<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1998
Commission file number: 33-24464-NY
IMTEK OFFICE SOLUTIONS, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE Tax ID #11-2958856
- ---------------------------- --------------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
2111 Van Deman Street, Suite 100, Baltimore, MD 21224
-----------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (410) 633-5700
--------------
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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12,13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity as the latest practicable date: 7,538,361 shares as of May 8, 1998.
<PAGE>
INDEX
IMTEK OFFICE SOLUTIONS, INC.
PART I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets - March 31, 1998 and September 30, 1997
Consolidated Statements of Income - Three months and six months
ended March 31, 1998 and 1997
Consolidated Statements of Cash Flows - Six months ended March 31,
1998 and 1997
Consolidated Statements of Shareholders Equity for the six months
ended March 31, 1998
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition and Liquidity
PART II. Other Information
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8K
2
<PAGE>
IMTEK OFFICE SOLUTIONS, INC.
(FORMERLY SPECTRUM EQUITIES, INC.)
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
ASSETS
------
<TABLE>
<CAPTION>
March 31, 1998 September 30,1997
--------------- ------------------
(unaudited) (audited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 444,460 $ 29,118
Accounts Receivable (less allowance
for doubtful accounts of $4,000) 1,828,180 393,062
Inventory 722,425 485,661
Notes receivable - related parties 35,420 20,466
Notes receivable - other 5,075 5,075
Deposit on equipment -0- 40,000
Prepaid expenses 41,008 -0-
Prepaid commissions 344,017 -0-
---------- ----------
Total current assets 3,420,585 973,382
PROPERTY AND EQUIPMENT - at cost 1,657,748 35,740
Less: accumulated depreciation 49,269 1,783
---------- ----------
1,608,479 33,957
RESTRICTED CASH 2,600,020 -0-
INTANGIBLE ASSETS - net 260,288 2,142
DEPOSITS AND OTHER ASSETS 30,344 -0-
---------- ----------
$7,919,716 $1,007,339
========== ==========
</TABLE>
================================================================================
See notes to consolidated financial statements
3
<PAGE>
IMTEK OFFICE SOLUTIONS, INC.
(FORMERLY SPECTRUM EQUITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
LIABILITIES
-----------
<TABLE>
<CAPTION>
March 31, 1998 September 30, 1997
--------------- ------------------
(unaudited) (audited)
<S> <C> <C>
CURRENT LIABILITIES
Notes Payable $ 50,000 -0-
Current maturities of long-term debt 58,980 -0-
Accounts payable - trade 466,526 81,825
Accounts payable - related party 71,098 73,063
Accrued expenses 565,883 35,411
Advances 554,729 -0-
Income taxes payable 473,450 20,600
Notes payable - related party -0- 22,368
---------- ----------
Total current liabilities 2,240,666 233,267
CUSTOMER ESCROW ACCOUNTS 2,599,042 -0-
LONG -TERM DEBT 1,611,193 -0-
DEFERRED REVENUES 51,212 -0-
STOCKHOLDERS' EQUITY
Common Stock -par value
$.000001, 250,000,000 shares
authorized, 7,537,361 (5,000,000 at
September 30, 1997) shares -0-
issued and outstanding 7 5
Paid-in capital 792,415 792,415
Retained earnings (deficit) 625,181 (18,348)
----------
Total Shareholders' Equity 1,417,603 774,072
---------- ----------
$7,919,716 $1,007,339
========== ==========
</TABLE>
================================================================================
4
<PAGE>
IMTEK OFFICE SOLUTIONS, INC.
(FORMERLY SPECTRUM EQUITIES, INC.)
