<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended March 31, l997.
Commission File Number 0-26182
INTERNATIONAL IMAGING, INC.
(Name of small business issuer in its charter)
Delaware 13-3469649
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Eseco Road, Cushing, Oklahoma 74023
(Address of principal executive offices) (Zip Code)
(918) 225-1266
(Issuer's telephone number)
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $0.0012 per share
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ______
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
(Cover page continued on next page)
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Issuer's revenues for its most recent fiscal year: $ 3,136,818
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: As of June 30, 1997 (December 20, 1996 was the last trade date), $295,838.
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No X
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of June 30, 1997, 4,733,416
shares of common stock.
No documents are incorporated by reference except those Exhibits so incorporated
as set forth in the Exhibit index.
Transitional Small Business Disclosure Format (Check one)
Yes No X
2
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INTERNATIONAL IMAGING, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
PART I
<S> <C>
Item 1. Description of Business 4
Item 2. Description of Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 7
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Item 7. Financial Statements 9
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 23
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act 23
Item 10. Executive Compensation 23
Item 11. Security Ownership of Certain Beneficial Owners and
Management 24
Item 12. Certain Relationships and Related Transactions 24
Item 13. Exhibits and Reports on Form 8-K 24
SIGNATURES 25
</TABLE>
3
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Part I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL:
International Imaging, Inc. ("IMGI" or the "Company"), a Delaware
corporation formed in 1988, is a manufacturer and distributor of equipment for
the specialty photographic laboratory market. IMGI entered this market when it
merged with Electronic Systems Engineering Co. ("ESECO") on July 27, 1994. IMGI
imports and markets a full line of film and paper processors under its
Speedmaster(R) label; IMGI also manufactures photographic process
instrumentation, including densitometers, color analyzers, darkroom doors,
computer controlled image enlargers and roll paper production transport systems.
In addition, some of the Company's equipment is used for nondestructive testing
in other industries such as brewing and x-ray processing.
On April 8, 1997, International Imaging, Inc. filed a prenegotiated
Joint Plan of Reorganization (the "Reorganization Plan") in the United States
Bankruptcy Court for the Western District of Oklahoma (the Court") case no.
97-13285BH. The Reorganization Plan only addresses the reorganization of
International Imaging, Inc. and not the Company's wholly owned operating
subsidiary, ESECO.
The Reorganization Plan calls for a one for five reverse stock
split and the issuance to the Company's creditors of 500,000 shares of common
stock and warrants to purchase 3,000,000 shares of common stock of IMGI in
exchange for outstanding debt to related parties of $206,512 and accrued
interest of $7,249 recorded as accrued liabilities in the accompanying
consolidated balance sheet.
The Company's Plan was filed in cooperation with the named
creditors and has been approved by a majority of the shareholders. Management
believes the Court will approve the Reorganization Plan; however, a date for
final approval has not been set.
Through its subsidiary, ESECO, the Company has over 25 years experience
in the photographic industry through its specialization in the electronic photo
instrumentation and color analyzer markets. In 1987, ESECO introduced automated
continuous process imaging enlargers. ESECO entered into a Distribution
Agreement with Colenta Labortechnik, GmbH and ART Processor-Technik, GmbH
(collectively "Colenta") on April 7, 1994 to distribute that company's line of
photographic paper and film processors in the United States, Canada, and Mexico.
ESECO agreed with Colenta to distribute it's products to the remainder of the
Western Hemisphere. ESECO added the processor lines so that it could provide its
customers with a full line of photographic equipment for the laboratory.
MARKETING AND COMPETITION:
The Company distributes its product lines both through dealers and
direct sales. Prior to January 1, 1996 approximately 60% of its sales were made
to dealers or other manufacturers, while approximately 40% of its sales were
made directly to the end-user. On January 1, 1996, the Company changed its
distribution method as described below.
In the Western Hemisphere, IMGI has four primary product lines;
enlargers, photo instrumentation devices, processors, and darkroom doors. Prior
to January 1, 1996, the Company had contracts with 13 select dealers in the
United States and two in Canada that are authorized to handle the entire product
line. On that date, all but one of the dealers' distribution agreements with
ESECO were terminated or modified. The Company now uses commission
representatives and telephone sales as the primary marketing approach. The
telephone marketing is augmented by exhibiting at various trade shows oriented
to different aspects of the industry. The Company also has contracts with a
number of other dealers and catalog sales companies who may sell part of the
product line; however, they do not have the required technical training to sell
the more sophisticated equipment the Company produces.
IMGI is primarily represented in the Eastern Hemisphere by subsidiaries
of the Eastman Kodak Co. and the ART Colenta Group, although it sells products
in South America, Canada, Japan, Korea and China through established
representatives or by direct
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sales. The Company also supplies equipment to other manufacturers, including
some manufacturers that compete with IMGI, that is either sold under such
manufacturers' respective labels or is incorporated into their manufactured
equipment.
The overall world photographic market is mature with projected growth
of three to five per cent per year. The laboratory equipment portion of the
photographic industry has been very slow in recent years due to the anticipated
change to digital imaging. Management believes the need for capital equipment
will expand in time as the older equipment wears out with use. Management
believes IMGI operates in a niche of the photographic market by providing a more
efficient and faster way to produce photographic products. The Company's
management believes that this part of the market, while relatively small, will
experience greater growth than the overall photographic market.
There are several major suppliers of enlargers both in the United
States and in foreign countries. The Company believes that its automated
enlargers and its digital product, as discussed below, are more technologically
advanced and operate more automatically than most of its competitors' equipment.
