UNITED STATES
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 MAY 31, 2000
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER 0-26774
IMPRESO.COM, INC.
(exact name of registrant as specified in its charter)
DELAWARE 75-1517936
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
652 SOUTHWESTERN BOULEVARD
COPPELL, TEXAS 75019
(Address of principal executive offices)
(972) 462-0100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has 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 [X] No [ ]
Indicate the number of shares outstanding of each of the issuers' classes of
Common Stock as of the latest practical date.
CLASS OF COMMON STOCK SHARES OUTSTANDING AT JULY 14, 2000
--------------------- -----------------------------------
$0.01 Par Value 5,292,780
<PAGE>
IMPRESO.COM, INC. AND SUBSIDIARIES
FORM 10-Q
MAY 31, 2000
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
Item 1. Consolidated Financial Statements:
Interim Consolidated Balance Sheets at May 31,
2000 (Unaudited) and August 31, 1999 1
Interim Consolidated Statements of Operations for the
Three Months and Nine Months Ended May 31, 2000,
and 1999 (Unaudited) 3
Interim Consolidated Statements of Cash Flows for the
Nine Months Ended May 31, 2000, and 1999
(Unaudited) 4
Notes to Interim Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market
Risk 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<PAGE>
<TABLE>
<CAPTION>
IMPRESO.COM, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
ASSETS
May 31, August 31,
2000 1999
------------ ------------
(Unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 180,601 $ 22,629
Trade accounts receivable, net of allowance for doubtful
accounts of $235,000 at May 31, 2000 and $130,397 at
August 31, 1999 5,819,646 6,295,988
Income tax receivable -- 478,909
Investments in marketable securities 11,088 11,088
Inventories 23,635,490 18,801,015
Prepaid expenses and other 256,062 200,739
Deferred income tax assets 107,099 44,335
------------ ------------
Total current assets 30,009,986 25,854,703
------------ ------------
Property, plant and equipment, at cost 17,596,222 16,845,961
Less-Accumulated depreciation (9,881,605) (9,635,739)
------------ ------------
Net property, plant and equipment 7,714,617 7,210,222
------------ ------------
Other assets 18,254 19,453
------------ ------------
Total assets $ 37,742,857 $ 33,084,378
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
1
<PAGE>
<TABLE>
<CAPTION>
IMPRESO.COM, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS- (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
May 31, August 31,
2000 1999
----------- -----------
(Unaudited)
Current Liabilities:
<S> <C> <C>
Accounts payable $ 8,255,507 $ 9,053,907
Accrued liabilities 1,522,552 1,678,862
Current maturities of long-term debt 112,890 28,179
Line of credit 10,924,208 6,357,787
Prepetition liabilities:
Current maturities of long-term debt 6,914 35,233
----------- -----------
Total current liabilities 20,822,071 17,153,968
----------- -----------
Deferred income tax liability 756,911 727,865
Long-term portion of prepetition debt, net of current maturities 254,757 884,785
Long-term debt, net of current maturities 2,592,817 1,744,487
----------- -----------
Total liabilities 24,426,556 20,511,105
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $.01 par value; 5,000,000 shares authorized; 0 shares
issued and outstanding at May 31, 2000 and
August 31, 1999 -- --
Common Stock, $.01 par value; 15,000,000 shares authorized;
5,292,780 shares issued and outstanding at May 31, 2000
and August 31, 1999 52,928 52,928
Warrants 110 110
Additional paid-in-capital 6,319,572 6,319,572
Retained earnings 6,943,691 6,200,663
----------- -----------
Total stockholders' equity 13,316,301 12,573,273
----------- -----------
Total liabilities and stockholders' equity $37,742,857 $33,084,378
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
2
<PAGE>
<TABLE>
<CAPTION>
IMPRESO.COM, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
May 31, May 31,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 17,577,738 $ 14,942,998 $ 50,407,787 $ 42,965,624
Cost of sales 14,704,275 13,007,788 43,456,560 37,360,381
------------ ------------ ------------ ------------
Gross profit 2,873,463 1,935,210 6,951,227 5,605,243
------------ ------------ ------------ ------------
Other costs and expenses:
Selling, general and administrative 1,878,833 1,512,251 5,043,719 4,223,858
