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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________to__________
Commission File Number 0-78271
IMAGEX.COM, INC.
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1727170
(State of Incorporation) (IRS Employer Identification No.)
10800 N.E. 8TH STREET, SUITE 200
BELLEVUE, WASHINGTON 98004
(Address of principal executive offices)
(425) 452-0011
(Registrant's telephone number)
Indicated by check mark whether the registrant has (1) filed all
reports required to be filed by Sections 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 requirements for the past 90 days.
Yes X No
------- -------
The number of shares of common stock, $.01 par value, outstanding on
May 3, 2000 was 22,451,957.
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IMAGEX.COM, INC.
CONTENTS
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PAGE NO.
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PART I -- FINANCIAL INFORMATION
Item 1. Condensed Financial Statements................................................................... 2
Consolidated Balance Sheets as of December 31, 1999 and
March 31, 2000................................................................................. 2
Consolidated Statements of Operations for the Three Months
Ended March 31, 1999 and March 31, 2000........................................................ 3
Consolidated Statements of Shareholders' Equity for the Three Months Ended
March 31, 2000................................................................................. 4
Consolidated Statements of Cash Flows for the Three Months Ended March 31,
1999 and March 31, 2000........................................................................ 5
Notes To Condensed Consolidated Financial Statements............................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................................... 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......................................12
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings................................................................................13
Item 2. Changes in Securities and Use of Proceeds........................................................13
Item 6. Exhibits and Reports on Form 8-K.................................................................13
SIGNATURES................................................................................................14
</TABLE>
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PART I -- FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
IMAGEX.COM, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
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DECEMBER 31, MARCH 31,
1999 2000
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ASSETS
Current assets
Cash and cash equivalents $ 18,257 $ 107,952
Accounts receivable (net of allowance for doubtful accounts of $126 and $212 at
December 31, 1999 and March 31, 2000, respectively) 3,427 3,907
Inventories 653 656
Prepaid expenses and other current assets 610 1,030
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Total current assets 22,947 113,545
Restricted cash 1,625 2,375
Property and equipment, net 6,613 9,188
Goodwill, net 2,132 2,060
Other assets, net 2,351 2,085
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Total assets $ 35,668 $ 129,253
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,500 $ 3,637
Accrued liabilities 1,394 1,788
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Total current liabilities 4,894 5,425
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Total liabilities 4,894 5,425
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Shareholders' equity
Preferred stock, 30,000,000 shares authorized
Series A convertible preferred stock, $0.01 par value; 1,500,000 shares authorized;
no shares outstanding
Common stock, $0.01 par value; 70,000,000 shares authorized; 17,381,639 and 22,309,837 shares
issued and outstanding December 31, 1999 and March 31, 2000, respectively 174 223
Additional paid-in capital 67,118 169,085
Unearned compensation (2,518) (1,952)
Notes receivable from shareholders (including $20 from a director) (168) (156)
Accumulated deficit (33,832) (43,372)
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Total shareholders' equity 30,774 123,828
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Total liabilities and shareholders' equity $ 35,668 $ 129,253
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</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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IMAGEX.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
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THREE MONTHS ENDED
MARCH 31,
---------------------------------
1999 2000
---------------------------------
<S> <C> <C>
Revenue $ 485 $ 5,569
Cost of sales 375 4,191
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Gross profit 110 1,378
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Operating expenses
General and administrative 1,117 5,077
Sales and marketing 631 3,995
Product development 395 1,859
Amortization of unearned compensation,
goodwill and other intangibles 398 707
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Total operating expenses 2,541 11,638
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Loss from operations (2,431) (10,260)
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Other income
Interest income (expense), net (24) 720
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Net loss $ (2,455) $ (9,540)
------------ ------------
Basic and diluted net loss
per share $ (2.40) $ (0.49)
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Weighted-average shares outstanding 1,053,583 19,306,911
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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IMAGEX.COM, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
NOTES
