SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                   FORM 10-Q
 
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
 
    For the Quarterly Period Ended MARCH 31, 1998
 
                                       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.)
 
    1100 E. Hector Street, Suite 396
       Conshohocken, Pennsylvania                            19428
     -------------------------------                      ----------
(Address of principal executive offices)                  (Zip Code)

 
       Registrant's telephone number, including area code: (610) 832-2111
 
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 May 8, 1998:

 
       Common Stock, no par value                          5,968,207
       --------------------------                          ---------
                  Class                                Number of Shares


<PAGE>

                        IMAGEMAX, INC. AND SUBSIDIARIES
                               INDEX TO FORM 10-Q
 
                                                              PAGE
                                                              ----
PART I - FINANCIAL INFORMATION
 
  Item 1 - Financial Statements (Unaudited)
 
     Consolidated Statements of Operations..................  F-1
 
     Consolidated Balance Sheets............................  F-2
 
     Consolidated Statements of Cash Flows..................  F-3
 
     Notes to Consolidated Financial Statements.............  F-4
 
  Item 2 - Management's Discussion and Analysis of Financial
           Condition and Results of Operations..............  F-7
 
PART II - OTHER INFORMATION
 
  Item 2 - Changes in Securities and Use of Proceeds........  F-10
 
  Item 6 - Exhibits and Reports on Form 8-K.................  F-10
 
SIGNATURES..................................................  F-11

 
<PAGE>
                        IMAGEMAX, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
               (Unaudited, in thousands except per share amounts)
 
<TABLE>
<CAPTION>
                                                                   THREE MONTHS
                                                                 ENDED MARCH 31,
                                                              ----------------------
                                                                1998          1997
                                                              --------      --------
<S>                                                           <C>           <C>
Revenues:
  Services..................................................  $  9,857      $     --
  Products..................................................     3,095            --
                                                              --------      --------
                                                                12,952            --
                                                              --------      --------
Cost of revenues:
  Services..................................................     6,469            --
  Products..................................................     2,033            --
  Depreciation..............................................       339            --
                                                              --------      --------
                                                                 8,841            --
                                                              --------      --------
     Gross profit...........................................     4,111            --
Selling and administrative expenses.........................     3,285            55
Amortization of intangibles.................................       300            --
                                                              --------      --------
  Operating income (loss)...................................       526           (55)
Interest expense (income), net..............................        48            --
                                                              --------      --------
  Income (loss) before income taxes.........................       478           (55)
Income tax provision........................................       258            --
                                                              --------      --------
Net income (loss)...........................................  $    220      $    (55)
                                                              ========      ========
Basic and diluted net income (loss) per share...............  $   0.04      $  (0.08)
                                                              ========      ========
Shares used in computing basic and diluted net income (loss)
  per share.................................................     5,546           677
                                                              ========      ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-1
<PAGE>
                        IMAGEMAX, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                 (Unaudited, in thousands except share amounts)
 
<TABLE>
<CAPTION>
                                                              MARCH 31,      DECEMBER 31,
                                                                1998             1997
                                                              ---------      ------------
<S>                                                           <C>            <C>
                           ASSETS
 
Current assets:
  Cash and cash equivalents.................................   $ 1,083           1,310
  Accounts receivable, net of allowance for doubtful
     accounts of $475 and $375 as of March 31, 1998 and
     December 31, 1997, respectively........................     8,904           6,922
  Inventories...............................................     2,015           1,997
  Prepaid expenses and other................................       427             367
  Deferred income taxes.....................................       151             160
                                                               -------         -------
     Total current assets...................................    11,497          10,756
 
Property, plant and equipment, net..........................     4,909           4,381
 
Intangibles, primarily goodwill, net........................    33,695          32,996
 
Other assets................................................       111              95
                                                               -------         -------
                                                               $51,285         $48,228
                                                               =======         =======
 
            LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
  Short-term debt and current portion of long-term debt.....   $   251         $   251
  Accounts payable..........................................     2,772           2,846
  Accrued expenses..........................................     2,423           3,248
  Deferred revenue..........................................     1,508           1,333
  Income taxes payable......................................       147              84
                                                               -------         -------
     Total current liabilities..............................     7,101           7,762
                                                               -------         -------
 
