<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED September 30, 1996.
( ) TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________.
Commission File No. 0-20747
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ImageMatrix Corporation
-----------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1313108
- -------- ----------
(State or jurisdiction of (I.R.S. Employer identification Number)
Incorporation or Organization)
400 S. Colorado Blvd. - Suite 500, Denver, CO 80222
- --------------------------------------------- -----
(Address of principal executive offices) (Zip code)
(303) 399-3700
--------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 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 registrant had 4,638,772 shares of common stock outstanding as of
October 25, 1996.
Transitional Small Business Disclosure Format:
Yes No X
--- ---
1
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Item 1. Financial Statements
--------------------
ImageMatrix Corporation
Consolidated Balance Sheet
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1996 1995
------------------ ----------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 1,540 $ 550
Accounts receivable, less allowance for doubtful accounts of $25 at
September 30, 1996 and $18 at December 31, 1995 229 752
Unbilled revenues 504 -
Inventory 62 216
Prepaid expenses and other current assets 179 44
------------------ ----------------
Total current assets 2,514 1,562
Property and equipment, at cost
Computer equipment 519 169
Office furniture and leasehold improvements 83 28
------------------ ----------------
602 197
Less: accumulated depreciation (109) (13)
------------------ ----------------
493 184
Software development costs, net of accumulated amortization of $78 at
September 30, 1996 and $0 at December 31, 1995 338 -
Other assets, net of accumulated amortization of $47 at
September 30, 1996 and $15 at December 31, 1995 64 176
------------------ ----------------
Total assets $ 3,409 $ 1,922
================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued expenses $ 728 $ 505
Deferred revenue 49 61
Note payable to bank - 1,160
Note payable to ENTEX Information Services of Colorado, Inc. - 1,484
------------------ ----------------
Total current liabilities 777 3,210
Stockholders' equity (deficit)
Preferred stock, no par value, 5,000,000 shares authorized,
no shares issued or outstanding - -
Common stock, no par value, 20,000,000 shares authorized,
4,638,772 shares issued and outstanding at September 30, 1996
and 3,265,193 shares issued and outstanding at December 31, 1995 5,106 (1,141)
Deferred compensation, net of accumulated amortization of $38 at
September 30, 1996 and $0 at December 31, 1995 (62) (100)
Retained deficit (2,412) (47)
------------------ ----------------
Total stockholders' equity (deficit) 2,632 (1,288)
------------------ ----------------
Total liabilities and stockholders' equity $ 3,409 $ 1,922
================== ================
</TABLE>
See notes to Unaudited Consolidated Financial Statements.
2
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ImageMatrix Corporation
Consolidated Statement of Operations
(Unaudited)
(in thousands, except share and per share information)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Three Nine Months
Three Months Ended Months Ended Nine Months Ended Ended
September 30, September 30, September 30, September 30,
1996 1995 1995 1996 1995 1995
------------- ------------ --------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
System sales $ 666 $ 394 $ 881 $ 2,100 $ 455 $ 3,189
Service contracts and other 102 11 19 330 11 125
------------- ------------ --------------- -------------- ------------- ---------------
Total revenue 768 405 900 2,430 466 3,314
Cost of revenue:
System sales 525 293 579 1,595 359 2,085
Service contracts and other 58 - 6 257 - 160
------------- ------------ --------------- -------------- ------------- ---------------
Total cost of revenue 583 293 585 1,852 359 2,245
Gross Profit:
System sales 141 101 302 505 96 1,104
Service contracts and other 44 11 13 73 11 (35)
------------- ------------ --------------- -------------- ------------- ---------------
Total gross profit 185 112 315 578 107 1,069
Selling, general
and administrative expenses 1,162 117 238 2,641 211 752
Depreciation and amortization 43 - 14 166 7 7
------------- ------------ --------------- -------------- ------------- ---------------
Operating income (loss) (1,020) (5) 63 (2,229) (111) 310
Other income (expense):
Interest - net 18 (12) (100) (139) (135) (233)
Other non-operating income 1 12 11 3 12 12
Net realized gain
on sale of assets - - - - 347 -
------------- ------------ --------------- -------------- ------------- ---------------
Net income (loss) before
income taxes (1,001) (5) (26) (2,365) 113 89
Provision for income taxes - - - - 18 -
------------- ------------ --------------- -------------- ------------- ---------------
Net income (loss) $(1,001) $ (5) $ (26) $ (2,365) $ 95 $ 89
============= ============ =============== ============== ============= ===============
Net income (loss) per
common share $ (0.22) $ - $ (0.01) $ (0.59) $ 0.03 $ 0.02
============= ============ =============== ============== ============= ===============
Weighted average shares
outstanding 4,639,000 3,575,000 3,575,000 4,035,000 3,575,000 3,575,000
============= ============ =============== ============== ============= ===============
</TABLE>
See notes to Unaudited Consolidated Financial Statements.