Interest expense 339,392 239,710 896,676 594,302
Other expense (income), net (27,481) 4,243 (102,185) (12,808)
------------ ------------ ------------ ------------
Total other costs and expenses 2,190,744 1,756,204 5,838,210 4,805,352
------------ ------------ ------------ ------------
Income before income tax expense 682,719 179,006 1,113,017 799,891
------------ ------------ ------------ ------------
Income tax expense (benefit):
Current 219,806 65,445 403,708 286,099
Deferred (16,041) (3,575) (33,719) 520
------------ ------------ ------------ ------------
Total income tax expense 203,765 61,870 369,989 286,619
------------ ------------ ------------ ------------
Net income $ 478,954 $ 117,136 $ 743,028 $ 513,272
============ ============ ============ ============
Net income per common share
(basic and diluted) $ 0.09 $ 0.02 $ 0.14 $ 0.10
============ ============ ============ ============
Weighted average shares outstanding 5,292,780 5,292,780 5,292,780 5,292,780
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
IMPRESO.COM, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
--------------------------
May 31, May 31,
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 743,028 $ 513,272
Adjustments to reconcile net income to net cash flow
provided by operating activities-
Depreciation and amortization 502,260 398,542
Increase (decrease) in deferred income taxes (33,718) 520
Decrease in accounts receivable, net 476,342 371,490
Increase in inventory (4,834,475) (5,062,608)
Increase in prepaid expenses and other (55,323) (14,058)
(Decrease) increase in accounts payable (798,400) 513,405
(Decrease) increase in accrued liabilities (156,310) 170,404
Decrease in income tax receivable 478,909 --
(Increase) decrease in other assets 1,199 (145,139)
----------- -----------
Net cash used in operating activities (3,676,488) (3,254,172)
----------- -----------
Cash Flows From Investing Activities:
Additions to property, plant, and equipment (1,035,143) (429,803)
Sales of property, plant and equipment, net 28,488 3,901
----------- -----------
Net cash used in investing activities (1,006,655) (425,902)
----------- -----------
Cash Flows From Financing Activities:
Net borrowing on line of credit 4,566,421 3,748,665
Payments on prepetition debt (653,146) (66,105)
Net borrowing (payments) on postpetition debt 927,840 (25,367)
----------- -----------
Net cash provided by financing activities 4,841,115 3,657,193
----------- -----------
Net increase (decrease) in cash and cash equivalents 157,972 (22,881)
Cash and cash equivalents, beginning of period 22,629 117,840
----------- -----------
Cash and cash equivalents, end of period $ 180,601 $ 94,959
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
IMPRESO.COM, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND NATURE OF BUSINESS
Impreso.com, Inc., a Delaware corporation, is the parent holding company of
TST/Impreso, Inc., a manufacturer and distributor to dealers and other resellers
of paper and film products for commercial and home use in domestic and
international markets, and Hotsheet.com, Inc., the owner and operator of the
Hotsheet.com web portal (referred to collectively as the "Company").
TST/Impreso, Inc.'s product line consists of standard continuous computer stock
business forms; thermal facsimile paper; cut sheet products such as copy paper,
ink jet paper, digital photo paper and transparencies; fine business stationary;
point of sale and cash register machine rolls; high speed laser roll paper; wide
format engineering rolls; wide format ink jet media; and processed laser cut
sheets. Currently, TST/Impreso, Inc., has two wholly owned subsidiaries:
TST/Impreso of California, Inc., and Texas Stock Tab of West Virginia, Inc. Both
of these subsidiaries support the activities of the paper converting segment of
the Company's business.
2. INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the unaudited Interim Consolidated Financial
Statements of the Company include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the Company's
financial position as of May 31, 2000, and its results of operations for the
three and nine months ended May 31, 2000, and 1999. Results of the Company's
operations for the interim period ended May 31, 2000, may not be indicative of
results for the full fiscal year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations promulgated by the Securities and Exchange Commission (the
"SEC").