Management believes the Company is the second largest manufacturer of
photo instrumentation devices in the United States with the broadest product
line, providing a family of very sensitive, reliable devices. The basic
application technology of the photo instrumentation is currently being modified
to be a color-sensing device in other applications.
There are currently two manufacturers of processor lines in the United
States. The Company believes that it can compete successfully with each of them
due to the superior technology and customer support provided for the imported
processors from Colenta in Germany.
There is one other manufacturer of revolving darkroom doors in the
United States. It primarily manufactures metal doors, whereas the Company
manufactures doors using plastic components, which currently places the Company
at a cost disadvantage. In addition, the Company has sold some darkroom doors in
export markets, but expensive shipping costs limit such sales. Some of the
Company's equipment is used for non-destructive testing in other areas such as
radiation monitoring and brewing, but these are not major segments of the
business at this time.
The Company advertises in professional and trade publications to create
name recognition and a quality image. The Company does not depend on any one or
even a few major customers for its sales. In addition, no individual customer
accounts for more than 10% of total sales although management expects various
subsidiaries of the Eastman Kodak Company will account for approximately 10% of
total sales.
CONSOLIDATED STRATEGY:
IMGI plans to build on its reputation for advanced engineering and
responsiveness to customer needs to expand the processor segment of its market
in the United States. By expanding the variety of products and related technical
services available to its customers, IMGI should be able to increase market
penetration. The Company also plans to add compatible product lines to further
utilize its sales force.
The Company introduced the Digimatic Universal(TM) digital imaging
system in February 1997. No deliveries to end users have been made yet, but the
Company has installed one unit in a dealers facility where it is being
demonstrated to various Federal Government agencies.
EMPLOYMENT:
As of March 31, 1997, the Company employed 38 individuals, all of whom
resided in the United States. In addition, the Company had contracts with some
independent sales representatives.
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WARRANTIES:
ESECO warrants its Speedmaster(TM) processors for one year on parts and
90 days on labor, while its Speedmaster(TM) and Speedmatic(TM) darkroom doors
and roll easels each carry a one year warranty on both parts and labor when
returned to the plant in Cushing. Compucolor(TM) and Compumatic(TM) enlargers
carry a thirty month warranty on both parts and labor when returned to the plant
in Cushing.
MANUFACTURING:
IMGI manufactures or distributes its product lines from its plant in
Cushing, Oklahoma. The Company also manufactures most of the electronic
assemblies used in its products. Metal stampings and fabrication are also
performed on site; however, die casting and plastic extrusions are subcontracted
to other manufacturers.
Processors are imported from Colenta in Germany and held for
distribution at the plant; all other products are assembled and held for
distribution or assembled to order at the plant. Dependence on outside sources
for castings and other components may cause delays during periods of strong
demand; nevertheless, the Company believes this method of production is the most
cost effective approach at this time.
RESEARCH AND DEVELOPMENT
The Company maintains an engineering staff of five professionals to
develop new products and applications for existing products. This department is
currently developing a digital imaging enlarger and smaller, portable photo
instrumentation devices as well as ultra-sensitive photo instrumentation and
dosimetry devices. The total amount of research and development expenses during
the fiscal year was 5.6% of total sales.
PATENTS AND COPYRIGHTS
The Company holds patents on various of its easels and masks and pays
royalties to the inventors of various other devices, including some of the
enlarger heads. The Company has also registered various of its trademarks, has
vigorously defended them in the past, and plans to continue to engage in such
defense in the future. The Company has a patent application pending on the
digital imaging device.
GOVERNMENT APPROVAL AND REGULATION
No business activities of the Company are subject to regulation by any
federal, state or local governmental agency. In addition, no governmental
approvals of new or existing products are required. Finally, the Company does
not use any unusual or hazardous chemicals in its operations.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company's headquarters is presently located at One Eseco Road,
Cushing, Oklahoma 74023, at the office of its President. The Company owns its
headquarters as well as its manufacturing facilities, which are also located in
Cushing, Oklahoma. The premises contain approximately 44,000 square feet, of
which approximately 75% is used for manufacturing with the balance being used
for administrative, marketing, and engineering functions. The Company does not
own or lease any other facilities at this time.
ITEM 3. LEGAL PROCEEDINGS
On April 8, 1997, after the Company's fiscal year end, the Company
filed a Joint Plan of Reorganization in the Bankruptcy Court for the Western
District of Oklahoma. This Reorganization Plan was mailed to all shareholders
and approved by a majority of the shareholders. There were no dissenting
shareholder votes. There were five creditors of the Company and they agreed to
the plan.
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The Plan calls for a one for five reverse stock split and the issuance
of stock and warrants to the creditors in exchange for debt of $206,512 and
accrued interest of $7,249. All of the creditors are associates of G. David
Gordon, the Company's former General Counsel.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on the NASDAQ Bulletin Board under
the symbol "IMGI". On March 31, 1997 there were approximately 189 shareholders
of record of the Common Stock of the Company, based on information provided by
the Company's transfer agent.