3
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ImageMatrix Corporation
Consolidated Statement of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
----------------- ------------------
Operating activities
<S> <C> <C>
Net income (loss) $ (2,365) $ 95
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 244 7
Net realized gain on sale of net assets - (347)
Changes in operating assets and liabilities:
Accounts receivable 523 7
Unbilled revenue (504) -
Inventory 154 (154)
Prepaid expenses and other current assets (135) (135)
Accounts payable, accrued liabilities and deferred income 249 624
Other assets (2) (110)
----------------- ------------------
Net cash used in operating activities (1,836) (13)
Investing activities
Proceeds from sale to ENTEX Information Services, Inc. - 118
Purchase of net assets of ENTEX Information Services, Inc.
plus expenses totaling $66 - (787)
Purchases of computer equipment and furniture (405) (23)
Software development costs (416) -
Proceeds from disposal of discontinued operations - 292
----------------- ------------------
Net cash used in investing activities (821) (400)
Financing activities
Proceeds from the issuance of common stock 6,329 1,201
Repayment of note payable to bank (1,160) (280)
Repayment of note payable to ENTEX Information Services, Inc. (1,484) -
Repayment of amount due to principal stockholder (38) (83)
----------------- ------------------
Net cash provided by financing activities 3,647 838
Net increase in cash and cash equivalents 990 425
Cash and cash equivalents at beginning of period 550 5
----------------- ------------------
Cash and cash equivalents at end of period $ 1,540 $ 430
================= ==================
</TABLE>
4
See notes to Unaudited Consolidated Financial Statements.
<PAGE>
IMAGEMATRIX CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
1. Basis of Presentation
The Company, in its opinion, has included all adjustments (consisting
of normal recurring accruals) necessary for a fair presentation of its
financial position at September 30, 1996 and the results of its
operations for the three-month and nine-month periods ended September
30, 1996 and September 30, 1995, both actual and pro forma. The results
of operations for the period ended September 30, 1996 are not
necessarily indicative of the results for a full year.
2. Pro Forma Statement of Operations
The pro forma statement of operations for the three-month and
nine-month periods ended September 30, 1995 assumes operations of the
Imaging Division of Random Access, Inc. (the "Imaging Division") had
been owned by the Company for the entire three-month and nine-month
periods. However, historical combined results may not be comparable to,
or indicative of, future performance. The pro forma statement of
operations for the three-month and nine-month periods ended September
30, 1995 include adjustments to (i) eliminate goodwill amortization
expense during the period the Imaging Division was owned and operated
by Random Access, Inc. ("Random"); (ii) record interest expense during
the period February 16, 1995 through August 30, 1995 on the note
payable issued in conjunction with the acquisition of the assets of the
Imaging Division by ImageMatrix Corporation on August 30, 1995; (iii)
eliminate the gain on sale of assets recorded at February 15, 1995 by
Documatrix Corporation (predecessor to ImageMatrix Corporation) as a
result of its sale to Random of the assets that became the Imaging
Division; and (iv) eliminate the alternative minimum tax (AMT), as
ImageMatrix Corporation's AMT loss carryforward would not have been
used if the sale to Random had not occurred.