COMMON STOCK ADDITIONAL RECEIVABLE
------------------- PAID-IN UNEARNED FROM ACCUMULATED
SHARES AMOUNT CAPITAL COMPENSATION SHAREHOLDERS DEFICIT TOTAL
---------- ------- ----------- ------------ ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, January 1, 2000 17,381,639 $ 174 $ 67,118 $ (2,518) $ (168) $ (33,832) $ 30,774
Net proceeds from follow-on offering
(net of offering costs of $6,446) 4,695,595 47 101,405 101,452
Issuance of common stock upon exercise of
stock options 130,700 1 32 33
Issuance of common stock upon exercise of
warrants 48,870 159 159
Issuance of common stock pursuant to
Employee Stock Purchase Plan 53,033 1 371 372
Amortization of unearned compensation 566 566
Collection of notes receivable 12 12
Net loss (9,540) (9,540)
---------- ------- ----------- ------------ ------------ ----------- --------
Balances, March 31, 2000 22,309,837 $ 223 $ 169,085 $ (1,952) $ (156) $ (43,372) $123,828
---------- ------- ----------- ------------ ------------ ----------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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IMAGEX.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
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THREE MONTHS ENDED
MARCH 31,
---------------------------
1999 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,455) $ (9,540)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 161 796
Amortization of unearned compensation 398 566
Issuance of stock options to consultant 99
Change in operating assets and liabilities (104) (175)
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Net cash used in operating activities (1,901) (8,353)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (421) (3,230)
Deposits of restricted cash (750)
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Net cash used in investing activities (421) (3,980)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable 745
Principal payments on notes payable (40)
Proceeds from issuance of Series D Preferred stock (net of offering costs of
$29) 795
Proceeds from exercise of warrants 33
Proceeds from exercise of options 159
Proceeds from issuance of common stock in follow-on offering (net of
offering costs of $6,547) 101,452
Proceeds from issuance of common in related to
the Employee Stock Purchase Plan 372
Proceeds from repayment of notes receivable from shareholders 12
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Net cash provided by financing activities 1,500 102,028
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Net increase (decrease) in cash and cash equivalents (822) 89,695
Cash and cash equivalents at
Beginning of period 967 18,257
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End of period $ 145 $ 107,952
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</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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IMAGEX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
ImageX.com, Inc. ("the Company") was incorporated on August 21, 1995
and is headquartered in Bellevue, Washington. The Company is an Internet-based
business-to-business provider of printed business materials. The Company caters
to the unique needs of every type of printing customer - individuals, small
businesses, corporations, graphic art professionals, printing industry suppliers
and manufacturers. The Company has filed for 52 patents for its Web-based,
"just-in-time" printing manufacturing technology, which facilitates the entire
workflow process from creative concept to delivery of the final product. The
Company's e-procurement solution includes five services:
- Corporate Online Printing Center, a customized, secure Web
site for larger corporate customers containing an online
catalog of their repeat-ordered printed business materials;
- Small Business Printing Center, a small office/home office
service through which customers order personalized printed
materials from a non-customer site with online templates;
- PrintBid.com, an online bidding service in which print
customers can obtain bids from numerous participating vendors
on a specific set of job criteria;
- PaperDeals.com, an online auction service for commercial paper
stock aimed at raw materials suppliers and print
manufacturers; and
- PrintPlace.com, an online vertical marketplace for the graphic
arts industry.
The accompanying unaudited consolidated financial statements have been
prepared in conformity with generally accepted accounting principles and reflect
all adjustments that, in the opinion of management, are necessary for a fair
presentation of the results for the periods shown. Certain information and note
disclosures normally included in the financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. Portions of the accompanying financial statements are derived from
the audited financial statements for the year ended December 31, 1999. The
results of operations for interim periods are not necessarily indicative of the
results expected for the full fiscal year or for any future period. Generally
accepted accounting principles require 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 and
assumptions.
The accompanying unaudited consolidated financial statements should be
read in conjunction with the audited financial statements in our annual report
filed on Form 10-K for the fiscal year ended December 31, 1999 and the notes
thereto.
The financial statements of the Company are consolidated and include
the accounts of the Company and its wholly-owned subsidiaries. Significant
intercompany transactions and balances have been eliminated.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition", which
provides guidance on the recognition, presentation and disclosures of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosures
related to revenue recognition policies. Management believes that the impact of
SAB 101 will have no material effect on the financial position or results of
operations of the Company.
