<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q/A
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
/ / 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 or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
10800 N.E. 8TH STREET, SUITE 200
BELLEVUE, WASHINGTON 98004
(Address of principal executive offices)
(425) 452-0011
(Registrant's telephone number)
Check whether the registrant (1) filed all reports required to be
filed by Section 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 No XXX
-------------- --------------
The number of shares of common stock, $.01 par value, outstanding on
November 5, 1999 was 16,685,799.
<PAGE>
IMAGEX.COM, INC.
CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Condensed Financial Statements.............................................. 2
Consolidated Balance Sheets as of September 30, 1999 and
December 31, 1998....................................................... 2
Consolidated Statements of Operations for the Three Months
Ended September 30, 1999 and September 30, 1998, and the
Nine Months Ended September 30, 1999 and September 30,
1998.................................................................... 3
Consolidated Statements of Shareholders' Equity for the Nine
Months Ended September 30, 1999......................................... 4
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1999 and September 30, 1998............................... 5
Notes To Condensed Financial Statements..................................... 6
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................................ 9
SIGNATURES............................................................................. 10
</TABLE>
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<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
IMAGEX.COM, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 883 $ 27,256
Accounts receivable (net of allowance for doubtful accounts of $15 and $140
at December 31, 1998 and September 30, 1999, respectively) 234 3,319
Inventories 723
Prepaid expenses and other current assets 960
------------ -------------
Total current assets 1,117 32,258
Property and equipment, net 1,132 5,173
Goodwill, net 2,266
Other assets, net 70 2,053
------------ -------------
Total assets $ 2,319 $ 41,750
============ =============
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Current portion of notes payable $ 453 $ -
Line of credit 96
Accounts payable 746 3,019
Accrued liabilities 240 1,194
------------ -------------
Total current liabilities 1,535 4,213
Notes payable, net of current portion 312
------------ -------------
Total liabilities 1,847 4,213
------------ -------------
Commitments
Series B mandatorily redeemable convertible preferred stock, $0.01 par value;
3,500,000 shares authorized; 3,500,000 issued and outstanding at December
31, 1998; no shares issued and outstanding at September 30, 1999; aggregate
liquidation preference of $3,500 3,459
Series C mandatorily redeemable convertible preferred stock, $0.01 par value;
4,040,000 shares authorized; 4,000,000 issued and outstanding at December
31, 1998; no shares issued and outstanding at September 30, 1999; aggregate
liquidation preference of $6,000 5,109
Series D mandatorily redeemable convertible preferred stock, $0.01 par value;
1,925,000 shares authorized; 1,385,493 issued and outstanding at December 31,
1998; no shares issued and outstanding at September 30, 1999; aggregate
liquidation preference of $2,771 2,635
Value ascribed to mandatorily redeemable convertible preferred stock warrants 147
------------ -------------
Total mandatorily redeemable convertible preferred stock 11,350 -
------------ -------------
Shareholders' equity (deficit)
Preferred stock, 30,000,000 shares authorized
Series A convertible preferred stock, $0.01 par value; 1,500,000 shares
authorized; 1,500,000 issued and outstanding at December 31, 1998; no
shares issued and outstanding at September 30, 1999; aggregate
liquidation preference of $1,500 15
Common stock, $0.01 par value; 70,000,000 shares authorized; 1,608,520 and
16,700,643 shares issued and outstanding December 31, 1998 and September 30,
1999, respectively 16 167
Additional paid-in capital 3,908 62,107
Unearned compensation (1,956) (1,094)
Notes receivable from shareholders (including $20 from a director) (228) (220)
Accumulated deficit (12,633) (23,423)
------------ -------------
Total shareholders' equity (deficit) (10,878) 37,537
------------ -------------
Total liabilities, mandatorily redeemable convertible preferred stock
and shareholders' equity (deficit) $ 2,319 $ 41,750
============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
IMAGEX.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- ---------------------------
1998 1999 1998 1999
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Revenue $ 314 $ 3,320 $ 614 $ 6,646
Cost of sales 313 2,474 657 4,986
---------- ----------- ---------- -----------
Gross profit (loss) 1 846 (43) 1,660
---------- ----------- ---------- -----------
Operating expenses
General and administrative 996 2,729 2,234 5,653
Sales and marketing 455 1,928 1,741 3,778
Product development 557 1,181 1,884 2,051
Amortization of unearned compensation,
goodwill, and other intangibles 84 295 134 1,032
---------- ----------- ---------- -----------