CONSOLIDATED STATEMENTS OF INCOME
_____________________________________________________________________________
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
------------- ----------------
March 31, March 31, March 31, March 31,
1998 1997 1998 1997
----------- ----------- ------------ -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES
Office Solutions $2,026,529 $ --- $ 3,640,166 $ ---
Merchant Banking 7,912,213 --- 12,889,107 ---
---------- -----------
9,938,742 --- 16,529,273 --
COST OF REVENUES
Office Solutions 993,003 --- 1,805,523 ---
Merchant Banking 6,844,162 --- 10,950,806 --
---------- -----------
7,837,165 --- 12,756,329
GROSS PROFIT 2,101,577 --- 3,772,944 ---
SELLING AND GENERAL
EXPENSE 1,488,182 --- 2,655,491 ---
INTEREST 21,073 --- 21,073 ---
---------- -----------
INCOME BEFORE
INCOME TAXES 592,321 --- 1,096,379 ---
INCOME TAXES 242,850 --- 452,850 ---
---------- -----------
NET INCOME $ 349,471 $ --- $ 643,529 $ ---
- ---------------
NET INCOME PER SHARE
Primary $.05 $.09
Fully Diluted $.05 $.09
Weighted Average
Shares Outstanding 7,538,361 6,903,746
</TABLE>
================================================================================
See notes to consolidated financial statements.
5
<PAGE>
IMTEK OFFICE SOLUTIONS, INC.
(FORMERLY SPECTRUM EQUITIES, INC.)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
For the Period From September 30 to March 31, 1998
================================================================================
<TABLE>
<CAPTION>
Common Stock Retained Total
-------------------- Paid-in Earnings Shareholders'
Shares Amount Capital (Deficit) Equity
---------- -------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Balance-
September 30, 1997 5,000,000 $5 $792,415 $(18,348) $ 774,072
Exchange of stock
for acquisitions 2,538,3612 2 ---- ---- 2
Net income for
the period ---- ---- ---- 643,529 643,529
---------- -------- ------------- --------- ----------
Balance-
March 31, 1998 7,538,361 $7 $792,415 $625,181 $1,417,603
========== ======== ============= ======== ==========
</TABLE>
================================================================================
See notes to consolidated financial statements.
6
<PAGE>
IMTEK OFFICE SOLUTIONS, INC.
(FORMERLY SPECTRUM EQUITIES, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six months ended
March 31
1998 1997
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 643,529 $ --
Adjustments to reconcile net earning to
net cash provided (used) by operating
activities:
Depreciation and amortization 47,486 --
Changes in assets and liabilities
Increase in accounts receivable (1,435,118) --
Increase in inventory (236,764) --
Increase in prepaid expenses (385,025) --
Increase in accounts payable 388,718 --
Increase in accrued expenses 530,472 --
Increase in income taxes payable 452,850 --
Increase in deferred revenue 51,212 --
----------- ------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 57,360 --
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property and equipment (1,622,008) --
Cash deposits and other assets 9,656 --
-----------
NET CASH USED BY
INVESTING ACTIVITIES (1,612,352) --
CASH FLOWS FROM FINANCING ACTIVITIES
Intangible asset (258,146) (3000)
Paid-in capital
Cash received for issuance in common stock 2 3000
Proceeds from borrowing and advances 2,661,938 --
Payments on borrowing (418,506) --
Notes receivable advances (14,954) --
----------- ------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,970,334 --
INCREASE IN CASH 415,342 --
CASH -Beginning 29,118 --
-----------
CASH -Ending $ 444,460 $ --
=========== =====
Cash paid for interest $ 21,073 $ --
</TABLE>
7
<PAGE>
IMTEK OFFICE SOLUTIONS, INC.
(FORMERLY SPECTRUM EQUITIES, INC.)
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
================================================================================
NOTE A - SUMMARY OF ACCOUNTING POLICIES
- ---------------------------------------
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statement follows:
Nature of business
The Company is a regional supplier of equipment products and services used
by offices to manage information and documents. The Company also provides a
variety of specialty finance and merchant banking services. The Company
conducts business in the Baltimore, Washington, DC, Richmond and Tidewater,
Virginia metropolitan areas and grants credit to customers in those
regions. The company changed its name from Spectrum Equities, Inc. to Imtek
Office Solutions, Inc. in April 1997.
Principles of consolidation and basis of presentation
The accompanying consolidated financial statements as of March 31, 1998,
reflects the accounts of Imtek Corp. and Imtek Services, Inc., both wholly
owned subsidiaries. All inter-company transactions have been eliminated in
consolidation.