The following table sets forth the high and low bid prices for the
Company's Common Stock, as reported on NASDAQ, for the quarters presented. The
bid prices represent inter-dealer quotations, without adjustments for retail
mark-ups, mark-downs or commissions and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
Bid prices
----------
Fiscal 1995-1997 High Low
---------------- ---- ---
<S> <C> <C> <C>
First quarter 4/1/95-6/30/95 $ 1.5800-2.3750 $1.3750-2.1250
Second quarter 7/1/95-9/30/95 $ 0.7500-1.7500 $0.5625-0.6250
Third quarter 10/1/95-12/31/95 $ 0.6100-0.9375 $0.5000-0.5625
Fourth quarter 1/1/96- 3/31/96 $ 0.8125-0.8125 $0.6250-0.6250
First quarter 4/1/96-6/30/96 $0.40625-0.5100 $0.3125-0.3750
Second quarter 7/1/96-9/30/96 No trades
Third quarter 10/1/96-12/31/96 $ 0.0725-0.5000 $0.0625-0.5000
Fourth quarter 1/1/97- 3/31/97 No trades
</TABLE>
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
From time to time, the Company may publish forward-looking statements
relating to certain matters including anticipated financial performance,
business prospects, product development, and other similar matters. All
statements other than statements of historical fact contained in this Form
10-KSB or in any other report of the Company are forward-looking statements. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of that safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements. In
addition, the Company disclaims any intent or obligation to update those
forward-looking statements.
The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements at Item 7 herein.
RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997 AS COMPARED TO THE YEAR
ENDED MARCH 31, 1996
Sales for fiscal year ended March 31, 1997 amounted to $3,136,818, a
decrease of $420,809 or 11.8% compared to fiscal 1996. A decrease in processor
sales accounted for approximately $171,000 of this amount. Speedmaster(TM) and
Speedmatic(TM) product lines of densitometers, color analyzers, and enlarger
easels were down approximately $158,000 compared to the prior fiscal year.
Management feels sales of processors and analyzers are down due to a reluctance
on the part of customers to invest in non-digital laboratory equipment.
7
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Cost of goods sold decreased 18.5%. to $2,186,841 from the previous
year. The net decrease in sales and cost of goods sold resulted in a $76,706
increase in gross profit. The resulting gross profit margin was 30.3% of sales,
up from 24.5% in the previous fiscal year. This increase in gross profit
resulted from a decrease in employees, and the marketing emphasis on direct
sales, which have better margins, rather than sales to dealers.
Operating expenses decreased 2.2% to $1,504,757 for the 1997 fiscal
year. The decrease was largely accounted for by a 19.2% decrease in
Administrative expenses. Engineering and Research expenses increased 10.9% and
Sales expenses decreased 1.0%.
Interest expense increased 42.7% in the fiscal year 1997 because of the
need to borrow funds for capital expenditures. Other income (expense), net
improved significantly over the prior year.
TRENDS
On April 8, 1997, International Imaging Inc. filed a prenegotiated
Joint Plan of Reorganization (the "Reorganization Plan") in the United States
Bankruptcy Court for the Western District of Oklahoma (the Court"). The
Reorganization Plan only addresses the reorganization of International Imaging,
Inc. and not the Company's wholly owned operating subsidiary, ESECO.
The Reorganization Plan calls for a one for five reverse stock split
and the issuance of common stock and warrants to the creditors in exchange for
outstanding debt and accrued interest. Specifically, short-term advances -
related parties of $206,512 and accrued interest of $7,249 included in accrued
liabilities in the accompanying consolidated balance sheet would be exchanged
for 500,000 shares of common stock and warrants to purchase 2,000,000 shares of
common stock at $3.50 per share and 1,000,000 shares of common stock at $4.50
per share. (All share amounts are subsequent to the one for five reverse stock
split.)
The Reorganization Plan was filed in cooperation with the named
creditors and has been voted on and agreed to by a majority of the shareholders.
Management believes the Court will approve the Reorganization Plan; however, a
date for final approval has not been set.
On April 7, 1994, prior to its merger with IMGI, ESECO entered into an
agreement with Colenta to distribute, on an exclusive basis, the Colenta line of
automatic photographic film and paper processors in the U.S. and Canada under
ESECO's Speedmaster(TM) label. ESECO also granted Colenta the limited right to
distribute the ESECO product line in the Eastern Hemisphere. The processors have
a higher relative cost of sales compared to enlargers; but, because of a price
increase and more direct sales, the cost of sales as a percentage of sales
decreased from the level in the prior fiscal year. Even though processor sales
declined 14.2% in fiscal year 1997, processors accounted for a significant
proportion of sales, but gross margins generated by processors increased
significantly because of the factors mentioned above. These changes, plus the
reduction in Administrative expenses, reduced the loss from operations during
fiscal 1997 by $109,928. The fiscal 1997 loss was less than the loss in the
previous year and management expects this trend to continue because of price
increases.
The Company is developing new products and modifications of existing
products to market through established channels. It expects the Digimatic
Universal(TM) to make a major contribution to sales and profits. The Company is
also exploring other distribution channels for existing products or
modifications of existing products.
CAPITAL RESOURCES AND LIQUIDITY
The Company incurred losses of $1,417,116 during the two fiscal years
presented. The Company's management expects the losses will decrease during
fiscal year 1998 because of new products, primarily the Digimatic Universal,
reduction of overhead costs primarily achieved through voluntary reductions of
various management salaries, restructuring of the Company's distribution methods
effective January 1, 1996, focusing on direct sales and significantly reducing
commissions to dealers, and the availability of processors for sale.
Current working capital is not sufficient to sustain operations at
current levels, and additional capital will be required to sustain an expected
increased level of operations. Management plans to obtain the necessary working
capital either through the sale of stock or debt financing, as required. If the
working capital cannot be acquired, the Company will face severe liquidity
problems.
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The Company reduced its investment in inventory by $297,314 during the year
resulting in a positive cash flow from operations. Part of the Reorganization
Plan involves warrants, which if exercised, will provide capital for expansion
and for other investments.
There are currently no material commitments for capital expenditures.
