U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 COMMISSION FILE NUMBER: 33-82180
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IMAGEX SERVICES, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 93-0933399
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(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
80 WOLF ROAD, SUITE 503, ALBANY, NY 12205 518-438-3529
----------------------------------- ----- ------------
(Address of Principal Executive Offices) (Zip Code) (Telephone Number)
(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding at April 30, 1996
----- -----------------------------
Common stock $.001 Par Value 12,969,468 Common Shares
<PAGE>
IMAGEX SERVICES, INC. - 10-QSB
INDEX
Page Number
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet ....................... 3
Consolidated Statement of Income
Three Months Ended ............................ 4
Consolidated Statements of Income
Nine Months Ended ............................. 5
Consolidated Statement of Cash Flows
for the Nine Months Ended .................... 6
Item 2. Management's Discussion and Analysis ............. 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings ................................ 9
Item 2. Changes in Securities ............................ 9
Item 3. Defaults Upon Senior Securities .................. 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information ................................ 9
Item 6. Exhibits and Reports on Form 8-K ................. 10
SIGNATURE PAGE ...................................................... 11
Page 2
<PAGE>
IMAGEX SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
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(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CASH $ 3,387 $ 3,061
ACCOUNTS RECEIVABLE-NET 13,475 31,689
PREPAID EXPENSES AND OTHER ASSETS 53,831 84,266
DUE FROM RELATED PARTY 39,458 39,458
CONSTRUCTION IN PROGRESS 256,904 225,818
PROPERTY AND EQUIPMENT, NET 584,671 614,695
=========== ===========
Total assets $ 951,726 $ 998,987
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
ACCOUNTS PAYABLE $ 919,218 $ 1,062,143
ACCRUED EXPENSES PAYABLE 220,769 65,093
NOTES PAYABLE 591,375 602,527
DUE TO STOCKHOLDERS/DIRECTORS 135,963 145,963
OBLIGATIONS UNDER CAPITAL LEASE 15,581 23,177
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Total liabilities 1,882,906 1,898,903
COMMITMENTS
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, par value $.001 per share, authorized
25,000,000 shares, issued and outstanding 12,719,468
shares and 11,649,468 shares in 1996 and 1995, respectively 11,756 11,649
Additional paid-in-capital 3,058,811 2,706,418
Retained earning (deficit) (2,876,747) (2,492,983)
Subscription receivable (1,125,000) (1,125,000)
----------- -----------
Total stockholders' equity (deficiency) (931,180) (899,916)
----------- -----------
Total liabilities and stockholders' equity (deficiency) $ 951,726 $ 998,987
=========== ===========
</TABLE>
Page 3
<PAGE>
IMAGEX SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND MARCH 31, 1995
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
------------ ------------
Net Revenues $ 20,788 $ 95,955
Costs and expenses:
Direct operating 161,755 341,930
Selling, general and administrative 232,170 202,584
Interest 10,629 2,772
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Total 404,554 547,286
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Loss before income taxes (383,766) (451,331)
Provision for income taxes 0 900
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Net loss $ (383,766) $ (452,231)
============ ============
Net Loss per share $ (0.03) (0.04)
============ ============
Weighted average number of shares 12,719,468 10,116,828
============ ============
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<PAGE>
IMAGEX SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND MARCH 31, 1995
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(383,766) $(452,231)
Adjustments to reconcile net
loss to net cash provided by (used in) operating activities:
Depreciation and amortization 20,000 15,000
Loss on disposal of vehicle 3,390 0
Compensation expense contributed to capital 0 6,000
Changes in operating assets and liabilities:
Decrease - accounts receivable 18,214 70,940
Decrease - prepaid expenses and other assets 30,435 6,377
(Increase) - deferred offering costs 0 (12,837)
Increase - accounts payable and accrued expenses 12,751 62,963
--------- ---------
Net cash used in operating activities (298,976) (303,788)
Cash flows from investing activities:
Acquisition of property and equipment (5,100) (158,251)
Proceeds from disposal of vehicle 11,736 0
Capitalization of greenville start-up costs 0 (74,392)
Construction in progress outlays (31,086) (149,353)
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Net cash used in investing activities (24,450) (381,996)
