##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

[x] Annual Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended August 31, 2003


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 000-29883 _____________

Impreso, Inc.

(Exact name of registrant as specified in its charter)




---

|                                         |  |                    
|---------------------------------------- |  | -------------------
|Delaware                                 |  | 75-2849585         
|(State or other jurisdiction of          |  | (I.R.S. Employer   
|incorporation or organization)           |  | Identification No.)
|                                         |  |                    
|652 Southwestern Blvd., Coppell, Texas   |  | 75019              
|(Address of principal executive offices) |  | (Zip code)         

(972) 462-0100
(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act:

COMMON STOCK, $0.01 PAR VALUE

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 by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrants knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).

Yes [  ]   No   [X]


The aggregate market value of the voting stock held by non-affiliates of the
registrant as of February 28, 2003, based upon the closing sale price of the
Common Stock as reported on the Nasdaq SmallCap Market, was approximately $
3,033,427.

There were 5,278,780 shares of the registrants Common Stock outstanding as of
November 20, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant has incorporated by reference into Part III of this Form 10-K
portions of its definitive Proxy Statement for its Annual Meeting of
Shareholders to be filed within 120 days after the end of the fiscal year (the
Proxy Statement). Except with respect to information specifically
incorporated by reference into this Form 10-K, the Proxy Statement is not
deemed to be filed as a part hereof.





---

TABLE OF CONTENTS



|                                                  |                                                                                                         |  |  |  |  |  |  | 
|------------------------------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                           
|                                                  | ITEM 1. BUSINESS                                                                                       
|                                                  | ITEM 2. PROPERTIES                                                                                     
|                                                  | ITEM 3. LEGAL PROCEEDINGS                                                                              
|                                                  | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            
|PART II                                          
|                                                  | ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                      
|                                                  | ITEM 6. SELECTED FINANCIAL DATA                                                                        
|                                                  | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          
|                                                  | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                    
|                                                  | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                    
|                                                  | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           
|                                                  | ITEM 9A. CONTROLS AND PROCEDURES                                                                       
|PART III                                         
|                                                  | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                            
|                                                  | ITEM 11. EXECUTIVE COMPENSATION                                                                        
|                                                  | ITEM. 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|                                                  | ITEM. 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                
|                                                  | ITEM. 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                        
|PART IV                                          
|                                                  | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                               
|INDEX TO EXHIBITS                                
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS       
|REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS         
|CONSOLIDATED BALANCE SHEETS                      
|CONSOLIDATED STATEMENTS OF OPERATIONS            
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY  
|CONSOLIDATED STATEMENTS OF CASH FLOWS            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS       
|SIGNATURES                                       
|INDEX TO EXHIBITS                                
|EX-31.1 Certificate Pursuant to Section 302 - CEO
|EX-31.2 Certificate Pursuant to Section 302 - CFO
|EX-32.1 Certificate Pursuant to Section 906 - CEO
|EX-32.2 Certificate Pursuant to Section 906 - CFO



---



##### Table of Contents






PART I




ITEM 1. BUSINESS

GENERAL

Impreso, Inc. is the holding company of TST/Impreso, Inc. (TST), a
manufacturer and distributor to dealers and other resellers of various paper
and film products for commercial and home use in domestic and international
markets, and Hotsheet.com, Inc., the owner of
Hotsheet.com®, an online web
reference directory.

The primary operating company, TST, was founded in 1976. TST operates in the
hard copy supply market, which encompasses those products used with a hard copy
output or imaging device. Approximately 98% of TSTs total output is
initially sold domestically. Independent resellers purchase and may further
distribute the products internationally. Through its six manufacturing
facilities and 51 public distribution warehouse locations throughout the United
States and in Quebec, Canada, TST manufactures and distributes its products
under its own IMPRESO® label, generic labels and private labels. In April
1997, TST entered into a non-exclusive Trademark Licensing Agreement with
International Business Machines Corporation (IBM) for the manufacture and
distribution of a selected line of paper products. In 2003, this agreement was
extended to 2007.

