<PAGE>
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
JUNE 21, 2000
---------------------
Date of Report
(Date of earliest event reported)
IMAGEX.COM, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
WASHINGTON 0-78271 91-1727170
----------------- --------------- ----------------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
10210 NE POINTS DR., SUITE 200
KIRKLAND, WASHINGTON 98033
-------------------------------------------------
(Address of principal executive offices, including zip code)
(425) 576-6500
----------------
(Registrant's telephone number, including area code)
1
<PAGE>
This Amendment No. 1 to the Current Report on Form 8-K filed with
the Securities and Exchange Commission on July 5, 2000 of ImageX.com, Inc.
("ImageX") relates to ImageX's completion of an acquisition of 100% of
creativepro.com, Inc., an Oregon corporation ("creativepro") pursuant to an
Agreement and Plan of Merger dated March 18, 2000, as amended May 20, 2000,
among the Company, Columbia Acquisition Corp., an Oregon corporation and
wholly owned subsidiary of the Company, creativepro, and Standish O'Grady as
shareholder representative (the "Merger Agreement"). By the terms of the
Merger Agreement, creativepro merged with and into Columbia Acquisition Corp.
The purpose of this amendment is to amend Item 7 to provide the financial
statements of creativepro required by Item 7(a) of Form 8-K and the pro forma
financial information required by Item 7(b) of Form 8-K, which information
was impracticable to provide at the time ImageX filed the Current Report on
Form 8-K dated July 5, 2000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS
(1) AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF CREATIVEPRO.COM AS OF
DECEMBER 31, 1999 AND 1998 AND FOR THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 1999.
2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Creativepro.com, Inc.:
We have audited the accompanying consolidated balance sheets of
Creativepro.com, Inc. (formerly Extensis Corporation) as of December 31, 1999
and 1998, and the related consolidated statements of operations,
shareholders' equity (deficit), and cash flows for each of the years in the
three-year period ended December 31, 1999. These consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Creativepro.com, Inc. (formerly Extensis Corporation) as of December 31, 1999
and 1998, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1999, in conformity
with generally accepted accounting principles applicable.
/s/ KPMG LLP
Portland, Oregon
February 29, 2000, except note 13,
which is as of March 17, 2000
3
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1999 1998
--------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,072 $ 458
Restricted cash 275 --
Accounts receivable, net 1,835 3,626
Inventories, net 455 155
Prepaid expenses 266 409
Other current assets 34 36
--------------- ---------------
Total current assets 3,937 4,684
Property and equipment, net 1,303 1,385
Purchased technology, net 860 --
Other assets 35 79
--------------- ---------------
Total assets $ 6,135 $ 6,148
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Line of credit $ -- $ 1,400
Accounts payable 1,530 685
Accrued liabilities 1,360 2,111
Current portion of long-term debt and
capital lease obligations 430 370
--------------- ---------------
Total current liabilities 3,320 4,566
Long-term portion of long-term debt and capital lease obligations 3,196 492
--------------- ---------------
6,516 5,058
--------------- ---------------
Commitments and contingencies
Shareholders' equity (deficit):
Series A convertible preferred stock: 1,900 authorized preferred
shares; par value $.001, 1,883 shares issued and outstanding
at 1999 and 1998, respectively; (aggregate liquidation
preference of $3,860) 2 2
Series B convertible preferred stock: 2,685 authorized preferred
shares; par value $.001, 1,685 shares issued and outstanding
at 1999 and 1998, respectively; (aggregate liquidation
preference of $5,173) 2 2
Common stock, par value $.001 per share: 15,829 shares authorized;
issued and outstanding shares 4,247 and 3,767 at 1999 and 1998,
respectively 4 4
Additional paid-in capital 8,977 8,850
Warrant 202 --
Stock subscription for common stock 1,200 --
Prepaid advertising in exchange for stock subscription (1,200) --
Accumulated other comprehensive income (loss) - foreign currency
translation (43) (14)
Notes receivable from related party (130) (122)
Accumulated deficit (9,395) (7,632)
--------------- ---------------
Total shareholders' equity (deficit) (381) 1,090
--------------- ---------------
Total liabilities and shareholders' equity (deficit) $ 6,135 $ 6,148
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Consolidated Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Revenue, net $ 20,933 $ 15,555 $ 10,824
Cost of revenue 3,256 2,154 2,111
-------------- -------------- --------------
Gross margin 17,677 13,401 8,713
-------------- -------------- --------------
Operating expenses:
Sales and marketing 12,462 9,380 7,292
Research and development 3,613 3,462 2,680
General and administrative 2,674 2,228 1,553
-------------- -------------- --------------
Total operating expenses 18,749 15,070 11,525
-------------- -------------- --------------
Loss from operations (1,072) (1,669) (2,812)
-------------- -------------- --------------
Other income (expense), net (687) (129) 87
-------------- -------------- --------------
Loss before income taxes (1,759) (1,798) (2,725)
Provision for income taxes 4 3 76
-------------- -------------- --------------
Net loss $ (1,763) $ (1,801) $ (2,801)
============== ============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Consolidated Statements of
Shareholders' Equity (Deficit)
(In thousands)
<TABLE>
<CAPTION>
SERIES A SERIES B
CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------- ------------------ ------------------ PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
--------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of December 31, 1996 1,589 $ 1 -- $ -- 3,313 $ 3 $ 3,344
Net loss -- -- -- -- -- -- --
Currency translation -- -- -- -- -- -- --
Comprehensive loss
Issuance of common stock from
exercise of stock options -- -- -- -- 245 1 22
Issuance of common stock from
exercise of stock warrants -- -- -- -- 18 -- 9
Issuance of Series A preferred stock 294 1 -- -- -- -- 209
Issuance of Series B preferred stock -- -- 1,685 2 -- -- 5,168
Recognition of compensation expense
on common stock warrants -- -- -- -- -- -- 75
Notes receivable from related party -- -- -- -- -- -- --
Equity draw -- -- -- -- -- -- --
--------- -------- -------- -------- -------- -------- ----------
Balance as of December 31, 1997 1,883 2 1,685 2 3,576 4 8,827
Net loss -- -- -- -- -- -- --
Currency translation -- -- -- -- -- -- --
Comprehensive loss
Issuance of common stock from
exercise of stock options -- -- -- -- 191 -- 23
Interest on related party notes
