the Registrant's financial condition.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information with respect to this item is contained in the financial
statements appearing on Item 13 of this Report. Such information is
incorporated herein by reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Registrant has not changed its independent certified accountants
since inception.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Directors and Officers of the registrant are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
R. K. Ellis 72 Chairman of the Board of Directors,
Chief Executive Officer and President
Peter W. Ellis 36 Secretary, Treasurer and a Director
Ralph H. Sands 63 Director
</TABLE>
The Officers and Directors of the Registrant should be considered
"parents" (as such term is defined by Rule 405 under the Securities Act of
1933) and organizers of the Registrant inasmuch as they have taken
significant initiative in founding and organizing the business of the
Registrant and because of their control positions in the Registrant. There
are no persons other than the above Officers and Directors who are expected
to engage in any activities which would be material to the operations of the
Registrant.
R. K. Ellis and Peter W. Ellis are father and son.
R. K. ELLIS - CHAIRMAN OF THE BOARD OF DIRECTORS, CHIEF EXECUTIVE
OFFICER AND PRESIDENT. Mr. Ellis received a B.S. Degree in Business
Administration from Trinity University in 1950. After serving in the U.S.
Navy, he returned to San Antonio in 1952 and was employed in the savings and
loan industry,
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progressing to president of a small savings and loan. In 1968, he joined the
Department of Housing and Urban Development (HUD) as a mortgage underwriter
and later served as Rehabilitation Loan and Grant Specialist in the Denver
Regional Office of HUD. In 1971, he was nominated by HUD to serve with the
United Nations as housing finance expert in the Hashemite Kingdom of Jordan
and in Antigua, West Indies. From 1974 to 1977, he served as a consultant to
the Caribbean Development Bank, Bridgetown, Barbados, where he was
responsible for the administration of a United States Agency for
International Development (AID) loan for low cost housing projects in the
Caribbean countries of Granada, St. Vincent, Dominica, Monsterrat, Antigua
and Balise. From 1977 to 1982, he was a consultant to Real Estate Financing
Corporation, Aman, Jordan, which was converted to a U.S. style savings and
loan association and housing development company, and which became a public
company in 1980. In 1982, Mr. Ellis returned to San Antonio, Texas, where he
has since been engaged in real estate transactions. From 1984 to 1986, he was
the Chairman of the Board of Don Alt Associates, Inc., San Antonio, Texas, a
company engaged in sales and servicing of industrial scales. Since 1986, Mr.
Ellis has been engaged in private entrepreneurial activities. Mr. Ellis
devotes 30 to 40 hours per month to the business of the Registrant.
PETER W. ELLIS - SECRETARY, TREASURER AND DIRECTOR. From January 1993
to present, Mr. Peter Ellis has served as Secretary, Treasurer and a Director
of the Company and is a real estate tax assistant and vice president for the
Real Estate Tax Services, Inc. of San Antonio, Texas. From January 1, 1991
to January 1992, Mr. Ellis was an account executor with the Marvin F. Poer
and Company, a real estate tax consulting firm in San Antonio, Texas. From
November 1989 to January 1991, Mr. Ellis was a marketing analyst with Marvin
F. Poer. From 1982 to 1989, Mr. Ellis was a partner in Ellis Development
Corporation in San Antonio, Texas, a company engaged in purchasing and
reselling raw land for apartment and other residential projects. Mr. Ellis
devotes approximately 10 hours a month to the business of the Company.
RALPH H. SANDS - DIRECTOR. From November 1991 to the present, Mr. Sands
has served as a Director of the Company. Mr. Sands has practiced dental
surgery for the past five years in Southern California. Mr. Sands devotes
such time as necessary to the business of the Company.
All Directors of the Registrant will hold office until the next annual
meeting of the shareholders and until their successors have been elected and
qualified.
The Officers of the Registrant are elected by the Board of Directors at
the first meeting after each annual meeting of the Registrant's shareholders,
and hold office until their death, or until they shall resign or have been
removed from office.
