-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lkb88kLhahcNjyc5zoeUgyrsp70iw+GEn3BWdwdwPzPlPVFg3U0RI15Mub78KxOg u9Zlkh98VW2su1buk3arGA== 0000950134-03-000536.txt : 20030114 0000950134-03-000536.hdr.sgml : 20030114 20030114164956 ACCESSION NUMBER: 0000950134-03-000536 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021130 FILED AS OF DATE: 20030114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMPRESO INC CENTRAL INDEX KEY: 0001108345 STANDARD INDUSTRIAL CLASSIFICATION: MANIFOLD BUSINESS FORMS [2761] IRS NUMBER: 752849585 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-29883 FILM NUMBER: 03513847 BUSINESS ADDRESS: STREET 1: 652 SOUTHWESTERN BLVD CITY: COPPELL STATE: TX ZIP: 75019 BUSINESS PHONE: 9724620100 MAIL ADDRESS: STREET 1: 652 SOUTHWESTERN BLVD CITY: COPPELL STATE: TX ZIP: 75019 FORMER COMPANY: FORMER CONFORMED NAME: IMPRESO COM INC DATE OF NAME CHANGE: 20000302 10-Q 1 d02508e10vq.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15 (d) of the Securities - --- Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2002 OR Transition report pursuant to Section 13 or 15(d) of the Securities - --- Exchange Act of 1934 COMMISSION FILE NUMBER 000-29883 IMPRESO, INC. (Exact name of registrant as specified in its charter) DELAWARE 75-2849585 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 652 SOUTHWESTERN BOULEVARD COPPELL, TEXAS 75019 (Address of principal executive offices) (972) 462-0100 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date. Class of Common Stock Shares outstanding at January 13, 2003 --------------------- -------------------------------------- $0.01 Par Value 5,278,780 IMPRESO, INC. AND SUBSIDIARIES FORM 10-Q NOVEMBER 30, 2002 INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER ----------- Item 1. Interim Consolidated Financial Statements: Interim Consolidated Balance Sheets at November 30, 2002 (Unaudited) and August 31, 2002 1 Interim Consolidated Statements of Operations for the Three Months Ended November 30, 2002 and 2001 (Unaudited) 3 Interim Consolidated Statements of Cash Flows for the Three Months Ended November 30, 2002 and 2001 (Unaudited) 4 Notes to Interim Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk 11 Item 4. Controls and Procedures 11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14
IMPRESO, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED BALANCE SHEETS ASSETS
November 30 August 31, 2002 2002 -------------- -------------- Current assets: Cash and cash equivalents $ 206,333 $ 202,809 Trade accounts receivable, net of allowance for doubtful accounts of $515,010 at November 30, 2002 and August 31, 2002 13,248,659 15,863,549 Inventories 39,605,763 34,111,015 Prepaid expenses and other 182,591 226,065 Deferred income tax assets 524,150 513,950 -------------- -------------- Total current assets 53,767,496 50,917,388 -------------- -------------- Property, plant and equipment, at cost 27,876,383 27,712,994 Less-Accumulated depreciation (12,139,808) (11,773,895) -------------- -------------- Net property, plant and equipment 15,736,575 15,939,099 -------------- -------------- Other assets 111,105 115,377 -------------- -------------- Total assets $ 69,615,176 $ 66,971,864 ============== ==============
The accompanying notes are an integral part of these consolidated financial statements. 1 IMPRESO, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED BALANCE SHEETS (CONTINUED) LIABILITIES AND STOCKHOLDERS' EQUITY
November 30 August 31, 2002 2002 -------------- -------------- Current liabilities: Accounts payable $ 15,096,748 $ 16,301,801 Accrued liabilities 2,630,597 3,702,838 Current maturities of long-term debt 1,128,405 1,122,614 Line of credit 22,633,669 17,861,824 Current maturities of prepetition debt 7,859 7,784 -------------- -------------- Total current liabilities 41,497,278 38,996,861 Deferred income tax liability 962,958 948,601 Long-term debt, net of current maturities 10,191,937 10,372,474 Long-term portion of prepetition debt, net of current maturities 235,324 237,316 -------------- -------------- Total liabilities 52,887,497 50,555,252 -------------- -------------- Stockholders' equity: Preferred Stock, $.01 par value; 5,000,000 shares authorized; 0 shares issued and outstanding -- -- Common Stock, $.01 par value; 15,000,000 shares authorized; 5,292,780 issued and 5,278,780 outstanding 52,928 52,928 Treasury Stock (14,000 shares, at cost) (38,892) (38,892) Additional paid-in capital 6,353,656 6,347,209 Retained earnings 10,359,987 10,055,367 -------------- -------------- Total stockholders' equity 16,727,679 16,416,612 -------------- -------------- Total liabilities and stockholders' equity $ 69,615,176 $ 66,971,864 ============== ==============