Total operating expenses 2,092 6,133 5,993 12,514
---------- ----------- ---------- -----------
Loss from operations (2,091) (5,287) (6,036) (10,854)
---------- ----------- ---------- -----------
Other income
Interest income (expense), net (37) 109 (39) 64
---------- ----------- ---------- -----------
Net loss $ (2,128) $ (5,178) $ (6,075) $ (10,790)
========== =========== ========== ===========
Net loss available
to common shareholders $ (2,194) $ (5,189) $ (6,222) $ (10,874)
========== =========== ========== ===========
Basic and diluted net loss per share
as previously reported $ (1.99) $ (0.61) $ (5.33) $ (2.76)
========== =========== ========== ===========
as revised $ (3.57) $ (0.66) $ (10.90) $ (3.43)
========== =========== ========== ===========
Weighted-average shares outstanding -- revised,
see Note 4 613,880 7,839,674 570,723 3,173,827
========== =========== ========== ===========
Pro forma net loss available
to common shareholders $ (5,178) $ (10,790)
=========== ===========
Pro forma basic and diluted net
loss per share
as previously reported $ (0.36) $ (0.97)
=========== ===========
as revised $ (0.38) $ (1.04)
=========== ===========
Pro forma weighted-average
shares outstanding -- revised, see Note 4 13,702,341 10,364,130
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
IMAGEX.COM, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
(in thousands except share data)
(UNAUDITED)
<TABLE>
<CAPTION>
PREFERRED
SERIES A COMMON STOCK
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- -------- ----------- --------
<S> <C> <C> <C> <C>
Balances, December 31, 1998 1,500,000 $ 15 1,608,520 $ 16
Redemption of common stock (42,000) (1)
Issuance of stock options to consultants
Issuance of common stock upon exercise of
stock options 154,350 1
Issuance of common stock to Fine Arts 93,750 1
Warrants issued in conjunction with
Series E bridge financing
Warrants issued in conjunction with
issuance of Series E financing
Net proceeds from initial public offering
(net of offering costs of $3,119) 3,450,000 35
Payoff of note receivable
Issuance of common stock to Image Press
shareholders 16,394 1
Transfer value ascribed to preferred
stock warrants
Conversion of preferred to common stock
upon initial public offering (1,500,000) (15) 11,351,132 113
Issuance of common stock upon exercise
of warrants 68,497 1
Unearned compensation -
Amortization of unearned compensation
Accretion of mandatorily redeemable
convertible preferred stock
Net loss
---------- -------- ----------- --------
Balances, September 30, 1999 - $ - 16,700,643 $ 167
========== ======== =========== ========
</TABLE>
<TABLE>
<CAPTION>
NOTES
ADDITIONAL RECEIVABLE
PAID-IN UNEARNED FROM ACCUMULATED
CAPITAL COMPENSATION SHAREHOLDERS DEFICIT TOTAL
------- -------- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1998 $ 3,908 $ (1,956) $(228) $(12,633) $(10,878)
Redemption of common stock (7) 8 -
Issuance of stock options to consultants 68 68
Issuance of common stock upon exercise of
stock options 60 (15) 46
Issuance of common stock to Fine Arts 374 375
Warrants issued in conjunction with
Series E bridge financing 115 115
Warrants issued in conjunction with
issuance of Series E financing 130 130
Net proceeds from initial public offering
(net of offering costs of $3,119) 20,996 21,031
Payoff of note receivable 15 15
Issuance of common stock to Image Press
shareholders 299 300
Transfer value ascribed to preferred
stock warrants 147 147
Conversion of preferred to common stock
upon initial public offering 35,799 35,897
Issuance of common stock upon exercise
of warrants 218 219
Unearned compensation 84 (84) -
Amortization of unearned compensation 946 946
Accretion of mandatorily redeemable
convertible preferred stock (84) (84)
Net loss (10,790) (10,790)
------- -------- ----- -------- --------
Balances, September 30, 1999 $62,107 $ (1,094) $(220) $(23,423) $ 37,537
======= ======== ===== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
IMAGEX.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1998 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (6,075) $(10,790)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 304 1,203
Amortization of unearned compensation 134 946
Interest expense for warrants issued in connection with bridge financing 30 115
Issuance of stock options to consultant 169 68
Provision for doubtful accounts 10 140
Change in operating assets and liabilities, net of effects of purchase of Fine
Arts and Image Press (71) (208)
-------- --------
Net cash used in operating activities (5,499) (8,526)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (703) (2,769)
Purchase of Fine Arts including acquisition costs of $185 (4,810)
Purchase of Image Press including acquisition costs of $14 (2,712)
-------- --------
Net cash used in investing activities (703) (10,291)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable 450 2,200
Principal payments on notes payable (379) (2,265)
Repayments on line of credit (796)
Proceeds from issuance of Series C Preferred stock (net of offering costs of 5,445
$89)
Proceeds from issuance of Series D Preferred stock (net of offering costs of
$29 and $7 for the nine months ended September 30, 1998 and 1999, respectively 600 795
Proceeds from issuance of Series E Preferred stock (net of offering costs
of $1,055) 23,945