6
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2. INVENTORIES
Inventories consisted of the following at:
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March 31, December 31,
2000 1999
(in thousands) (in thousands)
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Paper stock and supplies $ 253 $ 225
Work-in-process 106 176
Finished goods 297 252
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$ 656 $ 653
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</TABLE>
3. NET LOSS PER SHARE
Net loss per share is computed using the weighted-average number of
common shares outstanding.
Net loss for the three months ended March 31, 1999 has been increased
by accretion of preferred stock of $73,000 in computing earnings per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" INCLUDES "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THIS
ACT PROVIDES A "SAFE HARBOR" FOR FORWARD-LOOKING STATEMENTS TO ENCOURAGE
COMPANIES TO PROVIDE PROSPECTIVE INFORMATION ABOUT THEMSELVES SO LONG AS THEY
IDENTIFY THESE STATEMENTS AS FORWARD-LOOKING AND PROVIDE MEANINGFUL CAUTIONARY
STATEMENTS IDENTIFYING IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER FROM THE PROJECTED RESULTS. ALL STATEMENTS OTHER THAN STATEMENTS OF
HISTORICAL FACT WE MAKE IN THIS FORM 10-Q ARE FORWARD-LOOKING. IN PARTICULAR,
THE STATEMENTS HEREIN REGARDING INDUSTRY PROSPECTS AND OUR FUTURE RESULTS OF
OPERATIONS OR FINANCIAL POSITION ARE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING
STATEMENTS REFLECT OUR CURRENT EXPECTATIONS AND ARE INHERENTLY UNCERTAIN. OUR
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS FOR MANY REASONS, INCLUDING THE FACTORS DESCRIBED
BELOW AND IN THE SECTION ENTITLED "FACTORS AFFECTING IMAGEX.COM'S OPERATING
RESULTS" FROM OUR FORM 10-K FOR OUR FISCAL YEAR ENDED DECEMBER 31, 1999. YOU
SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH APPLY
ONLY AS OF THE DATE OF THIS REPORT. WE DO NOT ASSUME ANY OBLIGATION TO REVISE
FORWARD-LOOKING STATEMENTS.
OVERVIEW
GENERAL
ImageX.com is an Internet-based business-to-business e-commerce company
in the U.S. commercial printing industry. We derive substantially all our
revenues from the sale of printed business materials in both the
marketing/promotional and general office categories. Such products include
business cards, stationery, letterhead and other general office products, as
well as color marketing brochures, sell sheets and similar products.
7
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By March 31, 2000, we had
- grown to 239 online customers
- expanded our sales regions beyond Seattle to include Los
Angeles, San Francisco, New York City, Chicago, New Jersey,
Portland, Washington DC, Orange County, San Jose, Atlanta,
Dallas, Philadelphia, Miami, San Leandro, Boston, Tampa, and
Connecticut;
- 52 patent applications pending on our proprietary corporate
Online Printing Center technology;
- launched PrintPlace.com a vertical marketplace designed to
provide supply chain value all the way from print users,
graphic designers, print buyers and printers to suppliers
within the entire graphic arts industry;
- expanded our product offerings to include a broad range of
marketing promotional materials and general office materials;
and
- grown to 365 employees (including employees from the
acquisition of Fine Arts Graphics, Image Press and PrintBid).
On February 11, 2000, we completed our follow-on offering and the
underwriters exercised their over-allotment options in full on March 14, 2000
for a total of 4,695,595 shares of additional common stock. The net proceeds
were approximately $ 101.5 million.
On March 20, 2000, we signed a definitive agreement to acquire
Creativepro.com, Inc. for a total of approximately 4.3 million shares of
ImageX.com common stock and $9.9 million in cash.
Our extremely limited operating history and the uncertain and emerging
nature of the market in which we compete make it difficult to assess our
prospects or predict our future results of operations. Therefore, you should not
consider our recent revenue growth as an indication of our future rate of
revenue growth, if any. Our prospects are subject to the risks and uncertainties
frequently encountered in establishing a new business enterprise, particularly
in the new and rapidly evolving markets for online products and services.
Because of our short operating history, period-to-period comparisons of our
results of operations are not necessarily meaningful. As a result, you should
not rely on such comparisons as indications of our future performance.