The accompanying consolidated balance sheet as of March 31, 1998,
consolidated statements of earnings from the quarter and six months ended
March 31, 1998 and 1997, the consolidated statement of shareholders' equity
for the six months ended March 31, 1998, and the consolidated statement of
cash flows for the six months ended March 31, 1998 and 1997 are unaudited.
In the opinion of management, all adjustments, consisting of normal
recurring accruals, necessary for a fair presentation of the results of
operations for the interim periods presented have been reflected in the
accompanying consolidated financial statements. The result of operations
for interim periods presented herein are not necessarily indicative of the
results which may be expected for the entire fiscal year.
8
<PAGE>
IMTEK OFFICE SOLUTIONS, INC.
(FORMERLY SPECTRUM EQUITIES, INC.)
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
================================================================================
Earnings per Share
Primary earnings per share of approximately $0.05 for the quarter ended
March 31, 1998 ($0.04 for the quarter ended December 31, 1997) are based
upon the weighted average number of shares outstanding.
Fully diluted earnings per share do not differ from primary earnings per
share for the period ended March 31, 1998 because there were no convertible
debentures, stock options or warrants outstanding during the period.
NOTE B - RESTRICTED CASH AND CUSTOMER ESCROW ACCOUNTS
The company's merchant banking subsidiary attempts to prefund certain asset
purchases with funds received from third party purchasers. These funds are
collected in an escrow account and released to the company upon the
settlement of these transactions.
NOTE C - ADVANCES AND PREPAID COMMISSIONS
The company's merchant banking subsidiary has the right, under the terms of
its agreements with third party purchasers with which it transacts
business, to receive an advance of certain of these funds to assist in
paying commissions to certain of the company's agents. Commissions are
expensed upon the settlement of the transactions.
NOTE D - LONG-TERM DEBT
Long term debt consist of :
<TABLE>
<S> <C>
Note payable to bank $ 34,669
Notes payable to former owners of acquired
entities 21,260
Notes payable to affiliate 320,825
Capital leases payable - affiliate 1,222,659
Other 70,760
----------
1,670,173
Less: current maturities 58,980
----------
$1,611,193
==========
</TABLE>
9
<PAGE>
IMTEK OFFICE SOLUTIONS, INC.
(FORMERLY SPECTRUM EQUITIES, INC.)
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
================================================================================
The note payable bank is due in monthly installments of approximately $900
including interest at a rate of 7-1/2 % per annum and secured by certain
inventory and other assets.
The notes payable to former owners of acquired entities bear interest at 7% and
are payable throughout 1998. These notes are unsecured.
The notes payable to affiliate is with a lending institution owned by certain of
the Company's offices. These notes are secured by certain inventory and
accounts receivable bear interest at 15% per annum, payable quarterly with a
balloon repayment due November 2001.
Other notes payable were assumed by the Company in one of its acquisitions.
These notes are unsecured and are payable in monthly installments of
approximately $2,000 including interest at 11%. These notes mature January 2001.
Approximate aggregate maturities of long-term debt (excluding capital lease
obligations) for the four years ending September 30, are as following:
$ 36,655
$ 32,200
$ 35,000
$343,659
NOTE E - CAPITALIZED LEASES
The Company leases certain equipment, which has been accounted for as a
capitalized lease. The related assets and obligations have been recorded using a
discount rate of 9%. The leases, which are non-cancelable, expire at various
dates through 2004.
The following is a schedule of leased property under capital leases of March 31,
1998:
<TABLE>
<S> <C>
Equipment $ 1,240,659
Accumulated depreciation $ 29,539
-----------
$ 1,211,120
</TABLE>
The following is a schedule by years of future minimum lease payments under
capital leases together with the present value of the net minimum lease payments
as of March 31, 1998 for the years ending September 30:
<TABLE>
<S> <C>
$ 317,757
85,258
174,781
216,377
248,494
Thereafter 509,156
----------
Total minimum lease payments 1,598,823
Less amount representing interest 376,164
----------
Present value of net minimum
lease payments $1,222,659
==========
Current portion 22,326
Non current portion 1,200,333
----------
$1,222,659
==========
</TABLE>
10
<PAGE>
IMTEK OFFICE SOLUTIONS, INC.
