<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

    [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended June 30, 2001

                                      OR

    [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

             For the Transition Period From _________ to _________

                        Commission File Number 0-23077
                            ______________________

                                IMAGEMAX, INC.
            (Exact name of Registrant as specified in its charter)


                      Pennsylvania                       23-2865585
                      ------------                       ----------
             (State or other jurisdiction of          (I.R.S. Employer
             incorporation or organization)          Identification No.)


            455 Pennsylvania Avenue, Suite 128
             Fort Washington, Pennsylvania                 19034
             -----------------------------                 -----
         (Address of principal executive offices)        (Zip Code)


                                (215) 628-3600
                                --------------
             (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 August 10, 2001:

      Common Stock, no par value                          6,732,473
      --------------------------                          ---------
                Class                                  Number of Shares
<PAGE>

                        IMAGEMAX, INC. AND SUBSIDIARIES
                              INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                   Page
                                                                   ----
<S>                                                                <C>
PART I - FINANCIAL INFORMATION

 Item 1 - Financial Statements (Unaudited)

    Consolidated Statements of Operations........................    1

    Consolidated Balance Sheets..................................    2

    Consolidated Statements of Cash Flows........................    3

    Notes to Consolidated Financial Statements...................    4

 Item 2 - Management's Discussion and Analysis of Financial
    Condition and Results of Operations..........................    7

 Item 3 - Quantitative and Qualitative Disclosures
    about Market Risk............................................   10

PART II - OTHER INFORMATION

 Item 6 - Exhibits and Reports on Form 8-K.......................   11

SIGNATURES.......................................................   12
</TABLE>
<PAGE>

                        IMAGEMAX, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
              (Unaudited, in thousands except per share amounts)


                                          Three Months           Six Months
                                          Ended June 30,       Ended June 30,
                                          --------------       --------------

                                         2001        2000      2001       2000
                                         ----        ----      ----       ----

Revenues:
  Services...........................   $10,822    $13,172   $21,099    $25,293
  Products...........................     2,482      2,831     4,480      5,403
                                        -------    -------   -------    -------

                                         13,304     16,003    25,579     30,696
                                        -------    -------   -------    -------

Cost of revenues:
  Services...........................     6,517      7,834    12,832     15,061
  Products...........................     1,523      1,931     2,668      3,472
  Depreciation.......................       430        464       853        924
                                        -------    -------   -------    -------

                                          8,470     10,229    16,353     19,457
                                        -------    -------   -------    -------

     Gross profit....................     4,834      5,774     9,226     11,239
Selling and administrative expenses..     4,105      4,278     7,910      8,290
Amortization of intangibles..........       513        473     1,011        923
                                        -------    -------   -------    -------

     Operating income................       216      1,023       305      2,026
Interest expense.....................       415        551       875      1,140
                                        -------    -------   -------    -------

Net income (loss)....................   $  (199)   $   472   $  (570)   $   886
                                        =======    =======   =======    =======

Basic and diluted net income (loss)
  per share..........................   $ (0.03)     $0.07   $ (0.09)     $0.13
                                        =======    =======   =======    =======

Shares used in computing basic
  net income (loss) per share........     6,713      6,649     6,700      6,641
                                        =======    =======   =======    =======

Shares used in computing diluted
  net income (loss) per share........     6,713      6,651     6,700      6,643
                                        =======    =======   =======    =======


  The accompanying notes are an integral part of these financial statements.