REVENUES
We derive substantially all our revenues from the sale of printed
products in both the marketing/ promotional and office stationery categories.
Our revenues, which consist of product and service revenues, totaled $5.6
million for the first three months of 2000 compared to $485,000 for the first
three months of 1999. We recognize product revenues when we ship an order to the
customer. We also generate revenues from services related to the setup and
management of each customer's customized Online Printing Center. Even though
service revenues constitute only a small portion of overall revenues, we charge
for constructing the Online Printing Center website, and creating and revising
the printed materials in the customer's customized website. We also charge
annual maintenance fees.
8
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GROSS PROFIT
For products that are produced by our commercial printing vendor
network, gross profit is the selling price of a specific product less the price
our vendor charges us. For products that we produce in our own facilities, gross
profit is calculated as the selling price of the product, less manufacturing
costs including certain allocated overhead.
OPERATING EXPENSES
Our business incurs operating expenses in three broad expense
categories: sales and marketing, product development and general and
administrative. As is typical of early-stage technology companies, most of our
historical expenditures have been in the product development and general and
administrative categories, as we have focused on building the ImageX.com online
printing system and an infrastructure suitable for future growth. In the future,
we intend to focus on acquiring new customers, converting customers of
businesses we may acquire to our online system and increasing our revenue base.
As a result, we expect that sales and marketing expenses and the general and
administrative expenses associated with our manufacturing operations will
account for a relatively larger percentage of our operating expenses. We expect
our infrastructure and development costs will decline as a percentage of sales
over time.
AMORTIZATION
Amortization consists of the amortization of unearned compensation,
goodwill and other intangible assets. The amortization of unearned compensation
is a result of recording the excess, if any, of the fair market value of our
common stock at the date of grant over the exercise or purchase price of such
securities, as applicable. The unearned compensation is amortized over the
remaining vesting period of the applicable stock or options using an accelerated
method. The amortization of goodwill and other intangible assets are a result of
the acquisitions of Fine Arts Graphics and Image Press. The amortization of
goodwill is over a 10-year period and the amortization of other intangible
assets range from a 3 to 8 year period.
NET LOSS
Net loss is calculated as gross profit less operating expenses and is a
function of revenues, cost of sales and other expenses, namely, sales and
marketing, product development, general and administrative and amortization of
unearned compensation, goodwill and other intangible assets. We have incurred
significant net losses since our inception. As of March 31, 2000, we had
accumulated a deficit of $43.4 million.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
REVENUE
Revenues were $485,000 and $5.6 million for the three month periods
ended March 31, 1999 and 2000, respectively, representing an increase of $5.1
million, or 1048%, in 2000 over the comparable period in 1999. This increase was
primarily due to the acquisition of Fine Arts Graphics and Image Press customers
in 1999 and to an increased number of additional customers using our online
system, from 108 customers in the three month period ended March 31, 1999 to 239
customers in the comparable period in 2000. The increase in the number of
customers contributes to both increased product and service revenues.
9
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GROSS PROFIT
Gross profit was $110,000 and $1.4 million for the three month period
ended March 31, 1999 and 2000, respectively. Gross profit increased by $1.3
million for the three month periods ended March 31, 2000 over the same period in
1999. Gross margin was 23% for the three month period ended March 31, 2000 and
25% for the three month period ended March 31, 1999. The increase in gross
profit and gross margin were primarily due to lower costs due to increased
volume.
SALES AND MARKETING EXPENSES
Sales and marketing expenses consist primarily of salaries and related
benefits for sales and marketing personnel, advertising expenses, marketing
expenses and travel expenses. Sales and marketing expenses were $631,000 and
$4 million for the three months ended March 31, 1999 and 2000, respectively.
Sales and marketing expenses increased $3.4 million, or 533%, for the three
months ending March 31, 2000 as compared to the same period ended in 1999. The
increase in sales and marketing expenses resulted primarily from hiring new
sales representatives and marketing personnel, travel expenses, and marketing
expenses including public relations, company website maintenance, print media
insertions, telemarketing expenses and printed marketing materials.