3. Revenue Recognition Policy
Revenues from contracts extending over a period of time, which are
being performed on a firm price basis, are recognized on the percentage
of completion method. The Company's basis for measuring the extent of
progress toward completion is the ratio of costs incurred to total
estimated costs. Revenues from the sale of software licenses and
hardware products are recognized at the time of shipment unless
significant future obligations remain. Post-contract service contracts
are recorded as unearned maintenance fees and recognized as revenue
ratably over the contract period. Costs associated with post-sale
obligations are accrued and recognized as expense ratably over the
contract period.
4. Software Development Costs
The costs incurred internally to develop computer software products to
be sold, leased or otherwise marketed are charged to expense until the
technological feasibility of the product has been established. Once
technological feasibility of the related software products has been
established, computer software development costs are capitalized and
reported at the lower of amortized cost or net realizable value. When a
product is ready for general release, its capitalized costs are
amortized based on current period revenue generated to total
anticipated revenue expected for the product with an annual minimum
amortization equal to the straight-line method of amortization over
three years. The Company capitalized approximately $416,000 of software
development costs related to the Company's ClaimMatrix(TM) product
during the nine-month period ended September 30, 1996.
5
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5. Notes Payable To Bank
As of December 31, 1995, the Company owed $1,160,000 to Bank One,
Colorado, N.A. This note, plus accrued interest, was paid in full out
of the net proceeds of the initial public offering (IPO) during the
month of June 1996.
6. Notes Payable To ENTEX
As of December 31, 1995, the Company owed $1,484,000 to ENTEX
Information Services, Inc. of Colorado, Inc. This note, plus accrued
interest, was paid in full out of the net proceeds of the IPO during
the month of June 1996.
7. Offering Costs
During the nine months ended September 30, 1996, the Company incurred
additional costs related to the public offering of the Company's common
shares. Offering costs, totaling $756,000, were netted against the
proceeds received from the sale of 1,400,000 common shares as a result
of the IPO.
8. Newly Implemented Accounting Standard
On January 1, 1996, the Company adopted Financial Accounting Standards
Board Statement No. 121 ("Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of") which requires
impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. The impact of the adoption of
this Statement was not material to the Company's consolidated financial
statements.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
---------------------
OVERVIEW
ImageMatrix Corporation (the "Company") designs, sells, and installs
computerized document imaging and workflow control systems which
improve productivity and customer service for health maintenance
organizations ("HMOs"), health insurance companies, and businesses and
associations in financial, communications, engineering and other
industries. Development of its core product, known as ClaimMatrix(TM),
continues and the installation of the first ClaimMatrix(TM) system was
successfully completed in October 1996.
In June 1996, the Company raised $6,329,000, net of offering costs,
from its initial public offering of 1,400,000 shares of Common Stock
(the "IPO").
In August 1995 the Company acquired the imaging business of Entex
Information Services, Inc. of Colorado, Inc. ("ENTEX"). The imaging
business had been acquired by ENTEX from Documatrix Corporation, a
company controlled by the Company's president, on February 15, 1995. As
Documatrix and the Company had no operations from February 16, 1995
through August 30, 1995, pro forma results of operations incorporating
the financial statements of Documatrix Corporation and the imaging
division of ENTEX as predecessor companies are being compared to 1996
actual results of operations for the three- and the nine-month periods
ended September 30, 1996.
RESULTS OF OPERATIONS
Three months ended September 30, 1996 compared to pro forma three months ended
September 30, 1995
Revenues
Revenues for Third Quarter 1996 are comprised of revenues recognized in
conjunction with the delivery of a ClaimMatrix(TM) system sold during
the three months ended June 30, 1996 plus revenues related to the
delivery of general non-health care imaging systems. Total revenues
were $768,000 for the three months ended September 30, 1996 ("Third
Quarter 1996"), compared to $900,000 for the pro forma three months
ended September 30, 1995 ("Third Quarter 1995"), a decrease of 14.7%.