                                       1
<PAGE>

                        IMAGEMAX, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                (Unaudited, in thousands except share amounts)

<TABLE>
<CAPTION>
                                                                             June 30,     December 31,
                                                                               2001           2000
                                                                               ----           ----
<S>                                                                          <C>          <C>
                                   ASSETS

Current assets:
 Cash and cash equivalents..............................................     $  1,290       $  2,248
 Accounts receivable, net of allowance for doubtful
    accounts of $527 and $506 as of June 30, 2001 and
    December 31, 2000, respectively.....................................        9,600         10,080
 Inventories............................................................        1,458          1,526
 Prepaid expenses and other.............................................        1,242          1,238
                                                                             --------       --------

    Total current assets................................................       13,590         15,092

Property, plant and equipment, net......................................        3,954          4,374
Intangibles, primarily goodwill, net....................................       41,807         42,689
Other assets............................................................          691            805
                                                                             --------       --------

                                                                             $ 60,042       $ 62,960
                                                                             ========       ========

                    LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Short-term debt and current portion of long-term debt..................     $  6,461       $  6,431
 Accounts payable.......................................................        3,058          2,332
 Accrued expenses.......................................................        3,427          3,607
 Deferred revenue.......................................................        1,497          2,513
                                                                             --------       --------

    Total current liabilities...........................................       14,443         14,883
Long-term debt..........................................................        3,365          5,365
Subordinated convertible debt, net of discount of $363 and $432, as of
 June 30, 2001 and December 31, 2000, respectively......................        5,637          5,568

Other long-term liabilities.............................................           51             51

Shareholders' equity:
 Preferred stock, no par value, 10,000,000 shares
    authorized, none issued.............................................           --             --
 Common stock, no par value, 40,000,000 shares authorized,
    6,732,473 and 6,686,368 shares issued and outstanding
    as of June 30, 2001 and December 31, 2000, respectively.............       53,478         53,455
 Accumulated deficit....................................................      (16,932)       (16,362)
                                                                             --------       --------

    Total shareholders' equity..........................................       36,546         37,093
                                                                             --------       --------

                                                                             $ 60,042       $ 62,960
                                                                             ========       ========
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>

                        IMAGEMAX, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Unaudited, in thousands)

<TABLE>
<CAPTION>
                                                                          Six Months
                                                                        Ended June 30,
                                                                        --------------

                                                                       2001         2000
                                                                       ----         ----
<S>                                                                  <C>          <C>
Cash flows from operating activities:
 Net income (loss)..............................................     $  (570)     $   886
 Adjustments to reconcile net income (loss) to net cash
    provided by operating activities-
    Depreciation and amortization...............................       1,736        1,847
    Amortization of deferred financing costs....................         128           40
    Amortization of imputed interest............................          69           41
    Changes in operating assets and liabilities-
      Accounts receivable, net..................................         480       (1,043)
      Inventories...............................................          68          468
      Prepaid expenses and other................................          (4)          (6)
      Other assets..............................................          20           --
      Accounts payable..........................................         726         (641)
      Accrued expenses..........................................        (181)        (125)
      Deferred revenue..........................................      (1,016)         296
                                                                     -------      -------

         Net cash provided by operating activities..............       1,456        1,763
                                                                     -------      -------

Cash flows from investing activities:
 Purchases of property and equipment............................        (433)        (383)
                                                                     -------      -------

         Net cash used in investing activities..................        (433)        (383)
                                                                     -------      -------

Cash flows from financing activities:
 Principal payments on debt and capital lease obligations.......      (2,270)         (88)
 Net borrowings (repayments) under line of credit...............         300       (5,942)
 Payment of deferred financing costs............................         (34)        (600)
 Proceeds from issuance of common stock.........................          23           38
 Proceeds of subordinated debt transaction......................          --        6,000
                                                                     -------      -------

         Net cash used in financing activities..................      (1,981)        (592)
                                                                     -------      -------

Net increase (decrease) in cash and cash equivalents............        (958)         788
Cash and cash equivalents, beginning of period..................       2,248        1,719
                                                                     -------      -------

Cash and cash equivalents, end of period........................     $ 1,290      $ 2,507
                                                                     =======      =======

Supplemental disclosures of cash flow information:
 Cash paid for:
    Interest....................................................     $ 1,104      $   984
                                                                     =======      =======

    Income taxes................................................     $   104      $    53
                                                                     =======      =======
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>