(FORMERLY SPECTRUM EQUITIES, INC.)
NOTES TO CONSOLIDATES FINANCIAL STATEMENTS
================================================================================
NOTE F- RECONCILIATION OF SEGMENT INFORMATION TO CONSOLIDATED AMOUNTS
- ---------------------------------------------------------------------
Condensed information for reportable segments relating to the Company's
consolidated totals for the six months ended March 31, 1998 are as follows:
SEGMENTS
<TABLE>
<CAPTION>
Office Solutions Merchant Banking
Consolidated Totals
<S> <C> <C> <C>
Revenues $3,640,166 $12,889,107 $16,529,273
Cost of Revenue 1,805,523 10,950,806 12,756,329
Before tax (214,412) 1,310,791 1,096,379
Segment assets 2,842,249 5,077,467 7,919,716
</TABLE>
NOTE G - PREFERRED STOCK OFFERING
In November, 1997, the Company's Board of Directors approved the issuance of a
private placement memorandum for an offering of up to $7,500,000 of convertible
preferred stock. The Company intends to use the proceeds of their offering to
fund acquisitions. See Part II- Other Information
11
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition and Liquidity
Results of Operations
The Company, as has been previously reported, effectively commenced operations
during April 1997. Prior to then, the Company, and its predecessor, was a
development stage company with no operations. Thus, there is no meaningful
comparison to prior year financial results of operations and financial condition
and liquidity. Additionally, as previously reported, the Company has effectively
created two (2) business segments.
The first segment, representing the core business component, is the sale at
retail and wholesale, of office products, copier sales and service, the
rebuilding and rental of high volume copiers and duplicators, and commercial
printing and copying. The Company refers to this segment as "Office Solutions".
The second segment is referred to as "Merchant Banking". This segment consists
principally of specialty finance services, including copier and office equipment
leasing, accounts receivable financing, and factoring and more significantly,
viatical settlements.
During the first six months, the Company generated consolidated revenue of
$16,529,000 with a consolidated gross profit of 3,773,000, or 22.8% gross
margin. Selling, administrative and general expense for the first six months
amounted to $2,668,000, or 16.1% of gross revenue. Thus, for the first six
months, the Company produced income from operations in the amount of $1,104,000
or approximately 6.7% of gross revenue.
The second quarter, ended as of March 31, 1998, resulted in consolidated gross
revenue of $9,938,700, which was an increase of $3,348,200 or 50.8% over the
prior quarter. Moreover, the Company generated a gross profit of $2,101,600 or
21.1% of gross revenue. During the quarter, the Company's selling, general and
administrative expense amounted to $1,508,200 or 15.2% of gross revenue. Thus,
the Company's income from operations, before taxes, was $592,300, or 5.95% of
gross revenue.
During the quarter, on a consolidated basis, the Company provided an income tax
provision of $242,850 thus, the Company's effective tax rate was 41%, as
compared to 32% in the previous
12
<PAGE>
quarter. The increase is primarily related to the effective loss limitations
within the office solutions segment. Because of the tax impact of special
transactions and depending upon the Company's consolidated net income or loss
level, this rate may vary dramatically.
Office Solutions Segment
The Office Solutions segment produced 20.4% of the Company's consolidated gross
revenue during the second quarter, as compared to 24.5% in the previous quarter.
The segments' gross revenue for the quarter increased to $2,026,500 from
$1,613,600 for a 25.6% increase over the prior quarter. This increase was
derived from two factors.
During the quarter the Company acquired an additional business unit, which
contributed in excess of $200,000 of revenue. Additionally, the prepress
printing division experienced a sales volume increase of approximately $100,000
or approximately a 68% increase over the prior quarter. The litigation support
division, due principally to the completion of a non-recurring large contract,
experienced a net increase of approximately $23,400, or 4.6% over the prior
quarter. Finally, the office equipment sales and services division, net of the
acquisition, produced an approximately increase in gross revenue of 8.9% or
approximately $77,000.