The hard copy imaging business is a very competitive industry. Advances in
hardware and imaging material technology have accelerated business and public
consumption of new types of products and are changing the industrys customers,
products and channels of distribution. TST has strategically located its
distribution points so that it can deliver its products to customers in most
major cities in the United States within 24 hours. TST has approximately
3,800 customers, ranging in size from small business forms dealers to large
office product wholesalers with multiple offices and branches. An increasing
segment of our customer base has been large and medium size mass merchants,
including computer and office superstores. Our primary method of generating
sales contacts is through our own sales force, manufacturers sales
representatives, extensive marketing programs, referrals and reputation.

Our other subsidiary, Hotsheet.com, Inc., owns and operates the Hotsheet.com
web portal. Hotsheet® is an internet website directory, or portal,
specializing in listing popular and useful web destinations utilized by a wide
general audience. The 14 primary categories provide over 500 links to premier
sites. Hotsheet is unique due to the single-page presentation of the main
directory.

Services provided by Hotsheet.com include My Hotsheet, a unique method of
bookmark management that lets users create their own personalized page of
categorized favorite links and Hotsheet Super Search, a meta-search that
combines results from multiple web search engines and ranks them by relevance.
For the years ended August 31, 2003, 2002 and 2001, net sales of Hotsheet.com ,
Inc. amounted to $158,755, $122,629, and $171,256, respectively.

1



---



##### Table of Contents



TSTS PRODUCTS

The product line during the fiscal year ended August 31, 2001 (Fiscal 2001)
consisted of the following:

Continuous Computer Stock Business Forms. We maintain a wide variety of
standard continuous computer stock business forms in various types of papers,
formats for readability and contrast, and basis weights. Upon request, we
occasionally produce customized forms for larger customers.

Thermal Facsimile Paper. Our thermal facsimile papers are suitable for use
with all original equipment manufacturers (OEMs) machines currently on the
market and are warranted against damage that the paper may cause to a
customers thermal facsimile machine.

Cut Sheet Paper for use in Laser Printers, Copying Machines and Plain Paper
Facsimile Machines. We convert cut sheet products, including IMPRESO Lazer Cut
Sheets®.

Cut Sheet Paper for use in Ink Jet Printers. We manufacture two types of ink
jet paper, coated and un-coated. Coated ink jet paper, in both glossy and
matte, is designed for superior high resolution color graphics and photographic
reproductions. Uncoated ink jet paper is primarily used for traditional
monochrome applications.

Digital Photo Ink Jet Paper. Used for printing images from digital cameras,
photo CDs, the Internet, or desktop scanners.

Gloss Coated Ink Jet Paper. Gloss coated on one side for brilliant,
high-contrast color images with photographic detail and matte on the reverse
side for text and graphics.

Gloss Opaque Ink Jet Film. A stable and long-lasting film for printing any
ink-generated image. Its high gloss finish prints brilliant color images and
its matte side prints text and graphics.

Ink Jet Coated Canvas. A textured product which creates the illusion of a
painted surface.

Transparency Film for Ink Jet Printers. Clear film specially coated for
smudge/bleed-free color or black ink jet imaging.

Transparency Film for Copier and Laser Printers. Overhead transparencies can
be created using a plain paper copier and this film.

Transparency Film for Color Laser Printers. Designed specially for color laser
applications; the unique coating controls absorption of color, creating high
quality full color overhead transparencies.

T-Shirt Transfers. A computer and ink jet printer can create personalized
designs for applications on various cotton materials.

2



---



##### Table of Contents



Point of Sale and Cash Register Machine Rolls. Available in both thermal and
plain paper.

Fine Cotton Business Stationery Line. Fine cotton business stationery for sale
at the retail level.
High Speed Laser Roll Paper. High speed laser roll paper is specifically
engineered for high speed roll fed printing systems, such as IBMs Infoprint®
family of continuous-feed printing systems like the Infoprint 3000, Infoprint
4000, and Infoprint 4100. In addition, this paper can be used in
Xerox® or OCE®
systems. These rolls are used by companies, such as investment banking
institutions and publishing companies, for variable data output applications,
such as customized statements and book publishing. The advantages of using high
speed roll fed printing systems for mass production over traditional methods of
offset printing are lower costs and faster speeds of production without
sacrificing image quality.

Wide Format Engineering Rolls. Available in three different grades of paper,
bond, vellum and translucent bond, and in a variety of widths and lengths.
These products are used with wide format printing and copying equipment, such
as those used by architectural and engineering firms for design plans and
renderings. The introduction of engineering rolls represents our entry into
the rapidly growing wide format printing market. This product category also
opened a new channel of distribution through computer-aided design (CAD) supply
dealers.