                        IMAGEMAX, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1. BACKGROUND AND BASIS OF PRESENTATION:

     ImageMax, Inc. ("ImageMax") is a single-source provider of outsourced
document management solutions to companies located throughout the United States
and concentrated primarily in the health care, financial services and legal
services industries.  The Company's services include electronic (digital) and
micrographic media conversion, data entry and indexing, Internet retrieval and
hosting services, document storage (including Internet "web-enabled" document
storage and retrieval) and system integration.  The Company also sells and
supports document management equipment and proprietary as well as third party
open architecture imaging and indexing software. The Company has one reportable
segment.

     The accompanying unaudited consolidated financial statements include the
accounts of ImageMax and its subsidiaries (the "Company").  All material
intercompany balances and transactions have been eliminated in consolidation.
The consolidated balance sheet as of December 31, 2000 has been derived from the
Company's consolidated financial statements that have been audited by the
Company's independent auditors.

     The unaudited financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information pursuant to rules and regulations of the Securities and
Exchange Commission ("SEC"). Accordingly, unaudited interim financial statements
such as those in this report allow certain information and footnotes required by
accounting principles generally accepted in the United States for year-end
financial statements to be excluded.  The Company believes all adjustments
necessary for a fair presentation of these interim financial statements have
been included and are of a normal and recurring nature. Interim results are not
necessarily indicative of results for a full year.  These interim financial
statements should be read in conjunction with the Company's pro forma and
historical financial statements and notes thereto included in its Annual Report
on Form 10-K for the year ended December 31, 2000.

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those estimates.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     There were no changes in the accounting policies of the Company during the
periods presented.  For a description of these policies, refer to Note 2 of
Notes to Consolidated Financial Statements of ImageMax, Inc. and Subsidiaries
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000.

3. LONG-TERM DEBT:

     On June 12, 2000, the Company closed on a $14.5 million senior credit
facility (the "Credit Facility") pursuant to the Credit Agreement dated June 9,
2000 (the "Credit Agreement") with Commerce Bank, NA and FirsTrust Bank
(together, the "Banks").  The Credit Facility consists of a two-year $7.0
million revolving credit line (the "Revolving Credit Line") and a four-year $7.5
million term loan (the "Term Loan").

     Under the Revolving Credit Line, interest is payable monthly at the prime
rate plus 1.5% (effective rate of 8.5% as of June 30, 2001) with principal due
and payable in June 2002. Borrowing availability is based on the level of the
Company's eligible accounts receivable, as defined in the Credit Agreement.  The
obligation of the Banks to make any extension of credit is subject to the
satisfaction of Commerce Bank in its sole and absolute discretion of certain
conditions precedent on the relevant borrowing or issue date.  As of June 30,
2001, approximately $4.2 million was outstanding under the Revolving Credit
Line.

     Under the Term Loan, interest is payable monthly at the prime rate plus
2.0% (effective rate of 9.0% as of June 30, 2001) with principal due and payable
in consecutive quarterly payments of $500,000 commencing September 30, 2000
until March 31, 2004. In addition, on an annual basis, the Company is required
to reduce the principal amount outstanding under the Term Loan to the extent
that EBITDA (as defined in the Credit Agreement), as adjusted, exceeds certain
specified levels set forth in the Credit Agreement and upon certain asset sales
by the Company, if any.  As of June 30, 2001, approximately $4.8 million was
outstanding under the Term Loan.

                                       4
<PAGE>

3. LONG-TERM DEBT (Continued):

     The Credit Facility restricts the payment of dividends and is secured by
substantially all assets of the Company and requires maintenance of various
financial and restrictive covenants including minimum levels of EBITDA and net
worth.  The Company also issued warrants to the Banks to purchase an additional
100,000 shares of common stock of the Company (subject to downward adjustment
under certain circumstances) at $3.50 per share.  The warrants are exercisable
beginning one year from the date of issuance.  The warrants expire five years
from the date of issuance.  The Company also paid $242,500 in bank fees to the
Banks upon closing.