The accompanying notes are an integral part of these consolidated financial statements. 2 IMPRESO, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended November 30, 2002 2001 --------------- --------------- Net sales $ 31,842,729 $ 25,401,360 Cost of sales 28,598,347 22,802,742 --------------- --------------- Gross profit 3,244,382 2,598,618 --------------- --------------- Other expenses and income: Selling, general and administrative 2,370,089 2,098,774 Interest expense 483,639 452,494 Litigation Settlement -- (1,005,452) Other income, net (106,697) (149,975) --------------- --------------- Total other expense and income 2,747,031 1,397,841 --------------- --------------- Income before income tax expense 497,351 1,200,777 --------------- --------------- Income tax expense: Current 188,574 432,760 Deferred 4,157 2,088 --------------- --------------- Total income tax expense 192,731 434,848 --------------- --------------- Net income $ 304,620 $ 765,929 =============== =============== Net income per share (basic and diluted) $ 0.06 $ 0.15 =============== =============== Weighted average shares outstanding 5,278,780 5,278,780 =============== ===============
The accompanying notes are an integral part of these consolidated financial statements. 3 IMPRESO, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended November 30, 2002 2001 -------------- -------------- Cash Flows From Operating Activities: Net income $ 304,620 $ 765,929 Adjustments to reconcile net income to net cash used in operating activities- Depreciation and amortization 365,913 292,651 Provision for Losses of Receivables -- 54,922 Provision for Losses of Inventory 40,000 -- Increase in Deferred income taxes 4,157 2,088 Decrease in trade accounts receivable, net 2,614,890 2,103,139 (Increase) decrease in inventory (5,534,748) 2,365,715 Decrease (increase) in prepaid expenses and other 47,746 (181,129) Decrease in accounts payable (1,205,053) (4,968,628) (Decrease) increase in accrued liabilities (1,072,241) 691,060 -------------- -------------- Net cash (used in) provided by operating activities (4,434,716) 1,125,747 Cash Flows From Investing Activities: Additions to property, plant and equipment (163,389) (59,166) -------------- -------------- Net cash used in investing activities (163,389) (59,166) Cash Flows From Financing Activities: Net borrowing (payments) on line of credit 4,771,845 (226,187) Principal payments on prepetition debt (1,917) (1,841) Principal payments on post-petition debt (174,746) (909,756) Warrant Issued 6,447 21,079 -------------- -------------- Net cash provided by (used in) financing activities 4,601,629 (1,116,705) -------------- -------------- Net Increase (decrease) in cash and cash equivalents 3,524 (50,124) Cash and cash equivalents, beginning of year 202,809 211,352 -------------- -------------- Cash and cash equivalents, end of year $ 206,333 $ 161,228 ============== ==============
The accompanying notes are an integral part of these consolidated financial statements. 4 IMPRESO, INC. AND SUBSIDIARIES NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND NATURE OF BUSINESS: Impreso, Inc., a Delaware corporation (referred to collectively with its subsidiaries as the "Company"), is the parent holding company of TST/Impreso, Inc. ("TST"), a manufacturer and distributor to dealers and other resellers of paper and film products for commercial and home use in domestic and international markets, and Hotsheet.com, Inc., the owner and operator of the Hotsheet.com web portal. Currently, TST has one wholly owned subsidiary, TST/Impreso of California, Inc., which was formed to support the activities of the paper converting segment of the Company's business. 2. INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS: In the opinion of management, the unaudited Interim Consolidated Financial Statements of the Company include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company's financial position as of November 30, 2002, and its results of operations for the three months ended November 30, 2002 and November 30, 2001. Results of the Company's operations for the interim period ended November 30, 2002, may not be indicative of results for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations promulgated by the Securities and Exchange Commission (the "SEC"). The unaudited Interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes of the Company and its subsidiaries, included in the Company's Form 10-K (the "Company's Form 10-K"), for the fiscal year ended August 31, 2002 ("Fiscal 2002"). Accounting policies used in the preparation of the unaudited Interim Consolidated Financial Statements are consistent in all material respects with the accounting policies described in the Notes to Consolidated Financial Statements in the Company's Form 10-K. 3. INVENTORIES: Inventories are stated at the lower of cost (principally on a first-in, first-out basis) or market and include material, labor and factory overhead. Inventories consisted of the following:
November 30, August 31, 2002 2002 --------------- --------------- Finished goods $ 20,227,816 $ 19,059,199 Raw materials 19,124,046 14,684,869 Supplies 942,535 1,011,967 Work-in-process 105,082 108,695 Allowance for Obsolete Inventory (793,715) (753,715) --------------- --------------- Total inventories $ 39,605,764 $ 34,111,015 =============== ===============
5 4. LONG -TERM DEBT AND LINE OF CREDIT:
