UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) February 9, 1998
----------------
ImageMax, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its Charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Pennsylvania 000-23077 23-2865585
------------------------------- ---------------------- ----------------------
(State or other jurisdiction of Commission File Number (IRS Employer
incorporation or organization) Identification Number)
</TABLE>
--------------------------------------------
1100 East Hector Street
Suite 396
Conshohocken, PA 19428
(610) 832-2111
--------------------------------------------
(Address, including zip code, and telephone
number [including area code] of registrant's
principal executive office)
--------------------------------------------
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Page No.
--------
(a) Combined Financial Statements of Document Management
Group, Inc. and Image Tec, Inc.
Report of Independent Public Accountants F-1
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to the Financial Statements F-6
(b) Pro Forma Financial Information
Basis of Presentation F-10
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1997 F-11
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 1997 F-12
Notes to Unaudited Pro Forma Consolidated Financial Statements F-13
(c) Exhibits
None
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Document Management Group, Inc. and
Image Tec, Inc.:
We have audited the accompanying combined balance sheets of DOCUMENT MANAGEMENT
GROUP, INC. and IMAGE TEC, INC. (both Michigan Corporations) as of December 31,
1996 and 1997, and the related combined statements of operations, stockholders'
equity and cash flows for the years then ended. 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 Document Management Group, Inc.
and Image Tec, Inc. as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
April 1, 1998.
F-1
<PAGE>
DOCUMENT MANAGEMENT GROUP, INC. AND
IMAGE TEC, INC.
COMBINED BALANCE SHEETS
December 31,
---------------------------
ASSETS 1996 1997
------ ------------ ------------
CURRENT ASSETS:
Cash $ 11,756 $ 13,599
Accounts receivable 106,449 178,731
Unbilled revenue 46,179 86,179
------------ ------------
Total current assets 164,384 278,509
PROPERTY AND EQUIPMENT, NET 40,451 175,329
------------ ------------
$ 204,835 $ 453,838
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $ -- $ 72,300
Current portion of long-term debt 13,266 22,249
Accounts payable 11,294 84,306
Accrued payroll, payroll taxes and other taxes 16,165 46,736
Deferred revenue 145,583 21,643
Dividends payable -- 41,500
------------ ------------
Total current liabilities 186,308 288,734
------------ ------------
LONG-TERM DEBT, less current portion 17,457 9,477
------------ ------------
COMMITMENTS (Note 5)
STOCKHOLDERS' EQUITY:
Document Management Group, Inc. Common stock,
$1 par value, 60,000 shares authorized,
7,097 shares issued and outstanding 7,097 7,097
Image Tec, Inc. Common stock, $1 par value,
60,000 shares authorized, 1,000 shares
issued and outstanding 1,000 1,000
Additional paid-in capital 35,555 108,645
Retained earnings (deficit) (42,582) 38,885
----------- ------------
Total stockholders' equity 1,070 155,627
----------- ------------
$ 204,835 $ 453,838
=========== ============
The accompanying notes are an integral part of these combined statements.
F-2
<PAGE>
DOCUMENT MANAGEMENT GROUP, INC. AND
IMAGE TEC, INC.
COMBINED STATEMENTS OF OPERATIONS
Year Ended December 31,
-----------------------------
1996 1997
-------------- -------------
REVENUES $ 1,254,318 $ 1,352,906
-------------- -------------
COST OF REVENUES:
Services 880,670 855,200
Depreciation and amortization 35,161 45,176
-------------- -------------
915,831 900,376
-------------- -------------
Gross profit 338,487 452,530
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 315,934 304,762
-------------- -------------
Operating income 22,553 147,768
OTHER EXPENSE 4,731 6,843
-------------- -------------
NET INCOME $ 17,822 $ 140,925
============== =============
The accompanying notes are an integral part of these combined statements.
F-3
<PAGE>
DOCUMENT MANAGEMENT GROUP, INC. AND
IMAGE TEC, INC.