Wide Format Ink Jet Media. Available in a wide variety of coated papers and
films used for full color graphic signage and display.

Processed Laser Cut Sheets. Laser cut sheets are micro-perforated and/or
pre-punched cut sheets used in copiers, laser printers and ink jet printers for
applications such as return/reply promotional materials, billing and remittance
statements, or coupons. Users can keep printing projects in-house by
eliminating the use of outside sources for custom forms.

Ink Jet Greeting Cards. Pre-scored white card stock in matte and glossy
finishes, packaged with matching envelopes.

Ink Jet Bumper Stickers. Coated vinyl bumper sticker material for use in ink
jet printers to create personalized bumper stickers.

Photo Quality Business Card Size Magnets. Photo quality, magnet stock is die
cut into business card size pieces. Excellent for producing business card size
magnets, magnets with important phone numbers and photo magnets. Magnets can
be affixed to all metal surfaces including refrigerators, lockers, etc.

Bulk Bin Packaging of Wide Format Engineering Rolls. Packaged for large users
to buy in bulk and conveniently store.

Expanded Line of Wide Format Ink Jet Media. Additional SKUs with expanded
widths and lengths to accommodate new printer capabilities within the market.

3



---



##### Table of Contents



Outdoor Banner Material. Part of our Wide Format line of products, specially
designed surface for use by retail signage shops and in-house sign production.

Complete Line of ATM Rolls. Expansion of our Point of Sale products for
automated teller machines servicing the financial market.

CD/DVD Sleeves. Die cut sheeted paper with adhesive strips for printing and
assembling customized CD/DVD protective sheaths.

CD/DVD Labels. Pre-formatted, die cut, adhesive paper for printing CD/DVD
labels.

Ink Jet Address Labels. Pre-formatted, die cut, adhesive paper for printing ink
jet address labels.

Two sided Glossy Coated Ink Jet Paper. Gloss coated on both sides for
brilliant, high-contrast color images with photographic detail.

Professional Grade Ultimate Glossy Photo Paper. Designed for ink jet
printers, this ultra-bright, 100-plus whiteness paper creates a true
photograph look and feel for high-end applications.

File Folders. Manilla folders available in letter and legal size.

Rolodex and Index cards.

99 Brite Ultimate InkJet and Ultimate Laser Paper. Twenty-four pound
ultra-bright paper for laser, ink jet, and multi-functional equipment.

Recycled Computer Paper Line. Three recycled grades introduced with varying
brightnesses, including an 84 bright, 30% post-consumer waste product which
meets governmental agencies recycled requirements.

Custom Printed Point of Sale/Add Rolls (Company logo, return policy, etc.)

Crayola Brand Print & Color Specialty Fun Papers: Includes Crayola T-Shirt
Transfers, Crayola Greeting Cards with Envelopes, Crayola Glossy Photo Paper,
Crayola Classic Colors, Crayola Assorted Brights and Pastels, Crayola Cling
Art, Crayola Stardust Magnets and Stickers, Crayola Stardust Paper and Crayola
Repositional Stickers.

TSTS TRADEMARK LICENSE

In April 1997, TST entered into a non-exclusive Trademark Licensing Agreement
with IBM. Under this agreement TST manufactures and distributes a selected
line of paper products within the United States, Canada and Mexico under the
IBM brand name. Through various amendments the authorized product lines have
been expanded and the term extended to April 30, 2007. TST began shipping IBM
branded products in fiscal 1998. Substantially all of the products manufactured
by TST are also marketed under the IBM Brand Paper Program. TST has been

4



---



##### Table of Contents



actively soliciting distributors, dealers and retail accounts into the IBM
program and has established a solid base for creating additional sales
opportunities to existing accounts, as well as initial sales to new customers
who are now purchasing from us as a direct result of their participation in the
IBM Brand Paper Program.

In February 2002, TST entered into a trademark licensing agreement with Binney
& Smith, owner of the Crayola Trademark. The agreement provides for TST to
manufacture and distribute a select line of Crayola® imaging products such as
Laser and Ink Jet paper, card stock, post cards, magnets, and t-shirt transfers
within the United States, Canada and Mexico. TST began shipping Crayola
branded products in March 2002. The addition of the Crayola brand has helped
the Company diversify its position in the retail segment through mass merchant
and food and drug store channels by attracting new end-users such as teachers,
children and parents. Management believes that brand name identification is an
effective tool for penetration of the paper industrys market and maintenance
of profit margins.