     In connection with the Credit Facility, the Company entered into an
interest rate cap agreement maturing on June 9, 2002, with a total notional
amount of $6,000,000.  The Company paid the counterparty a premium of $29,000 on
June 9, 2000, and will receive monthly an amount equal to the product of the
amount by which the Prime Rate (7.0% at June 30, 2001) exceeds the Cap Rate
(11.5%) multiplied by the notional amount. During 2001, the Prime Rate has not
exceeded the Cap Rate.  Accordingly, the Company has not received any payments
under this agreement during 2001.

     On March 30, 2001, the Company entered into an amendment to the Credit
Facility (the "Amendment") which reduced the minimum levels of EBITDA required
under the restrictive covenants.  In addition, the Amendment increased the level
of payments under the Term Loan by a minimum of $1,000,000 over the next 12
months.  This increase includes minimum payments of $600,000 on May 30, 2001,
and $150,000 on June 30, 2001, both of which have been made.  An additional
payment of $150,000 is due on September 30, 2001, with the balance of $100,000
split over December 31, 2001 and March 31, 2002.

     In April 1999, the Company executed a $900,000 mortgage loan with a lender
relating to a Company-owned property that houses a business unit operation.  The
Company received $869,000 in proceeds, net of closing costs, from the
transaction.  In July 1999, the $869,000 was applied to the balance of the
Credit Facility.  Interest on the mortgage is the greater of 8.50% or the U.S.
Treasury rate plus 375 basis points (9.50% at June 30, 2001).  The loan carries
a ten-year term (maturing May 2009), is secured by the mortgaged property, and
requires equal monthly repayments of principal and interest of $7,500.

4. SUBORDINATED CONVERTIBLE DEBT:

     On February 15, 2000, the Company completed a $6 million financing
transaction involving the sale of convertible subordinated notes (the "Notes")
and warrants (the "Investor Warrants") to TDH III, L.P. ("TDH"), Dime Capital
Partners, Inc. and Robert E. Drury (the "Investors").  The proceeds of this
financing were used to repay $5 million under the previous credit facility, and
provide working capital for the Company.  Additionally, J.B. Doherty, the
managing general partner of TDH, and Mr. Drury, joined the Company's Board of
Directors.

     The Notes are due and payable upon the fourth anniversary of the date of
issuance and bear interest at nine percent (9%) payable semi-annually.  The
Company does not have the option to voluntarily prepay the Notes.  The Notes are
initially convertible into the Company's Common stock, no par value, at $3.50
per share, which price may be adjusted downward if, under certain circumstances,
the holders thereof convert the Notes prior to the third anniversary of the date
of issuance.  The Company also issued the Investor Warrants to the Investors to
purchase an additional 1,800,000 shares of Common stock of the Company (subject
to downward adjustment under certain circumstances), no par value, at $3.50 per
share.  The Investor Warrants are exercisable beginning the later of (i) one
year from the date of issuance or (ii) the conversion of the Notes into Common
stock.  The Investor Warrants expire five years from the date of issuance.  The
estimated fair value of the Investor Warrants of $553,000 has been recorded as
an increase to shareholders' equity and a related reduction in the carrying
amount of the Notes.  The Company is amortizing the $553,000 discount over the
four-year term of the Notes.

5. INCOME TAXES:

     As of June 30, 2001, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $6.5 million.  The net operating
loss carryforward differs from the accumulated deficit principally due to
differences in the recognition of certain expenses for financial and income tax
reporting purposes, as well as the nondeductibility of special compensation,
acquired research and development charges, losses on the sale of business units
and goodwill amortization.  As of June 30, 2001, a valuation allowance was
established for the Company's tax benefit based upon the uncertainty of the
realizability of the associated deferred tax asset given the Company's losses to
date under the guidelines set forth in Statement of Financial Accounting
Standards ("SFAS") No. 109.

