-----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, KWLrep2QZlAgQW1ZRu1hXzagAnBl64WUI2TgJVsZuXX427gOJYYW8FuOHk5/yAK5 I+GKBKSAMHeREMzjWCQaGQ== /in/edgar/work/20000717/0001019056-00-000389/0001019056-00-000389.txt : 20000920 0001019056-00-000389.hdr.sgml : 20000920 ACCESSION NUMBER: 0001019056-00-000389 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000531 FILED AS OF DATE: 20000717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMPRESO COM INC CENTRAL INDEX KEY: 0001108345 STANDARD INDUSTRIAL CLASSIFICATION: [7389 ] IRS NUMBER: 752849585 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-29883 FILM NUMBER: 673970 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 10-Q 1 0001.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 MAY 31, 2000 OR [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 COMMISSION FILE NUMBER 0-26774 IMPRESO.COM, INC. (exact name of registrant as specified in its charter) DELAWARE 75-1517936 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 652 SOUTHWESTERN BOULEVARD COPPELL, TEXAS 75019 (Address of principal executive offices) (972) 462-0100 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuers' classes of Common Stock as of the latest practical date. CLASS OF COMMON STOCK SHARES OUTSTANDING AT JULY 14, 2000 --------------------- ----------------------------------- $0.01 Par Value 5,292,780 IMPRESO.COM, INC. AND SUBSIDIARIES FORM 10-Q MAY 31, 2000 INDEX PART I. FINANCIAL INFORMATION PAGE NUMBER Item 1. Consolidated Financial Statements: Interim Consolidated Balance Sheets at May 31, 2000 (Unaudited) and August 31, 1999 1 Interim Consolidated Statements of Operations for the Three Months and Nine Months Ended May 31, 2000, and 1999 (Unaudited) 3 Interim Consolidated Statements of Cash Flows for the Nine Months Ended May 31, 2000, and 1999 (Unaudited) 4 Notes to Interim Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14
IMPRESO.COM, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED BALANCE SHEETS ASSETS May 31, August 31, 2000 1999 ------------ ------------ (Unaudited) Current assets: Cash and cash equivalents $ 180,601 $ 22,629 Trade accounts receivable, net of allowance for doubtful accounts of $235,000 at May 31, 2000 and $130,397 at August 31, 1999 5,819,646 6,295,988 Income tax receivable -- 478,909 Investments in marketable securities 11,088 11,088 Inventories 23,635,490 18,801,015 Prepaid expenses and other 256,062 200,739 Deferred income tax assets 107,099 44,335 ------------ ------------ Total current assets 30,009,986 25,854,703 ------------ ------------ Property, plant and equipment, at cost 17,596,222 16,845,961 Less-Accumulated depreciation (9,881,605) (9,635,739) ------------ ------------ Net property, plant and equipment 7,714,617 7,210,222 ------------ ------------ Other assets 18,254 19,453 ------------ ------------ Total assets $ 37,742,857 $ 33,084,378 ============ ============
The accompanying notes are an integral part of these consolidated balance sheets. 1
IMPRESO.COM, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED BALANCE SHEETS- (CONTINUED) LIABILITIES AND STOCKHOLDERS' EQUITY May 31, August 31, 2000 1999 ----------- ----------- (Unaudited) Current Liabilities: Accounts payable $ 8,255,507 $ 9,053,907 Accrued liabilities 1,522,552 1,678,862 Current maturities of long-term debt 112,890 28,179 Line of credit 10,924,208 6,357,787 Prepetition liabilities: Current maturities of long-term debt 6,914 35,233 ----------- ----------- Total current liabilities 20,822,071 17,153,968 ----------- ----------- Deferred income tax liability 756,911 727,865 Long-term portion of prepetition debt, net of current maturities 254,757 884,785 Long-term debt, net of current maturities 2,592,817 1,744,487 ----------- ----------- Total liabilities 24,426,556 20,511,105 ----------- ----------- Commitments and contingencies Stockholders' equity: Preferred Stock, $.01 par value; 5,000,000 shares authorized; 0 shares issued and outstanding at May 31, 2000 and August 31, 1999 -- -- Common Stock, $.01 par value; 15,000,000 shares authorized; 5,292,780 shares issued and outstanding at May 31, 2000 and August 31, 1999 52,928 52,928 Warrants 110 110 Additional paid-in-capital 6,319,572 6,319,572 Retained earnings 6,943,691 6,200,663 ----------- ----------- Total stockholders' equity 13,316,301 12,573,273 ----------- ----------- Total liabilities and stockholders' equity $37,742,857 $33,084,378 =========== ===========
The accompanying notes are an integral part of these consolidated balance sheets. 2