TSTS MARKETING AND DISTRIBUTION

TST markets its products to approximately 3800 customers through its own sales
force and established manufacturers representatives. TSTs targeted customers
are business consumable and office machine dealers and large and medium size
mass merchants, including computer and office superstores. We are continually
seeking to diversify our customer base and distribution channels. The
incorporation of non-traditional but related product categories into our
expanding product line may facilitate our access to different distribution
channels.

TST has 57 distribution points (51 public distribution warehouses and six
manufacturing locations), which enable it to deliver products to most major
cities in the United States within 24 hours. TSTs primary method of
generating revenue is through its own sales force. The members of this sales
force generally seek business within specific geographic territories.
Manufacturers representatives serve as an important supplementary source of
sales and marketing. Their territories are identified by specific accounts or
prospects, primarily those of a retail nature.

TST sells to the following types of customers:



| |  | Business Forms Dealers - Businesses that primarily buy and resell
various types of business forms. Examples include Standard Forms,
American Business Forms and Better Business Forms.                                                         
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Wholesale Stationers - Businesses that supply a large variety of
office products to office product dealers. Wholesale stationers
generally do not sell directly to the end user. Examples include
United Stationers, SP Richards, and Daisytek.
| 
| |  | Office Products Dealers - Businesses that generally purchase a
majority of their products from wholesale stationers, but often
negotiate directly with manufacturers. Examples include Navrats
Office Products and Crest Office Supply.       

5



---



##### Table of Contents





| |  | Paper Merchants - Businesses that sell all types of papers to printers
and dealers and directly to end users. Examples include Unisource,
Xpedx and Ris Paper.                                                                                                                                                                                              
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Consumer Electronics Stores - Businesses that sell retail to the end
user in a broad spectrum electronics environment. Examples include
Fryes, Best Buy and CompUSA.                                                                                                                                                                                       
| 
| |  | Mass Merchants - Discount department stores with retail sections that
sell computer, copier and facsimile related supplies. Examples
include Kmart and Army and Air Force Exchange Service.                                                                                                                                                                 
| 
| |  | Grocery and Drug Store Chains - Businesses that sell computer
consumables as a convenience to its customer and secondary sale to its
primary target product. Examples include Walgreens, Kroger and
Rite-Aid.                                                                                                                                              
| 
| |  | Wholesale Clubs/Office Superstores - Businesses that sell large
quantities of inventory at or near wholesale prices to end users and
dealers. These stores generally do not provide the credit, delivery
and other types of services and support to the extent that wholesale
stationers provide their customers. Examples include Staples, Costco
and BJs.
| 
| |  | Buying Groups - Groups of dealers, ranging from ten to 400 members,
that combine their buying power to receive, among other things, volume
discount pricing and rebate incentives from manufacturers. Examples
include Independent Stationers and Association of Independent Printing
Paper Merchants.                                                      
| 
| |  | Computer Aided Design (CAD) Supply Dealers - Dealers that typically
sell wide format supplies and papers to architects and engineers.
Examples include CAD Supply Specialty and IMPACO.                                                                                                                                                                     
| 
| |  | Contract Stationers - Companies that offer a complete catalog of
office and business supplies generally to large corporations. In many
cases, various types of products are bundled and sold under contract.
Examples include Corporate Express, Boise Cascade Office Products and
Staples.                                                                 
| 
| |  | Cash Register Dealers - Dealers that sell cash register systems and
point of sale supplies to businesses such as restaurants and retail
vendors. Examples include Impact Paper, USA Paper and Columbia Paper
& Ribbon.                                                                                                                                      

Though TST has specialized in select markets and has emphasized service and
long-term relationships to meet customer needs more effectively, there are no
long-term contractual relationships between it and any of its customers. One
customer, Staples, Inc. (Staples) accounted for more than 10% of TSTs sales
in the years ended August 31, 2003, 2002 and 2001. Another customer, Xpedx,
accounted for more than 10% of TSTs sales in the years ended August 31, 2002
and 2001. There can be no assurance that purchases by these customers will
remain at significant levels. TST may in the future be dependent on Staples,
Xpedx, or other significant customers. The loss of Staples, Xpedx or any other
significant customer could materially adversely
affect our financial position, results of operations and cash flows.

