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TRIANGLE IMAGING GROUP INC (TRIG)
Quarterly Report (SEC form 10-Q)
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.
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Recent Filings: Aug 1997 (Qtrly Rpt) | Nov 1997 (Qtrly Rpt) | Apr 1998
(Annual Rpt) | May 1998 (Qtrly Rpt)
More filings for TRIG available from EDGAR Online
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