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
-----------------------------------
DMG Image Tec Additional Retained Total
---------------- ---------------- Paid-in Earnings Stockholders'
Shares Amount Shares Amount Capital (Deficit) Equity
------ ------ ------ ------ ---------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 7,097 $ 7,097 -- $ -- $ 67,528 $ (60,404) $ 14,221
Issuance of Image Tec
Common stock -- -- 1,000 1,000 -- -- 1,000
Net distributions to
stockholders -- -- -- -- (31,973) -- (31,973)
Net income -- -- -- -- -- 17,822 17,822
------- ------- ------- -------- ---------- ------------ -------------
BALANCE, DECEMBER 31, 1996 7,097 7,097 1,000 1,000 35,555 (42,582) 1,070
Net contributions from
stockholders -- -- -- -- 73,090 -- 73,090
Dividends declared -- -- -- -- -- (59,458) (59,458)
Net income -- -- -- -- -- 140,925 140,925
------- ------- ------- -------- ---------- ------------ -------------
BALANCE, DECEMBER 31, 1997 7,097 $ 7,097 1,000 $ 1,000 $ 108,645 $ 38,885 $ 155,627
======= ======= ======= ======== ========== ============ =============
</TABLE>
The accompanying notes are an integral part of these combined statements.
F-4
<PAGE>
DOCUMENT MANAGEMENT GROUP, INC. AND
IMAGE TEC, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1996 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 17,822 $ 140,925
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 35,161 45,176
Loss on sale of equipment -- 1,033
Change in operating assets and liabilities:
Accounts receivable 83,780 (72,282)
Unbilled revenue 18,768 (40,000)
Accounts payable and accrued expenses (64,104) 103,583
Deferred revenue 39,320 (123,940)
----------- -----------
Net cash provided by operating activities 130,747 54,495
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment (41,284) (171,942)
Proceeds from sale of equipment -- 7,800
----------- -----------
Net cash used in investing activities (41,284) (164,142)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Image Tec Common stock 1,000 --
Repayments under related party debt (10,832) (12,266)
Contributions (distributions) of stockholders' capital (31,973) 73,090
Principal payments on long-term debt (36,310) (3,676)
Net borrowings under line of credit -- 72,300
Dividends paid -- (17,958)
----------- -----------
Net cash provided by (used in) financing activities (78,115) 111,490
----------- -----------
NET INCREASE IN CASH 11,348 1,843
CASH, BEGINNING OF YEAR 408 11,756
----------- -----------
CASH, END OF YEAR $ 11,756 $ 13,599
=========== ===========
SUPPLEMENTAL DATA:
Cash paid for interest $ 4,731 $ 5,810
=========== ===========
NONCASH FINANCING TRANSACTION:
Equipment financed through capital leases $ -- $ 16,945
=========== ===========
</TABLE>
The accompanying notes are an integral part of these combined statements.
F-5
<PAGE>
DOCUMENT MANAGEMENT GROUP, INC. AND
IMAGE TEC, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
1. DESCRIPTION OF COMPANIES:
Document Management Group, Inc. ("DMG") and Image Tec, Inc. ("Image Tec")
(collectively, "the Companies") provide electronic data storage services to
businesses primarily in Michigan. Image Tec was formed during 1996 and therefore
the accompanying combined financial statements include the results of operations
from the date of inception. The Companies' customer base includes hospitals,
commercial enterprises and a limited number of government institutions. The
Companies are located in Saginaw, Michigan. In 1996 and 1997, the Companies had
sales to two customers which represent 27% and 31% of total revenues,
respectively. As of December 31, 1996 and 1997, 27% and 5% of total accounts
receivable, respectively, were the result of such sales.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The Companies are controlled and managed through common ownership. Accordingly,
the financial statements have been combined and reflect the elimination of all
significant intercompany accounts and transactions.
Property and Equipment
Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expense as incurred.
Depreciation is provided using accelerated methods over the estimated useful
lives of the assets.
Capitalization of Software Developed for Internal Use
The Company capitalizes the direct external and internal costs incurred in
connection with the development, testing and installation of software for
internal use. Internally developed software is included in property and
equipment and is amortized using an accelerated method over the estimated useful
life of the asset.
Equity Transactions with Stockholders
Periodically, the majority stockholder makes contributions to provide working
capital for the Companies and withdraws capital as it is available. These
amounts are recorded as increases or decreases to additional paid-in capital.
Dividends declared are recorded as decreases to retained earnings.
F-6
<PAGE>
DOCUMENT MANAGEMENT GROUP, INC. AND
IMAGE TEC, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(continued)
Revenue Recognition
Revenues are recognized when services are rendered. Deferred revenue represents
payments received in advance of performance of services.
Income Taxes
The Companies have elected to be taxed under Subchapter S of the Internal
Revenue Code, and, accordingly, all taxable income or loss of the Companies is
included in the stockholders' individual income tax returns. As a result, no
provision for Federal income taxes has been included in the accompanying
combined statements of operations. Michigan Single Business Tax has been
recorded as a charge to selling, general and administrative expense.