6



---



##### Table of Contents



INVENTORY MANAGEMENT; RAW MATERIALS OF TST

We believe that it is necessary for TST to maintain a sufficient inventory of
finished goods and raw materials to adequately service its customers. In recent
years inventory levels had been increased to facilitate the introduction of new
brands and expanded product lines. At the beginning of the year ended August
31, 2002 (Fiscal 2002), we implemented a program to reduce inventory and
reduced inventory levels by $4.35 million. This is in addition to the depletion
of $3 million of inventory acquired in the purchase of the assets of United
Computer Supplies, Inc. in April 2002. We reduced inventory levels in the
fiscal year ending August 31, 2003 (Fiscal 2003) by $5.6 million. Management
intends to continue reducing inventory through the year ending August 31, 2004
(Fiscal 2004), however, downward pressures on raw material prices could
compress the market for our existing inventory and have a material adverse
effect on the results of operations of TST or restrain our attempts at further
reducing inventory.

In recent years we have depended primarily on international vendors of raw
materials. One of the largest vendors from Asia suffered a financial crisis
and created a supply disruption and a tighter raw material market for the
Company. In reaction to the last year the Company shifted its supply chain
from international to domestic sources, which historically charge higher prices
for raw materials. This shift could have a material adverse effect on the
results of operation by making our finished goods pricing uncompetitive

For the six month period ended February 28, 2003, the price of raw materials
had remained relatively stable. During the third and fourth quarter of Fiscal
2003, the price of raw materials rapidly dropped. Prices continued to decrease
through the first quarter of Fiscal 2004, but we believe they will stabilize
in the second quarter.

TST bears the risk of increases in the prices charged by its suppliers and
decreases in the prices of raw materials held in its inventory. If prices for
products held in its finished goods inventory decline, if prices for raw
materials required by it increase, or if new technology is developed that
renders obsolete products distributed and held in inventory by TST, the
Companys business could be materially adversely affected.

TST purchases raw paper, coated thermal facsimile paper, coated technical
paper, carbon and carbonless paper (consisting of a wide variety of weights,
widths, colors, sizes and qualities), transparency film, packaging and other
supplies in the open market from a number of different companies around the
world. We believe that TST has adequate sources of raw material supplies to
meet the requirements of its business. We believe that TST has a good
relationship with all of its current suppliers.

MARKET CONDITIONS OF TST

The primary product produced by the Company is continuous feed business forms.
Management believes that the market for business forms, which declined in 2003,
will continue to decline in 2004. Management believes that the slowed economy
had a significant impact on Fourth Quarter
results of operation, and will continue to affect the year ending August 31,
2004, results of operations.

7



---



##### Table of Contents



The slowed economy has resulted in an increase in bad debt. One of our larger
customers filed a Chapter 11 bankruptcy on May 7, 2003, owing us approximately
$450,000. This amount, has been written off as bad debt expense this fiscal
year. Although the Company has not been served with any notice of a preference
action, we could be subject to a preference action of approximately $1 million
by the debtors bankruptcy trustee. Due to the range of remittance dates by
the debtor before and during the preference period, we believe we will prevail
in any litigation by the trustee of the bankruptcy for this alleged preference
with the ordinary course of business defense available under the Bankruptcy
Code.

TST sales significantly declined in June, July, and August 2003, which resulted
in poor financial performance. In order to reduce our overhead to compensate
for reduced sales on September 30, 2003, we reduced our workforce and employee
benefits, eliminated administrative overtime, froze wages and all capital
expenditures. When all reductions are completely implemented, we estimate a
reduction of expenses on an annual basis of $2.5 million.

SEASONALITY

TST may be subject to certain seasonal fluctuations in that orders for products
may decline over the summer months. If the market for finished goods
decreases, then the adverse impact of the seasonal fluctuations on the Company
will be greater.

Hotsheet.com revenues are partially generated by retail sales which are
typically stronger during the Christmas holiday season.