Deferred income taxes.......................................        53              59
                                                               -------         -------
 
Long-term debt..............................................     3,657             342
                                                               -------         -------
 
Other long-term liabilities.................................        98              47
                                                               -------         -------
 
Shareholders' equity:
  Preferred stock, no par value, 10,000,000 shares
     authorized, none issued................................        --              --
  Common stock, no par value, 40,000,000 shares authorized,
     5,552,755 and 5,537,436 shares issued and outstanding
     as of March 31, 1998 and December 31, 1997,
     respectively...........................................    47,708          47,580
  Accumulated deficit.......................................    (7,342)         (7,562)
                                                               -------         -------
     Total shareholders' equity.............................    40,366          40,018
                                                               -------         -------
                                                               $51,285         $48,228
                                                               =======         =======
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-2
<PAGE>
                        IMAGEMAX, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Unaudited, in thousands)
 
<TABLE>
<CAPTION>
                                                                   THREE MONTHS
                                                                 ENDED MARCH 31,
                                                              ----------------------
                                                                1998          1997
                                                              --------      --------
<S>                                                           <C>           <C>
Cash flows from operating activities:
  Net income (loss).........................................  $    220      $    (55)
  Adjustments to reconcile net income (loss) to net cash
     used in operating activities-
     Depreciation and amortization..........................       639            --
     Deferred income tax benefit............................       (17)           --
     Changes in operating assets and liabilities, excluding
       effect of businesses acquired-
        Accounts receivable, net............................      (638)           --
        Inventories.........................................       (18)           --
        Prepaid expenses and other..........................       (23)           --
        Other assets........................................       (16)           --
        Accounts payable....................................      (317)           --
        Accrued expenses....................................    (1,160)           10
        Income tax payable..................................       174            --
        Deferred revenue....................................       203            --
                                                              --------      --------
           Net cash used in operating activities............      (953)          (45)
                                                              --------      --------
Cash flows from investing activities:
  Payments for businesses acquired, net of cash acquired....    (1,616)           --
  Purchases of property and equipment.......................      (421)           --
                                                              --------      --------
           Net cash used in investing activities............    (2,037)           --
                                                              --------      --------
Cash flows from financing activities:
  Net borrowings under line of credit.......................     3,400
  Payment of deferred financing costs.......................      (552)
  Principal payments on debt and capital lease
     obligations............................................       (85)           --
                                                              --------      --------
           Net cash provided by financing activities........     2,763
                                                              --------      --------
Net decrease in cash and cash equivalents...................      (227)          (45)
Cash and cash equivalents, beginning of period..............     1,310            62
                                                              --------      --------
Cash and cash equivalents, end of period....................  $  1,083      $     17
                                                              ========      ========
Supplemental disclosures of cash flow information:
  Cash paid for:
     Interest...............................................  $     33      $     --
                                                              ========      ========
     Income taxes...........................................  $    195      $     --
                                                              ========      ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                      F-3
<PAGE>
                        IMAGEMAX, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
 
1. BACKGROUND AND BASIS OF PRESENTATION
 
     ImageMax, Inc. ("ImageMax") was founded in November 1996 to become a
leading, national single source provider of integrated document management
solutions. On December 4, 1997, ImageMax sold 3,100,000 shares of its Common
stock in an initial public offering (the "Offering") at $12 per share which
raised net proceeds to ImageMax of $30.5 million, net of offering costs of $6.7
million. Concurrent with the Offering, ImageMax began material operations with
the acquisition of 14 document management services companies (the "Founding
Companies"). ImageMax was identified as the accounting acquirer for financial
statement presentation purposes. These acquisitions were accounted for using the
purchase method of accounting.
 
     The accompanying unaudited historical 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, 1997 has been
derived from the Company's consolidated financial statements that have been
audited by the Company's independent public accountants. The unaudited financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information pursuant to rules and regulations
of the Securities and Exchange Commission. Accordingly, unaudited interim
financial statements such as those in this report allow certain information and
footnotes required by generally accepted accounting principles 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.
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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 significant 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.
 