receivable -- -- -- -- -- -- --
--------- -------- -------- -------- -------- -------- ----------
Balance as of December 31, 1998 1,883 2 1,685 2 3,767 4 8,850
Net loss -- -- -- -- -- -- --
Currency translation -- -- -- -- -- -- --
Comprehensive loss
Issuance of common stock from
exercise of stock options -- -- -- -- 480 -- 116
Stock compensation expense -- -- -- -- -- -- 11
Issuance of preferred stock warrant -- -- -- -- -- -- --
Issuance of stock subscription -- -- -- -- -- -- --
Interest on related party notes
receivable -- -- -- -- -- -- --
--------- -------- -------- -------- -------- -------- ----------
Balance as of December 31, 1999 1,883 $ 2 1,685 $ 2 4,247 $ 4 $ 8,977
========= ======== ======== ======== ======== ======== ==========
6
<PAGE>
<CAPTION>
ACCUMULATED
OTHER
STOCK PREPAID COMPREHENSIVE COMPREHENSIVE
WARRANT SUBSCRIPTION ADVERTISING INCOME (LOSS) INCOME (LOSS)
-------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance as of December 31, 1996 $ -- $ -- $ -- $ --
Net loss -- -- -- -- $ (2,801)
Currency translation -- -- -- 12 12
-------------
Comprehensive loss $ (2,789)
=============
Issuance of common stock from
exercise of stock options -- -- -- --
Issuance of common stock from
exercise of stock warrants -- -- -- --
Issuance of Series A preferred stock -- -- -- --
Issuance of Series B preferred stock -- -- -- --
Recognition of compensation expense
on common stock warrants -- -- -- --
Notes receivable from related party -- -- -- --
Equity draw -- -- -- --
-------- ------------ ----------- -------------
Balance as of December 31, 1997 -- -- -- 12
Net loss -- -- -- -- $ (1,801)
Currency translation -- -- -- (26) (26)
-------------
Comprehensive loss $ (1,827)
=============
Issuance of common stock from
exercise of stock options -- -- -- --
Interest on related party notes
receivable -- -- -- --
-------- ------------ ----------- -------------
Balance as of December 31, 1998 -- -- -- (14)
Net loss -- -- -- -- $ (1,763)
Currency translation -- -- -- (29) (29)
-------------
Comprehensive loss $ (1,792)
=============
Issuance of common stock from
exercise of stock options -- -- -- --
Stock compensation expense -- -- -- --
Issuance of preferred stock warrant 202 -- -- --
Issuance of stock subscription -- 1,200 (1,200) --
Interest on related party notes
receivable -- -- -- --
-------- ------------ ----------- -------------
Balance as of December 31, 1999 $ 202 $ 1,200 $ (1,200) $ (43)
======== ============ =========== =============
<CAPTION>
NOTES
RECEIVABLE
FROM
RELATED ACCUMULATED
PARTY DEFICIT TOTAL
----------- ----------- ---------
<S> <C> <C> <C>
Balance as of December 31, 1996 $ (10) $ (2,676) $ 662
Net loss -- (2,801) (2,801)
Currency translation -- -- 12
Comprehensive loss
Issuance of common stock from
exercise of stock options -- -- 23
Issuance of common stock from
exercise of stock warrants -- -- 9
Issuance of Series A preferred stock -- -- 210
Issuance of Series B preferred stock -- -- 5,170
Recognition of compensation expense
on common stock warrants -- -- 75
Notes receivable from related party (104) -- (104)
Equity draw -- (354) (354)
----------- ----------- ---------
Balance as of December 31, 1997 (114) (5,831) 2,902
Net loss -- (1,801) (1,801)
Currency translation -- -- (26)
Comprehensive loss
Issuance of common stock from
exercise of stock options -- -- 23
Interest on related party notes
receivable (8) -- (8)
----------- ----------- ---------
Balance as of December 31, 1998 (122) (7,632) 1,090
Net loss -- (1,763) (1,763)
Currency translation -- -- (29)
Comprehensive loss
Issuance of common stock from
exercise of stock options 116
Stock compensation expense -- -- 11
Issuance of preferred stock warrant -- -- 202
Issuance of stock subscription -- -- --
Interest on related party notes
receivable (8) -- (8)
----------- ----------- ---------
Balance as of December 31, 1999 $ (130) $ (9,395) $ (381)
=========== =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1999 1998 1997
---------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,763) $ (1,801) $ (2,801)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 852 489 285
Loss on disposal of property 45 20 --
Noncash interest expense 202 -- --
Noncash compensation expense 11 -- 75
Noncash interest on notes receivable from related party (8) (8) (4)
Change in operating assets and liabilities:
Accounts receivable 1,791 (1,056) (1,489)
Inventories (300) (24) 97
Prepaid expenses 143 144 (457)
Other current assets 2 7 --
Other assets 44 (6) --
Accounts payable 845 (566) (69)
Accrued liabilities (751) 94 1,392
---------------- ------------- -------------
Net cash provided (used) by operating activities 1,113 (2,707) (2,971)
---------------- ------------- -------------
Cash flows from investing activities:
Purchase of property and equipment (575) (868) (880)
Proceeds from disposal of property and equipment -- 35 --
Purchased technology (50) -- --
Restricted cash (275) -- --
---------------- ------------- -------------
Net cash used by investing activities (900) (833) (880)
---------------- ------------- -------------
Cash flows from financing activities:
Borrowings (repayments) on line of credit, net (1,400) 1,400 --
Issuance of related party notes receivable -- -- (100)
Repayment of debt and capital lease obligations (1,286) (166) (32)
Proceeds from long-term debt 3,000 750 --
Proceeds from issuance of common stock 116 23 32
Sale of preferred stock -- -- 5,170
Equity draws -- -- (354)
---------------- ------------- -------------
Net cash provided by financing activities 430 2,007 4,716
---------------- ------------- -------------
Increase (decrease) in cash and cash equivalents 643 (1,533) 865
Effect of exchange rate changes (29) (26) 12
Cash and cash equivalents at beginning of year 458 2,017 1,140
---------------- ------------- -------------
Cash and cash equivalents at end of year $ 1,072 $ 458 $ 2,017
================ ============= =============
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 479 $ 135 $ 57
Supplemental disclosure of noncash information:
Notes payable to related parties converted to
preferred stock -- -- 210
Purchased technology acquired in exchange
for short-term debt 1,050 -- --
Stock subscription in exchange for
prepaid advertising 1,200 -- --
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
(1) SIGNIFICANT ACCOUNTING POLICIES
(a) NATURE OF BUSINESS
Creativepro.com, Inc. (formerly Extensis Corporation)
(Creativepro.com or the Company) is in one business segment -
developing, publishing, marketing and support of cross-platform
software applications for professionals in the creative and
pre-press markets worldwide. Creativepro.com products maximize the
productivity of creative and pre-press professionals such as
advertising and design professionals, production artists,
publishers, multimedia and CD-ROM developers, Web site designers,
digital imagers and photographers service bureaus and commercial
printers.