Cash flows from financing activities:
Proceeds from the sale of common stock 352,500 467,360
Proceeds from shareholder loans 244,000
Repayment of notes payable and obligations under
capital lease (18,748) (13,941)
Repayments on shareholder loans (10,000) 0
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Net cash provided by financing activities 323,752 697,419
Net increase in cash 326 11,635
Cash - beginning of period 3,061 20,360
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Cash - ending of period $ 3,387 $ 31,995
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year for:
Interest $ 807 $ 2,772
Income taxes 0 900
NON-CASH INVESTING AND FINANCING ACTIVITIES
Contribution of capital in exchange for
officer's salary $ 0 $ 6,000
</TABLE>
Page 5
<PAGE>
IMAGEX SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additonal Total
------------------------- Paid-in- Subscription Shareholers'
Shares Amount capital Receivable Deficit (Deficiency)
------------- ---------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 11,649,468 11,649 $ 2,706,418 $ (1,125,000) (2,492,983) (899,916)
Issuance of common stock 1,070,000 107 352,393 0
Net loss 0
------------ ---------- -------------- -------------- -------------- -------------
Balance March 31, 1996 12,719,468 $ 11,756 $ 3,058,811 $ (1,125,000) $ (2,492,983) $ (899,916)
============ ========== ============== ============== ============== =============
</TABLE>
Page 6
<PAGE>
IMAGEX SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Results of Operations:
- ----------------------
Three Months Ended March 31, 1996
---------------------------------
The Company continues to operate medical diagnostics service centers.
For the three months ended March 31, 1996, the Company incurred a loss of
$383,766. This loss is primarily attributable to a lack of patients seeking
diagnostics services and the payments of machines leases and the medical staff
to operate them.
Three Months Ending March 31, 1996 to March 31, 1995
----------------------------------------------------
Net revenue for the three months ended March 31, 1996 were $20,788 as
compared to $95,955 for the three month period ended March 31, 1995, a decrease
of $75,167.
Direct operating costs were $161,755 for the three month period ended
March 31, 1996 as compared to $341,930 for the period March 31, 1995, a decrease
of $180,175. This decrease was primarily due to reduction in equipment leases
and payroll costs. The Company has settled the legal proceeding with General
Electric (see item Part II, Item 1).
Selling, general and administrative expenses were $232,170 for the
three month period ended March 31, 1996 as compared to $202,584 for the period
March 31, 1995, a increase of $29,586. This increase was primarily due to the
accrued officers salary under the employment agreement.
The Company financial condition at March 31, 1996 reflects a decrease
in revenue generated and a decrease in expenses. This is primarily due to the
lack of revenue generated in the centers. The Company's operation have been
severely limited due to the judgement obtained by General Electric Company
against the Company. This judgment has been vacated, see Part II, Item 1.
Liquidity and Capital Resources:
- -------------------------------
March 31, 1996 compared to March 31, 1995
-----------------------------------------
During the three months ended March 31, 1996, cash has increased
minimally. Cash used in operation was $298,976 as compared to $303,788 for the
three months ended March 31, 1996 and 1995, respectively. Cash was also used for
the acquisition of furniture and continued construction on the Greenville
facility amounted to $36,186. The Company turned in a vehicle for the balance of
the outstanding note of $11,736. The Company generated cash of $352,500 through
the sale of common stock. The Company did repay $18,748 of its debt.
On March 17, 1995 General Electric Company (General Electric) filed
suit against the Company in the Supreme Court of the State of New York in the
County of Nassau; Index no. 95-007721. The suit alleged the Company defaulted on
its leases of MRI imaging machines and demanded payment in full, approximately
$1.5 million. A Stipulated Settlement of $1.3 million was reached on April 28,
1995. The Company was in monetary default under the terms of the Settlement,
which obligation the Company's president has personally guaranteed. In April,
1996, the Company finalized its settlement of the General Electric litigation.
The judgment against the Company was vacated in April, 1996. The settlement
agreement calls for the Company to pay General Electric $700,000 over a two year
period which sum the Company's president has personally guaranteed and placed a
first mortgage to the benefit of General Electric on the Greenville facility.
The Company has returned the GE 1.5 Vectra/Tesla MRI to General Electric and
closed its Slocum Dixon Center.