Repurchase of common stock (2)
Proceeds from issuance of common stock 1 272
Proceeds from issuance of common stock related to public offering (net of
offering costs of $3,119) 21,031
Proceeds from repayment of notes receivable from shareholders 8
-------- --------
Net cash provided by financing activities 6,115 45,190
-------- --------
Net increase (decrease) in cash and cash equivalents (87) 26,373
Cash and cash equivalents at beginning of period
Beginning of period 186 883
-------- --------
End of period $ 99 $ 27,256
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
IMAGEX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
ImageX.com, Inc. ("the Company") provides e-commerce solutions that
automate the way businesses manage and acquire marketing communication
materials, ranging from office stationery to complex marketing materials. The
Company has sales offices and an integrated manufacturing partner network of
printers that are nationwide. The Company was incorporated in the state of
Washington in 1996.
The accompanying unaudited consolidated financial statements have been
prepared in conformity with generally accepted accounting principles and reflect
all adjustments consisting of normal recurring adjustments that, in the opinion
of management, are necessary for a fair presentation of the results for the
periods shown. Certain information and footnote 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. The results of
operations for such periods are not necessarily indicative of the results
expected for the full fiscal year or for any future period. The 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 of the Company
for the year ended December 31, 1998 and the notes thereto contained in the
Form S-1 on file with the Securities and Exchange Commission.
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.
2. INVENTORIES
Inventories consisted of the following at:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1999
(IN THOUSANDS)
(UNAUDITED)
<S> <C>
Paper stock and supplies $ 316
Work-in-process 83
Finished goods 324
-----
$ 723
=====
</TABLE>
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<PAGE>
3. OTHER ASSETS
Other assets consist primarily of customer lists and assembled and
trained workforce. The customer lists are amortized on a straight-line basis
over 8 years and the assembled and trained workforce are amortized on a
straight-line basis over 3 years.
4. NET LOSS PER SHARE
Pro forma net loss per share is computed using the weighted-average
number of common shares outstanding, including the pro forma effects of the
automatic conversion of the Company's mandatorily redeemable convertible
preferred stock into shares of the Company's common stock effective upon the
closing of the Company's initial public offering as if such conversion occurred
on the date the shares were originally issued.
Both historical and pro forma basic and diluted net loss per share
for all periods presented have been revised to exclude the effect of stock
subject to repurchase from the weighted average shares of common stock
outstanding. In addition, the pro forma net loss for common stock for each pro
forma period has been revised to show the effect of pro forma conversion of
securities as a decrease in the historical net loss for common stock. These
revisions had no effect on the previously reported net losses or cash flows of
the Company for any period.
The following table sets forth the computation of the numerators and
denominators in the basic and diluted net loss and pro forma net loss per share
calculations for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- --------------------------
1998 1999 1998 1999
-------- ---------- -------- ----------
(IN THOUSANDS (IN THOUSANDS
EXCEPT SHARE DATA) EXCEPT SHARE DATA)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Numerator
Net loss $ (2,128) $ (5,178) $ (6,075) $ (10,790)
Accretion of mandatorily redeemable
convertible preferred stock (66) (11) (147) (84)
-------- ---------- -------- ----------
Net loss available to common shareholders $ (2,194) (5,189) $ (6,222) (10,874)
======== ========
Effect of pro forma conversion of securities
Accretion of mandatorily redeemable
convertible preferred stock 11 84
---------- ----------
$ (5,178) $ (10,790)
========== ==========
Denominator
Weighted-average shares outstanding
as previously reported 1,102,039 8,548,263 1,167,095 3,935,641
========= =========
as revised 613,880 7,839,674 570,723 3,173,827
========= =========
Weighted-average effect of pro forma
securities
Preferred stock adjustment
Series A, B, C, D, E
as previously reported 5,863,521 7,227,939
---------- ----------
as revised 5,862,667 7,190,303
---------- ----------
Pro forma weighted-average shares
outstanding
as previously reported 14,411,784 11,163,580
========== ==========
as revised 13,702,341 10,364,130
========== ==========
</TABLE>
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<PAGE>
5. ACQUISITION
On April 13, 1999, the Company acquired the assets of Fine Arts
Engravers Company, Inc., a commercial printer focused exclusively on general
office printing, which includes items such as business cards, stationery, and
corporate letterhead. The aggregate purchase price of the acquisition was $5.0
million, which was accounted for using the purchase method of accounting.