SEASONALITY
The Company is not aware of any seasonal factors affecting its business
although the sale of darkroom doors tends to be slower in the fourth calendar
quarter of the year.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of International Imaging, Inc.
and Subsidiaries, together with the reports thereon of Arthur Andersen LLP dated
June 20, 1997 are set forth on pages 10 through 22 hereof, which immediately
follows this page.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
International Imaging, Inc.:
We have audited the accompanying consolidated balance sheet of International
Imaging, Inc. (a Delaware corporation), formerly J & E Beauty Supply Inc., and
subsidiaries (the "Company") as of March 31, 1997, and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the
years ended March 31, 1997 and 1996. These 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 financial statements referred to above present fairly, in
all material respects, the financial position of International Imaging, Inc. and
subsidiaries as of March 31, 1997, and the results of their operations and their
cash flows for the years ended March 31, 1997 and 1996, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations,
has an excess of current liabilities over current assets and has a net
stockholders' deficit. On April 8, 1997, International Imaging, Inc. filed a
prenegotiated Joint Plan of Reorganization under Chapter 11 of the United States
Bankruptcy Code. These matters raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to the
future operations of the Company are described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
Oklahoma City, Oklahoma,
June 20, 1997
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Page 1 of 2
INTERNATIONAL IMAGING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,668
Short-term investments 17,815
Accounts receivable, net of allowance for
doubtful accounts of $5,000 181,343
Inventories 1,310,912
Other current assets 9,085
----------
Total current assets 1,525,823
----------
PROPERTY AND EQUIPMENT:
Building 663,868
Furniture, fixtures and equipment 621,346
Land 12,560
----------
Total property and equipment 1,297,774
Less- Accumulated depreciation 744,615
Net property and equipment 553,159
OTHER NONCURRENT ASSETS, net of amortization 10,758
----------
Total assets $2,089,740
==========
</TABLE>
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Page 2 of 2
INTERNATIONAL IMAGING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
<TABLE>
<S> <C>
CURRENT LIABILITIES:
Accounts payable $ 632,454
Accrued liabilities 159,163
Deferred compensation 20,000
Short-term advances - related parties 206,512
Advances from president 55,047
Short-term debt 620,161
Current portion of long-term debt 30,000
-----------
Total current liabilities 1,723,337
-----------
NONCURRENT LIABILITIES:
Long-term debt, net of current portion 467,053
Deferred compensation 42,953
-----------
Total noncurrent liabilities 510,006
-----------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, par value $0.0012; authorized 300,000,000 shares;
issued and outstanding 4,733,416 shares 5,680
Additional paid-in capital 2,615,540
Accumulated deficit (2,764,823)
-----------
Total stockholders' equity (deficit) (143,603)
-----------
Total liabilities and stockholders' equity (deficit) $ 2,089,740
===========
</TABLE>
The accompanying notes are an integral part of this consolidated
balance sheet.
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INTERNATIONAL IMAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
SALES $ 3,136,818 $ 3,557,627
COST OF SALES 2,186,841 2,684,356
----------- -----------
GROSS PROFIT 949,977 873,271
----------- -----------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,504,757 1,537,979
----------- -----------
OPERATING LOSS (554,780) (664,708)
----------- -----------
OTHER INCOME (EXPENSE):
Interest income 2,708 36,631
Interest expense (128,527) (90,041)
Other 9,772 (28,171)
----------- -----------
(116,047) (81,581)
----------- -----------
NET LOSS $ (670,827) $ (746,289)
=========== ===========
NET LOSS PER WEIGHTED AVERAGE SHARE
OF COMMON STOCK $ (0.14) $ (0.16)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 4,733,416 4,728,007
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
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INTERNATIONAL IMAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
Common Stock Additional
---------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
---------- ---------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, March 31, 1995 4,689,666 $5,628 $2,528,092 $(1,347,707) $ 1,186,013
Exercise of stock options 43,750 52 87,448 -- 87,500
Net loss -- -- -- (746,289) (746,289)
--------- ------ ---------- ----------- -----------
BALANCE, March 31, 1996 4,733,416 5,680 2,615,540 (2,093,996) 527,224
Net loss -- -- -- (670,827) (670,827)
--------- ------ ---------- ----------- -----------
BALANCE, March 31, 1997 4,733,416 $5,680 $2,615,540 $(2,764,823) $ (143,603)
========= ====== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
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INTERNATIONAL IMAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(670,827) $(746,289)
Adjustments to reconcile net loss to net cash used in operating
activities-
Depreciation and amortization 108,482 83,340
Gain on sales of property, equipment and investments (4,140) (6,057)
Deferred compensation (17,160) (16,840)
Changes in current assets and liabilities-
(Increase) decrease in accounts receivable 308,477 (11,835)
(Increase) decrease in inventories 297,314 (337,612)
Decrease in other current assets 10,118 13,091
Increase in accounts payable 9,888 299,935
Increase (decrease) in accrued liabilities (6,065) 12,778
Other 376 (59)
--------- ---------
Net cash provided by (used in) operating activities 36,463 (709,548)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (122,392) (105,274)
Purchase of short-term investments -- (3,124)
Proceeds from sales of property and equipment 11,232 11,519
--------- ---------
Net cash used in investing activities (111,160) (96,879)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt and related party advances 572,091 875,503
Repayment of debt (503,516) (195,434)
Proceeds from sale of common stock -- 87,500
--------- ---------
Net cash provided by financing activities 68,575 767,569
--------- ---------
NET DECREASE IN CASH (6,122) (38,858)
CASH, beginning of year 12,790 51,648
--------- ---------
CASH, end of year $ 6,668 $ 12,790
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during period for-
Interest $ 118,868 $ 84,387
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE> 16
INTERNATIONAL IMAGING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. COMPANY INFORMATION:
International Imaging, Inc. (the "Company") is a manufacturer and distributor of
equipment for the specialty photographic laboratory market. International
Imaging, Inc. entered this market when it merged with Electronic Systems
Engineering Co. ("ESECO") on July 27, 1994.