IMPRESO.COM, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended May 31, May 31, ---------------------------- ---------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Net Sales $ 17,577,738 $ 14,942,998 $ 50,407,787 $ 42,965,624 Cost of sales 14,704,275 13,007,788 43,456,560 37,360,381 ------------ ------------ ------------ ------------ Gross profit 2,873,463 1,935,210 6,951,227 5,605,243 ------------ ------------ ------------ ------------ Other costs and expenses: Selling, general and administrative 1,878,833 1,512,251 5,043,719 4,223,858 Interest expense 339,392 239,710 896,676 594,302 Other expense (income), net (27,481) 4,243 (102,185) (12,808) ------------ ------------ ------------ ------------ Total other costs and expenses 2,190,744 1,756,204 5,838,210 4,805,352 ------------ ------------ ------------ ------------ Income before income tax expense 682,719 179,006 1,113,017 799,891 ------------ ------------ ------------ ------------ Income tax expense (benefit): Current 219,806 65,445 403,708 286,099 Deferred (16,041) (3,575) (33,719) 520 ------------ ------------ ------------ ------------ Total income tax expense 203,765 61,870 369,989 286,619 ------------ ------------ ------------ ------------ Net income $ 478,954 $ 117,136 $ 743,028 $ 513,272 ============ ============ ============ ============ Net income per common share (basic and diluted) $ 0.09 $ 0.02 $ 0.14 $ 0.10 ============ ============ ============ ============ Weighted average shares outstanding 5,292,780 5,292,780 5,292,780 5,292,780
The accompanying notes are an integral part of these consolidated financial statements. 3
IMPRESO.COM, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended -------------------------- May 31, May 31, 2000 1999 ----------- ----------- Cash Flows From Operating Activities: Net income $ 743,028 $ 513,272 Adjustments to reconcile net income to net cash flow provided by operating activities- Depreciation and amortization 502,260 398,542 Increase (decrease) in deferred income taxes (33,718) 520 Decrease in accounts receivable, net 476,342 371,490 Increase in inventory (4,834,475) (5,062,608) Increase in prepaid expenses and other (55,323) (14,058) (Decrease) increase in accounts payable (798,400) 513,405 (Decrease) increase in accrued liabilities (156,310) 170,404 Decrease in income tax receivable 478,909 -- (Increase) decrease in other assets 1,199 (145,139) ----------- ----------- Net cash used in operating activities (3,676,488) (3,254,172) ----------- ----------- Cash Flows From Investing Activities: Additions to property, plant, and equipment (1,035,143) (429,803) Sales of property, plant and equipment, net 28,488 3,901 ----------- ----------- Net cash used in investing activities (1,006,655) (425,902) ----------- ----------- Cash Flows From Financing Activities: Net borrowing on line of credit 4,566,421 3,748,665 Payments on prepetition debt (653,146) (66,105) Net borrowing (payments) on postpetition debt 927,840 (25,367) ----------- ----------- Net cash provided by financing activities 4,841,115 3,657,193 ----------- ----------- Net increase (decrease) in cash and cash equivalents 157,972 (22,881) Cash and cash equivalents, beginning of period 22,629 117,840 ----------- ----------- Cash and cash equivalents, end of period $ 180,601 $ 94,959 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 4 IMPRESO.COM, INC. AND SUBSIDIARIES NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. ORGANIZATION AND NATURE OF BUSINESS Impreso.com, Inc., a Delaware corporation, is the parent holding company of TST/Impreso, Inc., a manufacturer and distributor to dealers and other resellers of paper and film products for commercial and home use in domestic and international markets, and Hotsheet.com, Inc., the owner and operator of the Hotsheet.com web portal (referred to collectively as the "Company"). TST/Impreso, Inc.'s product line consists of standard continuous computer stock business forms; thermal facsimile paper; cut sheet products such as copy paper, ink jet paper, digital photo paper and transparencies; fine business stationary; point of sale and cash register machine rolls; high speed laser roll paper; wide format engineering rolls; wide format ink jet media; and processed laser cut sheets. Currently, TST/Impreso, Inc., has two wholly owned subsidiaries: TST/Impreso of California, Inc., and Texas Stock Tab of West Virginia, Inc. Both of these subsidiaries support the activities of the paper converting segment of the Company's business. 2. INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS In the opinion of management, the unaudited Interim Consolidated Financial Statements of the Company include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company's financial position as of May 31, 2000, and its results of operations for the three and nine months ended May 31, 2000, and 1999. Results of the Company's operations for the interim period ended May 31, 2000, may not be indicative of results for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations promulgated by the Securities and Exchange Commission (the "SEC"). The unaudited Interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes of the Company and its subsidiaries, included in the Company's Form 10-K, as amended by Form 10-K/A (the "Company's Form 10-K"), for the fiscal year ended August 31, 1999 ("Fiscal 1999"). Accounting policies used in the preparation of the unaudited Interim Consolidated Financial Statements are consistent in all material respects with the accounting policies described in the Notes to Consolidated Financial Statements in the Company's Form 10-K. 3. INVENTORIES OF TST/IMPRESO, INC. Inventories are stated at the lower of cost (principally on a first-in, first-out basis) or market and include material, labor, and factory overhead. 5 Inventories consisted of the following: May 31, August 31, 2000 1999 ----------- ----------- Finished goods $ 8,502,483 $ 5,126,046 Raw materials 14,412,257 12,826,083 Supplies 663,522 783,964 Work-in-process 57,228 64,922 ----------- ----------- Total inventories $23,635,490 $18,801,015 =========== =========== 4. LONG -TERM DEBT AND LINE OF CREDIT OF TST/IMPRESO, INC. The following is a summary of long-term debt and line of credit:
May 31, August 31, 2000 1999 ----------- ---------- Note payable to a commercial financial corporation under a revolving credit line maturing May 2001, secured by inventories, trade accounts receivable, equipment, goodwill associated with TST/Impreso, Inc.'s trademark IMPRESO (no value on financial statements), and a personal guarantee by the trustee of a trust which is a principal shareholder of the Company, interest payable monthly at prime plus .25% (9.25% at May 31, 2000). $10,924,208 $6,357,787 Note payable to commercial financial corporation, secured, payable in monthly installments, interest at 1.3%, maturing June 2001. 6,140 9,862 Note payable to a commercial financial corporation, payable in monthly installments, interest at 7.25%, maturing December 2002. 36,581 48,980 Note payable to a bank, secured by property, payable in monthly installments of $14,391 (including interest at 4.5% above the 11th District Cost of Funds rate, 9.5% at May 31, 2000) maturing August 2008. 1,688,397 1,698,720 Note payable to a commercial financial corporation, secured, payable in monthly installments, interest rate of 6.7%, maturing July 2003. 12,804 15,103 Note payable to a commercial financial corporation, payable in monthly installments, interest rate at 10.27%, maturing September 2004. 223,903 -- Note payable to a commercial financial corporation, payable in monthly installments, interest rate of 11.17%, maturing November 2004. 98,409 --
6
Note payable to a bank, secured by property, payable in monthly installments, interest rate at 8.5% through 2004, interest at prime plus 0.25% thereafter, maturing December 2009. 625,096 -- Note payable to a commercial financial corporation, payable in monthly installments, interest rate at 6.9%, maturing August 2004. 14,377 -- Prepetition- Note payable to a bank, secured by property, payable in monthly installments of $4,815 (including interest at 6%) through May 2003, at which time the remaining balance becomes due and payable. -- 546,120 Other notes payable, secured by one or more of the following: a personal guarantee by the trustee of a trust which is a principal shareholder of the Company, and certain property, plant, and equipment, maturity dates to 2023, interest rates ranging from 4% to 8%. 261,671 373,899 ----------- ---------- Total 13,891,586 9,050,471 Less-Current maturities (11,044,012) (6,421,199) ----------- ---------- Long term debt $ 2,847,574 $2,629,272 =========== ==========