(b) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary. All
significant intercompany accounts and transactions have been
eliminated. The functional currency of the subsidiary has been
determined to be the local currency.
(c) REVENUE RECOGNITION
Effective January 1, 1998, the Company adopted the Statement of
Position 97-2, "Software Revenue Recognition," (SOP 97-2). SOP
97-2 generally requires revenue earned on software arrangements
involving multiple elements to be allocated to each element based
on the relative fair values of the elements. The revenue allocated
to license revenue generally is recognized upon shipment of the
products. The revenue allocated to post-contract customer support
(maintenance) generally is recognized ratably over the term of the
agreement. The adoption of SOP 97-2 did not have a significant
impact on the Company's financial statements. The Company
generally provides a sixty-day right of return policy for consumer
software sales.
The Company sells products to distributors and resellers and to
some distributors that will reproduce, localize, and package its
products. The revenue for these sales is recognized when all
obligations have been met under the specified agreement.
Distributors and resellers have a sixty-day right of return.
Revenue related to original equipment manufacturer contracts is
recognized ratably over the contract period, or on per unit basis
as specified in the agreement.
9
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
(d) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash
equivalents, accounts receivable, related party notes receivable,
long-term debt, capital lease obligations, and accounts payable
for which their current carrying amounts approximate fair market
value. The recorded amounts due from related parties approximate
fair value as the related interest rates are comparable with the
current competitive rates for instruments of a similar nature and
degree of risk.
(e) CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and highly liquid
investments with original maturities of three months or less and
which are readily convertible to cash.
(f) RESTRICTED CASH
The Company has a certificate of deposit held by a bank as
collateral for a $275 letter of credit.
(g) INVENTORIES
Inventories consist of media, training materials and packaging
supplies. Inventories are stated at the lower of cost or market
(approximates first-in, first-out method). Inventories are net of
a reserve at December 31, 1999 and 1998 of $122 and $118,
respectively.
(h) ADVERTISING EXPENSES
Advertising costs are expensed in the month the advertisement
appears. Advertising costs were $6,316, $4,491 and $3,988 for the
years ended December 31, 1999, 1998 and 1997, respectively.
Prepaid advertising costs, included in prepaid expenses, amounted
to $30 and $227 at December 31, 1999 and 1998, respectively. On
December 10, 1999, the Company entered into a stock subscription
agreement in exchange for future advertising (see note 9).
(i) RESEARCH AND DEVELOPMENT
Software development costs have been accounted for in accordance
with Statement of Financial Accounting Standards (SFAS) No. 86,
ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED
OR OTHERWISE MARKETED. Under the standard, capitalization of
software development costs begins upon the establishment of
technological feasibility, subject to net realizable value
considerations. The Company begins capitalization upon completion
of a working model. To date, such capitalizable costs have not
been material. Accordingly, the Company has charged all such costs
to product development expense as incurred. Future capitalized
costs, if any, will be amortized on a straight-line basis over the
estimated life of the products or the ratio of current revenue to
the total of current and anticipated future revenue, whichever
expense is greater.
10
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
(j) CONCENTRATION OF CREDIT RISK
Financial instruments that potentially expose the Company to
concentration of credit risk consist primarily of trade accounts
receivable. The Company extends credit to its customers based upon
an evaluation of the customer's financial condition and credit
history and generally does not require collateral. The Company has
historically incurred minimal credit losses. At December 31, 1999,
two customers accounted for approximately 49% of accounts
receivable. At December 31, 1998, two customers accounted for
approximately 61% of accounts receivable.
The Company had one significant customer in 1999, 1998 and 1997,
respectively that accounted for greater than 10% of the Company's
revenues. In 1999, one product accounted for approximately 29% of
sales. In 1998, one product accounted for approximately 31% of
sales.
(k) PROPERTY AND EQUIPMENT
Furniture, fixtures and equipment are stated at cost. Furniture
and equipment under capital leases are stated at the lower of the
present value of minimum lease payments at the beginning of the
lease term or fair value of the leased assets at the inception of
the lease. Repair and maintenance costs are expensed as incurred.
Leasehold improvements are capitalized at cost and amortized on a
straight-line basis over the shorter of the initial lease term or
the estimated useful lives of the assets.
Depreciation on furniture, fixtures, equipment and software is
calculated on the straight-line method over the estimated useful
lives of the related assets, ranging from three to seven years.
Furniture and equipment held under capital leases are amortized on
the straight-line method over the shorter of the related lease
term or estimated useful life of the leased assets.
(l) INCOME TAXES
The Company uses the asset and liability method of accounting for
income taxes. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
11
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
(m) CURRENCY TRANSLATION
The local currency is the functional currency in the Company's
foreign subsidiary. Assets and liabilities of the foreign
subsidiary are translated to U.S. dollars at current rates of
exchange, and revenues and expenses are translated using weighted
average rates during the year. Foreign currency translation
adjustments are included as a separate component of shareholders'
equity (deficit).
(n) PURCHASED TECHNOLOGY
During 1999, the Company purchased technology in the amount of
$1,100. Purchased technology amortization expense of $241 was
recorded for the year ended December 31, 1999. Total accumulated
amortization as of December 31, 1999 was $241. The useful life of
the technology has been estimated at four years.
(o) STOCK-BASED COMPENSATION
The Company accounts for stock-based compensation using the
Financial Accounting Standard Board's Statement of Financial
Accounting Standards No. 123 (SFAS 123), ACCOUNTING FOR
STOCK-BASED COMPENSATION. This statement permits a company to
choose either a fair-value-based method of accounting for its
stock-based compensation arrangements or to comply with the
current Accounting Principles Board Opinion 25 (APB Opinion 25)
intrinsic-value-based method adding pro forma disclosures of net
loss computed as if the fair-value-based method had been applied
in the financial statements. The Company applies SFAS 123 by
retaining the APB Opinion 25 method of accounting for stock-based
compensation for employees with annual pro forma disclosures of
net loss. Stock-based compensation for non-employees is accounted
for using the fair-value-based method.
(p) COMPREHENSIVE INCOME (LOSS)
The Company follows SFAS No. 130, REPORTING COMPREHENSIVE INCOME,
which establishes standards for reporting and presentation of
comprehensive loss and its components in a full set of financial
statements. Comprehensive loss consists of net loss and foreign
currency translation adjustment and is presented in the
consolidated statement of shareholders' equity (deficit).