Subsequent Event
On April 8, 1997, International Imaging, Inc. filed a prenegotiated Joint Plan
of Reorganization (the "Reorganization Plan") under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the Western
District of Oklahoma (the "Court"). The Reorganization Plan only addresses the
reorganization of International Imaging, Inc. and not the Company's wholly owned
operating subsidiary, ESECO.
The Reorganization Plan calls for a one for five reverse stock split and the
issuance of common stock and warrants to the creditors in exchange for
outstanding debt and accrued interest. Specifically, short-term advances -
related parties of $206,512 and accrued interest of $7,249 included in accrued
liabilities in the accompanying consolidated balance sheet would be exchanged
for 500,000 shares of common stock and warrants to purchase 2,000,000 and
1,000,000 shares of common stock at $3.50 and $4.50 per share, respectively.
(All share amounts are subsequent to the one for five reverse stock split.)
The Reorganization Plan was filed in cooperation with the named creditors and
has been voted on and agreed to by a majority of the shareholders. Management
believes the Court will approve the Reorganization Plan; however, a date for
final approval has not been determined.
Operating Plan
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. For the years ended March 31, 1997 and
1996, the Company reported a consolidated loss of $1,417,116, and, at March 31,
1997, reported an excess of current liabilities over current assets and a net
stockholders' deficit of $143,603. These losses have been funded primarily by
bank and related party debt, slower payment of accounts payable, increased cash
flows from collection of accounts receivable and a reduction of existing
inventory.
The Company is developing new products and is modifying existing products to
enhance sales. One product, the Digimatic Universal, a digital imaging system,
has been demonstrated at various trade shows and has received positive
recognition in selected trade publications. However, no sales were made of this
product in fiscal year 1997, as it only became ready for production in early
fiscal year 1998. Management is uncertain as to the market's acceptance or level
of sales that can be achieved by this new product.
The Reorganization Plan described above proposes to reduce the Company's current
liabilities; however, the effect of the Reorganization Plan will not
significantly impact the Company's future cash flows or operating results.
Management's plan for operating in fiscal year 1998 is highly contingent on the
ability to produce and sell the Digimatic Universal, maintaining sales levels on
existing products, reductions of general and administrative costs and the
availability of continued financing.
6
<PAGE> 17
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying consolidated financial statements include the accounts of the
Company, ESECO (a wholly owned subsidiary), and ESECO International Corporation
(a wholly owned inactive corporation formed in fiscal 1982). All significant
intercompany accounts and transactions have been eliminated in the accompanying
consolidated financial statements.
Property and Equipment
Property and equipment is recorded at cost. Normal maintenance and repairs are
expensed as incurred. Upon the sale or retirement of depreciable properties, the
costs and related accumulated depreciation are removed from the accounts and the
resulting gain or loss is reflected in other income (expense).
Depreciation of property and equipment is computed on the straight-line method
over estimated useful lives. Depreciation of property and equipment used in the
manufacture of goods for sale was $87,313 and $65,786 for the years ended March
31, 1997 and 1996, respectively, and is included in cost of sales in the
accompanying consolidated statements of operations.
Estimated useful lives, in years, are as follows:
<TABLE>
<S> <C>
Building and improvements 10 - 40
Equipment and tools 5 - 10
Office furniture and equipment 5 - 10
Rental and demonstration equipment 10
Automobiles 5
</TABLE>
Earnings Per Share and Shares Outstanding
Earnings per share of common stock are based upon the weighted average number of
shares outstanding during the year.
Financial Instruments
The Company values its financial instruments as required by Statement of
Financial Accounting Standards ("SFAS") No. 107, "Disclosures About Fair Values
of Financial Instruments." Management believes the carrying value of the
Company's financial instruments approximates the fair market value.
Use of Estimates
The preparation of these consolidated financial statements in conformity with
generally accepted principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
7
<PAGE> 18
Cash and Cash Equivalents
For purposes of reporting cash flows, cash includes cash on hand and highly
liquid cash investments with a maturity of three months or less.
Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings Per Share," which replaces primary earnings per share ("EPS")
with basic EPS. Basic EPS includes no dilution and is computed by dividing
income available to common stockholders by the weighted-average number of common
shares outstanding for the period. The statement is effective for periods ending
after December 15, 1997, and does not allow for early adoption. Upon adoption,
restatement of prior years' EPS will be required. The Company believes the
effect on its EPS in future periods will be immaterial.
In July 1997, the FASB issued SFAS No. 129, "Reporting Comprehensive Income,"
which establishes standards for reporting and displaying comprehensive income
and its components in the financial statements. Comprehensive income is the
total of net income and certain other changes in equity (excluding stock related
transactions) that bypass net income. The statement is effective for periods
ending after December 15, 1997. When adopted, reclassification of comparative
financial statements provided for earlier periods is required. During the year
ended March 31, 1997, the Company has no comprehensive income items which would
require modification under this statement.
3. INVENTORIES:
Inventories are stated at the lower of first-in, first-out cost or market and
consisted of the following as of March 31, 1997:
<TABLE>
<S> <C>
Finished goods $ 410,805
Work-in-process 403,621
Raw material parts and supplies 496,486
-----------
$ 1,310,912
===========
</TABLE>
Provisions have been made to reduce excess and obsolete inventories to net
realizable values.