The date of the next annual meeting of the Registrant will be determined
by the Registrant's Board of Directors in accordance with Colorado law.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth certain information regarding the
compensation paid or accrued by the Company to or for the account of the
Chief Executive Officer, and any other Executive Officer of the Company to
earn in excess of $100,000, for services rendered in all capacities during
the fiscal years ended December 31, 1995, 1994 and 1993:
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------
Pay-
Annual Compensation Awards outs
------------------------------- -------------------- ----
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted LTIP Other
and Compen- Stock Options/ Pay- Compen-
Principal Salary Bonus sation Award(s) SARs outs sation
Position Year(1) ($) ($) ($)(2) ($) (#)(2) ($) ($)
- --------- ------- ------ ----- ------- ---------- -------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert K. Ellis, 1995 $0 $0 $ 0 N/A -0- N/A $0
President 1994 $0 $0 $ 0 N/A $0
1993 $0 $0 $25,000 N/A $0
</TABLE>
_______________
(1) Periods presented are for the years ended December 31.
(2) Mr. Ellis received a stock bonus for services valued at $25,000.
BONUSES AND DEFERRED COMPENSATION
During the fiscal year ended December 31, 1995, the Registrant paid no
cash bonuses or cash compensation to any Officer and/or Director.
INCENTIVE STOCK OPTION PLAN
None.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this Report, the stock
ownership of each person known by the Registrant to be the beneficial owner
of five percent or more of the Registrant's Common Stock, each Officer and
Director individually and all Directors and Officers of the Registrant as a
group:
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<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
---------------------- -------------------- ----------
<S> <C> <C>
R. K. Ellis 3,957,430 7.0%
830 Northeast Loop 410
Suite 305B
San Antonio, TX 78209
Peter K. Ellis 5,852,135 10.3%
830 Northeast Loop 410
Suite 305B
San Antonio, TX 78209
Ralph H. Sands 1,813,767 3.2%
830 Northeast Loop 410
Suite 305B
San Antonio, TX 78209
R. David Prengaman 5,623,750 9.9%
2207 Ravina Drive
Arlington, TX 76012
Otho Sprague 5,776,250 10.2%
111 W. Mockingbird Ln.
Dallas, TX 75247
All Officers and Directors 11,623,332 20.5%
as a Group (3 Persons)
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On March 4, 1988, the Registrant issued 21,186,400 shares of its
Common Stock to the following then Officers and Directors (which was
subsequently reduced to 10%) for a total of $6,355 in cash:
<TABLE>
<CAPTION>
NUMBER REDUCED TOTAL
NAME OF SHARES TO CONSIDERATION
- ---- --------- ------- -------------
<S> <C> <C> <C>
Financial Data Services, Inc. 8,474,550 847,455 $2,542
Arthur W. Havers 8,474,550 847,455 $2,542
Robert D. Wieder 4,237,300 423,730 $1,271
</TABLE>
Effective March 3, 1988, the Registrant entered into an oral agreement
with R. K. Ellis, the Chairman of the Board of Directors of the Registrant,
pursuant to which the Registrant uses office space provided by the Chairman
at no charge to the Registrant on a month-to-month basis. The Chairman is to
be reimbursed for out-of-pocket expenses, such as telephone use and similar
items.
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<PAGE>
During 1993, the Company issued 1,375,000 shares of the Company's no par
restricted Common Stock at $.01 per share in consideration for cash of
$13,750 to Directors of the Company to pay legal, accounting and other
operating expenses.
During 1993, the Company issued 90,480 shares of no par value common
stock at $.01 per share to pay legal, accounting and other necessary
expenses. In addition, 2,500,000 shares of no par value common stock were
issued to the Company's President for services valued at $25,000.
The Company maintains its offices in space provided by the company's
President pursuant to an oral agreement on a rent-free basis with
reimbursement for out-of-pocket expenses, such as telephone. During the year
ended December 31, 1994, the Company issued its President 142,500 shares of
common stock for reimbursement of out-of-pocket expenses totalling $1,425.
During 1995 and 1994, the Company issued 580,000 and 230,000 shares,
respectively, of no par "restricted" common stock at $0.01 per share in
consideration of cash $2,300 to a Director and existing shareholder of the
Company to pay legal accounting and other operating expenses.
The Board of Directors has adopted a policy that the Registrant will not
seek an acquisition or merger with any entity in which the Registrant's
Officers or Directors serve as officers, directors or partners, or in which
they or their family members own or hold greater than a 10% ownership
interest.