(q) 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, as well as
revenues and expenses reported for the periods presented. Actual
results could differ from those estimates.
(r) RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 and 1998
consolidated financial statements to conform with 1999
consolidated financial statement presentation.
12
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
(2) ACQUISITION
On January 8, 1998, the Company completed a merger with Astrobyte, Inc.
(Astrobyte). The merger was accounted for using the pooling-of-interest
method under Accounting Principles Board Opinion No. 16. Accordingly, all
prior period consolidated financial statements presented have been
restated to include the combined results of operations, financial
position and cash flows of Astrobyte as though it had always been a part
of the Company.
The Company issued 300,000 shares of common stock in exchange for all of
the outstanding common stock of Astrobyte.
(3) ACCOUNTS RECEIVABLE
Accounts receivable consists of the following at:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1999 1998
-------------------- --------------------
<S> <C> <C>
Gross accounts receivable $ 2,482 $ 4,033
Less allowance for doubtful accounts (158) (130)
Less allowance for returns (489) (277)
-------------------- --------------------
$ 1,835 $ 3,626
==================== ====================
</TABLE>
(4) PROPERTY AND EQUIPMENT
Property and equipment consists of the following at:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1999 1998
-------------------- --------------------
<S> <C> <C>
Furniture and fixtures $ 430 $ 403
Computer equipment 1,531 1,143
Leasehold improvements 298 257
Capital leases 60 343
Software 356 315
-------------------- --------------------
2,675 2,461
Less accumulated depreciation and amortization (1,372) (1,076)
-------------------- --------------------
$ 1,303 $ 1,385
==================== ====================
</TABLE>
(5) BORROWINGS
(a) LINE OF CREDIT
The Company has a $2,000 revolving line of credit facility with a
bank which provides for interest at prime (8.25% at December 31,
1999) plus 2% and is collateralized by accounts receivable.
Borrowings outstanding at December 31, 1999
13
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
and 1998 are $-0- and $1,400, respectively. The facility requires
the Company to meet certain financial covenants and restrictions,
including maintenance of specified ratios for minimum tangible
net worth and debt to tangible net worth. At December 31, 1999,
the Company was not in compliance with the financial covenants.
The Company has obtained a waiver from the bank for noncompliance
with the financial covenants.
(b) LONG-TERM DEBT
The Company has three term loans with a bank. The first loan bears
interest at prime plus 2.5% and matures in June 2000. The second
loan bears interest at 9.75% and matures in September 2001. On
January 19, 1999, the Company entered into a loan and security
agreement with a bank for $3,000 at 14% interest with a maturity
of January 2002. This agreement carries a warrant subscription
agreement that allows the bank to purchase up to 1,000 shares of
the Company's Series B preferred stock at various exercise prices
over the term of the agreement. The principal is due at maturity.
The three loans are secured by substantially all of the Company's
assets. The principal payments are as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
2000 $ 416
2001 189
2002 3,000
-------------------
$ 3,605
===================
</TABLE>
(6) LEASES
The Company leases office facilities and minor office equipment under
operating leases expiring through the year 2002. The facilities leases
contain renewal options and rent escalation clauses. Minimum future
rental payments under these and capital lease agreements as of December
31, 1999 are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
-------------------- --------------------
Year ending December 31:
<S> <C> <C>
2000 $ 16 $ 466
2001 8 468
2002 -- 70
-------------------- --------------------
24 $ 1,004
====================
Less amounts representing interest (3)
--------------------
Present value of future minimum lease payments 21
Less current portion 14
--------------------
$ 7
====================
</TABLE>
14
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
Total rental expense under operating leases was $402, $387 and $309, for
the years ended December 31, 1999, 1998 and 1997, respectively.
(7) RELATED PARTY TRANSACTIONS
In September 1996, the Company executed a note in the principal amount of
$10 to a former officer of the Company for the purchase of stock. The
note is unsecured and accrues interest at the prime rate (8.25% at
December 31, 1998). The outstanding principal balance and any accrued and
unpaid interest was due and payable on September 6, 1999. The Company is
currently taking steps to re-purchase shares of the Company's stock to
satisfy the debt in full. The loan is classified as a component of
shareholders' equity.
In June 1997, the Company executed a note in the principal amount of $10
to an officer and director of the Company. The Company agreed to loan the
officer additional principal amounts from time to time up to a total
principal balance of $100. In October 1997, the Company executed a
revised and amended promissory note for the additional $90 available
under the original agreement. The note accrues interest at 7.5% and is
secured by a Stock Pledge and Security Agreement. The Board is currently
working on an employment agreement that would provide for settlement of
this debt in the event of termination.
(8) ROYALTIES
The Company has contractually entered into various agreements with
certain software developers to pay royalties based on a percentage of the
developed product revenues. Royalty expense was $1,342, $909 and $976 for
the years ended December 31, 1999, 1998 and 1997, respectively. Royalties
payable were $319 and $519 at December 31, 1999 and 1998, respectively.
(9) SHAREHOLDERS' EQUITY (DEFICIT)
(a) STOCK OPTIONS
During 1994, the Company adopted, and the Board of Directors
approved, a stock incentive plan for eligible employees, directors
and outside consultants of the Company (the 1994 Plan). Either
non-qualified or incentive stock options may be issued under this
plan and are exercisable for a period of up to ten years from date
of grant. As of December 31, 1999, the Company had authorized
issuance of such options to purchase up to an aggregate of 5,400
shares of its common stock. The options vest and are exercisable
over various periods from the initial grant date.
SFAS No. 123 (SFAS 123), ACCOUNTING FOR STOCK-BASED COMPENSATION,
defines a fair value based method of accounting for an employee
stock option and similar equity instrument. As allowed under SFAS
No. 123, the Company has elected to account for its stock-based
compensation plans under APB 25. The Company has computed, for pro
forma disclosure purposes, the value of all options granted during
1999, 1998 and 1997 using the minimum value option pricing model
using the following weighted average assumptions for grants:
15
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
<TABLE>
<CAPTION>
1999 1998 1997
----------------- ------------------- -------------------
<S> <C> <C> <C>
Risk-free interest rate 6.1% 5% 5.2%
Expected dividend yield None None None
Expected lives 5 years 5 years 5 years
</TABLE>
Using the minimum value valuation model for 1999, 1998 and 1997,
the total value of options granted was $850, $1,782 and $340,
respectively, which would be amortized on a pro forma basis over
the vesting period of the options (typically four years). The
weighted average grant date fair value of options granted during
1999 was $4.00 per share. If the Company had accounted for its
stock-based compensation plans in accordance with SFAS 123, the
Company's net loss and net loss per share would approximate the
pro forma disclosures below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1999 1998 1997
------------------- ------------------- -------------------
<S> <C> <C> <C>
Net loss - as reported $ (1,763) $ (1,801) $ (2,801)
Net loss - pro forma (2,578) (2,345) (2,904)
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure may
not be indicative of future amounts. SFAS 123 does not apply to
awards prior to January 1, 1995.