In March 2000, TST/Impreso, Inc. amended its revolving line of credit to increase the line from $13 million to $14.9 million. The amended loan's available borrowings, which is a percentage of eligible inventories, is limited by a staggered declining cap based upon certain dates. As of May 31, 2000, the revolving credit line is limited to the lesser of $14.9 million or a percentage of eligible trade accounts receivable and inventories, as defined. The remaining availability under the revolving credit line was $2.3 million. The line of credit, as amended, has restrictive covenants requiring the maintenance of a minimum tangible net worth and working capital requirements, as defined. As of May 31, 2000, TST/Impreso, Inc. was in compliance with all covenants. 5. SUPPLEMENTAL CASH FLOW INFORMATION Nine Months Ended May 31, ----------------------- 2000 1999 -------- -------- Cash paid during the period for: Interest $896,676 $594,302 Income taxes $342,590 $302,100 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE INTERIM PERIODS ENDED MAY 31, 2000 AND MAY 31, 1999 Net Sales---Net sales for the three months ended May 31, 2000, ("Third Quarter") increased $2.6 million, or 17.6%, to $17.6 million as compared to $14.9 million for the corresponding period of the prior year. Net sales for the nine months ended May 31, 2000, increased $7.4 million, or 17.3%, to $50.4 million as compared to $43.0 million for the corresponding period of the prior YEAR. Net sales increased in the Third Quarter and for the nine months ended May 31, 2000, due to TST/Impreso, Inc.'s introduction and sales of new product lines into existing and new channels of distribution, and its expanding customer base. Gross Profit---Gross profit for the three months ended May 31, 2000, increased approximately $938,000 or 48.5%, to $2.9 million, as compared to $1.9 million for the corresponding period of the prior year. Gross profit for the nine months ended May 31, 2000, increased $1.3 million, or 24% to $7.0 million, as compared to $5.6 million for the corresponding period of the prior year. Gross profit margin for the Third Quarter and for nine months ended May 31, 2000 increased to approximately 16.3% from 13.0% and 13.8% from 13.0%, respectively, for the corresponding periods of the prior year. The Company's increased gross profit and gross profit margin for the three and nine month periods ended May 31, 2000, was due to TST/Impreso, Inc.'s introduction of new higher margin specialty imaging products and increased sales of higher margin branded products. Selling, General, and Administrative Expenses---SG&A expenses for the Third Quarter, were $1.9 million, or 10.7% of net sales as compared to $1.5 million, or 10.1% of net sales, for the corresponding period of the prior year. SG&A expenses for the nine months ended May 31, 2000, were $5.0 million, or 10% of net sales, as compared to $4.2 million, or 9.8% of net sales for the corresponding period of the prior year. The increases in SG&A as a percentage of net sales for the three and nine month periods ended May 31, 2000, resulted primarily from the addition of new employees and increased expenses associated with TST/Impreso, Inc. increasing its presence in existing sales territories. Interest Expense---Interest expense for the three months ended May 31, 2000, was approximately $339,000 as compared to approximately $240,000, an increase of 41.6% from the corresponding period of the prior year. Interest expense for the nine months ended May 31, 2000, was approximately $897,000 as compared to approximately $594,000, an increase of 50.9% from the corresponding period of the prior year. The increases in interest expense for the three and nine month periods ended May 31, 2000, were primarily attributable to increased borrowings under TST/Impreso, Inc.'s revolving line of credit. The increased borrowings reflected TST/Impreso, Inc.'s increased inventory, which increased 25.7% as of May 31, 2000, as compared to August 31, 1999. Financed acquisitions of equipment for TST/Impreso, Inc. also contributed to the increase in interest expense. Income Taxes---The Company's income tax expense for the Third Quarter was approximately $204,000, 8 as compared to $62,000 for the three months ended May 31, 1999. The Company's income tax expense for the nine months ended May 31, 2000 was approximately $370,000, as compared to $287,000 for the corresponding period of the prior year. The increase in income tax expense was the result of an increase in taxable income. LIQUIDITY AND CAPITAL RESOURCES Working capital increased to $9.2 million at May 31, 2000, from $8.7 million at August 31, 1999. This represented an increase of 5.6%, primarily attributable to a 25.7% increase in TST/Impreso, Inc.'s inventory, and a 71.8% increase in borrowing under TST/Impreso, Inc.'s line of credit. In May 1999, TST/Impreso, Inc. entered into an agreement with a bank for a two-year renewal of its revolving line of credit. The loan is secured by, among other things, inventory, trade receivables, equipment and a personal guarantee of Marshall Sorokwasz, Chairman of the Board and President of TST/Impreso, Inc. and Impreso.com, Inc., and trustee of a trust which is a principal shareholder of the Company. Available borrowings under this line of credit, which accrues interest at the prime