The segment's gross profit for the quarter increased by $232,400 over the prior
quarter. In addition to the dollar increase, the segment improved its operating
margin to 51% from 49% in the previous quarter. The litigation support division,
with increased volume and improved operating efficiencies, was the significant
contributor to this increase, raising its gross margin to 74% from 67% in the
previous quarter.
Additionally, the prepress division contributed a quarter gross margin of 63% as
compared to 49% in the prior quarter. In the previous quarter additional
resources were applied to this division to expand operating capacities and
improve productivity. These activities have begun to yield results.
Selling, general and administrative expense for the quarter increased by an
insignificant $29,200 or 2.9% over the prior quarter. This increase over the
prior quarter includes the expenses of the acquired business unit in the amount
of $79,600. Thus, in effect, the segment effectively reduced its operating
expenses by $140,500 or 14%, as compared to the prior quarter. As acquired
business units are integrated into the Company's operating systems, with its
centralized management and support services, operating costs and procedures
become more effective, with the anticipated
13
<PAGE>
product being lower costs. Within the near future, without taking account of
additional acquisitions, management anticipates that operating cost will
stabilize.
As a result of increases in revenue, supported by improved profit margins
and with continued operating cost containment efforts, the segment significantly
improved its operating performance, reducing its loss from operations to a
$5,600, as compared to a loss from operations of $208,800 in the previous
quarter.
Merchant Banking Segment
The second quarter produced a $3,348,200 or 50.8% increase in gross revenue for
the segment, as compared to the prior quarter. This increase was a direct
response for the segments expanded marketing efforts. Management anticipates
that this growth rate cannot be sustained indefinitely, but the near term trend
should remain.
During the second quarter, gross profit increased by $430,200 or 25.7% over the
prior quarter. As previously discussed, the Merchant Banking segment derives its
revenues and associated cost from financing activities of copier and office
equipment, accounts receivable financing and factoring, and viatical
settlements. Viatical settlements are the primary revenue source within this
segment. It is anticipated that this portion of the business will continue to
expand in the foreseeable near-term future. The profit margin, within a relevant
range, on these viatical settlements generally varies by the expected term of
viatication. The company considers these varying profit margins, based upon the
viatication period, to be the product mix. During the second quarter, the
product mix was more heavily weighted toward the shorter-term viatications, and
thus its margin were lower then the previous quarter, which was more heavily
weighted to the longer-term viatications.
Selling, general and administrative expenses for the quarter increased by
$319,000 or 212% over the second quarter. As previously discussed, effective
January 1, 1998, management begin receiving remuneration of $125,000 per
quarter. Previously, management waived remuneration. Additionally, the segment
incurred professional fees expense of $24,600 as a result of year-end audit and
the other accounting and consulting fees. As discussed earlier, with the
increased marketing efforts to expand the viatical settlement division,
associated costs, such as postage, printing, and office supplies have
significantly increased. Finally, during the second quarter, headquarter
expenses, such as rent, facilitates expense, and other such common expenses
commenced. Management continues in its belief that these expenses do not exceed
the industry averages, and are in fact, targeted to be below the industry
average.
14
<PAGE>
Taking account of the revenue increases, change in product mix and effect of
associated operating costs, the segment produced an in income from operations of
$197,801 or 22.7% as compared to the previous quarter.
Financial Condition and Liquidity
The Company generally provides for the cash requirements from outside
borrowings and internally generated funds. The Company believes that its current
sources of cash, including its ability to increase its borrowing limits, will be
sufficient to finance its operations.
During the second quarter, trade accounts receivable increased by
approximately $975,00 or 114.2% over the prior quarter. Approximately one-half
of this increase is directly related to sales volume increases. The remaining
increase is principally due to transactions within the merchant banking segment,
which were completed on the last day of the quarter but not funded until the
beginning on the subsequent quarter. Correspondingly, the segment has included
an equal amount, net of earnings, within the accrued expense liability account
During the quarter, long term debt, inclusive of current maturities
increased by $1,229,200. This increase was used principally to fund property,
equipment and other capital assets.