16
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
The following table summarizes the stock option transactions under the
plan described above.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTIONS EXERCISE
OUTSTANDING PRICE
---------------- ----------------
<S> <C> <C>
Balance, December 31, 1996 1,427 $ 0.13
Options granted 1,068 1.16
Options exercised (245) 0.06
Options canceled (55) 0.30
----------------
Balance, December 31, 1997 2,195 0.63
Options granted 1,533 4.10
Options exercised (191) 0.12
Options canceled (208) 1.36
----------------
Balance, December 31, 1998 3,329 2.22
Options granted 808 4.00
Options exercised (480) .24
Options canceled (783) 3.28
----------------
Balance, December 31, 1999 2,874 $ 2.77
================
</TABLE>
The stock options currently outstanding generally vest over four
years and expire ten years from the grant date so long as, in the
case of employees, the optionee remains employed by the Company.
If the employee terminates the relationship with the Company there
is a three-month period after the termination date to exercise the
options.
Authorized options available for grant at December 31, 1999
aggregate 1,198.
17
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
The following table summarizes information about options
outstanding and exercisable at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OUTSTANDING EXERCISABLE
-------------------------------------------------- ---------------------------------
NUMBER WEIGHTED NUMBER
OUTSTANDING AVERAGE WEIGHTED EXERCISABLE WEIGHTED
AS OF REMAINING AVERAGE AS OF AVERAGE
EXERCISE DECEMBER 31, CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE
PRICES 1999 LIFE PRICE 1999 PRICE
----------------- ---------------- -------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
$ 0.0500 68 4.42 $ 0.05 68 $ 0.05
0.1250 6 5.04 0.12 6 0.12
0.1750 60 5.09 0.17 60 0.17
0.2500 460 6.54 0.25 422 0.25
0.5000 253 7.29 0.50 187 0.50
1.0000 30 7.52 1.00 20 1.00
1.5000 147 7.73 1.50 86 1.50
3.0000 94 7.90 3.00 49 3.00
4.0000 1,406 8.99 4.00 269 4.00
4.4000 350 3.35 4.40 139 4.40
---------------- -------------- -------------- ---------------- --------------
$ 0.0500 - 4.4000 2,874 7.45 $ 2.77 1,306 $ 1.68
================ ============== ============== ================ ==============
</TABLE>
During 1998, the Company adopted, and the Board of Directors
approved, the 1998 Stock Option Plan for Nonemployee Directors.
Options granted under the plan shall be nonstatutory options and
vest over a period of four years and expire ten years after date
of grant. The exercise price shall be the fair market value per
share of common stock on the date of grant. The Company may grant
up to 250 shares of common stock. As of December 31, 1999, no
options had been granted.
(b) COMMON STOCK WARRANTS
On September 2, 1997, the Company issued warrants to purchase 65
shares of common stock at an exercise price of $0.50 per share and
a weighted average grant date fair value of $1.05 per share in
conjunction with software developer agreements. As of December 30,
1999, 19 warrants had been exercised.
(c) STOCK SUBSCRIPTION AGREEMENT
On December 10, 1999, the Company entered into a strategic
business relationship. The companies will cross-link the front
pages of their respective sites and cross-license selected content
targeted at the creative professional audience. In connection with
the deal, the other party will receive 300 shares of the Company's
common stock in exchange for various advertising spots to be
provided over a three-year period. The shares to be issued have
been valued at the current deemed fair market value of $4.00. As
the shares vest the related advertising will be expensed at the
then current fair market value of the vesting shares.
18
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
(d) PREFERRED STOCK
The Company has 9,171 shares of preferred stock authorized at
December 31, 1999. The stock has a par value of $.001 and was
issued as non-redeemable Series A and Series B (Series A and B).
The terms of the Series A and B preferred stock are:
- Each share of Series A and B preferred stock is voting, and
is convertible into common stock using formulas specified
in the Series A and B Preferred Stock Agreements. Series A
and B preferred shareholders have non-cumulative dividend
rights at the rate of 8% per annum and are payable only
upon declaration by the Board of Directors, and in
preference and priority to common stock. Upon liquidation,
Series A and B preferred shareholders are entitled to be
paid out of the assets of the Company which are available
for distribution to its shareholders before any payment is
made to common shareholders. Series A and B preferred
shareholders will receive an amount per share equal to
their respective Original Issue Price, plus all related and
declared but unpaid dividends. A merger of the Company or
sale of substantially all assets is considered a
liquidation.
- There is an automatic conversion of Series A and B
preferred stock into shares of common stock upon the
affirmation vote of the holders of at least a majority of
the outstanding shares of the Series A and B preferred
stock, or immediately upon the closing of a firmly
underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of the Company's
common stock that results in gross proceeds of at least
$7,500 and that has a public offering price of at least
$10.00 per share, or if less than 50% of the shares of
Series A and B preferred outstanding on the Original Issue
Date remain outstanding.
- Shares are subject to an Investors Rights Agreement which
provides for the registration of the shares under the
Securities Act of 1933 under certain circumstances.
(e) PREFERRED STOCK WARRANTS
On January 19, 1999, the Company issued in connection with a
lending agreement a warrant to purchase up to 1,000,000 shares of
Series B preferred stock, $0.001 par value, at various exercise
prices over the term of the agreement. The warrants are valued
using the Black-Scholes model. As of December 31, 1999, no
preferred stock warrants had been exercised.