Revenues from system sales totaled $666,000 for Third Quarter 1996,
compared to $881,000 for Third Quarter 1995, representing a decrease of
24.4%. The decrease in total revenues and revenues from system sales is
due to lower sales volume in the general system integration segment of
the business as the Company shifted its business strategy from that
segment to focusing primarily on developing its ClaimMatrix(TM)
product. The installation of the Company's first ClaimMatrix(TM)
system, which was initiated in June 1996, was completed in October 1996
and will serve as a reference site for the Company's products in the
future.
Because the Company's marketing and sales efforts will continue to be
focused primarily on its customized products in the health care
industry, revenues from custom-designed systems for the general system
integration market are expected to become a smaller portion of revenues
in relation to the total.
7
<PAGE>
Revenues from service contracts and other totaled $102,000 in Third
Quarter 1996 compared to $19,000 in Third Quarter 1995. This increase
in revenue was due to the increased number and average contract price
of service contracts sold during Third Quarter 1996.
Cost of revenues and resulting gross margin results
Cost of sales decreased to $583,000 in the Third Quarter 1996 compared
to $585,000 in the Third Quarter 1995.
Cost of system sales decreased 9.3% to $525,000 in the Third Quarter
1996 from $579,000 in the Third Quarter 1995. The decrease in cost of
system sales was the result of lower sales volume due to the shift in
the Company's business focus away from general systems integration
projects. As previously stated in Note 4 above, capitalized costs are
amortized based on current period revenue generated to total
anticipated revenue expected for the product with annual minimum
amortization equal to the straight-line method of amortization over
three years. Accordingly, the Company amortized $55,000 of these
development expenses during the Third Quarter 1996. This had the effect
of increasing costs and reducing gross margins on system sales.
Cost of service contracts and other rose to $58,000 in the Third
Quarter 1996 from $6,000 in the Third Quarter 1995. The increase is due
to the impact of having additional service contracts in place during
the Third Quarter 1996 compared to Third Quarter 1995
Gross profit decreased 41.3% to $185,000 (24.1% of total revenue) in
the Third Quarter 1996 from $315,000 (35.0% of total revenue) in the
Third Quarter 1995. Cost of system sales in Third Quarter 1996,
excluding the amortization of ClaimMatrix(TM) software, was $470,000
resulting in a direct gross margin of 29.4% of total system revenue in
the Third Quarter of 1996, compared to the 21.2% reported below.
Gross profit from system sales totaled $141,000 (21.2% of total system
sales revenue) in the Third Quarter 1996 and $302,000 (34.3% of total
system sales revenue) in the Third Quarter 1995, respectively. This
decrease in gross profit is due to lower sales volume, as well as to
the additional $55,000 in ClaimMatrix(TM) software amortization
expenses recorded during the period.
Gross profit from service contracts and other totaled $44,000 (43.1% of
sales from service contracts and other) and $13,000 (68.4% of sales
from service contracts and other) in the Third Quarter 1996 and Third
Quarter 1995, respectively. The increase in gross profit is primarily
the result of additional service contract costs during the Third
Quarter of 1996.
Operating expenses
Selling, general and administration expenses increased to $1,162,000
for the Third Quarter 1996, compared to $238,000 for the Third Quarter
1995. The increase is related to the addition of office space and
personnel engaged in sales, marketing, product development, and general
administration activities. The Company expects selling, general and
administrative expenses to increase during the remainder of 1996 as the
Company increases its marketing and sales efforts in connection with
the sale of ClaimMatrix(TM) systems.