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.
3. PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
Estimated December 31,
Useful Life --------------------------
(Years) 1996 1997
----------- ------------ ------------
<S> <C> <C> <C>
Scanning and imaging equipment 5 $ 78,684 $ 252,468
Furniture and office equipment 5 2,176 3,088
Automobiles 3 4,000 7,150
------------ ------------
84,860 262,706
Less - Accumulated depreciation (44,409) (87,377)
------------ ------------
$ 40,451 $ 175,329
============ ============
</TABLE>
As of December 31, 1997, the Companies had approximately $5,000 in scanning and
imaging equipment, net of accumulated depreciation, financed under capital
leases (see Notes 4 & 5).
F-7
<PAGE>
DOCUMENT MANAGEMENT GROUP, INC. AND
IMAGE TEC, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(continued)
4. LINE OF CREDIT AND LONG-TERM DEBT:
During 1997, DMG obtained a line of credit with a bank whereby the Companies may
borrow up to $100,000. The line bears interest at the bank's prime rate plus 1%
(effective rate of 9.5% as of December 31, 1997) and expires in June 1998. The
line of credit is collateralized by substantially all assets of DMG and a
personal guarantee by DMG's sole stockholder.
Long-term debt consisted of the following as of December 31:
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C> <C>
Note payable to related party, payable in monthly installments
of $1,500, including interest at 10%, due in January 1999 $ 29,723 $ 17,457
Capital lease obligation, payable in monthly installments of
$600, including interest at 16.5%, due in May 2000,
collateralized by the related equipment -- 14,269
Other, repaid in 1997 1,000 --
----------- -----------
30,723 31,726
Less - Current portion (13,266) (22,249)
----------- -----------
$ 17,457 $ 9,477
=========== ===========
</TABLE>
Scheduled future maturities of long-term debt as of December 31, 1997 were as
follows:
1998 $ 22,249
1999 6,597
2000 2,880
------------
$ 31,726
============
5. COMMITMENTS:
Operating Leases
The Companies lease office space and certain vehicles under noncancelable
operating leases. These leases expire on various dates through 2002. The office
space and the vehicles are leased from companies under common ownership and
control. Rent expense for all operating leases for the years ended December 31,
1996 and 1997, was approximately $72,000 and $72,500, respectively.
F-8
<PAGE>
DOCUMENT MANAGEMENT GROUP, INC. AND
IMAGE TEC, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(continued)
The future minimum lease payments under these noncancelable operating leases as
of December 31, 1997, are as follows:
1998 $ 100,000
1999 97,000
2000 96,000
2001 96,000
2002 87,000
------------
$ 476,000
============
Capital Lease
DMG leases certain equipment under a noncancelable capital lease. The principle
portion of the lease obligation (see Note 4) and related equipment (see Note 3)
are included in the accompanying combined balance sheets. The future minimum
lease payments under this lease, including interest, as of December 31, 1997,
are as follows:
1998 $ 7,200
1999 7,200
2000 3,000
------------
17,400
Less - Interest (3,131)
------------
$ 14,269
============
6. OTHER RELATED-PARTY TRANSACTIONS:
The Companies purchase computer equipment and consulting services from a related
party. Management believes that the Companies' purchase prices are generally the
same prices as sold to unrelated customers. Such purchases amounted to
approximately $11,000 and $21,000 in 1996 and 1997, respectively.
7. SUBSEQUENT EVENT:
In February 1998, the Companies entered into an agreement with ImageMax, Inc.
("ImageMax") to sell substantially all operating assets to ImageMax. In
conjunction with the acquisition of these assets, ImageMax also assumed certain
liabilities.
F-9
<PAGE>
IMAGEMAX, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The following unaudited pro forma consolidated financial statements should be
read in conjunction with ImageMax, Inc.'s ("ImageMax") Supplemental Pro Forma,
As Adjusted and historical consolidated financial statements and notes thereto
filed with ImageMax's annual report on Form 10-K for the year ended December 31,
1997, the Form 8-K/A dated April 8, 1997 for the acquisition of Integrated
Information Services, L.L.C. ("IIS"), and the Form 8-K dated February 9, 1998
and the historical combined financial statements and notes thereto of Document
Management Group, Inc. and Image Tec, Inc. (together "DMG") filed pursuant to
item 7(a) of this report on Form 8-K/A.