19
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
(10) INCOME TAXES
The actual income tax expense (benefit) differs from the expected tax
expense (benefit) computed by applying the U.S. federal corporate income
tax rate of 34% to net loss before income taxes as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Computed expected income tax benefit $ (598) $ (612) $ (927)
(Increase) decrease in income tax
benefit resulting from:
State income tax benefit (75) (77) (130)
Foreign tax rate differential 5 5 53
Research and experimentation tax
credits (103) (98) (121)
Exclusion of earnings for LLC -- -- (71)
Increase in valuation allowance 729 1,179 1,263
Change in valuation allowance due
to Astrobyte acquisition -- (397) --
Other 46 3 9
--------------- --------------- ---------------
Income tax expense $ 4 $ 3 $ 76
=============== =============== ===============
</TABLE>
The Company merged with Astrobyte, Inc. on January 8, 1998. Astrobyte was
a Limited Liability Company prior to incorporation whose income was
generally taxed to the shareholders. Accordingly, no income tax expense
or deferred income taxes are reflected in the consolidated financial
statements related to Astrobyte, Inc. for the year ended December 31,
1997.
Income tax expense consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Current:
Federal $ -- $ -- $ --
State 2 -- --
Foreign 2 3 76
--------------- --------------- ---------------
$ 4 $ 3 $ 76
=============== =============== ===============
</TABLE>
20
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 2,978 $ 2,663
Research and experimentation tax credits 383 279
Reserves and allowances 306 154
Accrued vacation 74 68
Goodwill 347 374
Warrants 77 --
Purchased technology 68 --
Other 64 33
---------------- ----------------
4,297 3,571
Valuation allowance (4,297) (3,568)
---------------- ----------------
Deferred tax asset -- 3
Deferred tax liabilities:
Fixed assets -- 3
---------------- ----------------
Deferred tax liabilities -- 3
---------------- ----------------
Net deferred tax liabilities $ -- $ --
================ ================
</TABLE>
The valuation allowance for deferred tax assets as of December 31, 1996
was approximately $1,126.
The net change in the total valuation allowance for 1999, 1998 and 1997
was an increase of approximately $729, $1,179 and $1,263, respectively.
At December 31, 1999, the Company had net operating loss carryforwards
for federal and state income tax purposes which can be used to offset
future income subject to taxes. In addition, there are unused research
and experimentation credits which can be offset against future federal
income taxes after use of the loss carryforwards. Such loss carryforwards
and tax credits are summarized below (in thousands):
<TABLE>
<CAPTION>
EXPIRATION
AMOUNT DATES
-------------------- --------------------
<S> <C> <C>
Loss carryforwards:
Federal $ 7,259 2010 - 2019
State 7,259 2010 - 2014
Research and experimentation credits:
Federal 308 2011 - 2019
State 113 2003 - 2004
</TABLE>
21
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(In thousands, except per share data)
A provision of the Tax Reform Act of 1986 requires the utilization of net
operating losses and credits be limited when there is a change of more
than 50% in ownership of the Company. Such a change occurred with the
sale of preferred stock in 1996 and with the Astrobyte acquisition in
1998. Therefore, a limitation has been placed on the utilization of the
net operating loss and credit carryforwards. As a result of this
provision, future changes in equity may contribute to another change in
ownership.
(11) EMPLOYEE BENEFIT PLAN
Effective October 1, 1995, the Company offered a defined contribution
401(k) employee savings plan which covers substantially all employees. In
January 1997, the Company began matching 25% of employees' 401(k)
contributions up to maximum of 4% of earnings. The Company's contribution
for 1999, 1998 and 1997 was $37, $24 and $17, respectively.
(12) COMMITMENTS AND CONTINGENCIES
LEGAL ACTIONS
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse
effect on the Company's financial position, results of operations or
liquidity.
(13) SUBSEQUENT EVENT
On March 17, 2000, ImageX.com Inc. and the Company entered into a
definitive agreement whereby ImageX.com Inc. will acquire all the issued
and outstanding shares of the Company in exchange for approximately 4,300
shares of ImageX.com Inc.'s common stock and $9,900 in cash.
22
<PAGE>
(2) UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2000
AND FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
MARCH 31, 2000
--------------
(UNAUDITED)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 925
Accounts receivable, net 1,300
Inventories, net 352
Other assets 315
--------------
Total current assets 2,892
Property and equipment, net 1,125
Purchased technology, net 790
Other long-term assets 52
--------------
Total assets $ 4,859
==============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable 1,224
Accrued liabilities 1,220
Current portion of long-term debt and capital lease obligations 267
--------------
Total current liabilities 2,711
Long-term portion of long-term debt and capital lease obligations 3,131
--------------
5,842
--------------
Commitments and contingencies
Shareholders' equity (deficit):
Series A convertible preferred stock: 1,900 authorized
preferred shares; par value $.001, 1,883 shares
issued and outstanding 2
Series B convertible preferred stock: 2,685 authorized
preferred shares; par value $.001, 1,685 shares
issued and outstanding 2
Common stock, par value $.001 per share: 15,829 shares
authorized; 4,458 shares issued and outstanding 4
Additional paid-in capital 9,027
Warrant 877
Stock subscription for common stock 1,200
Prepaid advertising in exchange for stock subscription (1,137)
Accumulated other comprehensive income (loss) - foreign
currency translation (32)
Notes receivable from related party (133)
Accumulated deficit (10,793)
--------------
Total shareholders' equity (deficit) (983)
--------------
Total liabilities and shareholders' equity (deficit) $ 4,859
==============
</TABLE>
See accompanying notes to consolidated financial statements.