8
<PAGE>
Interest expense - net
The Company recorded interest income in the amount of $18,000 for the
Third Quarter 1996 compared to interest expense in the amount of
$100,000 for the Third Quarter 1995. The difference is primarily due to
the retirement of all notes payable immediately after completion of the
IPO in June 1996. Excess cash resources available since the IPO have
been invested in interest-bearing securities.
Net loss
The Company reported a net loss of $1,001,000 ($0.22 per share) for the
Third Quarter 1996 as compared to a net loss of $26,000 ($0.01 per
share) for the Third Quarter 1995. The increased loss was due to lower
revenues and higher expense levels as the Company moved away from
general systems integration business toward the development of
ClaimMatrix(TM).
Nine months ended September 30, 1996 compared to pro forma nine months ended
September 30, 1995
Revenues
Revenues were $2,430,000 for the nine months ended September 30, 1996
("First Three Quarters of 1996") and were $3,314,000 for the pro forma
nine months ended September 30, 1995 ("First Three Quarters of 1995"),
a decrease of 26.7%.
Revenues from system sales decreased 34.1% to $2,100,000 for the First
Three Quarters of 1996 from the $3,189,000 reported for the First Three
Quarters of 1995. The decrease in system sales is primarily due to the
fact that the Company was not engaged in comparable large ongoing
general systems integration contracts during the First Three Quarters
of 1996. Revenues from system sales for the First Three Quarters of
1995 included $1,032,000 of revenue recognized in conjunction with a
major contract, plus $2,157,000 of system sales from other projects.
Total revenues for the First Three Quarters of 1996 included $602,000
of revenue recognized from the sale of a ClaimMatrix(TM) system, plus
$1,498,000 of system sales from other projects. Revenue for the First
Three Quarters of 1996 included $1,317,000 (63% of total revenue) from
five major customers.
Revenues from service contracts and other increased significantly to
$330,000 in the First Three Quarters of 1996 from $125,000 in the First
Three Quarters of 1995. The increase in service contract revenue from
First Three Quarters of 1995 to First Three Quarters of 1996 is due to
the increased number and average contract price of service contracts
during the 1996 period.
Cost of revenues and resulting gross margin results
Cost of sales declined 17.5% to $1,852,000 in the First Three Quarters
of 1996 from $2,245,000 in the First Three Quarters of 1995. Cost of
system sales totaled $1,595,000 and $2,085,000 in the First Three
Quarters of 1996 and First Three Quarters of 1995, respectively,
representing a decrease of 23.5%. The decrease in total cost of sales
and cost of system sales is related to lower sales volume in the First
Three Quarters of 1996 versus the First Three Quarters of 1995.
9
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Cost of service contracts and other rose to $257,000 in the First Three
Quarters of 1996 from $160,000 in the First Three Quarters of 1995.
This increase in costs is related to the increased number of service
contracts.
Gross profit was $578,000 (23.8% of revenue) in the First Three
Quarters of 1996 and $1,069,000 (32.3% of revenue) in the First Three
Quarters of 1995, representing a decrease of 45.9%. Gross profit from
system sales totaled $505,000 and $1,104,000 in the First Three
Quarters of 1996 and First Three Quarters of 1995, respectively. This
is a decrease of 54.3%, while gross margin from system sales decreased
to 24.0% from 34.6% over the same periods.
Gross profit from service contracts and other totaled $73,000 in the
First Three Quarters of 1996 compared to negative gross profit of
$35,000 in the First Three Quarters of 1995. The improved gross profit
from service contracts and other is due a greater number of service
contracts during the First Three Quarters of 1996.
Operating expenses
Selling, general and administration expenses increased significantly to
$2,641,000 for the First Three Quarters of 1996, compared to $752,000
for the First Three Quarters of 1995. The increase for the First Three
Quarters of 1996 compared to the First Three Quarters of 1995 is
related to an increase in the number of personnel engaged in sales,
marketing and general administration activities together with higher
expenditures for marketing and sales activities. Also included in
selling, general and administrative expenses for the First Three
Quarters of 1996 is $348,000 related to the utilization of the
professional services staff in sales, product development and training
efforts. The totals for the First Three Quarters of 1996 are exclusive
of $416,000 in software development costs capitalized during the
period.