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PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. The following Financial Statements are filed as part of this Report:
Page
Independent Auditors' Report F-1
Balance Sheets, December 31, 1995 and 1994 F-2
Statements of Operations, Years Ended December 31, 1995,
1994 and 1993 F-3
Statements of Stockholders' Equity (Deficit), For the
Period December 8, 1981 (Inception) to December 31, 1995 F-4
Statements of Cash Flows, Years Ended December 31, 1995,
1994 and 1993 F-8
Notes to Financial Statements F-9 to F-15
(a) 2. The following Financial Statement Schedules are filed as part of
this Report:
ALL SCHEDULES HAVE BEEN OMITTED, AS THE REQUIRED INFORMATION IS
INAPPLICABLE OR THE INFORMATION IS PRESENTED IN THE FINANCIAL
STATEMENTS OR THE NOTES THERETO.
(a) 3. EXHIBITS.
None.
(b) The Registrant filed no reports on Form 8-K during the last quarter
of the period covered by this Report.
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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, INC.
Dated: By
--------------------------- ----------------------------------
R. K. Ellis, President and CEO
Dated: By
--------------------------- ----------------------------------
Peter W. Ellis, Treasurer &
Principal Financial Officer
SIGNATURES
Dated: By
--------------------------- ----------------------------------
R. K. Ellis, Director
Dated: By
--------------------------- ----------------------------------
Peter W. Ellis, Director
Dated: By
--------------------------- ----------------------------------
Dr. Ralph Sands
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
and
INDEPENDENT AUDITORS' REPORT
December 31, 1995, 1994 and 1993
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
Page
Independent Auditors' Report F-1
Financial Statements:
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity (Deficit) F-4 - F-7
Statements of Cash Flows F-8
Notes to Financial Statements F-9 - F-15
<PAGE>
[SCHMIDT + ASSOCIATES LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Board of Directors
Triangle, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Triangle, Inc. (a
development stage company) as of December 31, 1995 and 1994, and the related
statements of operations, stockholders' equity (deficit), and cash flows for
the years ended December 31, 1995, 1994 and 1993, and the period from
December 8, 1981 (inception) to December 31, 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 Triangle, Inc. (a
development stage company) at December 31, 1995 and 1994, and the results of
their operations and their cash flows for the years ended December 31, 1995,
1994 and 1993, and the period from December 8, 1981 (inception) to December
31, 1995, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8 to the
financial statements, the Company has suffered recurring losses from
operations and has a net capital deficiency which raises substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 8. The financial
statements do not include any adjustments that may result from the outcome of
this uncertainty.
SCHMIDT + ASSOCIATES, P.C.
March 11, 1996
Greenwood Village, Colorado
F-1
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 136 $ 116
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable $ 10,840 $ 9,767
--------- ---------
Commitments and contingencies (notes 1,
2, 6, 7 and 8)
Stockholders' (deficit) (notes 3, 4 and 6):
Preferred stock, $.10 par value, 100,000,000
shares authorized, none issued - -
Common stock, Class A no par value, 800,000,000
shares authorized, 56,643,090 shares issued
and outstanding 213,324 207,524
Deficit accumulated during development stage (224,028) (217,175)
(10,704) (9,651)
--------- ---------
$ 136 $ 116
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
DECEMBER 8,
1981
(INCEPTION)
YEARS ENDED DECEMBER 31, TO
------------------------------------- DECEMBER 31,
1995 1994 1993 1995
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Interest income $ - $ - $ - $ 3,230
------- ------- -------- ---------
Operating expenses:
Legal and accounting 6,395 4,026 7,203 52,038
Filing fees 250 250 385 6,861
Public relations - - 228 14,414
Other 208 940 26,128 34,835
6,853 5,216 33,944 108,148
------- ------- -------- ---------
(6,853) (5,216) (33,944) (104,918)
------- ------- -------- ---------
Writeoff of advances/
recision of merger
(note 6) - - - (119,110)
Net (loss) $(6,853) $(5,216) $(33,944) $(224,028)
------- ------- -------- ---------
------- ------- -------- ---------
Net (loss) per
common share (a) (a) (a)
------- ------- --------
------- ------- --------
Weighted average
number of common
shares outstanding 56,351,967 55,722,501 53,076,492