The unaudited Interim Consolidated Financial Statements should be read in
conjunction with the audited Consolidated Financial Statements and accompanying
notes of the Company and its subsidiaries, included in the Company's Form 10-K,
as amended by Form 10-K/A (the "Company's Form 10-K"), for the fiscal year ended
August 31, 1999 ("Fiscal 1999"). Accounting policies used in the preparation of
the unaudited Interim Consolidated Financial Statements are consistent in all
material respects with the accounting policies described in the Notes to
Consolidated Financial Statements in the Company's Form 10-K.
3. INVENTORIES OF TST/IMPRESO, INC.
Inventories are stated at the lower of cost (principally on a first-in,
first-out basis) or market and include material, labor, and factory overhead.
5
<PAGE>
Inventories consisted of the following:
May 31, August 31,
2000 1999
----------- -----------
Finished goods $ 8,502,483 $ 5,126,046
Raw materials 14,412,257 12,826,083
Supplies 663,522 783,964
Work-in-process 57,228 64,922
----------- -----------
Total inventories $23,635,490 $18,801,015
=========== ===========
4. LONG -TERM DEBT AND LINE OF CREDIT OF TST/IMPRESO, INC.
The following is a summary of long-term debt and line of credit:
<TABLE>
<CAPTION>
May 31, August 31,
2000 1999
----------- ----------
<S> <C> <C>
Note payable to a commercial financial corporation
under a revolving credit line maturing May 2001,
secured by inventories, trade accounts receivable,
equipment, goodwill associated with TST/Impreso,
Inc.'s trademark IMPRESO (no value on financial
statements), and a personal guarantee
by the trustee of a trust which is a principal
shareholder of the Company, interest payable
monthly at prime plus .25% (9.25% at May 31,
2000). $10,924,208 $6,357,787
Note payable to commercial financial corporation,
secured, payable in monthly installments, interest
at 1.3%, maturing June 2001. 6,140 9,862
Note payable to a commercial financial
corporation, payable in monthly installments,
interest at 7.25%, maturing December 2002. 36,581 48,980
Note payable to a bank, secured by property,
payable in monthly installments of $14,391
(including interest at 4.5% above the 11th
District Cost of Funds rate, 9.5% at May 31, 2000)
maturing August 2008. 1,688,397 1,698,720
Note payable to a commercial financial
corporation, secured, payable in monthly
installments, interest rate of 6.7%, maturing July
2003. 12,804 15,103
Note payable to a commercial financial
corporation, payable in monthly installments,
interest rate at 10.27%, maturing September 2004. 223,903 --
Note payable to a commercial financial
corporation, payable in monthly installments,
interest rate of 11.17%, maturing November 2004. 98,409 --
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Note payable to a bank, secured by property,
payable in monthly installments, interest rate at
8.5% through 2004, interest at prime plus 0.25%
thereafter, maturing December 2009. 625,096 --
Note payable to a commercial financial
corporation, payable in monthly installments,
interest rate at 6.9%, maturing August 2004. 14,377 --
Prepetition-
Note payable to a bank, secured by property,
payable in monthly installments of $4,815
(including interest at 6%) through May 2003, at
which time the remaining balance becomes due and
payable. -- 546,120
Other notes payable, secured by one or more of the
following: a personal guarantee by the trustee of
a trust which is a principal shareholder of the
Company, and certain property, plant, and
equipment, maturity dates to 2023, interest rates
ranging from 4% to 8%. 261,671 373,899
----------- ----------
Total 13,891,586 9,050,471
Less-Current maturities (11,044,012) (6,421,199)
----------- ----------
Long term debt $ 2,847,574 $2,629,272
=========== ==========
</TABLE>
In March 2000, TST/Impreso, Inc. amended its revolving line of credit to
increase the line from $13 million to $14.9 million. The amended loan's
available borrowings, which is a percentage of eligible inventories, is limited
by a staggered declining cap based upon certain dates.