Interest expense - net
Interest expense - net decreased to $139,000 for First Three Quarters
of 1996, compared to $233,000 for First Three Quarters of 1995. Because
the Company paid off all of its existing debt at the closing of the
IPO, interest expense is not expected to be significant for the
remainder of 1996.
Net income (loss)
The Company reported a net loss of $2,365,000 ($0.59 per share) for the
First Three Quarters of 1996 as compared to net income of $89,000 for
the First Three Quarters of 1995 ($0.02 per share). The increased loss
was due to lower revenues and higher expense levels, as noted above.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $1,836,000 and $13,000 in
First Three Quarters of 1996 and First Three Quarters of 1995,
respectively. In the First Three Quarters of 1996, net cash used in
operating activities consisted primarily of the net loss for the period
offset by depreciation and amortization expense and a decrease in
accounts receivable balances and an increase in accounts payable and
accrued expenses.
10
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Net cash used in investing activities was $821,000 and $400,000 in the
First Three Quarters of 1996 and First Three Quarters of 1995,
respectively. In the nine months ended September 30, 1996, net cash
used in investing activities consisted primarily of purchases of
computer equipment and furniture related to the increase in the number
of employees of the Company and occupation of additional office space.
Net cash provided by financing activities was $3,647,000 and $838,000
in the First Three Quarters of 1996 and First Three Quarters of 1995,
respectively. In June 1996, the Company raised $6,329,000, net of
offering costs, from the IPO. The Company has repaid all of its
long-term debt obligations with the proceeds of this offering,
including $1,484,000 owed to ENTEX Information Services of Colorado,
Inc., and $1,160,000 owed to Bank One, Colorado, N.A. The Company
intends to use the remaining proceeds to fund the purchase of computer
equipment and to finance general working capital needs.
The Company's backlog at September 30, 1996 is approximately $327,000,
including approximately $38,000 included in deferred revenue at the
same date. The sales cycle of ClaimMatrix(TM) systems is running longer
than originally anticipated. Management had originally anticipated that
the average sales cycle for the ClaimMatrix(TM) system would take from
two to four months. Based on recent experience, management now
anticipates that the sales cycle will typically take between four and
six months. The results of that change have slowed the market
development and the anticipated increase in revenues from the
ClaimMatrix(TM) system and caused a greater use of capital resources
than anticipated. Management believes that its current capital
resources are adequate, given current operations and anticipated
developments in the next two quarters. However, if revenues continue to
be lower than anticipated, the Company may find it necessary to borrow
money, sell additional securities or perform a combination of both. The
result of such a change in capitalization could adversely effect future
earnings due to increased interest costs. Such a change in
capitalization could also increase shares outstanding, thus diluting
ownership of current shareholders in the Company.
"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this report which are not historical facts
are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially from
those set forth in or implied by forward-looking statements, including,
but not limited to, the risk that the market for imaging-based claims
processing may not develop as expected, the recent introduction of
ClaimMatrix(TM) which is based on client/server technology, the degree
of success of the Company's market initiatives, expansion of sales in
the industries to which the Company provides systems, the success of
the Company in forecasting demand for the ClaimMatrix(TM) system, the
success of the Company in increasing ClaimMatrix(TM) system sales as a
percentage of overall revenues to increase gross profit margins and
decrease general, administration and sales costs as a percentage of
overall gross profit, the risk that the long length of the Company's
sales cycle could delay revenues, and those risks and uncertainties
discussed more completely in the Company's Form SB-2 registration
statement.
11
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
Exhibit Number Description of Exhibit
-------------- ----------------------
3.1 Amended and Restated Articles of Incorporation.
(Incorporated by reference from Exhibit 3.1 to the
Registrant's Registration Statement on Form SB-2
(No. 333-1990)).