3. ACQUISITIONS
 
     During the three month period ended March 31, 1998, the Company acquired
two additional document management services companies (the "Acquired
Businesses"). The aggregate purchase price approximated $1.7 million plus
transaction costs. The purchases were funded through borrowings of $1.5 million
under a demand note payable to a bank and the issuance of 15,319 shares of the
Company's Common stock. The demand note was subsequently refinanced through the
Company's line of credit (see Note 4). The excess of purchase price over net
assets acquired of approximately $400,000 was allocated to goodwill.
 
     The following unaudited pro forma information shows the results of the
Company's operations in accordance with APB No. 16, "Business Combinations," for
the three months ended March 31, 1998 and 1997 as though the Acquired Businesses
had occurred as of January 1, 1997:
 
                                      F-4
 
<PAGE>


 
                                                    THREE MONTHS
                                                  ENDED MARCH 31,
                                            ----------------------------
                                               1998             1997
                                            -----------      -----------
Total revenues............................  $13,396,000      $13,413,000
Operating income..........................  $   513,000      $   753,000
Net income................................  $   192,000      $   238,000
Basic and diluted net income per share....  $      0.03      $      0.04

 
     The pro forma results have been prepared for comparative purposes only and
are not necessarily indicative of the actual results of operations had the
Acquired Businesses taken place as of January 1, 1997, or the results that may
occur in the future. The pro forma results do not give effect to the Offering
and exclude any reductions in historical interest expense. Furthermore, the pro
forma results do not give effect to all cost savings or incremental costs which
may occur as a result of the integration and consolidation of the Acquired
Businesses.
 
     The following table displays supplemental cash flow information for the
three months ended March 31, 1998 of the net non-cash assets acquired relating
to Acquired Businesses:
 


Fair value of assets acquired...................  $2,246,000
Liabilities assumed.............................    (501,000)
Fair value of Common stock issued...............    (128,000)
Cash acquired...................................      (1,000)
                                                  ----------
  Net cash paid.................................  $1,616,000
                                                  ==========

 
4. LINE OF CREDIT AND LONG-TERM OBLIGATIONS
 
     On March 30, 1998, the Company entered into a credit facility with a bank
(the "Credit Facility"), providing a revolving line of credit of $30 million in
borrowings. Under the terms of the Credit Facility, the Company may borrow up to
$25 million to finance future acquisitions and up to $5 million for working
capital purposes. Outstanding working capital advances of up to $2 million may
be made in the form of standby letters of credit for an applicable fee. The
Credit Facility is secured by substantially all of the assets of the Company.
Borrowings under the facility bear interest at LIBOR or prime plus an applicable
margin at the option of the Company. In addition to interest and other customary
fees, the Company is obligated to remit a fee ranging from 0.2% to 0.375% per
year on unused commitments. The Credit Facility matures on December 31, 2002,
and is subject to certain financial covenants which pertain to criteria such as
minimum levels of cash flow, ratio of debt to cash flow, and ratio of fixed
charges to cash flow. The Company's available borrowing capacity under the
Credit Facility is contingent upon the Company meeting certain financial ratios
and other criteria.
 
     Upon entering into the Credit Facility, the Company incurred $552,000 of
lending and other customary fees. The Company has capitalized these amounts and
included them within intangible assets at March 31, 1998. These costs will be
amortized to interest expense over the term of the agreement.
 
     As of March 31, 1998, the Company had borrowed $3.4 million under the
Credit Facility at an interest rate of 8.5%. As of May 8, 1998, $13 million was
outstanding under the facility. The increase was attributable to acquisition
financing and working capital uses.
 
     In connection with the acquisition of the Founding Companies, the Company
assumed debt of approximately $600,000 (net of repayments from proceeds from
Offering), representing notes payable, capital lease obligations and other
indebtedness. As of March 31, 1998, $472,000 was outstanding under this
indebtedness.
 
                                      F-5
<PAGE>


5. EARNINGS PER SHARE
 
     The Company has presented net income (loss) per share pursuant to Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share", which
requires dual presentation of basic and diluted earnings per share. Basic
earnings per share ("Basic EPS") is 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") is
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 both periods presented, Common stock equivalents are not
included, as their effect is antidilutive and, as such, Basic EPS and Diluted
EPS are the same.
 
6. 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
March 31, 1998, the Company believes that no revisions of the remaining useful
lives or write-downs of intangible assets are required.
 