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
________________
(a) Less than $.01 net loss per share
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Period December 8, 1981 (Inception)
to December 31, 1995
<TABLE>
<CAPTION>
CLASS B DEFICIT
COMMON STOCK COMMON STOCK ACCUMULATED
-------------------- ------------------- DURING
NUMBER OF NUMBER OF DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT STAGE
--------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Balance at inception
December 8, 1981 - $ - - $ - $ -
Issuance of stock to
officers and
directors, March,
1988:
for cash ($.003
per share) 2,118,640 6,355 - - -
Issuance of stock
March, 1988:
for cash ($.003
per share) 2,881,360 8,645 - - -
Net (loss) for the
year ended December
31, 1988 - - - - (7,179)
---------- -------- ---------- -------- ---------
Balances, December
31, 1988 5,000,000 15,000 - - (7,179)
Issuance of stock in
public offering, net
of expenses of
$71,435 (note 4) 20,316,000 131,725 - - -
Issuance of stock to
underwriter (note 4) 677,200 100 - - -
Issuance of stock to
affiliated entities
(note 4) - - 1,000,000 10,000 -
Conversion of stock
(note 4) 15,000,000 10,000 (1,000,000) (10,000) -
Shares not returned
in merger reversal
(note 6) 10,000,000 - - - -
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
For the Period December 8, 1981 (Inception)
to December 31, 1995
<TABLE>
<CAPTION>
CLASS B DEFICIT
COMMON STOCK COMMON STOCK ACCUMULATED
-------------------- ------------------- DURING
NUMBER OF NUMBER OF DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT STAGE
--------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net (loss) for the
year ended December
31, 1989 - - - - (154,955)
---------- -------- ---------- -------- ---------
Balances, December
31, 1989 50,993,200 156,825 - - (162,134)
Net (loss) for the
year ended December
31, 1990 - - - - (4,622)
---------- -------- ---------- -------- ---------
Balances, December
31, 1990 50,993,200 156,825 - - (166,756)
Net (loss) for the
year ended December
31, 1991 - - - - (330)
---------- -------- ---------- -------- ---------
Balances, December
31, 1991 50,993,200 156,825 - - (167,086)
Issuance of stock
to officers and
directors, for
cash, June, 1992
($.01 per share) 731,910 7,319 - - -
Net (loss) for the
year ended December
31, 1992 - - - - (10,929)
---------- -------- ---------- -------- ---------
Balances, December
31, 1992 51,725,110 164,144 - - (178,015)
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
For the Period December 8, 1981 (Inception)
to December 31, 1995
<TABLE>
<CAPTION>
CLASS B DEFICIT
COMMON STOCK COMMON STOCK ACCUMULATED
-------------------- ------------------- DURING
NUMBER OF NUMBER OF DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT STAGE
--------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Issuance of stock
to officers and
directors, for
cash, during 1993
($.01 per share) 1,375,000 13,750 - - -
Issuance of stock
for cash, April,
1993
($.01 per share) 90,480 905 - - -
Issuance of stock
for officer
compensation,
November, 1993
(note 3)
($.01 per share) 2,500,000 25,000 - - -
Net (loss) for the
year ended December
31, 1993 - - - - (33,944)
---------- -------- ---------- -------- ---------
Balances, December
31, 1993 55,690,590 203,799 - - (211,959)
Net (loss) for the
year ended December
31, 1994 - - - - (5,216)
Issuance of stock
to an officer and
a shareholder/
director, for
cash, November,
1994 ($.01 per
share) 230,000 2,300 - - -
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Concluded)
For the Period December 8, 1981 (Inception)
to December 31, 1995
<TABLE>
<CAPTION>
CLASS B DEFICIT
COMMON STOCK COMMON STOCK ACCUMULATED
-------------------- ------------------- DURING
NUMBER OF NUMBER OF DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT STAGE
--------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Issuance of stock
to officer for
reimbursement of
expenses, November,
1994 ($.01 per
share) 142,500 1,425 - - -
---------- -------- ---------- -------- ---------
Balances, December
31, 1994 56,063,090 207,524 - - (217,175)
Issuance of stock
to officer for
cash, January,
1995 ($.01 per
share 20,000 200 - - -
Issuance of stock
to officer for
cash, April,
1995 ($.01 per
share 200,000 2,000 - - -
Issuance of stock
to officer for
cash, August,
1995 ($.01 per
share 60,000 600 - - -
Issuance of stock
to officer for
cash, September,
1995 ($.01 per
share 300,000 3,000 - - -
Net (loss) for the
year ended December
31, 1995 - - - - (6,853)
---------- -------- ---------- -------- ---------
Balances, December
31, 1995 56,643,090 $213,324 - $ - $(224,028)
---------- -------- ---------- -------- ---------