4. SHORT-TERM ADVANCES - RELATED PARTIES:
At March 31, 1997, the Company had outstanding advances from related parties of
$206,512 primarily used to meet operating cash flow requirements. Advances
totaling $65,000 are covered under a note agreement that matured in November
1996, with interest at 7.5% per annum. At March 31, 1997, the balance of the
note remained unpaid and the Company was in default of the note terms. The
remaining advances totaling $141,512 were not covered under note agreements,
have no defined repayment terms and are not interest bearing.
The advances from the related parties described above are included in the
Company's Reorganization Plan described in Note 1.
5. ADVANCES FROM PRESIDENT:
At March 31, 1997, the Company had outstanding cash advances from the president
of the Company of $55,047. The advances were used to meet operating cash flow
needs. The repayment terms of the advances are not defined and thus the advances
have been reflected as a current liability. The advances are noninterest bearing
and are subordinate to the obligations to a bank detailed in Note 6.
8
<PAGE> 19
6. DEBT OBLIGATIONS:
Debt obligations at March 31, 1997, consisted of the following:
<TABLE>
<S> <C>
Short-Term Debt
Line of credit to a bank with interest at 2% over National prime (10.5% at
March 31, 1997), adjusted annually, accrued interest due monthly with
unpaid principal and accrued interest due upon maturity at
July 1997 $500,000
Note payable to a bank, due in monthly installments of $617, including
interest, at 6.9%, to December 1997 5,315
Note payable to a bank, with interest at 10.25%, accrued interest due
monthly with unpaid principal and accrued interest due upon maturity
in October 1997 81,343
Note payable to a bank, with interest at 10.25%. The note was repaid to the
bank in May 1997 21,253
Note payable to a bank, with interest at 10.5%. The note was repaid to the
bank in June 1997 12,250
--------
Total short-term debt $620,161
========
Long-Term Debt
Notepayable to a bank, with interest at 10.5%, accrued interest due
monthly with unpaid principal and accrued interest due upon maturity
in October 1997 (see below) $367,053
Note payable to a bank, due in monthly installments of $2,500, plus interest
at 10.5%, to June 2001 130,000
--------
Total long-term debt 497,053
Less- Current portion 30,000
--------
Long-term debt, net of current portion $467,053
========
</TABLE>
The note payable of $367,053 included above as long-term debt has been
classified as long-term based on a commitment letter signed by the bank that the
note will be renewed in October 1997 for an additional one year period.
The line of credit agreement allows the Company to borrow amounts based on
certain percentages of its inventories and receivable balances, as defined. The
short-term and long-term notes payable and line of credit detailed above are
individually secured by various assets of the Company including land, building,
automobile, accounts receivable, inventory and certain contract rights.
Borrowings under substantially all of the notes payable and the line of credit
agreement are personally guaranteed by the president of the Company.
9
<PAGE> 20
In March 1996, the Board of Directors approved an agreement between
International Imaging, Inc. and the president of the Company to place in escrow
all of the voting stock of ESECO, the Company's operating subsidiary, in
exchange for personal guarantees by the president of approximately $2,000,000 of
the Company's debt obligations. The stock of ESECO will be held in escrow until
the obligations under the debt agreements are repaid in full. While in escrow,
the president individually has voting power of the stock. The escrowed shares
will be delivered to International Imaging, Inc. upon payment in full of the
notes and release of the president from his personal guarantees within three
years of the escrow agreement. If the notes are not paid within three years, the
Company's shares of ESECO, along with any accompanying stock powers will be
released to the president.
Maturities of long-term debt for years subsequent to March 31, 1997, are as
follows:
<TABLE>
<S> <C>
1998 $ 30,000
1999 397,053
2000 30,000
2001 30,000
2002 and thereafter 10,000
---------
$ 497,053
=========
</TABLE>
7. EMPLOYEE BONUS PLAN:
The Company has an arrangement with its president which calls for an annual
bonus of 5%, 7.5% or 10% of ESECO's income before bonuses and provision for
income taxes based upon specified relationships between income and sales.
Additionally, bonuses are awarded to certain other employees based on net sales
and income before bonuses and provision for income taxes. No bonuses were
awarded during fiscal years 1997 or 1996. Bonuses awarded in prior years which
remained unpaid at March 31, 1997, totaled $89,646 and are included in accrued
liabilities in the accompanying consolidated balance sheet. Interest on unpaid
bonuses is accrued based on the one year certificate of deposit rate at a local
bank.
8. DEFERRED COMPENSATION:
ESECO entered into a deferred compensation agreement with an officer of ESECO
whereby all bonuses due him are payable in installments, including interest,
upon his reaching retirement age in 1982. Deferred compensation payments are
being made at $1,667 per month. The current and noncurrent portions of the
payments due under this agreement and the related accrued interest have been
reflected as deferred compensation in the accompanying consolidated balance
sheet.
9. INCOME TAXES:
A valuation allowance is required to be recorded against tax assets which are
not likely to be realized. The Company's net tax operating loss carryforwards
totaling approximately $2,100,000 expire at specific future dates, beginning in
2009, and utilization of certain carryforwards is limited to specific amounts
each year. Due to the Company's past performance and the expiration dates of the
net operating loss carryforwards, the ultimate realization of such tax benefits
is uncertain. The Company has established a valuation allowance against the
total amount of these carryforward benefits and will recognize the benefits only
as reassessment demonstrates they are more likely than not to be realizable.
Realization is primarily dependent upon future earnings. While the need for this
valuation allowance is subject to periodic review, if the allowance is reduced,
the tax benefits of the carryforwards will be recorded in future operations as a
reduction of the Company's income tax expense.
10
<PAGE> 21
10. RELATED PARTY TRANSACTIONS:
The short-term investments held by the Company consist primarily of preferred
and common stock of Reconversion Technologies, Inc. The Company's former general
counsel is also the chief executive officer of Reconversion Technologies, Inc.