7. COMPREHENSIVE INCOME
 
     The Company has reviewed SFAS No. 130 and has determined that for the
quarters ended March 31, 1998 and 1997, no items meeting the definition of
comprehensive income as specified in SFAS No. 130 existed in the consolidated
financial statements. As such, no disclosure is necessary to comply with SFAS
No. 130.
 
8. SUBSEQUENT EVENTS
 
     Subsequent to March 31, 1998 and through May 8, 1998, the Company acquired
five document management services companies, which were accounted for under the
purchase method of accounting. The aggregate purchase price of these
acquisitions approximated $11.8 million and was funded through a combination of
cash on hand, borrowings under the Company's Credit Facility and the issuance of
415,452 shares of the Company's Common stock. The acquired companies have
approximately $10 million of combined annualized revenues.
 
                                      F-6
<PAGE>

                                PART I - ITEM 2
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
 
     Except for the historical information contained herein, 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", 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 ending December 31, 1997.
 
     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 March 31, 1998 Compared to Three Months Ended March 31, 1997
 
     The results of operations for the three months ended March 31, 1998 include
the revenues, cost of revenues and S&A expenses of the Founding Companies from
January 1, 1998, and for Acquired Businesses from the date of their acquisition.
ImageMax did not conduct material operations prior to the Offering. The results
of operations for the three months ended March 31, 1997 include only S&A
expenses of ImageMax, principally legal and travel costs.
 
UNAUDITED PRO FORMA COMBINED, AS ADJUSTED, RESULTS OF OPERATIONS
 
Results of Historical Three Months Ended March 31, 1998 Compared to Pro Forma
Combined, as Adjusted, Three Months Ended March 31, 1997
 
     The unaudited pro forma, as adjusted, combined Founding Companies' results
of operations for the three months ended March 31, 1997 include pro forma
combined revenues, cost of revenues and S&A expenses for the Founding Companies
as if their acquisition occurred on January 1, 1997. Such results are not
necessarily indicative of the results the Company would have obtained had these
events actually then occurred or of the Company's future results. Management
believes the pro forma presentation is informative in analyzing the business.
 
     Prior to their acquisition, the Founding Companies and Acquired Businesses
were managed as independent private companies, and the results of their
operations reflect different tax structures (S corporations and C corporations)
which have influenced, among other things, their historical levels of owners'
compensation. Certain former owners and key employees of the Founding Companies
and Acquired Businesses have agreed to certain reductions in their historical
compensation subsequent to their acquisition, and these adjustments are
reflected in the pro forma results of operations.
 
     The Company has begun and will continue to integrate the operations and
administrative functions of the Founding Companies and Acquired Businesses over
a period time. This integration process may present opportunities to reduce
costs through the elimination of duplicative functions and through economies of
scale, but will also necessitate additional costs and expenditures for corporate
 
                                      F-7
<PAGE>


management and administration, systems integration and facilities expansion.
These costs and possible cost-savings may make comparison to past pro forma
operating results incompatible with, or not indicative of, future performance.
 
<TABLE>
<CAPTION>

                                                                               UNAUDITED PRO
                                                                            FORMA, AS ADJUSTED,
                                                         HISTORICAL          COMBINED FOUNDING
                                                        THREE MONTHS            COMPANIES,
                                                       ENDED MARCH 31,      THREE MONTHS ENDED
                                                            1998              MARCH 31, 1997
                                                       ---------------      -------------------
                                                           (IN THOUSANDS-EXCEPT SHARE DATA)
<S>                                                    <C>                  <C>
Revenues:
  Services...........................................     $  9,857               $  8,374
  Products...........................................        3,095                  3,037
                                                          --------               --------
                                                            12,952                 11,411
                                                          --------               --------
Cost of revenues:
  Services...........................................        6,469                  5,171
  Products...........................................        2,033                  2,053
  Depreciation.......................................          339                    343
                                                          --------               --------
                                                             8,841                  7,567
                                                          --------               --------
     Gross profit....................................        4,111                  3,844
Selling, and administrative expenses.................        3,285                  2,814
Amortization of intangibles..........................          300                    299
                                                          --------               --------
     Operating income................................          526                    731
Interest expense (income), net.......................           48                     (5)
                                                          --------               --------
     Income before income taxes......................          478                    736
Income tax provision.................................          258                    365
                                                          --------               --------
Net income...........................................     $    220               $    371
                                                          ========               ========
Basic and dilutive net income per share..............     $   0.04               $   0.07
                                                          ========               ========
Shares used in computing basic and dilutive net
  income
  per share..........................................        5,546                  5,457
                                                          ========               ========
</TABLE>
 