rate of interest plus .25% (9.25% at May 31, 2000), are based upon specified percentages of eligible accounts receivable and inventories. In March 2000, TST/Impreso, Inc. amended its revolving line of credit to increase the line from $13 million to $14.9 million. The amended loan's available borrowings, which is a percentage of eligible inventories, is limited by a staggered declining cap based upon certain dates. As of May 31, 2000, there was a $2.3 million borrowing capacity remaining under the $14.9 million line of credit. In June 2000, TST/Impreso, Inc. completed construction on the expansion of its facility in West Virginia. In July 2000, the Company anticipates that the West Virginia Economic Development Authority will close its loan with TST/Impreso, Inc. to fund its portion of the permanent financing of the facility which will be co-financed with One Valley Bank - East, National Association. The Company believes that the funds available under the loan and loan commitment for the addition to TST/Impreso, Inc.'s West Virginia facility, the revolving credit facility, cash and cash equivalents, trade credit, and internally generated funds will be sufficient to satisfy the Company's requirements for working capital and capital expenditures for at least the next twelve months. Such belief is based on certain assumptions, including the continuation of current operations and no extraordinary adverse events. There can be no assurance that such assumptions are correct. In addition, expansion of Impreso.com, Inc.'s operations due to growth of the TST/Impreso, Inc. business or capital requirements for Hotsheet.com, Inc., may require the Company to obtain additional capital for expansion purposes. It is anticipated if that should occur, the funds required would be generated through securities offerings or additional debt. There can be no assurance that any additional financing will be available if needed, or, if available, will be on acceptable terms. INVENTORY MANAGEMENT; RAW MATERIALS The Company believes that it is necessary for TST/Impreso, Inc. to maintain a large inventory of 9 finished goods and raw materials to adequately service its customers. Because TST/Impreso, Inc. has in the past and is currently expanding the manufacturing and distribution of new brands and types of products, its raw material and finished goods inventory requirements have increased over prior years. Therefore, TST/Impreso, Inc. has substantially increased its inventory levels. In addition, increasing international sourcing of raw materials has impacted delivery cycles resulting in TST/Impreso, Inc.'s expanding inventory to accommodate less frequent, larger shipments. TST/Impreso, Inc. bears the risk of increases in the prices charged by the its suppliers and decreases in the prices of raw materials held in its inventory. If prices for products held in its finished goods inventory decline or if prices for raw materials required by it increase, or if new technology is developed that renders obsolete products distributed and held in inventory by TST/Impreso, Inc., the Company's business could be materially adversely affected. MARKET CONDITIONS Continuing consolidation within the paper industry is creating significant opportunities for TST/Impreso, Inc. to expand its customer base and increase its market share. The recent completion of the liquidation of a major Midwestern competitor of TST/Impreso, Inc. has resulted in a substantial number of new customers which were captured without compromise to the Company's profit margins or substantial increases in SG&A expenses. The price of raw materials that TST/Impreso, Inc. utilizes had been steadily increasing since the second quarter of fiscal 1999. During the Third Quarter, prices for raw materials decreased and then stabilized in June 2000. Management believes that raw material paper costs will again begin to increase throughout the remainder of the Company's 2000 fiscal year and into fiscal 2001. Market indications are that the supply of the material which comprises the raw material utilized by TST/Impreso, Inc., pulp wood product, will start to tighten at the beginning of the Company's fiscal year 2001. Currently, raw material inventory costs are equal to or less than average raw material market costs. Management believes that its increase of TST/Impreso, Inc.'s inventory has advantageously positioned itself to capitalize on this anticipated future market trend. If selling prices for products manufactured by TST/Impreso, Inc. cannot increase in relationship to raw material cost increases, or if prices for products manufactured by TST/Impreso, Inc. declines as a result of market pressures, the Company's results of operations could be materially adversely affected. SEASONALITY TST/Impreso, Inc. may be subject to certain seasonal fluctuations in that orders for products may decline over the summer months. However, the Company does not believe that such fluctuations have a material adverse effect on the Company's results of operations. 