11. EMPLOYMENT AGREEMENTS:
Effective July 1, 1994, ESECO entered into five-year employment agreements with
eleven key employees. Such agreements provide for minimum salary levels,
adjusted annually for cost-of-living changes, as well as a lump-sum payment
equal to 300% of the total compensation if the employee is terminated other than
for cause, as defined. The annual salaries for these employees at March 31,
1997, was approximately $342,300.
12. COMMON STOCK:
Common Stock Issuances
Shares issued during fiscal year 1996, under the stock option plan described in
Note 13 totaled 43,750 shares, at $2.00 per share.
Warrants Outstanding
At March 31, 1997, the Company had redeemable, transferable warrants outstanding
to purchase 728,332 shares of common stock of the Company. The warrants are
exercisable at $6.00 per share through February 3, 1999, unless redeemed earlier
by the Company. The Company has the right to redeem these warrants at $0.0012
per warrant upon 30 days written notice.
In addition to the warrants above, the Company also has nonredeemable,
transferable warrants outstanding to purchase 36,417 shares of the Company's
stock at $0.72 per share and 72,834 shares at $6.00 per share through February
3, 1999.
During fiscal years 1997 and 1996, the Company issued warrants to purchase
45,000 and 2,050,500 shares of common stock, respectively, to the president of
the Company for personal guarantees he has made of the Company's debt
obligations. The warrants are exercisable in whole or in part solely at the
option of the holder through December 31, 2005. The exercise price is $0.50 per
share, with provisions for a downward per share adjustment for certain events
defined in the agreement. Additionally, during fiscal 1997, the Company issued
warrants to purchase an additional 1,458,333 shares of the Company's common
stock at $0.06 per share to the president of the Company for additional
guarantees he has made of the Company's debt obligations. The warrant price is
subject to potential downward adjustments as defined in the agreement. No
compensation related to these warrants has been recorded by the Company. The
common shares underlying the warrants are shares restricted from trading on the
public market. In addition, at the date of issuance, the public shares were very
thinly traded and management of the Company believes the market quotes on the
date of grant would not be reflective of the market price for this volume of
stock trading.
11
<PAGE> 22
13. STOCK OPTION PLAN:
The Company has a stock option plan under which options to purchase up to
24,000,000 shares of common stock may be granted to key employees or consultants
of the Company. The Plan provides that the option price may not be less than 85%
of the then current market price without approval of the Company's Board of
Directors and that each option shall be made exercisable as prescribed by the
Company's Option Committee. No options may be granted under the Plan after
December 31, 1997.
In July 1994, options to purchase 1,000,000 shares of the Company's stock for
$2.00 per share were granted. Options exercised during fiscal years 1996 and
1995 totaled 43,750 and 575,583 shares, respectively. No options were exercised
during 1997. The unexercised options expire in July 1997.
In December 1994, options to purchase 250,000 shares of the Company's stock for
$0.828 per share were granted to certain employees and officers of the Company.
None of these options, which expire in December 1997, have been exercised.
In July 1995, options to purchase 405,000 shares of the Company's common stock
for $0.5625 per share were authorized. Of these shares, 305,000 were granted and
issued to certain employees, officers, and related parties of the Company. The
remaining 100,000 shares authorized, but not issued, will be used by the Company
as part of an employment package to future employee(s). None of these options,
which expire in July 1998, have been exercised.
During August 1996, options to purchase 2,670,000 shares of the Company's common
stock for $0.32 per share were granted to certain employees, officers and
related parties of the Company. None of these options, which expire in August
1999, have been exercised during fiscal 1997.
12
<PAGE> 23
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth the names, ages and current positions
with the Company held by Directors, Executive Officers and Significant Employees
as of March 31, 1997, together with the year such positions were assumed. There
is no immediate family relationship between or among any of the Directors,
Executive Officers or Significant Employees, other than Jerome L. Kaminshine,
the Executive Vice President of ESECO, is the son of Arthur A. Kaminshine. The
Company is not aware of any arrangement or understanding between any Director or
Executive Officer and any other person pursuant to which he was elected to his
current position.
<TABLE>
<CAPTION>
Position
Name Age Position Since
- ------------------------ ------ ----------------------- ---------
<S> <C> <C> <C>
Arthur A. Kaminshine 72 President/Director 1994
Edward L. Handlin 58 Secretary/Director 1994
</TABLE>
Arthur A. Kaminshine, age 72, was elected a Director and President of
International Imaging, Inc. in July 1994. Prior to its merger with the Company,
Mr. Kaminshine had been President and a Director of ESECO since 1964. Mr.
Kaminshine attended Southwestern State University in Weatherford, Oklahoma. Mr.
Kaminshine continues to be the President of ESECO, IMGI's principal subsidiary.
Edward L. Handlin, age 58, was elected a Director and Secretary of
International Imaging, Inc. in July 1994. Prior to its merger with the Company,
Mr. Handlin was the Chief Financial Officer of ESECO. Mr. Handlin has a B.S.
degree from the University of California, Berkeley, California and an M.B.A.
degree from the University of Chicago. Mr. Handlin has also been a practicing
Certified Public Accountant in the State of Oklahoma for more than fifteen
years.
No Forms 3 or 4 were filed or required to be filed during the most
recent fiscal year.