As of May 31, 2000, the revolving credit line is limited to the lesser of $14.9
million or a percentage of eligible trade accounts receivable and inventories,
as defined. The remaining availability under the revolving credit line was $2.3
million. The line of credit, as amended, has restrictive covenants requiring the
maintenance of a minimum tangible net worth and working capital requirements, as
defined. As of May 31, 2000, TST/Impreso, Inc. was in compliance with all
covenants.
5. SUPPLEMENTAL CASH FLOW INFORMATION
Nine Months Ended
May 31,
-----------------------
2000 1999
-------- --------
Cash paid during the period for:
Interest $896,676 $594,302
Income taxes $342,590 $302,100
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE INTERIM PERIODS ENDED MAY 31, 2000 AND MAY 31,
1999
Net Sales---Net sales for the three months ended May 31, 2000, ("Third Quarter")
increased $2.6 million, or 17.6%, to $17.6 million as compared to $14.9 million
for the corresponding period of the prior year. Net sales for the nine months
ended May 31, 2000, increased $7.4 million, or 17.3%, to $50.4 million as
compared to $43.0 million for the corresponding period of the prior YEAR. Net
sales increased in the Third Quarter and for the nine months ended May 31, 2000,
due to TST/Impreso, Inc.'s introduction and sales of new product lines into
existing and new channels of distribution, and its expanding customer base.
Gross Profit---Gross profit for the three months ended May 31, 2000, increased
approximately $938,000 or 48.5%, to $2.9 million, as compared to $1.9 million
for the corresponding period of the prior year. Gross profit for the nine months
ended May 31, 2000, increased $1.3 million, or 24% to $7.0 million, as compared
to $5.6 million for the corresponding period of the prior year. Gross profit
margin for the Third Quarter and for nine months ended May 31, 2000 increased to
approximately 16.3% from 13.0% and 13.8% from 13.0%, respectively, for the
corresponding periods of the prior year. The Company's increased gross profit
and gross profit margin for the three and nine month periods ended May 31, 2000,
was due to TST/Impreso, Inc.'s introduction of new higher margin specialty
imaging products and increased sales of higher margin branded products.
Selling, General, and Administrative Expenses---SG&A expenses for the Third
Quarter, were $1.9 million, or 10.7% of net sales as compared to $1.5 million,
or 10.1% of net sales, for the corresponding period of the prior year. SG&A
expenses for the nine months ended May 31, 2000, were $5.0 million, or 10% of
net sales, as compared to $4.2 million, or 9.8% of net sales for the
corresponding period of the prior year. The increases in SG&A as a percentage of
net sales for the three and nine month periods ended May 31, 2000, resulted
primarily from the addition of new employees and increased expenses associated
with TST/Impreso, Inc. increasing its presence in existing sales territories.
Interest Expense---Interest expense for the three months ended May 31, 2000, was
approximately $339,000 as compared to approximately $240,000, an increase of
41.6% from the corresponding period of the prior year. Interest expense for the
nine months ended May 31, 2000, was approximately $897,000 as compared to
approximately $594,000, an increase of 50.9% from the corresponding period of
the prior year. The increases in interest expense for the three and nine month
periods ended May 31, 2000, were primarily attributable to increased borrowings
under TST/Impreso, Inc.'s revolving line of credit. The increased borrowings
reflected TST/Impreso, Inc.'s increased inventory, which increased 25.7% as of
May 31, 2000, as compared to August 31, 1999. Financed acquisitions of equipment
for TST/Impreso, Inc. also contributed to the increase in interest expense.
Income Taxes---The Company's income tax expense for the Third Quarter was
approximately $204,000,
8
<PAGE>
as compared to $62,000 for the three months ended May 31, 1999. The Company's
income tax expense for the nine months ended May 31, 2000 was approximately
$370,000, as compared to $287,000 for the corresponding period of the prior
year. The increase in income tax expense was the result of an increase in
taxable income.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased to $9.2 million at May 31, 2000, from $8.7 million at
August 31, 1999. This represented an increase of 5.6%, primarily attributable to
a 25.7% increase in TST/Impreso, Inc.'s inventory, and a 71.8% increase in
borrowing under TST/Impreso, Inc.'s line of credit.