3.2 Bylaws of Registrant. (Incorporated by reference
from Exhibit 3.2 to the Registrant's Registration
Statement on Form SB-2 (No. 333-1990)).
4.1 Form of certificate for shares of Common Stock.
(Incorporated by reference from Exhibit 4.1 to the
Registrant's Registration Statement on Form SB-2
(No. 333-1990)).
4.2 Form of Warrant Agreement and Redeemable Warrant.
(Incorporated by reference from Exhibit 4.2 to the
Registrants Registration Statement on Form SB-2
(File No. 333-1990)).
10.1 Employment Agreement dated December 29, 1995 by and
between ImageMatrix Corporation and Gerald E.
Henderson. (Incorporated by reference from Exhibit
10.1 to the Registrant's Registration Statement on
Form SB-2 (File No. 333-1990)).
10.2 Severance Agreement dated December 29, 1995 by and
between ImageMatrix Corporation and Dennis C. Hefter.
(Incorporated by reference from Exhibit 10.2 to the
Registrant's Registration Statement on Form SB-2
(File No. 333-1990)).
10.3 Letter Agreement dated December 21, 1995 by and
between ImageMatrix Corporation and Blair W. McNea.
(Incorporated by reference from Exhibit 10.3 to the
Registrant's Registration Statement on Form SB-2
(File No. 333-1990)).
10.4 ImageMatrix Corporation Founders and Consultants
Stock Option Plan. (Incorporated by reference from
Exhibit 10.4 to the Registrant's Registration
Statement on Form SB-2 (File No. 333-1990)).
10.5 ImageMatrix Corporation 1996 Stock Option Plan.
(Incorporated by reference from Exhibit 10.5 to the
Registrant's Registration Statement on Form SB-2
(File No. 333-1990)).
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Exhibit Number Description of Exhibit
-------------- ----------------------
10.6 ImageMatrix Corporation Stock Option Plan for Non-
Employee Directors. (Incorporated by reference from
Exhibit 10.6 to the Registrant's Registration
Statement on Form SB-2 (File No. 333-1990)).
10.7 Asset Purchase Agreement dated August 30, 1995 by and
among Documatrix Acquisition Corporation, Random
Access, Inc. and Gerald E. Henderson. (Incorporated
by reference from Exhibit 10.7 to the Registrant's
Registration Statement on Form SB-2 (File No. 333-
1990)).
10.8 Authorized Reseller Agreement dated February 21, 1996
by and between ImageMatrix Corporation and Optika
Imaging Systems, Inc. (Incorporated by reference from
Exhibit 10.8 to the Registrant's Registration
Statement on Form SB-2 (File No. 333-1990)).
10.9 Reseller Agreement dated January 8, 1996 by and
between ImageMatrix Corporation and FileNet
Corporation. (Incorporated by reference from Exhibit
10.9 to the Registrant's Registration Statement on
Form SB-2 (File No. 333-1990)).
10.10 Asset Purchase Agreement dated February 15, 1995 by
and among Random Access, Inc., Documatrix Corporation
and Gerald E. Henderson. (Incorporated by reference
from Exhibit 10.10 to the Registrant's Registration
Statement on Form SB-2 (File No. 333-1990)).
10.11 Change in Terms Agreement dated December 27, 1995 by
and among Bank One Colorado, N.A., Gerald E.
Henderson, Carolyn Lee Henderson and Documatrix
Corporation, as amended by Change in Terms Agreement
dated February 29, 1996 by and among Bank One
Colorado, N.A., Gerald E. Henderson, Carolyn Lee
Henderson, Documatrix Corporation and ImageMatrix
Corporation. (Incorporated by reference from Exhibit
10.11 to the Registrant's Registration Statement on
Form SB-2 (File No. 333-1990)).
11.1 Statement re: Computation of per share earnings over
the period July 1, 1996 to September 30, 1996
11.2 Statement re: Computation of per share earnings over
the period January 1, 1996 to September 30, 1996
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fiscal quarter for
which this report is filed.