ITEM 10. EXECUTIVE COMPENSATION
For services rendered to the Company during the fiscal year ended March
31, 1997, no executive officers received cash compensation in excess of
$120,000. The following table sets forth information concerning all annual cash
compensation paid to the chief executive officer of the Company for services
rendered to the Company during the twelve month period ended March 31, 1997.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL CAPACITY CASH
OR NUMBER IN GROUP SERVED COMPENSATION
- ------------------ ------ ------------
<S> <C> <C>
Arthur A. Kaminshine President & Chief $65,107
Executive Officer
</TABLE>
During fiscal years 1997 and 1996, the Company issued warrants to
purchase 45,000 and 2,050,500 shares of common stock, respectively, to the
president of the Company for personal guarantees he has made of the Company's
debt obligations. The warrants are exercisable in whole or in part solely at the
option of the holder through December 31, 2005. The exercise price is $0.50 per
share, with provisions for a downward per share adjustment for certain events
defined in the agreement. Additionally, during fiscal 1997, the Company issued
warrants to purchase an additional 1,458,333 shares of the Company's common
stock at $0.06 per share to the president of the Company for additional
guarantees he has made of the Company's debt obligations. The warrant price is
subject to potential downward adjustments as defined in the agreement. No
compensation related to these warrants has been recorded by the Company. The
common shares underlying the warrants are shares restricted from trading on the
public market. In addition, at the date of issuance, the public shares were very
thinly traded and management of the Company believes the market quotes on the
date of grant would not be reflective of the market price for this volume of
stock trading.
13
<PAGE> 24
In addition, the Company makes available certain non-monetary benefits
to its executive officers with a view to acquiring and retaining qualified
personnel and facilitating job performance. The Company considers such benefits
to be ordinary and incidental business costs and expenses. The value of such
benefits did not exceed, in the case of any named individual, 10% of the cash
compensation of the individual. Finally, the Company's ESECO's subsidiary is
continuing to make deferred compensation payments to a retired officer of ESECO
at the rate of $1,667 per month, as discussed in Note 8 to the Company's
Financial Statements in Item 7 herein.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of March 31, 1997,
concerning shares of Common Stock of the Company beneficially owned by persons
who own more than 5% of the Company's common stock, each director and officer
and by all directors and officers as a group. Unless expressly indicated
otherwise, each stockholder exercises sole voting and investment power with
respect to the shares beneficially owned.
<TABLE>
<CAPTION>
Name and address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Class
- ------------------- ------------------ --------
<S> <C> <C>
Arthur A. Kaminshine
P. O. Box 1505
Cushing, OK 74023 362,143 7.65%
Edward L. Handlin
P. O. Box 156
Chandler, OK 74834 17,913 (1)
</TABLE>
(1) Beneficial ownership of less than one percent (1%)
(2) Number of outstanding shares used to calculate percentage computed as
described in the preceding paragraph: 4,733,416
----------
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following sets forth information regarding transactions between the
Company and the following persons: directors, officers and persons who, under
certain assumptions set forth in the previous Item 11, potentially own in excess
of 5% of the Company's Common Stock:
A series of relatively small loans were made by the President, Mr.
Kaminshine to ESECO prior to and after its merger with the Company. A total of
$55,047 remains to be repaid by the Company to Mr. Kaminshine at March 31, 1997.
The Company granted warrants to purchase 3,553,833 shares to Mr.
Kaminshine in exchange for his personal guarantee of the Company's bank lines of
credit as discussed in Item 10 and in Footnote 12 to the Consolidated Financial
Statements. As part of this agreement all of the voting stock of ESECO was
placed in escrow for the life of these guarantees (See Footnote 6 to the
Consolidated Financial Statements).
During August 1996, options to purchase 1,000,000 shares each of the
Company's common stock for $0.32 per share were granted to Mr. Kaminshine and
Mr. Handlin. None of these options, which expire in August 1999, have been
exercised during fiscal 1997.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A
(a) EXHIBITS
(1) SEE SEC EXHIBIT NO. 23, CONSENTS OF EXPERTS AND COUNSEL, ON PAGE
26.
(b) REPORTS ON FORM 8-K
The Company filed no reports during the fourth quarter of the fiscal
year ended March 31, 1997.
14
<PAGE> 25
SIGNATURES
Pursuant to the regulations of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL IMAGING, INC.
Date: July 24, 1997 /s/ Arthur A. Kaminshine
------------------------
Arthur A. Kaminshine
President, Director
Date: July 24, 1997 /s/ Edward L. Handlin
---------------------
Edward L. Handlin
Chief Financial Officer
Director
15
<PAGE> 26
EXHIBIT INDEX
EXHIBIT 23.1 CONSENT OF EXPERTS AND COUNSEL
EXHIBIT 27 FINANCIAL DATA SCHEDULE
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated June 20, 1997, included in this Form 10-KSB, into the Company's
previously filed Registration Statement on Form S-8 filed August 3, 1994.
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
June 20, 1997
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 6,668
<SECURITIES> 17,815
<RECEIVABLES> 186,343
<ALLOWANCES> 5,000
<INVENTORY> 131,912
<CURRENT-ASSETS> 1,525,823
<PP&E> 1,297,774
<DEPRECIATION> 744,615
<TOTAL-ASSETS> 2,089,740
<CURRENT-LIABILITIES> 1,723,337
<BONDS> 510,006
0
0
<COMMON> 4,733,416
<OTHER-SE> (143,603)
<TOTAL-LIABILITY-AND-EQUITY> 2,089,740
<SALES> 3,136,818
<TOTAL-REVENUES> 3,136,818
<CGS> 2,186,841
<TOTAL-COSTS> 2,186,841
<OTHER-EXPENSES> 1,504,757
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128,527
<INCOME-PRETAX> (670,827)
<INCOME-TAX> 0
<INCOME-CONTINUING> (670,827)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (670,827)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