In May 1999, TST/Impreso, Inc. entered into an agreement with a bank for a
two-year renewal of its revolving line of credit. The loan is secured by, among
other things, inventory, trade receivables, equipment and a personal guarantee
of Marshall Sorokwasz, Chairman of the Board and President of TST/Impreso, Inc.
and Impreso.com, Inc., and trustee of a trust which is a principal shareholder
of the Company. Available borrowings under this line of credit, which accrues
interest at the prime rate of interest plus .25% (9.25% at May 31, 2000), are
based upon specified percentages of eligible accounts receivable and
inventories. In March 2000, TST/Impreso, Inc. amended its revolving line of
credit to increase the line from $13 million to $14.9 million. The amended
loan's available borrowings, which is a percentage of eligible inventories, is
limited by a staggered declining cap based upon certain dates. As of May 31,
2000, there was a $2.3 million borrowing capacity remaining under the $14.9
million line of credit.
In June 2000, TST/Impreso, Inc. completed construction on the expansion of its
facility in West Virginia. In July 2000, the Company anticipates that the West
Virginia Economic Development Authority will close its loan with TST/Impreso,
Inc. to fund its portion of the permanent financing of the facility which will
be co-financed with One Valley Bank - East, National Association.
The Company believes that the funds available under the loan and loan commitment
for the addition to TST/Impreso, Inc.'s West Virginia facility, the revolving
credit facility, cash and cash equivalents, trade credit, and internally
generated funds will be sufficient to satisfy the Company's requirements for
working capital and capital expenditures for at least the next twelve months.
Such belief is based on certain assumptions, including the continuation of
current operations and no extraordinary adverse events. There can be no
assurance that such assumptions are correct. In addition, expansion of
Impreso.com, Inc.'s operations due to growth of the TST/Impreso, Inc. business
or capital requirements for Hotsheet.com, Inc., may require the Company to
obtain additional capital for expansion purposes. It is anticipated if that
should occur, the funds required would be generated through securities offerings
or additional debt. There can be no assurance that any additional financing will
be available if needed, or, if available, will be on acceptable terms.
INVENTORY MANAGEMENT; RAW MATERIALS
The Company believes that it is necessary for TST/Impreso, Inc. to maintain a
large inventory of
9
<PAGE>
finished goods and raw materials to adequately service its customers. Because
TST/Impreso, Inc. has in the past and is currently expanding the manufacturing
and distribution of new brands and types of products, its raw material and
finished goods inventory requirements have increased over prior years.
Therefore, TST/Impreso, Inc. has substantially increased its inventory levels.
In addition, increasing international sourcing of raw materials has impacted
delivery cycles resulting in TST/Impreso, Inc.'s expanding inventory to
accommodate less frequent, larger shipments. TST/Impreso, Inc. bears the risk of
increases in the prices charged by the its suppliers and decreases in the prices
of raw materials held in its inventory. If prices for products held in its
finished goods inventory decline or if prices for raw materials required by it
increase, or if new technology is developed that renders obsolete products
distributed and held in inventory by TST/Impreso, Inc., the Company's business
could be materially adversely affected.
MARKET CONDITIONS
Continuing consolidation within the paper industry is creating significant
opportunities for TST/Impreso, Inc. to expand its customer base and increase its
market share. The recent completion of the liquidation of a major Midwestern
competitor of TST/Impreso, Inc. has resulted in a substantial number of new
customers which were captured without compromise to the Company's profit margins
or substantial increases in SG&A expenses.