PRODUCT DEVELOPMENT EXPENSES
Product development expenses consist primarily of salaries and benefits
for developers, product managers, and quality assurance personnel. Product
development expenses were $395,000 and $1.9 million for the three months ended
March 31, 1999 and 2000, respectively. Product development expenses increased
$1.5 million, or 371%, for the three months ended March 31, 2000 as compared to
the same period ended in 1999. The increase in product development expenses were
due to increased salary and benefit related expenses from increased staffing,
including software development personnel. We believe that continued investment
in product development is critical to attaining our goals and that the dollar
amount of product development expenses will increase in future periods, although
they may decline as a percent of total revenues.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist primarily of salaries and
benefits for executive, finance, administrative and information technology
personnel as well as outside professional services and facilities related
expenses. General and administrative expenses were $1.1 million and $5.1 million
for the three months ended March 31, 1999 and 2000, respectively. This
represents an increase of $4 million, or 355%, in general and administrative
expenses in 2000 over the comparable three month period in 1999. The increase
was primarily due to our hiring additional executives, finance, administrative
and information technology personnel to support the growth of our business. In
addition, we have had higher expenses resulting from depreciation, software
maintenance expenses and professional fees. We believe that our general and
administrative expenses will continue to increase as a result of the continued
expansion of our administrative staff.
AMORTIZATION
The amortization of unearned compensation was $398,000 and $566,000 for
the three months ended March 31, 1999 and 2000, respectively. The unamortized
portion of this total unearned compensation amount is reflected as a reduction
of shareholders' equity, and will be amortized over the remaining vesting
10
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period of the applicable stock or options. The unearned compensation is being
amortized over the vesting period of the individual options, generally four
years, using an accelerated method.
The amortization of goodwill and other intangibles is $0 and $141,000
for the three month periods ended March 31, 1999 and 2000, respectively. The
amortization of goodwill and other intangibles is a result of the acquisition of
Fine Arts Graphics and Image Press.
OTHER INCOME (EXPENSE) NET
Other income and expense consists primarily of interest income and
interest expense. The net other income/expense were an expense of $24,000 and
income of $720,000 for the three month period ended March 31, 1999 and 2000,
respectively. The expense for the first quarter 1999 was interest on short term
debt incurred during the quarter. As a result of the cash received in our public
offering in August 1999 and our follow-on offering in February 2000, we have a
net interest income for the three month ended March 31, 2000.
INCOME TAXES
No provision for federal and state income taxes has been recorded to
date because we incurred net operating losses from inception through March 31,
2000. As of March 31, 2000, we had approximately $40 million of net operating
loss carryforwards for federal income tax purposes, expiring in 2011 through
2020. These losses are available to offset future taxable income. Given our
limited operating history, losses incurred to date and the difficulty in
accurately forecasting our future results, we do not believe that the
realization of the related deferred income tax assets meets the criteria
required by generally accepted accounting principles and, accordingly, no
deferred tax asset has been recorded.
NET LOSS
The net loss was $2.5 million and $9.5 million for the three month
periods ended March 31, 1999 and 2000, respectively. The increase in net loss
for the three month period ended March 31 of $7.1 million as compared to the
same period in 1999 was primarily due to increases in all expense categories -
sales and marketing, product development, general and administrative, and
amortization as the Company has completed two acquisitions and had significant
growth overall.
LIQUIDITY AND CAPITAL RESOURCES
In February and March, 2000 we completed our follow-on offering of
common stock and issued additional 4,695,595 shares at $23 per share. The net
proceeds from this offering were approximately $101.5 million, net of
underwriting discounts, commissions and other offering costs.
As of March 31, 2000, we had cash and cash equivalents of $108 million,
representing an increase of $89.7 million from cash and cash equivalents held as
of December 31, 1999. Our working capital at December 31, 1999 was $18.1
million, compared to $108.1 million at March 31, 2000.
Net cash used in operating activities was $1.9 million and $8.4 million
for the three month periods ended March 31, 1999 and 2000, respectively. The
operating cash outflows were primarily attributable to significant expenditures
on product development, sales and marketing and general and administrative
expenses, all of which led to operating losses. The cash outflows resulting from
operating losses and increases in accounts receivable were partially offset by
increases in current liabilities, including trade payables.