On September 21, 1999, the Company acquired substantially all of the
outstanding stock of Image Press, Inc. ("Image Press"), a privately owned
California corporation. Image Press is a print broker. The acquisition was
accounted for using the purchase method. The aggregate purchase price of
$2,997,207 consisted of $2,697,207 in cash and $300,000 in common stock
(16,394 shares) issued to the sellers.
The following summarizes the unaudited pro forma results of operations,
on a combined basis, as if the Company's acquisition of Fine Arts Engravers
Company, Inc. and Image Press occurred as of the beginning of each of the
periods presented, after including the impact of certain adjustments such as
amortization of goodwill and other intangible assets:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1998 1999
-------- ---------
(IN THOUSANDS EXCEPT
PER SHARE DATA)
(UNAUDITED)
<S> <C> <C>
Pro forma revenues $ 13,265 $ 14,494
======== =========
Pro forma net loss $ (6,034) $ (10,976)
======== =========
Pro forma basic and diluted net loss per share $ (9.09) $ (3.45)
======== =========
</TABLE>
The unaudited pro forma results are not necessarily indicative of the
results of operations which would actually have been reported had the
acquisition occurred prior to the beginning of the periods presented. In
addition, they are not intended to be indicative of future results.
6. STOCK SPLIT
On June 16, 1999, the Board of Directors approved a one-for-two reverse
stock split of the Company's common stock. The reverse stock split became
effective on August 18, 1999. All references in the financial statements and all
related notes thereto referring to shares, share prices, per share amounts and
other share information have been retroactively adjusted for the reverse stock
split.
-8-
<PAGE>
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
See Exhibit Index.
(b) REPORTS ON FORM 8-K
We filed a current Report on Form 8-K on September 30, 1999 relating to
our acquisition of 100% of the outstanding capital stock of Image Press, Inc.
Financial statements of the business acquired and required pro forma financial
information relating to the acquisition was filed by amendment to the September
30, 1999 Form 8-K, which was filed on November 15, 1999.
-9-
<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: February 4, 2000 By /s/ Robin L. Krueger
-------------------------------
Robin L. Krueger
Chief Financial Officer
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<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of
ImageX.com (Incorporated by reference to exhibit number
3.2 to ImageX.com's registration statement on Form S-1
(file number 333-78271), filed May 12, 1999).
3.2 Bylaws of ImageX.com, as amended (Incorporated by
reference to exhibit number 3.3 to ImageX.com's
registration statement on Form S-1 (file number
333-78271), filed May 12, 1999).
10.1 Stock Purchase Agreement dated September 21, 1999 among
ImageX.com, Inc., Stanley F. and Marina Lynne Poitras,
individually and as Trustees of the Poitras Family Trust
Dated November 22, 1993, Glen R. and Anne S. Douglas, as
community property (incorporated by reference to exhibit
number 10.1 to ImageX.com's current report on Form 8-K,
filed September 30, 1999).
27.1 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 27,256
<SECURITIES> 0
<RECEIVABLES> 3,459
<ALLOWANCES> (140)
<INVENTORY> 723
<CURRENT-ASSETS> 32,258
<PP&E> 6,811
<DEPRECIATION> (1,638)
<TOTAL-ASSETS> 41,750
<CURRENT-LIABILITIES> 4,213
<BONDS> 0
0
0
<COMMON> 167
<OTHER-SE> 37,370
<TOTAL-LIABILITY-AND-EQUITY> 41,750
<SALES> 3,320
<TOTAL-REVENUES> 3,320
<CGS> 2,474
<TOTAL-COSTS> 6,133
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> (5,178)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,287)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,178)
<EPS-BASIC> (0.66)
<EPS-DILUTED> (0.66)
</TABLE>