TSTS BACKLOG

The dollar value of TSTs order backlog as of August 31, 2003 and 2002, was
approximately $ 3.2 million and $3.7 million, respectively. TSTs ability to
fill orders is directly impacted by the general cyclical pattern of the paper
industry and its ability to purchase the raw materials and finished goods
necessary to fill customer orders. The increase in backlog is related to TSTs
increased net sales.

TSTS COMPETITION

TST competes with a number of other business organizations within the paper
industry, some of which have substantially greater financial, human and other
resources. TST currently competes principally with manufacturers that
distribute their products through dealers, resellers and/or retailers and, to a
lesser extent, manufacturers who distribute their own products directly to
end-users. Weak industry conditions in the past few years have caused the major
direct-selling companies, which are much larger than TST, to sell direct and to
dealers. In some cases, this has led to TSTs customers reducing their selling
prices to compete with these dealers. This has also caused increased
competition among companies selling products through dealers. In addition,
vertical consolidation among entities in the paper industry has created tougher
conditions for TST,

8



---



##### Table of Contents



because certain of TSTs suppliers have subsidiaries that compete with TST and
these suppliers generally support the efforts of their subsidiaries. Finally,
in the changing environment of the hard copy supply industry, advancing
technology has contributed to the competition as companies must commit
resources to obtain new equipment in order to convert the evolving types of
business consumables required by the advancement of technology, to expand
facilities to house the increasing number of types of products available and
for just-in-time inventory purchasing practices of customers.

TST has remained competitive by incorporating the manufacture and distribution
of technical and high recognition branded paper products into its line. The
addition of technical products into our line has positioned TST as a supplier
of business consumables at the initial growth stages of the technologys
introduction into the market and, therefore, at the greatest opportunity for
strong profit margins and growth in unit sales. Sales of branded products
benefit from brand loyalty and name recognition. Since TST began the
manufacture and distribution of technical and trademark licensed branded
products, and has penetrated new distribution channels with its expanding
product lines, management believes that in the future the companies TST will
compete with will change as the consolidation within the paper industry causes
competitors to branch into other categories of products that may not compete
with the lines we offer.

Over the past 10 years, the number of national producers of stock computer
forms has decreased from 19 to two through consolidation and business closures.
Continuing consolidation within the paper industry of regional suppliers
provides new customer opportunities for TST, which offsets the loss of
customers who are going out of business from the slowed economy. The
acquisition of United in Fiscal 2002 resulted in a substantial number of new
customers which were captured without compromise to the Companys profit
margins or substantial increases in selling, general and administrative
expenses as a percentage of net sales.

We believe that TST effectively competes on the basis of the following: its
nationwide distribution network, which enables products to be delivered to its
customers in most major cities in the United States within 24 hours; its larger
number of inventory items providing customers cost-effective, efficient
purchasing and volume discounts; and by providing high-quality products and
customer-oriented services.

TRADEMARKS

TST uses the trademark IMPRESO, a Spanish word meaning printed matter, on
certain products it manufactures and distributes. The trademark and service
mark is registered in the United States. These registrations are effective
until August 2009 and May 2010, respectively.

The IMPRESO trademark is also registered in Canada and Great Britain. These
foreign registrations are effective until July 2007 and October 2007. The
foreign registration renewal for the IMPRESO trademark in Italy has been
submitted, but we have not received the certificate from the Italian
administration. An application to register the IMPRESO trademark under the new
European Community Trademark regulations, which was filed July 19, 2000, was
denied and subsequently abandoned due to the generic meaning of the word
impreso in Spain and Portugal.

9



---



##### Table of Contents



Management believes that the IMPRESO trademark has significant name recognition
and is important in marketing and achieving visibility of TSTs products. The
goodwill value associated with the name IMPRESO has been pledged as an asset to
TSTs current primary secured lender under TSTs revolving line of credit.

TST also has a trademark registration in the United States for Lazer Cut
Sheets® and Lazer Bond®, effective until May 2007. Each of the Lazer Cut
Sheet and Lazer Bond trademarks are applied only to one specific product that
TST manufactures.

The United States service mark registration obtained on Hotsheet, our
subsidiarys proprietary Internet portal, is effective until January 2008. The
European Community Trademark registration for Hotsheet.com is effective until
February 2010. The United States service mark registration for Shopsheet®, a
subportal of Hotsheet.com, is effective until February 2010.