11
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Net cash used in investing activities was $421,000 and $4 million for
the three month periods ended March 31, 1999 and 2000, respectively, and
consisted primarily of capital expenditures, including equipment.
Net cash provided by financing activities was $1.5 million for the
three month period ended March 31, 1999 and was primarily from the issuance of
convertible preferred stock and borrowings pursuant to our bank credit
facilities. Net cash provided by financing activities was $102 million for the
three month period ended March 31, 2000 and consisted primarily of $101.5
million in net proceeds from the issuance of common stock in our follow-on
offering.
We anticipate continued capital expenditures and lease commitments
consistent with anticipated growth in operations, infrastructure and personnel,
including growth associated with product and service offerings, geographic
expansion and integration of any new acquired businesses. We may increase our
operating expenses which will consume a material amount of our cash resources;
however, we believe that our existing cash and cash equivalents together with
available credit facilities, will be sufficient to meet our anticipated cash
needs for working capital and capital expenditures for at least the next 12
months. However, our future capital requirements will depend on many factors
that are difficult to predict, including the size, timing and structure of any
acquisitions that we complete, our rate of revenue growth, our operating losses,
the cost of obtaining new customers and technical capabilities, and the cost of
upgrading and maintaining our network infrastructure and other systems. We have
no commitments for additional financing, and we may experience difficulty in
obtaining additional funding on favorable terms, if at all. Any difficulty in
obtaining additional financial resources could force us to curtail our
operations or prevent us from pursuing our growth strategy. Any future funding
may dilute the ownership of our existing shareholders.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARD
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition", which
provides guidance on the recognition, presentation and disclosures of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosures
related to revenue recognition policies. Management believes that the impact of
SAB 101 will have no material effect on the financial position or results of
operations of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to financial market risks, including changes in interest
rates. We typically do not attempt to reduce or eliminate our market exposures
on our investment securities because the majority of our investments are cash
and cash equivalents. We do not have any derivative instruments.
The fair value of our investment portfolio or related income would not
be significantly impacted by either a 100 basis point increase or decrease in
interest rates due mainly to the short-term nature of the major portion of our
investment portfolio.
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(d) USE OF PROCEEDS
During February 2000, our registration statement on Form S-1/A, file
number 333-94639, became effective. The offering date was February 11, 2000. The
offering has terminated as a result of all of the shares offered being sold. The
managing underwriters were Chase H&Q, Banc of America Securities LLC, Prudential
Volpe Technology and SG Cowen. The offering consisted of 5,750,000 shares of our
common stock, including 750,000 shares of common stock pursuant to the exercise
of the underwriter's over-allotment option. Of these shares 1,054,405 shares
were sold on behalf of existing shareholders. The aggregate price of the shares
offered and sold for the Company was $108 million. After accounting for
approximately $5.6 million in underwriting discounts and commissions and
$912,000 in other expenses, we received proceeds of $101.5 million.
None of the net offering proceeds were paid, and none of the follow-on
offering expenses related to payments, directly or indirectly, to directors,
officers or general partners of ImageX.com or their associates, persons owning
10% or more of any class of our securities, or affiliates of ImageX.com.
Included in other expenses were costs related to the 1,054,405 shares sold for
shareholders of ImageX.com.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
We filed an amendment to our Current Report on Form 8-K dated
December 22, 1999 relating to our completion of the acquisition of 100% of
PrintBid.com, Inc., an Oregon corporation and providing certain financial
information, which information was impracticable to provide at the time
ImageX.com filed the Current Report on Form 8-K dated December 22, 1999.
We filed a Current Report on Form 8-K on February 7, 2000 announcing
our 31-day post-merger combined financial results following our business
combination with PrintBid.com, Inc, pursuant to the U.S. Securities and
Exchange Commission (SEC) regulations (Accounting Staff Release No. 135, as
amended by Staff Accounting Bulletins Nos. 65 and 76) in order for affiliates
to be able to sell their shares in our public offering.
13
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
IMAGEX.COM, INC.
(Registrant)
Date: May 15, 2000 By /s/ Robin L. Krueger
-------------------------------
Robin L. Krueger
Chief Financial Officer
14
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