                                       5
<PAGE>

6. EARNINGS PER SHARE:

     The Company has presented net income (loss) per share pursuant to SFAS No.
128, "Earnings Per Share", which requires dual presentation of basic and diluted
earnings per share.  Basic earnings per share ("Basic EPS") are computed by
dividing the net income (loss) for the period by the weighted average number of
shares of common stock outstanding for the period.  Diluted earnings per share
("Diluted EPS") are computed by dividing net income (loss) for the period by the
weighted average number of shares of common stock and common stock equivalents
outstanding during the period.  For the three and six months ended June 30,
2000, the weighted average number of shares used to compute Diluted EPS includes
common stock equivalents.  For all other periods presented, common stock
equivalents are not included, as their effect is antidilutive and, as such,
Basic EPS and Diluted EPS are the same.

7. INTANGIBLE ASSETS:

     The Company continually evaluates whether events or circumstances have
occurred that indicate that the remaining useful lives of intangibles assets
should be revised or that the remaining balance of such assets may not be
recoverable.  When the Company concludes it is necessary to evaluate its long-
lived assets, including intangibles, for impairment, the Company will use an
estimate of the related undiscounted cash flow as the basis to determine whether
impairment has occurred.  If such a determination indicates an impairment loss
has occurred, the Company will utilize the valuation method, which measures fair
value based on the best information available under the circumstances.  As of
June 30, 2001, the Company believes that no revisions of the remaining useful
lives or write-downs of intangible assets are required.

8. NEW ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new pronouncements, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests. Other intangible assets will continue to be
amortized over their useful lives.

     The Company will adopt the new pronouncements effective January 1, 2002,
however, the pronouncements are effective for any business combination that is
completed after June 30, 2001. The Company is currently evaluating the impact of
these pronouncements.

                                       6
<PAGE>

                                PART I - ITEM 2
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

     This Report on Form 10-Q contains certain forward-looking statements that
involve substantial risks and uncertainties.  When used in this Report, the
words "anticipate," "believe," "estimate," "expect," "intend," and similar
expressions, as they relate to the Company or its management, are intended to
identify such forward-looking statements.  The Company's actual results,
performance, or achievements could differ materially from the results expressed
in, or implied by, these forward-looking statements. Factors that could cause or
contribute to such differences include those set forth in "Business--Risk
Factors" as disclosed in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000 and other ImageMax filings with the Securities and
Exchange Commission, and risks associated with the results of the continuing
operations of ImageMax.  Accordingly, there is no assurance that the results in
the forward-looking statements will be achieved.

     The Company's revenues consist of service revenues, which are recognized as
the related services are rendered, and product revenues, which are recognized
when the products are shipped to clients.  Service revenues are primarily
derived from media conversion, storage and retrieval, imaging and indexing of
documents, and the service of imaging and micrographic equipment sold. Product
revenues are derived from equipment sales and software sales and support.  Cost
of revenues consists principally of the costs of products sold and wages and
related benefits, supplies, facilities and equipment expenses associated with
providing the Company's services.  Selling and administrative ("S&A") expenses
include salaries and related benefits associated with the Company's executive
and senior management, marketing and selling activities (principally salaries
and related costs), and financial and other administrative expenses.

Historical Results of Operations

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

     Total revenues.  For the three months ended June 30, 2001, total revenues
decreased $2.7 million, or 16.9%, as compared to the corresponding period in
2000.  This was due to a product revenue decrease of 12.3% and a service revenue
decrease of 17.8%.  For the three months ended June 30, 2001, service revenue
and product revenue, respectively, comprised 81.3% and 18.7% of total revenues,
as compared to 82.3% and 17.7% in the corresponding period in 2000.