The acquisition of Uniteds assets in March 2002 included one United States
trademark: Computer Paper, Computer Paper, which registration is effective
until December 2003.

SERVICE AND SUPPORT

We believe that customer service is an important factor in product sales and
customer satisfaction. Service and support include TSTs own in-house trucking
which back-hauls goods for other entities, which reduces transportation costs
and improves customer service. Our in-house graphics department can design and
prepare layouts of packaging and can produce negatives, which allows TST speed
and flexibility when bringing new products or packaging into the marketplace.
TST also sells its graphics capabilities to its customers. TSTs customer
service department can expedite service because its computer system sends a
bill of lading by facsimile to the appropriate distributing warehouse and an
order acknowledgment to the receiving customer when an order is entered by a
customer service representative. TSTs computer system automatically
calculates inventory levels at each warehouse and the amount of raw materials
it must purchase, and identifies which of its plant locations will manufacture
an order.

TST also has a collection and credit department. The staff evaluates
extensions of credit and makes written and verbal requests for payment from
those customers whose invoices are not paid within agreed payment terms.
In-house counsel is available to assist the credit department in difficult
collections.

TST offers a 120-day warranty on all of its products. To date, warranty expense
has been minimal.

ENVIRONMENTAL REGULATION

We believe that compliance with any environmental regulations that may be
applicable to us will not have a material adverse effect on our capital
expenditures, earnings or competitive position.

10



---



##### Table of Contents



EMPLOYEES

We had 295 full-time employees at August 31, 2003 of whom approximately 70% are
engaged in manufacturing TSTs products. None of our employees are currently
covered by a collective bargaining agreement. We consider our employee
relations to be good as a result of an organizational structure which
encourages individual initiative as well as team work.




ITEM 2. PROPERTIES

TST operates six manufacturing plants encompassing an aggregate of
approximately 419,000 square feet of space. The Coppell, Texas, facility,
where our executive offices are located, is approximately 75,000 square feet.
TST owns five of its manufacturing plants, which are located in Coppell, Texas;
Kearneysville, West Virginia; Fontana, California; Greencastle, Pennsylvania;
and Itasca, Illinois. The facilities in Fontana, California, are encumbered by
a mortgage maturing in 2008. The Coppell and Greencastle plants are encumbered
by mortgages maturing in 2011. The West Virginia property is encumbered by
mortgages maturing in 2023. The Itasca, Illinois facilitys mortgage matures in
April 2012. TST maintains a manufacturing facility in Elk Grove, Illinois and
warehouse space in Dallas, Texas under month to month leases. Two regional
office spaces in Reading, Pennsylvania and Hunnington, New York were terminated
in fiscal 2003. Annual mortgage payments and minimum lease payments relating to
these facilities were approximately $768,495 in Fiscal 2003 and $998,409 in
Fiscal 2002. Costs incurred for the 51 public distribution and 7 storage
warehouses TST utilizes throughout the United States and in Quebec, Canada was
approximately $1.6 million for Fiscal 2003.

In August 2003, TST executed a lease with an option to purchase a 414,000
manufacturing facility located in Chambersburg, Pennsylvania. The Landlord is
completing substantial renovations on the building and we believe the plant
will be available for full occupancy in January 2004. We intend to exit and
sell the Kearneysville, West Virginia and Greencastle, Pennsylvania buildings
as soon as practical. We will also exit four storage warehouses and store the
inventory in Chambersburg.

The Itasca, Illinois plant is under expansion. We are adding on 34,820 square
feet and intend to consolidate the Elk Grove plant into Itasca.

We believe the current facilities are in good condition, and are suitable and
adequate for current business needs. We estimate that, as of August 31, 2003,
TST was operating at approximately 75% capacity for all of the products it
manufactures, which will allow it to increase production to meet increased
demand, if any, with no immediate capital investment.

Our Hotsheet operation is currently operating from our headquarters at the
Coppell , Texas facility and through its internet service providers located in
Dallas, Texas and Providence, Rhode Island.