13
<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
ImageMatrix Corporation
By: /s/ Gerald E. Henderson
--------------------------------
Gerald E. Henderson, President and Chief
Executive Officer (Principal Executive Officer)
Date: October 30, 1996
By: /s/ Keith Brue
--------------------------------
Keith Brue, Chief Financial Officer
(Principal Financial Officer)
14
<PAGE>
IMAGEMATRIX CORPORATION
EXHIBIT 11.1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Over the period July 1, 1996 to September 30, 1996
<TABLE>
<CAPTION>
Allocation
-
Days Calculation
---- -----------
<S> <C> <C>
Total shares issued and outstanding from June 4, 1996 through 4,638,772
September 30, 1996
Note: Common stock equivalents have been excluded from the
calculation from June 4, 1996 through September 30, 1996 as
these common stock equivalents are anti-dilutive.
Total shares to be used in computing ------------
income per share subsequent to June 4, 1996 4,638,772 X 91 = 422,128,252
============ ---- -------------
91 422,128,252
==== =============
Divided by 91
-------------
TOTAL WEIGHTED AVERAGE SHARES O/S -
July 1 through September 30, 1996 4,638,772
=============
</TABLE>
15
<PAGE>
IMAGEMATRIX CORPORATION
EXHIBIT 11.2
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Over the period January 1, 1996 to September 30, 1996
<TABLE>
<CAPTION>
Allocation -
Days Calculation
---- -----------
<S> <C> <C>
Applicable Common Shares:
Net effect of common stock - based on the treasury stock
method using the IPO price of $5.75
Shares issued during 1995 3,265,193
Less: Treasury stock assumed purchased
Net stock proceeds 1,201,000
Divided by: IPO price $5.75
----------
(208,870)
Net effect of common stock options - based on the treasury
stock method using the IPO price of $5.75:
Shares assumed issued for stock options 940,759
Less: Treasury stock assumed purchased
Options having an exercise price below IPO price 940,759
Multiplied by: Option Price $2.58
----------
2,427,158
Divided by: IPO price $5.75
----------
(422,114)
Total shares to be used in computing ------------
income per share prior to June 4, 1996 3,574,968 X 155 = 554,120,040
============
Total shares issued and outstanding from June 4, 1996
through September 30, 1996 4,638,772
Note: Common stock equivalents have been excluded from the
calculation from June 4, 1996 through September 30, 1996
as these common stock equivalents are anti-dilutive
Total shares to be used in computing ------------
income per share subsequent to June 4, 1996 4,638,772 X118 = 547,375,096
============ ---- -------------
273 1,101,495,136
====
Divided by 273
TOTAL WEIGHTED AVERAGE SHARES -------------
O/S- January 1 through September 30,
1996 4,034,781
=============
</TABLE>
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JUL-01-1996 JAN-01-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 1,540 1,540
<SECURITIES> 0 0
<RECEIVABLES> 254 254
<ALLOWANCES> 25 25
<INVENTORY> 62 62
<CURRENT-ASSETS> 2,514 2,514
<PP&E> 602 602
<DEPRECIATION> 109 109
<TOTAL-ASSETS> 3,409 3,409
<CURRENT-LIABILITIES> 777 777
<BONDS> 0 0
0 0
0 0
<COMMON> 5,106 5,106
<OTHER-SE> (62) (62)
<TOTAL-LIABILITY-AND-EQUITY> 3,409 3,409
<SALES> 666 2,150
<TOTAL-REVENUES> 768 2,430
<CGS> 583 1,852
<TOTAL-COSTS> 1,205 2,807
<OTHER-EXPENSES> (1) (3)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (18) 139
<INCOME-PRETAX> (1,001) (2,365)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,001) (2,365)
<EPS-PRIMARY> (.22) (.59)
<EPS-DILUTED> (.22) (.59)
</TABLE>