The following is a summary of long-term debt and line of credit: November 30, August 31, 2002 2002 ------------- ------------- Line of Credit with a commercial financial corporation under revolving credit line, maturing May 2004, secured by inventories, trade accounts receivable, equipment, goodwill associated with TST's trademark "IMPRESO" (no value on financial statements), and a personal guarantee by the trustee of a trust which is a principal stockholder of the Company, interest payable monthly at prime plus .25% (5% at November 30, 2002). $ 22,633,669 $ 17,861,824 Note payable to a commercial financial corporation, secured by real property, payable in monthly installments of $15,151 (including interest at 7.75%, or 4.5% above the 11th District cost of funds rate, whichever is greater; 7.75% at November 30, 2002), maturing August 2008. 1,652,422 1,657,436 Note payable to a commercial financial corporation, secured by real property and equipment, payable in monthly installments of $4,457 (including interest at 8.50%), maturing December 2009. 277,370 284,546 Note payable to a commercial financial corporation, secured by real property and equipment, payable in monthly installments of $10,843 (including interest at 8.50%), maturing August 2010. Revolving lender's blanket lien subordinated to note's collateral. 733,658 749,987 Note payable to a commercial financial corporation, secured by real property, payable in monthly installments of $2,834 (including interest at 5.5%), maturing November 2010. 216,745 222,213 Notes payable to various commercial financial corporations, secured by equipment, interest rates ranging from 1.9% to 11.17%, maturing at various dates from December 2002 through July 2005. 439,828 449,858 Notes payable to a commercial financial corporation, secured by real property and a personal guarantee by the trustee of a trust which is a principal stockholder of the Company, payable in monthly installments of $21,407 (including interest at 8%), maturing May 2011. 2,109,162 2,130,905 Acquisition note payable, unsecured, payable in quarterly installments of $15,000 (including interest at 8%), maturing April 2006. 225,000 225,000 Acquisition note payable, secured by equipment, payable in monthly installments of $16,024, no interest, maturing May 2003. 352,145 368,169
6 Note payable to a commercial financial corporation, secured by real property and a personal guarantee by the trustee of a trust which is a principal stockholder of the Company, payable in monthly installments of $22,827 (including a fixed schedule for interest, 7.0% at November 30, 2002), maturing March 2007. 3,172,895 3,184,468 Note payable to a commercial financial corporation, secured by equipment, payable in monthly installments of $17,857 (including interest at a variable rate equal to 30 day Commercial Paper plus 350 basis points, 5.22% at November 30, 2002), maturing February 2009. 1,369,383 1,410,714 Acquisition notes payable, unsecured, payable in monthly installments of $16,666, maturing February 2007. 771,733 811,792 Prepetition- Note payable to a commercial financial corporation, secured by real property and equipment and a personal guarantee by the trustee of a trust which is a principal stockholder of the Company, payable in monthly installments of $1,461 (including interest at 4%), maturing June 2023. 243,184 245,100 ------------- ------------- Total 34,197,194 29,602,012 ------------- ------------- Less Current Maturities (23,769,933) (18,992,222) ------------- ------------- Long-Term Debt $ 10,427,261 $ 10,609,790 ============= =============
Prepetition amount listed above represents the renegotiated amounts and terms under the 1993 plan of reorganization. In April 2002, TST amended its revolving line of credit to increase the line from $22 million to $25 million. The amended revolving credit line is limited to the lesser of $25 million or a percentage of eligible trade accounts receivable and inventories, as defined. The remaining borrowing capacity under the revolving credit line was $2.0 million as of November 30, 2002. The line of credit, as amended, has restrictive covenants requiring the maintenance of a minimum tangible net worth and working capital requirements, as defined in the agreement. One of the notes payable contains restrictive covenants on current and debt to worth ratios, and the payment of cash dividends. As of November 30, 2002, the Company was in compliance with all covenants. 5. SUPPLEMENTAL CASH FLOW INFORMATION:
Three Months Ended November 30, 2002 2001 ----------- ----------- Cash paid during the period for: Interest $ 483,639 $ 452,494 Income taxes $ 376,878 $ 134,606
7 6. CRITICAL ACCOUNTING POLICIES The Company has identified significant accounting policies that, as a result of the judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved, could result in material changes to its financial condition or results of operations under different conditions or using different assumptions. The Company's most critical accounting policies are related to the following areas: revenue recognition, long-lived assets and concentrations of credit risks. Details regarding the Company's use of these policies and the related estimates are described in the Company's Form 10-K for the fiscal year ended August 31, 2002 filed with the SEC. There have been no material changes to the Company's critical accounting policies that impacted the Company's financial condition or results of operations in the three months ended November 30, 2002 ("First Quarter 2003"). ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE INTERIM PERIODS ENDED NOVEMBER 30, 2002 AND NOVEMBER 30, 2001 Net Sales---Net sales increased from $25.4 million in the three months ended November 30, 2001 ("First Quarter 2002"), to $31.8 million for the First Quarter 2003, an increase of 25.4% as a result of sales to new customers due to the acquisition of United Computer Supplies, Inc. ("United") and fewer competitors in the marketplace. Gross Profit---Gross profit increased from $2.6 million in the First Quarter 2002 to $3.2 million in the First Quarter 2003, an increase of approximately 24.9%. The increase in gross profit was primarily the result of increased sales. Our gross profit margin remained stable at 10.2% for the First Quarters of 2003 and 2002. Selling, General and Administrative Expenses--- SG&A expenses for First Quarter 2003 were $2.4 million, or 7.4% of net sales, as compared to $2.1 million, or 8.2% of net sales for First Quarter 2002. SG&A expense increased in dollars in the First Quarter 2003 as compared to the First Quarter 2002 due primarily to the integration of new personnel from the acquisition of United. SG&A decreased as a percentage of net sales in the First Quarter of 2003 due to our acquisition of United's customers and leveraging existing fixed costs. Interest Expense---Interest expense increased from $452,000 in the First Quarter 2002 to $484,000 in the First Quarter 2003, an increase of $31,000, or approximately 6.9%. The increase in interest expense was the result of increased borrowings to finance increased inventory. Other Expense (Income)---On October 16, 2001, TST received approximately $1 million in a United States class action lawsuit involving international and domestic manufacturers' alleged attempt to fix jumbo roll thermal facsimile paper prices in the United States. TST was not a named plaintiff and did not participate in the lawsuit. The award is reported as other income in First Quarter 2002. The award skews net income results for First Quarter 2003 as compared to First Quarter 2002. If this other income is excluded from the results for First Quarter 2002, First Quarter 2003 reflects an increase in net income from operations as compared to the corresponding period of the prior year. 8 Income Taxes---Our income tax expense for the First Quarter 2003 decreased to $193,000, as compared to $435,000 for the corresponding period of the prior year. The decrease resulted primarily from the effect of the litigation settlement in the First Quarter 2002. LIQUIDITY AND CAPITAL RESOURCES Working capital increased to $12.3 million at November 30, 2002 from $11.9 million at August 31, 2002. This represented an increase of 2.9%. Borrowings under TST's line of credit increased from $17.8 million at August 31, 2002 to $22.6 million at November 30, 2002, an increase of $4.8 million, or 26.7%. The increased borrowing primarily resulted from TST's increasing inventory. In April 2002, TST entered into an agreement with a bank for a two-year renewal of its revolving line of credit. The new agreement increases the line from $22 million to $25 million. The loan is secured by, among other things, inventory, trade receivables, equipment and a personal guarantee of Marshall Sorokwasz, our Chairman of the Board and President, and Trustee of a trust which is a principal shareholder of our Company. Available borrowings under this line of credit, which accrues interest at the prime rate of interest plus .25% (5.0% at November 30, 2002), are based upon specified percentages of eligible accounts receivable and inventories. As of November 30, 2002, there was a $2.0 million borrowing capacity remaining under the $25 million revolving line of credit. The revolving credit line will mature in May 2004. We believe that the funds available under the loans encumbering our California, Texas, Pennsylvania, Illinois and West Virginia plants, the revolving credit facility, cash and cash equivalents, trade credit and internally generated funds will be sufficient to satisfy our requirements for working capital and capital expenditures for at least the next twelve months. Such belief is based on certain assumptions, including the continuation of current operations and no extraordinary adverse events, and there can be no assurance that such assumptions are correct. In addition, expansion of our operations due to an increased demand for products TST manufactures or significant growth of Hotsheet.com, Inc. may require us to obtain additional capital to add new operations or manufacturing facilities. If that should occur, we anticipate that the funds required would be generated through securities offerings or additional debt. There can be no assurance that any additional financing will be available if needed, or, if available, will be on acceptable terms. As of November 30, 2002, we did not own derivative or other financial instruments for trading or speculative purposes. We do not use financial instruments and, therefore, the implementation of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" did not have a material impact on our financial position or results operations. INVENTORY