---------- -------- ---------- -------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
DECEMBER 8,
1981
(INCEPTION)
YEARS ENDED DECEMBER 31, TO
---------------------------------- DECEMBER 31,
1995 1994 1993 1995
-------- -------- --------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net (loss) $(6,853) $(5,216) $(33,944) $(224,028)
Adjustments to reconcile
net (loss) to net cash
used by operating
activities:
Amortization - - 37 750
Stock issued for
services/expenses - 1,425 25,000 26,425
Change in assets and
liabilities:
Increase (decrease)
in accounts payable 1,073 1,484 (7,260) 10,840
------- ------- -------- ---------
Net cash (used) by
operating activities (5,780) (2,307) (16,167) (186,013)
------- ------- -------- ---------
Cash flows from investing
activities:
Organization costs - - - (750)
------- ------- -------- ---------
Cash flows from financing
activities:
Proceeds from issuance
of common stock 5,800 2,300 14,655 248,334
Proceeds from issuance
of Class B common
stock - - - 10,000
Deferred offering costs - - - (71,435)
------- ------- -------- ---------
Net cash provided by
financing activities 5,800 2,300 14,655 186,899
------- ------- -------- ---------
Net increase (decrease)
in cash 20 (7) (1,512) 136
Cash, beginning of period 116 123 1,635 -
------- ------- -------- ---------
Cash, end of period $ 136 $ 116 $ 123 $ 136
------- ------- -------- ---------
------- ------- -------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
ORGANIZATION
Triangle, Inc. (the "Company") is a development stage organization
formed under the laws of the State of Colorado on December 8, 1981.
Since inception, the Company has been inactive except for recent
organizational and initial financing efforts. The Company's fiscal
year end is December 31, and there was no activity prior to the year
ended December 31, 1988. The Company intends to seek, investigate
and, if such investigation warrants, acquire an interest in business
opportunities presented to it by persons or firms who or which desire
to seek the perceived advantages of a publicly-held corporation. The
Company has no specific business plan. The impact of the Company not
having a specific business plan on the accompanying financial
statements cannot be determined at this time.
DEFERRED OFFERING COSTS
The Company incurred offering costs in connection with its public
offering. When the offering of the Company's stock was successful in
April of 1989, these costs were charged as a reduction of the proceeds
of the offering (note 4).
(LOSS) PER COMMON SHARE
(Loss) per common share is computed by dividing net (loss) available
to common stockholders by the weighted average number of common shares
outstanding during the periods.
INCOME TAXES
The Company follows the asset and liability approach in accounting for
income taxes as required by Statements of Financial Accounting
Standards No. 109, "Accounting for Income Taxes". Under this method,
deferred income taxes are recorded to reflect the tax consequences in
future years of temporary differences between the tax basis of the
assets and liabilities and their financial statement amounts at the
end of each period. Valuation allowances will be established when
necessary to reduce deferred tax assets to the amount expected
F-9
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES (CONTINUED)
to be realized. Income tax expense is the tax payable for the current
period and the change during the period in deferred tax assets and
liabilities. For financial reporting, start-up costs are expensed as
incurred; for tax purposes they are capitalized and will be amortized
over five years when operations begin.
The Company has no taxable income to date; therefore, no provision for
income taxes has been made. The deficit accumulated during the
development stage is generally available to offset future taxable
income. The available net operating loss will begin expiring in 2004.
The tax benefit to be derived from the total net operating loss
carryforwards amounted to approximately $18,500 as of December 31,
1995, assuming a marginal federal tax rate of 15%. However, because
the Company is a development stage company with no earnings history, a
valuation allowance has been established at an amount equal to the
potential tax benefit, and no deferred tax asset or tax benefit has
been recognized in these financial statements.
USE OF 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.
2. RELATED PARTY TRANSACTIONS
The Company maintains its offices in space provided by the Company's
President pursuant to an oral agreement on a rent-free basis with
reimbursement for out-of-pocket expenses, such as telephone.