Page 7
<PAGE>
The Company's plans to overcome its current financial difficulties are
largely based upon its ability to raise capital through the private placement of
equity securities with potential investors. Raising capital will enable the
Company to continue its lease obligation for the 0.5 Tesla MRI unit and payment
plan reached with the General Electric Company. Thereafter, the Company plans to
develop its Greenville and Rome centers as well as other revenue producing
centers. These centers may take longer than one year to establish and no
assurance can be given the Company will be successful in raising such capital,
or in developing additional centers, or that any of its centers will be
profitable.
Page 8
<PAGE>
IMAGEX SERVICES, INC.
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS.
There are no material legal proceedings known or threatened against the
Company, except:
LITIGATION WITH - GENERAL ELECTRIC - On March 17, 1995 General Electric Company
filed suit against the Company in the Supreme Court of the State of New York in
the County of Nassau; Index no. 95-007721. The suit alleged the Company
defaulted on its leases of MRI imaging machines and demanded payment in full,
approximately $1.5 million. A Stipulated Settlement of $1.3 million was reached
on April 28, 1995. The Company is currently in monetary default under the terms
of the Settlement, which obligation the Company's president has personally
guaranteed. On September 13, 1995 General Electric Company obtained a money
judgment in the amount of $3,699,341.10 and an order allowing General Electric
to repossess the leased 1.5 Vectra/Tesla MRI located at the Slocum-Dickson
Center site and the leased 0.5 Tesla MRI located at the Rome Center site.
The Company's operations have been severely limited due to the effect
of a judgment obtained by General Electric Company against the Company. The
Company and General Electric are currently negotiating a settlement of
approximately $1.5 million to purchase the 1.5 Vectra/Tesla MRI unit; and shall
continue to meet its monthly obligations under the lease for the 0.5 Tesla MRI
unit located at Rome pursuant to the settlement. The Company is working with
potential investors to raise sufficient capital to settle the General Electric
matter and provide additional working capital. It cannot be assumed that the
Company will be successful in raising such capital.
In April, 1996, the Company finalized its settlement of the General
Electric litigation. The judgment against the Company was vacated in April,
1996. The settlement agreement calls for the Company to pay General Electric
$700,000 over a two year period which sum the Company's president has personally
guaranteed and placed a first mortgage to the benefit of General Electric on the
Greenville facility. The Company has returned the GE 1.5 Vectra/Tesla MRI to
General Electric and closed its Slocum Dixon Center.
LITIGATION WITH - CENTER GREEN, INC. - On May 10, 1995, Center Green, Inc. filed
a complaint against the Company in the Supreme court of the State of New York in
the county of Oneida. The complaint alleges that the Company breached a building
lease agreement and seeks specific performance under the lease, or in the
alternative, back rent and legal costs.
The Company denies such claims and believes it has no obligations thereunder.
ITEM 2. CHANGE IN SECURITIES.
No class of registered securities of the Company have been materially
modified, and no class of registered securities have been materially limited or
qualified by the issuance or modification of any other class of securities of
the Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There have been no defaults of any terms of the Company's securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the stockholders for a vote in the fiscal
quarter just ended.
Page 9
<PAGE>
ITEM 5. OTHER INFORMATION.
The Company does not have other information required to be reported in
this Form 10-QSB or on a Form 8-K.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27 - Financial data schedule (Electronic filing only)
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
Page 10
<PAGE>
IMAGEX SERVICES, INC.
Quarterly Report
on
Form 10-QSB
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
IMAGEX SERVICES, INC.
Dated as of June 7, 1996
Signed June 7, 1996 By /s/ Andrew F. Capoccia
----------------------
Andrew F. Capoccia
President
Page 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF IMAGEX SERVICES, INC., FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 3
<SECURITIES> 0
<RECEIVABLES> 45
<ALLOWANCES> 31
<INVENTORY> 0
<CURRENT-ASSETS> 109
<PP&E> 740
<DEPRECIATION> 155
<TOTAL-ASSETS> 952
<CURRENT-LIABILITIES> 1,731
<BONDS> 0
<COMMON> 12
0
0
<OTHER-SE> (943)
<TOTAL-LIABILITY-AND-EQUITY> 952
<SALES> 21
<TOTAL-REVENUES> 21
<CGS> 0
<TOTAL-COSTS> 162
<OTHER-EXPENSES> 232
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> (384)
<INCOME-TAX> 0
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<EPS-PRIMARY> (.03)
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</TABLE>