     Total revenues.  For the three months ended March 31, 1998, total revenues
increased $1.5 million, or 13.5%, as compared to the corresponding period in
1997. This increase was derived from a service revenue increase of 17.7% and a
product revenue increase of 1.9%. For the three months ended March 31, 1998,
service revenue and product revenue, respectively, comprised 76.1% and 23.9% of
total revenues, as compared to 73.4% and 26.6% in the corresponding period in
1997.
 
     The increase in total revenues was comprised of $670,000 attributable to
the Founding Companies and $871,000 attributable to the Acquired Businesses
which are not included in the three months ended March 31, 1997. The Founding
Companies increase was primarily due to increased utilization of excess media
conversion capacity at production facilities in the Louisiana, Indiana and Ohio
business units and increases in digital imaging software sales.
 
     Gross profit.  For the three months ended March 31, 1998, gross profit
increased by $267,000, or 6.9%, as compared to the corresponding period in 1997,
while as a percentage of total revenues, gross profit declined from 33.7% to
31.7%. The Founding Companies contributed $57,000 of the increase and
experienced a decline in gross profit percentage of 1.3%. Acquired Businesses
contributed $194,000 of gross profit at a gross profit percentage of 22.3% for
the three months ended March 31, 1998.
 
     The Founding Companies gross profit percentage decline was primarily due
to: (1) higher service costs on flat revenue volumes in the South Carolina and
Virginia business units; (2) changes in classifications between S&A and cost of
revenues; (3) an offsetting decrease in service costs at most other locations,
particularly in the California and Indiana business units, due to a combination
of
 
                                      F-8
<PAGE>


improved media conversion efficiency and larger revenue volumes; and (4) an
offsetting increase attributable to the increase in digital imaging software
sales, which carry low incremental costs.
 
     Selling and administrative expenses.  For the three months ended March 31,
1998, S&A expenses increased by $471,000, or 16.7%, as compared to the
corresponding period in 1997. This increase is comprised of $385,000 in
corporate expenses; $213,000 attributable to the Acquired Businesses; and an
offsetting decrease of $127,000 attributable to the Founding Companies.
 
     The increase in corporate expenses relates primarily to the staffing of the
Company's headquarters function, increased travel and marketing expenses and the
costs associated with being a public company. The Founding Companies' decrease
is primarily attributable to changes in classifications between administrative
expenses and cost of revenues in several business units, which offset higher
selling expenses.
 
     Operating income.  For the three months ended March 31, 1998, operating
income decreased by $205,000, or 28.0%, as compared to the corresponding period
in 1997. Excluding the impact of corporate expenses, operating income increased
by $180,000, or 19.2%.
 
     Interest expense, net.  For the three months ended March 31, 1998, net
interest expense amounted to $48,000 as compared to net interest income of
$5,000 in the corresponding period in 1997. The increase in interest expense is
attributable to borrowings under the Credit Facility.
 
     Income tax provision.  For the three months ended March 31, 1998, the
effective income tax rate amounted to 54.0%, as compared to 49.6% in the
corresponding period in 1997. The increase is primarily due to the impact of
non-deductible goodwill amortization related to certain of the Founding
Companies in relation to their pre-tax earnings.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company's primary capital requirements relate to the implementation of
its acquisition program and, to a lesser extent, working capital and capital
expenditures.
 
     As of March 31, 1998 and December 31, 1997, respectively, the Company had
cash and cash equivalents of $1.1 million and $1.3 million, and working capital
of $4.4 million and $3.0 million. The increase in working capital was primarily
attributed to borrowings under the Credit Facility.
 
     For the three months ended March 31, 1998, net cash used in operating
activities amounted to $953,000; net cash used in investing activities amounted
to $2.0 million; and net cash provided by financing activities amounted to $2.8
million.
 