23
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Consolidated Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
------------ ----------
(UNAUDITED)
<S> <C> <C>
Revenue, net $ 4,790 $ 4,719
Cost of revenue 895 635
------------ ----------
Gross margin 3,895 4,084
Operating expenses:
Sales and marketing 2,888 2,778
Research and development 918 755
General and administrative 687 535
------------ ----------
Total operating expenses 4,493 4,068
------------ ----------
Income (loss) from operations (598) 16
------------ ----------
Other income (expense), net (798) (120)
------------ ----------
Loss before income taxes (1,396) (104)
Provision for income taxes 2 4
------------ ----------
Net loss $ (1,398) $ (108)
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
24
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Consolidated Statements of
Shareholders' Equity (Deficit)
(In thousands)
<TABLE>
<CAPTION>
SERIES A SERIES B
CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------ ------------------ ------------------ PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL WARRANT
-------- -------- -------- -------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of December 31, 1999 1,883 $ 2 1,685 $ 2 4,247 $ 4 $ 8,977 $ 202
Net loss -- -- -- -- -- -- -- --
Currency translation -- -- -- -- -- -- -- --
Comprehensive loss
Issuance of common stock from
exercise of stock options -- -- -- -- 211 -- 50 --
Stock compensation expense -- -- -- -- -- -- -- --
Issuance of preferred stock warrant -- -- -- -- -- -- -- 675
Issuance of stock subscription -- -- -- -- -- -- -- --
Interest on related party notes
receivable -- -- -- -- -- -- -- --
Advertising expense -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- ---------- ---------
Balance as of March 31, 2000 1,883 $ 2 1,685 $ 2 4,458 $ 4 $ 9,027 $ 877
======== ======== ======== ======== ======== ======== ========== =========
<CAPTION>
NOTE
ACCUMULATED RECEIVABLE
OTHER FROM
STOCK PREPAID COMPREHENSIVE COMPREHENSIVE RELATED ACCUMULATED
SUBSCRIPTION ADVERTISING INCOME (LOSS) INCOME (LOSS) PARTY DEFICIT TOTAL
------------ ------------ ------------- ------------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of December 31, 1999 $ 1,200 $ (1,200) $ (43) $ (130) $ (9,395) $ (381)
Net loss -- -- -- $ (1,398) -- (1,398) (1,398)
Currency translation -- -- 11 11 -- -- 11
-------------
Comprehensive loss $ (1,387)
=============
Issuance of common stock from
exercise of stock options -- -- -- -- -- 50
Stock compensation expense -- -- -- -- -- --
Issuance of preferred stock warrant -- -- -- -- -- 675
Issuance of stock subscription -- -- -- -- -- --
Interest on related party notes
receivable -- -- -- (3) -- (3)
Advertising expense -- 63 -- -- -- 63
------------ ------------ ------------- ---------- ----------- --------
Balance as of March 31, 2000 $ 1,200 $ (1,137) $ (32) $ (133) $ (10,793) $ (983)
============ ============ ============= ========== =========== ========
</TABLE>
See accompanying notes to consolidated financial statements.
25
<PAGE>
CREATIVEPRO.COM, INC.
(Formerly Extensis Corporation)
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,398) $ (108)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 232 176
Amortization of prepaid advertising 62
Loss on disposal of property 1
Noncash interest expense 675
Noncash interest on notes receivable from related party (2)
Change in operating assets and liabilities:
Accounts receivable 535 769
Inventories 103 (17)
Prepaid expenses (15) 108
Other assets (17) (13)
Accounts payable (306) 224
Accrued liabilities (141) (557)
------------ ------------
Net cash provided (used) by operating activities (271) 582
Cash flows from investing activities:
Purchase of property and equipment 15 (90)
------------ ------------
Net cash used by investing activities 15 (90)
Cash flows from financing activities:
Proceeds from/repayment of credit line (1,400)
Interest on related party notes receivable (2)
Proceeds from debt and capital lease obligations 3,000
Repayment of debt and capital lease obligations (228) (219)
Proceeds from issuance of common stock 51 17
------------ ------------
Net cash provided by financing activities (177) 1,396
Increase (decrease) in cash and cash equivalents (433) 1,888
Effect of exchange rate changes 11 (81)
Cash and cash equivalents at beginning of period 1,347 458
------------ ------------
Cash and cash equivalents at end of period $ 925 $ 2,265
============ ============
Supplemental disclosure of noncash information:
------------
Purchased technology acquired in exchange for short-term debt 1,050
============
</TABLE>
See accompanying notes to consolidated financial statements.
26
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities
and Exchange Commission but do not include all of the information and
footnotes required by generally accepted accounting principles for
complete consolidated financial statements and should, therefore, be read
in conjunction with the Company's audited consolidated financial
statements and notes thereto as of December 31, 1999 and 1998 and for the
three years in the period ended December 31, 1999. The accompanying
statements include all normal recurring adjustments which the Company
believes necessary for a fair presentation of the statements. The interim
operating results are not necessarily indicative of the results for the
full year.
(2) ACCOUNTS RECEIVABLE
Accounts receivable as of March 31, 2000 consists of the following (in
thousands):
<TABLE>
<S> <C>
Gross accounts receivable $ 2,090
Less allowance for doubtful accounts (177)
Less allowance for returns (613)
-----------
$ 1,300
===========
</TABLE>
(3) PROPERTY AND EQUIPMENT
Property and equipment as of March 31, 2000 consists of the following (in
thousands):
<TABLE>
<S> <C>
Furniture and fixtures $ 287
Computer equipment 1,653
Leasehold improvements 298
Capital leases 60
Software 361
---------
2,659
Less accumulated depreciation and amortization (1,534)
---------
$ 1,125
=========
</TABLE>
(4) SUBSEQUENT EVENT
On June 21, 2000, the shareholders sold 100% of the Company's common
stock to ImageX.com, Inc. The acquisition was recorded by ImageX.com
using the purchase method of accounting under APB Opinion No. 16.
ImageX.com issued 3,541,195 shares of stock and $11.5 million in cash
resulting in an aggregate purchase price of $45.2 million.
27
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION
On June 21, 2000, ImageX.com, Inc. completed the acquisition of
Creativepro.com, Inc. The acquisition was recorded by ImageX.com using the
purchase method of accounting under APB Opinion No. 16. The Company issued
3,541,195 shares of stock and $11.5 million in cash resulting in an aggregate
purchase price of $45.2 million.
The unaudited pro forma condensed statements of operations are based on
individual historical results of operations of ImageX.com, Inc., Fine Arts
Engravers Company, Inc., Image Press, Inc., and creativepro.com, Inc. for the
year ended December 31, 1999 and for the six months ended June 30, 2000, after
giving effect to the acquisitions of Fine Arts Engravers Company, Inc., Image
Press, Inc., and creativepro.com, Inc. as if they had occurred at the beginning
of each period presented.
Fine Arts Engravers Company, Inc. was acquired April 13, 1999 and Image
Press, Inc. was acquired September 21, 1999. Their operations since those dates
are included with those of ImageX.com. Financial information for Fine Arts
Engravers Company, Inc. is included in Form S-1/A filed August 24, 1999, and
financial information for Image Press, Inc. is included in Form 8-K/A filed
November 15, 1999.
The unaudited pro forma condensed statements of operations should be read
in conjunction with the historical financial statements and notes thereto of
ImageX.com, Inc. included in its 1999 annual report on Form 10-K and
creativepro.com, Inc. included herein. The pro forma adjustments and assumptions
described in the accompanying notes to unaudited pro forma condensed statements
of operations are based on estimates, evaluations, and other data currently
available. The unaudited pro forma condensed statements of operations are
presented for illustrative purposes only and are not necessarily indicative of
results of operations that would have actually occurred had the acquisitions of
Fine Arts Engravers Company, Inc., Image Press, Inc., and creativepro.com, Inc.
been effected on the dates assumed.