The following unaudited pro forma condensed consolidated statement of operations
for the year ended December 31, 1997 gives effect to the acquisitions of IIS and
DMG by ImageMax as if they had occurred on January 1, 1997. The unaudited pro
forma condensed consolidated balance sheet as of December 31, 1997, gives effect
to the acquisitions as if they had occurred on that date. The pro forma results
are not necessarily indicative of results of operations had the acquisition
taken place at the beginning of the year.
F-10
<PAGE>
IMAGEMAX, INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended December 31, 1997
--------------------------------------------------------------------------------
ImageMax
Supplemental
Pro Forma Pro Forma
as Adjusted Adjustments
(Note 1) IIS DMG (Note 2) Pro Forma
------------ ----------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 48,930,000 $ 5,742,000 $ 1,353,000 $ -- $ 56,025,000
Cost of Revenues 32,926,000 4,558,000 900,000 (38,000)(A) 38,346,000
------------ ----------- ------------ ------------ ------------
Gross Profit 16,004,000 1,184,000 453,000 38,000 17,679,000
------------ ----------- ------------ ------------ ------------
Selling, General and
Administrative Expense 11,367,000 1,948,000 305,000 27,000(A)(B) 13,647,000
Executive Compensation 610,000 -- -- -- 610,000
Special Compensation Charge 2,235,000 -- -- -- 2,235,000
Founding Companies Transaction
Costs 742,000 -- -- -- 742,000
Amortization of Intangibles 1,195,000 47,000 -- (38,000)(C) 1,204,000
------------ ----------- ------------ ------------ ------------
Operating income (loss) (145,000) (811,000) 148,000 49,000 (759,000)
Interest Expense 70,000 24,000 7,000 135,000 (D) 236,000
Interest Income (94,000) -- -- -- (94,000)
------------ ----------- ------------ ------------ ------------
Income (Loss) Before Income
Taxes (121,000) (835,000) 141,000 (86,000) (901,000)
Income Tax Provision 1,139,000 -- -- (307,000) (E) 832,000
------------ ----------- ------------ ------------ ------------
Net Income (Loss) $ (1,260,000) $ (835,000) $ 141,000 $ 221,000 $ (1,733,000)
============ =========== ============ ============ ============
Basic and diluted loss per share $ (.24) $ (.32)
============ ============
Weighted average number of 5,362,000
common shares outstanding 5,347,000 ============
============
</TABLE>
The accompanying notes are an integral part of this statement.
F-11
<PAGE>
IMAGEMAX, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1997
-------------------------------------------------------------------------
Pro Forma
ImageMax IIS DMG Adjustments Pro Forma
------------ ----------- ----------- ----------- ------------
ASSETS
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,310,000 $ 13,000 $ 14,000 $ (26,000)(F) $ 1,311,000
Accounts receivable 6,922,000 1,085,000 265,000 -- 8,272,000
Inventories 1,997,000 18,000 -- -- 2,015,000
Prepaid expenses and other 527,000 75,000 -- -- 602,000
------------ ----------- ----------- ----------- ------------
Total current assets 10,756,000 1,191,000 279,000 (26,000) 12,200,000
PROPERTY, PLANT AND
EQUIPMENT, net 4,381,000 557,000 175,000 (257,000)(G) 4,856,000
INTANGIBLES, primarily goodwill, net 32,996,000 230,000 -- 53,000 (H) 33,279,000
OTHER ASSETS 95,000 135,000 -- (135,000)(F) 95,000
------------ ----------- ----------- ----------- ------------
$ 48,228,000 $ 2,113,000 $ 454,000 $ (365,000) $ 50,430,000
============ =========== =========== =========== ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current portion
of long-term debt $ 251,000 $ 39,000 $ 95,000 $ (64,000)(F) $ 321,000
Accounts payable 2,846,000 74,000 84,000 -- 3,004,000
Accrued expenses 3,248,000 119,000 47,000 -- 3,414,000
Deferred revenues 1,333,000 18,000 22,000 -- 1,373,000
Other current liabilities 84,000 38,000 41,000 (41,000)(F) 122,000
------------ ----------- ----------- ----------- ------------
Total current liabilities 7,762,000 288,000 289,000 (105,000) 8,234,000
------------ ----------- ----------- ----------- ------------
LONG-TERM DEBT 342,000 165,000 9,000 1,428,000 (I) 1,944,000
------------ ----------- ----------- ----------- ------------
OTHER LONG-TERM LIABILITIES 106,000 98,000 -- (98,000)(F) 106,000
------------ ----------- ----------- ----------- ------------
SHAREHOLDERS' EQUITY:
Preferred stock -- -- -- -- --
Common stock 47,580,000 -- 117,000 11,000 (J) 47,708,000
Member's capital -- 2,587,000 -- (2,587,000)(F) --
Retained earnings (deficit) (7,562,000) (1,025,000) 39,000 986,000 (F) (7,562,000)
------------ ----------- ----------- ----------- -------------
Total shareholders' equity 40,018,000 1,562,000 156,000 (1,590,000) 40,146,000
------------ ----------- ----------- ----------- ------------
$ 48,228,000 $ 2,113,000 $ 454,000 $ (365,000) $ 50,430,000
============ =========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of this statement.