     The Company has shifted its focus towards services, particularly conversion
services, and has de-emphasized equipment sales in the majority of its markets.
The Company believes that the migration towards services, which includes the
Company's Internet document repository service, ImageMaxOnline, will result in a
higher gross profit percentage, as service revenues generally carry a higher
gross profit percentage than equipment revenues.  Product revenues have declined
and are expected to continue to decline as the Company's focus shifts away from
equipment sales.  However, the Company's proprietary software sales and third-
party software sales by the Company are also classified as product sales and the
significant increase in software revenues that the Company experienced during
the three months ended June 30, 2001 partially offset lower equipment sales in
total product revenues.

     The decline in total revenues was due primarily to: (1) lower equipment
revenues related to the shift in the company's focus; (2) lower conversion
revenues (principally in three markets, two of which involve sales and
management transitions); (3) a decline in data entry volume as a result of
completed project work; and (4) lower software sales of the Company's
proprietary capture product attributable to ongoing development that has delayed
the sales cycle.  These declines were partially offset by the recognition of
several major third-party software sales by the Company which had been
previously deferred in accordance with generally accepted accounting principles.
These software sales resulted in a greater percentage of product revenues in the
three months ended June 30, 2001 as compared to the corresponding period in
2000, despite lower equipment sales.

     Gross profit.  For the three months ended June 30, 2001, gross profit
decreased by $0.9 million, or 16.3%, as compared to the corresponding period in
2000. Gross profit percentage increased from 36.1% to 36.3%.  The increase in
gross profit percentage was due to an increase in pricing, productivity gains
and revenues from the sales of third-party software by the Company, offset by
lower data entry volume as a result of certain completed project work.

     Selling and administrative expenses.  For the three months ended June 30,
2001, S&A expenses decreased by $0.2 million, or 4.0%, as compared to the
corresponding period in 2000. This decrease resulted from a decrease of $0.2
million related to an accrual for incentive compensation in 2000.

     Interest expense.  For the three months ended June 30, 2001, interest
expense amounted to $0.4 million, as compared to interest expense of $0.6
million in the corresponding period in 2000.  The decrease relates to lower debt
levels and interest rates in 2001 versus 2000.

                                       7
<PAGE>

Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

     Total revenues.  For the six months ended June 30, 2001, total revenues
decreased $5.1 million, or 16.7%, as compared to the corresponding period in
2000.  This was due to a product revenue decrease of 17.1% and a service revenue
decrease of 16.6%.  For the six months ended June 30, 2001, service revenue and
product revenue, respectively, comprised 82.5% and 17.5% of total revenues, as
compared to 82.4% and 17.6% in the corresponding period in 2000.

     The decline in total revenues was due primarily to: (1) lower equipment
revenues related to the shift in the company's focus; (2) lower conversion
revenues (principally in three markets, two of which involve sales and
management transitions); (3) a decline in data entry volume as a result of
completed project work; and (4) lower software sales of the Company's
proprietary capture product attributable to ongoing development that has delayed
the sales cycle. These declines were partially offset by the recognition of
several major third-party software sales.

     Gross profit.  For the six months ended June 30, 2001, gross profit
decreased by $2.0 million, or 17.9%, as compared to the corresponding period in
2000.  Gross profit percentage dropped from 36.6% to 36.1%. The decline in gross
profit percentage was due primarily to lower data entry volume as a result of
certain completed project work, partially offset by a higher level of third-
party software sales.

     Selling and administrative expenses.  For the six months ended June 30,
2001, S&A expenses decreased by $0.4 million, or 4.6%, as compared to the
corresponding period in 2000.  This decrease resulted from: (1) a decrease of
$0.5 million related to an accrual for incentive compensation in 2000; and (2) a
decrease of $0.2 million related to business unit S&A expenses; partially offset
by an increase in Corporate expenses of $0.3 million related to accrued
executive severance costs and increased marketing and personnel costs.

     Interest expense.  For the six months ended June 30, 2001, interest expense
amounted to $0.9 million, as compared to interest expense of $1.1 million in the
corresponding period in 2000.  The decrease relates primarily to bank fees paid
in 2000 and lower debt levels and interest rates in 2001 versus 2000.