The pro forma balance sheet is included in ImageX.com's balance sheet as of
June 30, 2000 on Form 10-Q for 2nd quarter of 2000 filed with the Securities and
Exchange Commission on August 14, 2000 as ImageX.com's balance sheet reflects
its acquisition of creativepro.com.
IMAGEX.COM, INC. AND CREATIVEPRO.COM, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ImageX.com, Prior Pro Forma
Inc. Acquisitions creativepro. Adjustments
(Actual) (Note 1) com, Inc. (Note 2) Pro Forma
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue 11,499 7,884 20,933 (37) 40,279
Cost of sales 8,541 5,523 3,256 69 17,389
--------------------------------------------------------------------------
Gross profit 2,958 2,361 17,677 (106) 22,890
Operating expenses
General and administrative 11,002 1,583 2,674 648 15,907
Sales and marketing 6,765 461 12,462 19,688
Product development 3,770 3,613 7,383
Amortization of unearned compensation, 2,497 4,581 7,078
goodwill, and other intangibles
--------------------------------------------------------------------------
Total operating expenses 24,034 2,044 18,749 5,229 50,056
Profit (Loss) from operations (21,076) 317 (1,072) (5,335) (27,166)
Interest income (expense) 241 (57) (687) (503)
Provision for income tax (29) (4) (33)
--------------------------------------------------------------------------
Net Loss (20,835) 231 (1,763) (5,335) (27,702)
--------------------------------------------------------------------------
Accretion of mandatorily redeemable convertible (84) (84)
preferred stock
------------ -----------
Net Loss for common stock (20,919) (27,786)
============ ===========
Basic and diluted net loss per share (3.07) (2.68)
============ ===========
Weighted-average shares outstanding 6,805,098 3,580,151 10,385,249
============ =========== ===========
</TABLE>
28
<PAGE>
SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
creativepro. Pro Forma
ImageX.com, com, Inc. Adjustments
Inc. (5.7 Months) (Note 2) Pro Forma
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue 12,702 7,888 20,590
Cost of sales 8,950 1,340 10,290
--------------------------------------------------------------
Gross Profit 3,752 6,548 10,300
Operating expenses
General and administrative 10,903 1,315 269 12,487
Sales and marketing 9,303 5,080 14,383
Product development 3,548 1,735 5,283
Amortization of unearned compensation, 1,419 2,044 3,463
goodwill, and other intangibles
In-process research and development 1,062 (1,062)
--------------------------------------------------------------
Total operating expenses 26,235 8,130 1,251 35,616
Profit (loss) from Operations (22,483) (1,582) (1,251) (25,316)
Interest income (expense) 2,175 (877) 1,298
Provision for income tax (2) (2)
--------------------------------------------------------------
Net loss (20,308) (2,461) (1,251) (24,020)
--------------------------------------------------------------
Basic and diluted net loss per share (0.97) (0.99)
================= ===============
Weighted-average shares outstanding 20,888,692 3,346,624 24,235,316
================= =============== ===============
</TABLE>
Note 1 - Prior Acquisitions
The pro forma results of operations for 3.5 months of Fine Arts and 8.5
months of Image Press before their acquisitions by ImageX.com in 1999 are
combined in the prior acquisition column to reflect the impact of Fine Arts and
Image Press acquisitions, as reported on the Current Report on Form 8-K/A filed
on November 15, 1999.
29
<PAGE>
Note 2 - Pro Forma Adjustments
The unaudited statements of operations give effect to the following pro
forma adjustments necessary to reflect the acquisitions of Fine Arts, Image
Press, and creativepro.com as if they had occurred at the beginning of each of
the periods presented:
(a) The amortization of goodwill is over a period of 10 years, and the
amortization of other intangible assets range from 3 to 8 years. The
pro forma adjustments of amortization of goodwill and intangible
assets by acquisition for the six months ended June 30, 2000 and the
year ended December 31, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
Fine Arts $ 49
Image Press 231
creativepro.com $ 2,044 4,301
------------ -------------
2,044 4,581
============ =============
</TABLE>
(b) The pro forma adjustment to general and administrative expenses in
2000 and 1999 resulting from depreciation of internally developed
software from creativepro.com acquisition is $269,000 and $617,000
respectively. The additional depreciation expense adjustments to cost
of sales and general and administrative expenses in 1999 are for the
increase in the value of acquired property and equipment of Fine Arts
Engravers Company.
(c) The unaudited pro forma statements of operations exclude the effect of
the nonrecurring charge of $1,062,000 for purchased in-process
research and development recorded by ImageX.com in second quarter of
2000 resulting from creativepro.com acquisition.
Note 2 - Pro Forma Net Loss Per Share
Basic pro forma net loss per share is computed using the weighted average
number of ImageX.com common shares outstanding during the period plus shares of
ImageX.com Common Stock issued in connection with acquisitions of Fine Arts,
Image Press, and creativepro.com, excluding ImageX.com Common Stock subject to
repurchase. Diluted pro forma earnings per share is computed using the weighted
average number of common and common equivalent shares outstanding during the
period plus shares of ImageX.com Common Stock and common equivalent shares
assumed in connection with aforementioned acquisitions. ImageX.com Common Stock,
options and warrants issued in connection with the acquisitions are assumed
outstanding at the beginning of each of the periods. The combined Company had a
pro forma net loss for all periods presented herein; therefore, none of the
options and warrants outstanding during the periods presented were included in
the computation of pro forma dilutive earnings per share as they were
antidilutive.
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
10.1 Amended and Restated Agreement and Plan of Merger
among ImageX.com, Inc., Columbia Acquisition Corp.,
and creativepro.com, Inc., and Shareholder
Representative dated May 20, 2000. *
23.1 Consent of KPMG LLP, Independent Accountants.
99.1 Text of Press release dated June 22, 2000, regarding
the completion of the acquisition of
creativepro.com, Inc. *
</TABLE>
*Previously filed with the Original 8-K.
30
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
IMAGEX.COM, INC.
Dated: August 30, 2000 By: /s/ Robin L. Krueger
------------------------
Robin L. Krueger
Chief Financial Officer
31
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
10.1 Amended and Restated Agreement and Plan of Merger
among ImageX.com, Inc., Columbia Acquisition Corp.,
and creativepro.com, Inc., and Shareholder
Representative dated May 20, 2000. *
23.1 Consent of KPMG LLP, Independent Accountants.
99.1 Text of Press release dated June 22, 2000, regarding
the completion of the acquisition of
creativepro.com, Inc. *
</TABLE>
*Previously filed with the Original 8-K.
32