     Net cash used in operating activities primarily represents an increase in
accounts receivable and the payment of accrued expenses related to acquisitions
and the Offering. The increase in accounts receivable is primarily due to higher
sales in March 1998 versus December 1997 and to a modest decline in the rate of
cash collections.
 
     Net cash used in investing activities represents the Company's investments
in the Acquired Businesses and capital equipment and technology. In the three
months ended March 31, 1998, the Company made $421,000 of capital expenditures,
principally production equipment and computer hardware.
 
     Net cash provided by financing activities represents borrowings of $3.4
million under the Credit Facility, the payment of $552,000 in related financing
costs, net of repayments of other debt of the Founding Companies. Of the amount
borrowed under the facility, $1.5 million was used to finance the purchase of
the Acquired Businesses and $1.3 million was used for working capital purposes
and capital expenditures.
 
     The Company plans to continue with its acquisition program and to invest in
equipment and technology to meet the needs of its expanding operations and to
improve its operating efficiency. The Company believes that the capital
resources described above will be sufficient to meet its liquidity requirement
for its operations and acquisition program in the foreseeable future.
 
                                      F-9
<PAGE>

                          PART II -- OTHER INFORMATION
 
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
 
     On February 9, 1998, the Company issued 15,319 shares of Common stock
(valued at $150,000 on the date of issuance) to Document Management Group, Inc.
and ImageTec, Inc., affiliated document management companies, as partial
consideration in exchange for substantially all of the assets of such companies.
The issuance of Common stock did not involve underwriters and was exempt from
registration under the Securities Act by virtue of the exemption provided by
Section 4(2) thereof for transactions not involving any public offering.
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
a) Exhibits:
 
          2.1 Asset Purchase Agreement, dated January 23, 1998, by and among
              Integrated Information Services, L.L.C., Pettibone, L.L.C. and
              Heisley Holding, L.L.C. and ImageMax, Inc. (incorporated by
              reference to Exhibit 2.1 of the Company's Form 8-K filed February
              4, 1998, File no. 0-23077).
 
          2.2 Asset Purchase Agreement, dated February 9, 1998 by and among
              document Management Group, Inc., Theron Robinson and ImageMax,
              Inc. (incorporated by reference to Exhibit 2.1 to the Company's
              Form 8-K filed on February 24, 1998, File No. 0-23077).
 
          2.3 Asset Purchase Agreement, dated February 9, 1998 by and among
              ImageTec, Inc., Theron Robinson and Robert Robinson and ImageMax,
              Inc. (incorporated by reference to Exhibit 2.2 to the Company's
              Form 8-K filed on February 24, 1998, File no. 0-23077).
 
         10.1 Master Demand Note, dated January 20, 1998, payable to CoreStates
              Bank, N.A. (incorporated by reference to Exhibit 10.1 of the
              Company's Form 8-K filed February 4, 1998, File no. 0-23077).
 
         10.2 Security Agreement, dated January 20, 1998, between CoreStates
              Bank, N.A. and ImageMax, Inc. (incorporated by reference to
              Exhibit 10.2 of the Company's Form 8-K filed February 4, 1998,
              File no. 0-23077).
 
         10.3 Credit Agreement by and among the Company and Subsidiaries and
              CoreStates Bank, N.A., for itself and as Agent, and any other
              Banks becoming Party, dated as of March 30, 1998 (incorporated by
              reference to Exhibit 10.25 of the Company's Form 10-K filed March
              31, 1998, File no. 0-23077).
 
         27   Financial Data Schedule (filed in electronic format only.)
 
B) REPORTS ON FORM 8-K:
 
         o The Company filed a Form 8-K on February 3, 1998 reporting the
           acquisition of Integrated Information Services of Carmel, Indiana.
 
         o The Company filed a Form 8-K on February 24, 1998 reporting the
           acquisition of Document Management Group/ImageTec of Saginaw,
           Michigan.
 
                                      F-10
<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/ BRUCE M. GILLIS                                       May 15, 1998
Bruce M. Gillis                                                   Date
Chairman of the Board and Chief Executive Officer


BY: /S/ JAMES D. BROWN                                        May 15, 1998
James D. Brown                                                    Date
Chief Financial Officer and Principal Accounting Officer

 
                                      F-11