The price of raw materials that TST/Impreso, Inc. utilizes had been steadily
increasing since the second quarter of fiscal 1999. During the Third Quarter,
prices for raw materials decreased and then stabilized in June 2000. Management
believes that raw material paper costs will again begin to increase throughout
the remainder of the Company's 2000 fiscal year and into fiscal 2001. Market
indications are that the supply of the material which comprises the raw material
utilized by TST/Impreso, Inc., pulp wood product, will start to tighten at the
beginning of the Company's fiscal year 2001. Currently, raw material inventory
costs are equal to or less than average raw material market costs. Management
believes that its increase of TST/Impreso, Inc.'s inventory has advantageously
positioned itself to capitalize on this anticipated future market trend.
If selling prices for products manufactured by TST/Impreso, Inc. cannot increase
in relationship to raw material cost increases, or if prices for products
manufactured by TST/Impreso, Inc. declines as a result of market pressures, the
Company's results of operations could be materially adversely affected.
SEASONALITY
TST/Impreso, Inc. may be subject to certain seasonal fluctuations in that orders
for products may decline over the summer months. However, the Company does not
believe that such fluctuations have a material adverse effect on the Company's
results of operations.
10
<PAGE>
YEAR 2000
On January 1, 2000, the Company's computer system transitioned into the year
2000 without any material business interruptions.
SUBSEQUENT EVENTS
On June 14, 2000, TST/Impreso, Inc. dissolved its wholly owned Texas subsidiary,
Big Time Paper, Inc. Management is dissolving a majority of TST/Impreso, Inc.'s
wholly owned subsidiaries to streamline accounting procedures and reduce
applicable taxes. These activities will not have a material impact on the
financial condition or operations of the Company.
FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and the Results of
Operations and the sections of this Form 10-Q contain "forward-looking
statements" about the Company's prospects for the future, such as the Company's
ability to generate sufficient working capital, the Company's ability to
continue to maintain sales to justify capital expenses, and the Company's
ability to generate additional sales to meet business expansion. Such statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those projected, including availability of raw
materials, availability of thermal facsimile, computer, laser and color ink jet
paper, to the cyclical nature of the industries in which the Company operates,
the potential of technological changes which would adversely affect the need for
the Companies products or services, price fluctuations which could adversely
impact the large inventory TST/Impreso, Inc. requires, loss of any significant
customer, and termination of contracts essential to the Companies businesses.
Parties are cautioned not to rely on any such forward-looking statements or
judgments in making investment decisions.
11
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not exposed to market risks such as foreign currency exchange
rates, but is exposed to risks such as variable interest rates. Market risk is
the potential loss arising from adverse changes in market prices and rates.
TST/Impreso, Inc. does not have supply contracts with any of TST/Impreso, Inc.'s
foreign vendors. All foreign vendors are paid in United States currency. In
addition, TST/Impreso, Inc.'s international sales of finished goods are
insignificant. Accordingly, there are not sufficient factors to create a
material foreign exchange rate risk; therefore, the Company does not use
exchange commitments to minimize the negative impact of foreign currency
fluctuations.
The Company had both fixed-rate and variable-rate debts as of May 31, 2000. The
fair market value of long-term variable interest rate debt is subject to
interest rate risk. Generally the fair market value of variable interest rate
debt will decrease as interest rates fall and increase as interest rates rise.
The estimated fair value of the Company's total long-term fixed rate and
floating rate debt approximates fair value.
As of May 31, 2000, the Company did not own derivative or other financial
instruments for trading or speculative purposes.
Based upon the Company's market risk sensitive debt outstanding at May 31, 2000,
there was no material exposure to the Company's financial position or results of
operations.
12
<PAGE>
PART II: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBITS
27 Financial data schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended May
31, 2000.
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 there unto duly authorized.
Dated: July 17, 2000
Impreso.com, Inc.
(Registrant)
/s/ MARSHALL SOROKWASZ
-----------------------------
Marshall Sorokwasz
Chairman of the Board, Chief
Executive Officer, President,
and Director
/s/ SUSAN ATKINS
-----------------------------
Susan Atkins
Chief Financial Officer
and Vice President
14
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBITS
27 Financial data schedule