F-10
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (CONTINUED)
During the year ended December 31, 1988, the Company's President
advanced $20,157 on an unsecured, interest-free basis to provide funds
for efforts related to the public offering and for operating needs.
These advances were repaid from the offering proceeds in April of
1989.
3. STOCKHOLDERS' EQUITY (DEFICIT)
COMMON AND PREFERRED STOCK
In December of 1981, the Company authorized 50,000 shares of no par
value common stock. In March of 1988, the Company amended and
restated its certificate of incorporation to authorize 800,000,000
shares of no par value common stock and 100,000,000 shares of $.10 par
value preferred stock. No preferred stock is issued or outstanding as
of December 31, 1995.
During 1995 and 1994, the Company issued 580,000 and 230,000 shares,
respectively, of common stock at $.01 per share to pay legal,
accounting and other necessary expenses. In addition, 2,500,000
shares of common stock were issued to the Company's President for
services valued at $25,000 during the year ended December 31, 1993.
RECAPITALIZATION
In October of 1988, the Company authorized 1,000,000 shares of no par
value Class B common stock to be included in an S-18 Registration
Statement, which was subsequently withdrawn (note 4).
In October of 1988, by unanimous written consent of the Board of
Directors and shareholders, all present shareholders agreed, effective
June 17, 1988, to return to the Company 45,000,000 shares of common
stock on a pro rata basis for no consideration. The accompanying
financial statements reflect the return of the 45,000,000 shares by
present shareholders as if these shares were never issued.
F-11
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
3. STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
INCENTIVE STOCK OPTION PLAN
Effective March 3, 1988, the Company adopted an incentive stock option
plan for Company executives and key employees. The Company has
reserved 10,000,000 common shares for issuance pursuant to the plan.
The plan provides that no option may be granted at an exercise price
less than the fair market value of the common shares of the Company on
the date of grant and no option can have a term in excess of ten
years. To date, no options have been granted pursuant to the plan.
4. PUBLIC OFFERING
UNDERWRITING
In May of 1989, the Company completed a public offering of 20,316
units:
<TABLE>
<S> <C>
Gross proceeds from the sale of units $ 203,160
Underwriting commissions, nonaccountable
expenses, and attorney fees paid
directly from proceeds (33,411)
169,749
Other offering costs paid directly by
the Company (38,024)
--------
Net proceeds $131,725
--------
--------
</TABLE>
Each unit offered consisted of 1,000 shares of the Company's no par
value common stock and 1,000 Class A warrants and 1,000 Class B
warrants.
The Class A and Class B warrants were immediately detachable and
separately transferable from the common shares. Each Class A warrant
was exercisable to purchase one common share at a price of $.02
through March 5, 1992. Each Class B warrant was exercisable to
purchase one common share at the price of $.04 through March 5, 1993.
Both of these warrants have expired.
F-12
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
4. PUBLIC OFFERING (CONTINUED)
CLASS B COMMON STOCK
In April of 1989, the Company sold 1,000,000 shares of no par value
Class B common stock at $.01 per share to a founder, a company wholly-
owned by a founder and an entity and an individual related to a
founder. The Class B common stock has no voting rights or preemptive
rights, is not redeemable or assessable and is not entitled to the
benefit of any sinking fund or antidilution provisions. Further, the
Class B common stock is not entitled to the payment of dividends and
does not participate in any distributions upon liquidation, whether
voluntary or involuntary, of the Company.
In September of 1989, the Class B common stock was converted into
common stock at the rate of fifteen shares of common stock for each
share of Class B common stock surrendered for conversion. The
conversion occurred subsequent to the consummation of the acquisition
of Enterprise Car Rental by the Company and prior to the recision of
that merger (note 6).
Depending upon a number of factors including the relationship of the
holder to the Company, all or any part of the 15,000,000 converted
shares could be lawfully reoffered without further registration and
without regard to Rule 144 adopted under the Securities Act of 1933,
as amended.
5. TRANSACTION WITH COMPANY'S COUNSEL
An affiliate of the Company's former legal counsel is a shareholder of
the Company. This former legal counsel received legal fees in
connection with the failed merger described in note 6 and various
other corporate matters. For the year ended December 31, 1989, the
Company's formal legal counsel performed legal services valued at
approximately $8,000 and has not been paid as of December 31, 1995.