10 YEAR 2000 On January 1, 2000, the Company's computer system transitioned into the year 2000 without any material business interruptions. SUBSEQUENT EVENTS On June 14, 2000, TST/Impreso, Inc. dissolved its wholly owned Texas subsidiary, Big Time Paper, Inc. Management is dissolving a majority of TST/Impreso, Inc.'s wholly owned subsidiaries to streamline accounting procedures and reduce applicable taxes. These activities will not have a material impact on the financial condition or operations of the Company. FORWARD-LOOKING STATEMENTS Management's Discussion and Analysis of Financial Condition and the Results of Operations and the sections of this Form 10-Q contain "forward-looking statements" about the Company's prospects for the future, such as the Company's ability to generate sufficient working capital, the Company's ability to continue to maintain sales to justify capital expenses, and the Company's ability to generate additional sales to meet business expansion. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected, including availability of raw materials, availability of thermal facsimile, computer, laser and color ink jet paper, to the cyclical nature of the industries in which the Company operates, the potential of technological changes which would adversely affect the need for the Companies products or services, price fluctuations which could adversely impact the large inventory TST/Impreso, Inc. requires, loss of any significant customer, and termination of contracts essential to the Companies businesses. Parties are cautioned not to rely on any such forward-looking statements or judgments in making investment decisions. 11 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is not exposed to market risks such as foreign currency exchange rates, but is exposed to risks such as variable interest rates. Market risk is the potential loss arising from adverse changes in market prices and rates. TST/Impreso, Inc. does not have supply contracts with any of TST/Impreso, Inc.'s foreign vendors. All foreign vendors are paid in United States currency. In addition, TST/Impreso, Inc.'s international sales of finished goods are insignificant. Accordingly, there are not sufficient factors to create a material foreign exchange rate risk; therefore, the Company does not use exchange commitments to minimize the negative impact of foreign currency fluctuations. The Company had both fixed-rate and variable-rate debts as of May 31, 2000. The fair market value of long-term variable interest rate debt is subject to interest rate risk. Generally the fair market value of variable interest rate debt will decrease as interest rates fall and increase as interest rates rise. The estimated fair value of the Company's total long-term fixed rate and floating rate debt approximates fair value. As of May 31, 2000, the Company did not own derivative or other financial instruments for trading or speculative purposes. Based upon the Company's market risk sensitive debt outstanding at May 31, 2000, there was no material exposure to the Company's financial position or results of operations. 12 PART II: OTHER INFORMATION ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT NO. DESCRIPTION OF EXHIBITS 27 Financial data schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended May 31, 2000. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized. Dated: July 17, 2000 Impreso.com, Inc. (Registrant) /s/ MARSHALL SOROKWASZ ----------------------------- Marshall Sorokwasz Chairman of the Board, Chief Executive Officer, President, and Director /s/ SUSAN ATKINS ----------------------------- Susan Atkins Chief Financial Officer and Vice President 14 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION OF EXHIBITS 27 Financial data schedule EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 (Replace this text with the legend) 0001108345 IMPRESO.COM, INC. 1,000 USD 9-MOS AUG-31-2000 SEP-01-1999 MAY-31-2000 1 180,601 11,088 6,054,646 235,000 23,635,490 30,009,986 17,596,222 9,881,605 37,742,857 20,822,071 0 0 0 53,038 13,263,263 37,742,857 17,577,738 17,577,738 14,704,275 14,704,275 (27,481) 235,000 339,392 682,719 203,765 478,954 0 0 0 478,954 .09 .09
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