During the second quarter inventory decreased by $29,900 or 40% as compared
to the prior quarter. This reduction is principally in response to increased
sales volume without corresponding increases in inventory levels.
Property and equipment increased by $1,281,400, net of accumulated
depreciation, during the second quarter. During the quarter, significant
software systems were acquired for both administrative and operational purposes.
Computer hardware, sufficient to support the software additions, was acquired,
as was high-speed copiers and duplicators which are to be used in outsourcing.
The company expects, albeit to a lesser extent, to continue to invest in the
infrastructure such that the cost efficiencies associated with centralized
management will be fully realized.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Imtek and one of its principals, Michael Lowe, has been named in a lawsuit
filed by Legal America of Virginia, Ltd., alleging that Imtek misappropriated
trade secrets when it hired one of Legal America's employees, George Simpson.
Mr. Simpson is also named as a defendant in the lawsuit. Imtek denies the
allegations and denies that it obtained or used any of Legal America's trade
secrets or confidential information. Imtek is in the process of preparing a
response to the complaint, which seeks damages for Legal America's alleged lost
business. Because of the early stage of the litigation, its outcome cannot be
predicted at this time. The lawsuit was filed in February 1998 in Circuit Court,
Richmond, Virginia.
15
<PAGE>
Item 2. Other Information
Private Placement Offering Memorandum
Effective January 10, 1998, the Company issued a private placement
memorandum offering 75,000 shares of Series A Convertible Preferred Stock on a
best efforts basis, 5,000 share minimum, 75,000 share maximum, at a price of
$100.00 (one-hundred dollars) per share. The shares carry an annual dividend
rate of 9.0%. The dividends will accrue daily and are payable annually beginning
October 1, 2001. The shares may be converted into shares of Company Common Stock
beginning 91 days following the issue date of the shares, on a sliding scale, as
more fully detailed within the memorandum. The shares will be non-voting. The
Company may, however, redeem the shares beginning 91 days after the issue date.
The redemption price is $100 (one-hundred dollars) per share plus accrued
interest and unpaid dividends. In the event the Company notifies a shareholder
of an intended redemption, the shareholder would have 30 days in which to
exercise their right to convert to Common Stock. The Company intends to use the
proceeds, if any, primarily for acquisitions, and to a lesser extent, for short-
term working capital needs.
Acquisition
During the quarter, the Company completed one acquisition within the office
solutions segment. This acquisition contributed nominal assets and liabilities
to the consolidated financial statements, but did add over $200,000 of gross
revenue for the quarter. The Company continues its expansion and growth plan and
anticipates future additional acquisition.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.0 Financial Data Schedule
(b) Reports on Form 8-K
On January 28, 1998 Registrant filed a Form 8-K reporting change of its
independent auditing firm.
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.
IMTEK OFFICE SOLUTIONS, INC.
By: /s/Edwin C. Hirsch
----------------------------
Edwin C. Hirsch, President
And Chief Executive Officer
Dated: May 20, 1998
By: /s/Brad Thompson
----------------------------
Brad Thompson, Chief
Financial Officer
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 444,460
<SECURITIES> 0
<RECEIVABLES> 1,802,180
<ALLOWANCES> 4,000
<INVENTORY> 722,425
<CURRENT-ASSETS> 3,390,585
<PP&E> 1,657,748
<DEPRECIATION> 49,269
<TOTAL-ASSETS> 7,889,716
<CURRENT-LIABILITIES> 2,240,666
<BONDS> 1,611,193
0
0
<COMMON> 7
<OTHER-SE> 1,417,596
<TOTAL-LIABILITY-AND-EQUITY> 7,889,716
<SALES> 9,938,742
<TOTAL-REVENUES> 9,938,742
<CGS> 993,003
<TOTAL-COSTS> 7,837,165
<OTHER-EXPENSES> 1,488,182
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 592,321
<INCOME-TAX> 0
<INCOME-CONTINUING> 349,471
<DISCONTINUED> 349,471
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 349,471
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