6. MERGER AND RELATED RECISION
In August of 1989, the Company consummated an exchange transaction
pursuant to which Triangle acquired all of the outstanding shares of
Enterprise Car Rental, Ltd. dba Wheels International Rent A Car
("Wheels") in exchange for 326,500,800 shares of no par value common
stock. In conjunction with the merger, Triangle advanced $119,110 to
F-13
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
6. MERGER AND RELATED RECISION (CONTINUED)
Wheels. Effective September 30, 1989, Triangle and Wheels consummated
a Compromise and Settlement Agreement pursuant to which the merger was
reversed. Wheel's shareholders returned all but 10,000,000 common
shares to Triangle in exchange for their original shares of Wheels
giving Triangle a note for $150,000 securing an undertaking by Wheels
to indemnify and hold harmless Triangle from actions by third parties
to Wheels and to secure performance of obligations of Wheels to
cooperate in any legal actions undertaken by Triangle against third
parties of Wheels.
The stockholders' (deficit) in the accompanying financial statements
has been reported as if the merger had not taken place. The
10,000,000 common shares not returned are recorded as issued in
October of 1989 for no consideration. The advances to Wheels of
$119,110 were written off at December 31, 1989. Management does not
anticipate any further contingencies associated with this failed
merger, however, there is no assurance that there will be no further
contingencies.
7. PROPOSED MERGER
On November 21, 1995, the Company signed a letter of intent to acquire
Texas Quick Service, Inc. (TQSI) in exchange for common stock of the
Company. Under the terms of the letter of intent, the Company plans
to acquire 100% of TQSI's stock in exchange for the Company issuing to
TQSI shareholders enough shares to give TQSI shareholders 90% of the
total shares outstanding of the Company upon completion of the
exchange. The parties have agreed that at the completion of the
closing of the merger, the outstanding shares of common stock of the
Company will be reverse split, 100 to 1. TQSI is a holding company
with no operations and was formed to acquire the assets of Red Line
Burgers, Inc. as part of a Chapter 11 reorganization plan. Red Line
Burgers, Inc. owns, operates or franchises several hamburger
restaurant chains in Texas and is presently in reorganization under
Chapter 11 of the U.S. Bankruptcy Code. TQSI has agreed to complete
an audit of its financial statements prior to the closing of the
merger with a letter of intent requirement of a minimum financial net
worth for TQSI of $200,000.
F-14
<PAGE>
TRIANGLE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Concluded)
7. PROPOSED MERGER (CONTINUED)
Following is an unaudited summary of financial position and results of
operations of TQSI at December 31, 1995:
<TABLE>
<CAPTION>
UNAUDITED
---------
<S> <C>
Current assets $ 87,137
Property, plant and equipment 4,000
Other assets 30,406
--------
Total Assets $121,543
--------
--------
Current liabilities $ 4,118
--------
--------
Stockholders Equity $117,425
--------
--------
Revenue $ 2,571
Expenses (3,977)
--------
Net (Loss) $ (1,406)
--------
--------
</TABLE>
8. GOING CONCERN
The accompany financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. The Company has not
yet commenced operations and has minimal cash to operate.
As of December 31, 1995, the Company's current liabilities exceeded
current assets by $10,704 and the Company has sustained substantial
losses since inception aggregating $224,028. The Company's ability to
continue as a going concern is dependent on its ability to obtain
additional equity financing. The Company intends to seek additional
equity financing through searching for a suitable merger candidate as
described in Note 7 and the sale of common stock to its officers and
directors. There is no assurance that a suitable merger candidate
will be found or that the Company's officers and directors will
continue to purchase common stock. The financial statements do not
include any adjustments relating to the recoverability and
classification of asset amounts that might be necessary should the
Company be unable to continue as a going concern.
F-15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 136
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 136
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 136
<CURRENT-LIABILITIES> 10840
<BONDS> 0
0
0
<COMMON> 213324
<OTHER-SE> (224028)
<TOTAL-LIABILITY-AND-EQUITY> 136
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6853
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6853)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6853)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6853)
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>EARNINGS PER SHARE LESS THAN $.001
</FN>
</TABLE>