Liquidity and Capital Resources

     As of June 30, 2001 and December 31, 2000, respectively, the Company had
cash and cash equivalents of $1.3 million and $2.2 million, a working capital
deficit of $0.9 million as of June 30, 2001 and working capital of $0.2 million
as of December 31, 2000.  In addition, the Company made $1.8 million in payments
on the Term Loan during the period from March 30, 2001 to June 30, 2001, $0.8
million as part of the amendment, and partially funded those payments through a
drawdown of $0.3 million on the Company's Revolving Credit Line (see below).
For the six months ended June 30, 2001 net cash provided by operating activities
amounted to $1.5 million; net cash used in investing activities amounted to $0.4
million; and net cash used in financing activities amounted to $2.0 million.

     Net cash provided by operating activities primarily represents net income
(loss) before depreciation and amortization.  For the six months ended June 30,
2001, improved cash collections and timing of payments to vendors were offset by
recognition of third party software sales by the Company.

     Net cash used in investing activities represents the Company's investments
in capital equipment and technology.  For the six months ended June 30, 2001,
the Company made capital expenditures of $0.4 million, principally production
equipment, office equipment, and computer hardware.

     Net cash used in financing activities primarily represents the $2.3 million
of payments under the Term Loan, partially offset by a $0.3 million drawdown on
the Revolving Credit Line (see below).  The funds used to repay borrowings under
the Term Loan were derived from existing cash reserves, cash provided by
operations and the drawdown on the Revolving Credit Line.

     On February 15, 2000, the Company completed a $6 million financing
transaction involving the sale of convertible subordinated notes (the "Notes")
and warrants (the "Investor Warrants") to TDH III, L.P. ("TDH"), Dime Capital
Partners, Inc. and Robert E. Drury (the "Investors").  The proceeds of this
financing were used to repay $5 million under the previous credit facility, and
provide working capital for the Company.  Additionally, J.B. Doherty, the
managing general partner of TDH, and Mr. Drury, joined the Company's Board of
Directors.

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<PAGE>

     The Notes are due and payable upon the fourth anniversary of the date of
issuance and bear interest at nine percent (9%) payable semi-annually.  The
Company does not have the option to voluntarily prepay the Notes.  The Notes are
initially convertible into the Company's Common stock, no par value, at $3.50
per share, which price may be adjusted downward if, under certain circumstances,
the holders thereof convert the Notes prior to the third anniversary of the date
of issuance. The Company also issued the Investor Warrants to the Investors to
purchase an additional 1,800,000 shares of Common stock of the Company (subject
to downward adjustment under certain circumstances), no par value, at $3.50 per
share. The Investor Warrants are exercisable beginning the later of (i) one year
from the date of issuance or (ii) the conversion of the Notes into Common stock.
The Investor Warrants expire five years from the date of issuance. The estimated
fair value of the Investor Warrants of $553,000 has been recorded as an increase
to shareholders' equity and a related reduction in the carrying amount of the
Notes. The Company is amortizing the $553,000 discount over the four-year term
of the Notes.

     On June 12, 2000, the Company closed on a $14.5 million senior credit
facility (the "Credit Facility") pursuant to the Credit Agreement dated June 9,
2000 (the "Credit Agreement") with Commerce Bank, NA and FirsTrust Bank
(together, the "Banks").  The Credit Facility consists of a two-year $7.0
million revolving credit line (the "Revolving Credit Line") and a four-year term
loan (the "Term Loan").

     Under the Revolving Credit Line, the Company is required to pay interest
monthly at the prime rate plus 1.5% (effective rate of 8.25% as of August 10,
2001).  The outstanding principal of the Revolving Credit Line is due and
payable at the end of term in June 2002.  Borrowing availability is based on the
level of the Company's eligible accounts receivable, as defined in the Credit
Agreement.  As of August 10, 2001, approximately $4.2 million was outstanding
and $0.7 million was available under the Revolving Credit Line.