MANAGEMENT; RAW MATERIALS OF TST We believe that it is necessary for TST to maintain a large inventory of finished goods and raw materials to adequately service its customers. In recent years inventory levels had been increased to facilitate the introduction of new brands and expanded product lines. At the beginning of Fiscal 2002, management implemented a program to reduce inventory. From August 31, 2001 to August 31, 2002, TST reduced its inventory levels by $4.35 million. This is in addition to the depletion of $3 million of inventory acquired in the purchase of the assets of United. Although inventories rose in the First Quarter 2003, management intends to continue reducing inventory levels through the fiscal year ending August 31, 2003 ("Fiscal 2003"). However, downward pressures on raw material prices could compress the market for our existing inventory and have a material adverse effect on the results of operations of TST, or restrain management's attempts at reducing inventory. 9 In recent years we have depended primarily on international vendors of raw materials. One of the largest vendors from Asia has suffered a financial crisis and this has created supply disruption and a tighter raw material market for the Company. The Company in recent months has shifted its supply chain from international to domestic sources, which historically charge higher prices for raw materials. This shift could have a material adverse effect on the results of operation by making our finished goods pricing uncompetitive. TST bears the risk of increases in the prices charged by its suppliers and decreases in the prices of raw materials held in its inventory. If prices for products held in its finished goods inventory decline, if prices for raw materials required by it increase, or if new technology is developed that renders obsolete products distributed and held in inventory by TST, the Company's business could be materially adversely affected. TST purchases raw paper, coated thermal facsimile paper, coated technical paper, carbon and carbonless paper (consisting of a wide variety of weights, widths, colors, sizes and qualities), transparency film, packaging and other supplies in the open market from a number of different companies around the world. We believe that TST has adequate sources of raw material supplies to meet the requirements of its business. We believe that TST has a good relationship with all of its current suppliers. MARKET CONDITIONS OF TST The primary product produced by the Company's recent acquisitions are continuous feed business forms. Management believes that the market for business forms, which declined in 2002, will continue to decline in 2003. September 11, 2001's impact on the economy also impacted the net sales of TST; however, the exact impact on the results of operations is not ascertainable. Although net sales in Fiscal 2002, as compared to Fiscal 2001, increased approximately 28%, the Company expected net sales to have been significantly higher due to the acquisition of United in March 2002 and reduction in the market place of competing distributors of the Company's products. Management believes that the slowed economy will continue to effect the Fiscal 2003 results of operations. If selling prices for products manufactured by us cannot increase in relation to raw material cost increases, or if prices for products manufactured by us decline as a result of market pressures, our results of operations could be materially adversely affected. Although TST has specialized in select markets and has emphasized service and long-term relationships to meet customer needs more effectively, there are no long-term contractual relationships between it and any of its customers. Four customers accounted for more than 41% of TST's sales in the First Quarter 2003. There can be no assurance that purchases by these customers will remain at significant levels. TST may in the future be dependent on these or other significant customers. The loss of any other significant customer could materially adversely affect our financial position, results of operations and cash flows. SEASONALITY TST may be subject to certain seasonal fluctuations in that orders for products may decline over the summer months. If the market for finished goods decreases, then the adverse impact of the seasonal fluctuations on the Company will be greater. 10 Hotsheet.com revenues are partially generated by retail sales which are typically stronger during the Christmas holiday season. FORWARD-LOOKING STATEMENTS Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Form 10-Q contain "forward-looking statements" about our prospects for the future, including but not limited to our ability to generate sufficient working capital, our ability to continue to maintain sales to justify capital expenditures, and our ability to generate additional sales to meet business expansion. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected, including availability of raw materials, availability of thermal facsimile, computer, laser and color ink jet paper, to the cyclical nature of the industry in which we operate, the potential of technological changes which would adversely affect the need for our products, price fluctuations which could adversely impact the large inventory we require, loss of any significant customer, and termination of contracts essential to our business. Parties are cautioned not to rely on any such forward-looking statements or judgments in making investment decisions. LEGAL PROCEEDINGS On September 18, 2002, TST filed a lawsuit against a vendor in the United States District Court for the Northern District of Texas - Dallas Division. Simultaneously with the initiation of the lawsuit, TST requested that its disputes with the vendor be submitted to arbitration through the American Arbitration Association's Dallas, Texas office. TST's general claim is that the vendor breached a Distributor Agreement entered into with TST in several material respects, including the vendor's late delivery of paper products, the vendor's delivery of defective product, and the vendor's failure to properly credit TST's accounts based upon these and other alleged breaches. The vendor responded to TST's demand for arbitration by generally denying TST's claims and asserting a counterclaim seeking to recover disputed accounts receivable and damages related to TST's alleged interference with the vendor's relationship with its lender. No date has yet been set for arbitration or litigation. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are not exposed to market risks such as foreign currency exchange rates, but are exposed to risks such as variable interest rates. Market risk is the potential loss arising from adverse changes in market prices and rates. Our subsidiaries do not have supply contracts with any of their foreign vendors. All foreign vendors are paid in United States currency. In addition, TST's international sales of finished goods are insignificant. Accordingly, there are not sufficient factors to create a material foreign exchange rate risk; therefore, we do not use exchange commitments to minimize the negative impact of foreign currency fluctuations. We had both fixed-rate and variable-rate debts as of November 30, 2002. The fair market value of long-term variable interest rate debt is subject to interest rate risk. Generally the fair market value of variable interest rate debt will decrease as interest rates fall and increase as interest rates rise. The estimated fair value of our total long-term fixed rate and floating rate debt approximates carrying value. Based upon our market risk sensitive debt outstanding at November 30, 2002, there was no material exposure to our financial position or results of operations. 11 ITEM 4. CONTROLS AND PROCEDURES Within the 90 days prior to the date of this report, the company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic SEC filings. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. 12 PART II: OTHER INFORMATION ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT NO. DESCRIPTION OF EXHIBITS 99 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) No reports on Form 8-K were filed during the quarter ended November 30, 2002. 13 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. Dated: January 14, 2003 Impreso, Inc. (Registrant) By: /s/ Marshall Sorokwasz ------------------------------------ Marshall Sorokwasz Chairman of the Board, Chief Executive Officer, President, and Director By: /s/ Susan Atkins ------------------------------------ Susan Atkins Chief Financial Officer and Vice President 14 CERTIFICATION PURSUANT TO RULE 13a-14(b) AND 15d-14 I, Marshall D. Sorokwasz, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Impreso, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the Audit Committee of the registrant's Board of Directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 14, 2003 Signature: /s/ Marshall D. Sorokwasz ------------------------- Marshall D. Sorokwasz Chief Executive Officer CERTIFICATION PURSUANT TO RULE 13a-14(b) AND 15d-14 I, Susan Atkins, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Impreso, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the Audit Committee of the registrant's Board of Directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 14, 2003 Signature: /s/ Susan Atkins -------------------------- Susan Atkins Chief Financial Officer INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBITS ----------- ----------------------- 99 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-99 3 d02508exv99.txt CERTIFICATION OF CEO & CFO EXHIBIT 99 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Impreso, Inc. (the "Company"), on Form 10-Q for the period ending November 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Marshall D. Sorokwasz, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: January 14, 2003 Signature: /s/ Marshall Sorokwasz ------------------------ Marshall D. Sorokwasz Chief Executive Officer CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Impreso, Inc. (the "Company"), on Form 10-Q for the period ending November 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Susan Atkins, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: January 14, 2003 Signature: /s/ Susan Atkins ------------------------ Susan Atkins Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----