F-12
<PAGE>
IMAGEMAX, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. IMAGEMAX FINANCIAL STATEMENTS:
ImageMax's statement of operations for the year ended December 31, 1997 presents
Supplemental Pro Forma, As Adjusted results of operations, as if the acquisition
of the Founding Companies and ImageMax's initial public offering occurred on
January 1, 1997 as described in Item 7 of ImageMax's Form 10-K. The balance
sheet at December 31, 1997 represents ImageMax's year-end balance sheet included
in its historical financial statements.
2. 1998 ACQUISITIONS:
IIS
On January 23, 1998, ImageMax acquired substantially all of the assets and
assumed certain liabilities of Integrated Information Services, L.L.C. ("IIS")
pursuant to an Asset Purchase Agreement. The total consideration paid by
ImageMax was $1,150,000 in cash, subject to adjustment based on the working
capital of IIS at closing. The acquisition has been accounted for using the
purchase method of accounting, whereby the purchase price is allocated to the
assets and liabilities of IIS based on the fair market values at the acquisition
date. Such allocation has been based on estimates that may be revised at a later
date. The fair market value of the net assets acquired exceeded the purchase
price and estimated transaction costs of $100,000 by approximately $257,000. For
financial reporting purposes, this excess reduced the fair market value of
property, plant and equipment.
DMG
On February 9, 1998, ImageMax acquired substantially all of the assets and
assumed certain liabilities of Document Management Group, Inc. and Image Tec,
Inc. (collectively "DMG") pursuant to Asset Purchase Agreements. The total
consideration paid by ImageMax was $510,000, comprised of 15,319 shares of
ImageMax's Common stock and $360,000 in cash, subject to adjustment based on the
working capital of DMG at closing. The acquisitions have been accounted for
using the purchase method of accounting, whereby the purchase price is allocated
to the assets and liabilities of DMG based on the fair market values at the
acquisition date. Such allocation has been based on estimates that may be
revised at a later date. The purchase price, including estimated transaction
costs of $70,000, exceeded the fair market value of the net assets acquired by
approximately $283,000, which has been recorded as goodwill and will be
amortized on a straight-line basis over 30 years.
F-13
<PAGE>
Unaudited Pro Forma Adjustments to Consolidated Statement of Operations
A. Reduction in depreciation expense of $51,000 based on the write down of
property, plant and equipment of IIS discussed above.
B. Additional compensation expense of $40,000 at DMG based on new employment
agreements.
C. Elimination of historical IIS goodwill and other intangible asset
amortization of $47,000 and amortization expense of $9,000 related to
goodwill recorded in connection with the acquisition of DMG.
d
D. Interest expense is adjusted by $104,000 and $31,000 to account for the debt
incurred to finance the acquisitions of IIS and DMG, respectively at a 8.44%
interest rate.
E. Reduction of the income tax provision of $307,000 based on a pro forma
consolidated loss before income taxes.
Unaudited Pro Forma Adjustments to Consolidated Balance Sheet
F Reflects the adjustment of certain assets and liabilities not acquired or
assumed as part of the acquisitions
G Reflects the write down of property, plant and equipment at IIS discussed
above.
H Reflects the write off of historical IIS goodwill of $230,000 and $283,000 of
goodwill recorded for the acquisition of DMG.
I Reflects ImageMax's borrowings of $1,229,000 and $373,000 on its credit
facility to fund the acquisitions of IIS and DMG, respectively, net of
$174,000 of debt not assumed.
J Reflects the issuance of $128,000 of ImageMax's Common Stock used for the
acquisition of DMG, net of the elimination of $117,000 of DMG's historical
Common Stock.
F-14
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
IMAGEMAX, INC.
Date: April 17, 1998 /s/ JAMES D. BROWN
------------------
James D. Brown
Senior Vice President -
Finance and Chief Financial Officer
F-15