     Under the Term Loan, interest is payable monthly at the prime rate plus
2.0% (effective rate of 8.75% as of August 10, 2001).  The outstanding principal
amount of the Term Loan was $4.8 million as of August 10, 2001 and is due and
payable in consecutive quarterly payments of $500,000 commencing September 30,
2000 until March 31, 2004.  In addition, on an annual basis, the Company is
required to reduce the principal amount outstanding under the Term Loan to the
extent that EBITDA (as defined in the Credit Agreement), as adjusted, exceeds
certain specified levels set forth in the Credit Agreement and upon certain
asset sales by the Company.

     The Credit Facility is secured by substantially all assets of the Company
and requires maintenance of various financial and restrictive covenants
including minimum levels of EBITDA and net worth.

     On March 30, 2001, the Company entered into an amendment to the Credit
Facility (the "Amendment") which reduced the minimum levels of EBITDA required
under the restrictive covenants.  In addition, the Amendment increased the level
of payments under the Term Loan by a minimum of $1,000,000 over the next 12
months.  This increase includes minimum payments of $600,000 on May 30, 2001,
and $150,000 on June 30, 2001, both of which have been made.  An additional
payment of $150,000 is due on September 30, 2001, with the balance of $100,000
split over December 31, 2001 and March 31, 2002.

     During the six months ended June 30, 2001, the Company made $2.3 million in
net principal repayments under the Term Loan of the Credit Facility.


     The Company continues to selectively invest in equipment and technology to
meet the needs of its operations and to improve its operating efficiency.  The
Company may also consider selective synergistic in-market acquisitions in the
future. The Company believes that its cash on hand, cash equivalents and
operating cash flow together with the unused portion of the Revolving Credit
Line will be sufficient to finance current operating requirements for at least
the next twelve months including capital expenditures.

New Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new pronouncements, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests. Other intangible assets will continue to be
amortized over their useful lives.

     The Company will adopt the new pronouncements effective January 1, 2002,
however, the pronouncements are effective for any business combination that is
completed after June 30, 2001. The Company is currently evaluating the impact of
these pronouncements.

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<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       The Company's major market risk exposure is to changing interest rates.
The Company has variable-rate debt representing 57.7% of its total long-term
debt at June 30, 2001. If interest rates average 25 basis points more in 2001
than they did during 2000, the Company's interest expense would increase. Year-
to-date as of August 10, 2001, the prime rate and the Company's interest rates
on variable-rate debt have declined 275 basis points. The Company has limited
its interest rate risk by entering into an interest rate cap agreement. The
agreement, which matures on June 9, 2002, is for a total notional amount of
$6,000,000. In connection with this agreement the Company paid the counterparty
a premium of $29,000 on June 9, 2000, and will receive monthly an amount equal
to the product of the amount by which the Prime Rate (7.0% at June 30, 2001)
exceeds the Cap Rate (11.5%) multiplied by the notional amount. During 2001, the
Prime Rate has not exceeded the Cap Rate. Accordingly, the Company has not
received any payments under this agreement during 2001.

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<PAGE>

                         PART II -- OTHER INFORMATION

ITEM 6. Exhibits and Reports on Form 8-K

A. Exhibits:

    3.2    Amended and Restated Bylaws of the Company.

    10.54  Amended and Restated Employment Agreement between the Company and
           Mark P. Glassman dated as of June 27, 2001.

B. Reports on Form 8-K:

    None.

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<PAGE>

                                  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.

IMAGEMAX, INC.


BY: /S/ MARK P. GLASSMAN                             August 14, 2001
    --------------------                             ---------------
Mark P. Glassman                                          Date
Chief Executive Officer

BY: /S/ DAVID B. WALLS                               August 14, 2001
    ------------------                               ---------------
David B. Walls                                            Date
Chief Financial Officer and Principal
Accounting Officer

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