ITEM 3. LEGAL PROCEEDINGS

On September 18, 2002, TST filed a lawsuit against a vendor in the United
States District Court for the Northern District of Texas  Dallas Division.
Simultaneously with the initiation of the

11



---



##### Table of Contents



lawsuit, TST requested that its disputes with the vendor be submitted to
arbitration through the American Arbitration Associations Dallas, Texas
office. TSTs general claim is that the vendor breached a Distributor
Agreement entered into with TST in several material respects, including the
vendors late delivery of paper products, the vendors delivery of defective
product, and the vendors failure to properly credit TSTs accounts based upon
these and other alleged breaches. The vendor responded to TSTs demand for
arbitration by generally denying TSTs claims and asserting a counterclaim
seeking to recover disputed accounts receivable and damages related to TSTs
alleged interference with the vendors relationship with its lender. Trial is
set for March 2005.

In Fiscal 2003 an employee filed suit under the Family Leave and Medical Act
claiming retaliatory treatment (firing) in violation of the FMLA. TST intends
to vigorously contest liability and believes the lawsuit is without merit. The
amount of her claim is not known at this time. There is no trial setting.

TST is the defendant in a suit filed in Fiscal 2003 for the collection of sums
due under two promissory notes. These liabilities are included on the
Companys balance sheet. TST recently filed a motion to stay the adversary
proceeding and to compel arbitration in Dallas, Texas under the terms of the
parties purchase agreement. TST asserts that liability does not exist because
of fraud and contractual breaches in connection with the agreements.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.




PART II




ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

From September 1, 2000 to May 24, 2001, our stock was reported on the Nasdaq
National Market (NNM) under the symbol ZCOM. On May 25, 2001, our common
stock began trading on the Nasdaq SmallCap Market (NSCM) under the symbol
ZCOM. The high and low closing prices for the common stock, as reported on the
NNM and NSCM in the respective time frames, are as follows:

|                               |  |             |      |     |  |   |      | 
|------------------------------ |  | ----------- | ---- | --- |  | - | ---- | 
|                               |  | Price Range
|                               |  |            
|2003 Fiscal Year               |  | High        |      | Low
|                               |  |             |      |    
|First Quarter (Sept.  -  Nov.) |  | $           | 2.50 |     |  | $ | 1.92 | 
|Second Quarter (Dec.  -  Feb.) |  |             | 2.87 |     |  |   | 1.86 | 
|Third Quarter (Mar.  -  May)   |  |             | 2.20 |     |  |   | 1.75 | 
|Fourth Quarter (June  -  Aug.) |  |             | 2.40 |     |  |   | 1.73 | 

12



---



##### Table of Contents



|                                |  |             |      |     |  |   |      | 
|------------------------------- |  | ----------- | ---- | --- |  | - | ---- | 
|                                |  | Price Range
|                                |  |            
|2002 Fiscal Year                |  | High        |      | Low
|                                |  |             |      |    
|First Quarter (Sept.  -  Nov. ) |  | $           | 2.49 |     |  | $ | 1.12 | 
|Second Quarter (Dec.  -  Feb.)  |  |             | 4.35 |     |  |   | 2.30 | 
|Third Quarter (Mar.  -  May)    |  |             | 3.35 |     |  |   | 2.50 | 
|Fourth Quarter (June  -  Aug.)  |  |             | 3.20 |     |  |   | 1.82 | 

On November 19, 2003, the closing price for the common stock on the NSCM was
$1.86 and the common stock was held by approximately 750 stockholders of
record, including holdings through nominee or street name accounts with
brokers.

We have not paid any dividends on our common stock since inception, and we do
not intend to pay dividends to our stockholders in the foreseeable future. Any
such dividends will be declared in compliance with the restrictive covenants of
our subsidiarys lender that no cash dividends paid during any one calendar
year shall exceed current years net profit. We also intend to reinvest
earnings, if any, in the development and expansion of our businesses. The
declaration of dividends in the future will be at the discretion of the Board
of Directors and will depend upon the earnings, capital requirements and our
financial position, general economic conditions and other pertinent factors.




ITEM 6. SELECTED FINANCIAL DATA

The following is a summary of our selected financial data as of and for the
five years ended August 31, 2003 (Fiscal 2003). The historical financial
data has been derived from our audited financial statements. This data should
be read in conjunction with Managements Discussion and Analysis of Financial
Condition and Results of Operations and the Consolidated Financial Statements
appearing elsewhere in this document.

SELECTED FINANCIAL DATA (a)
Years Ended August 31,

|                                              |  |      |            |      |  |      |            |      |  |      |            |  |  |   |             |  |  |   |             | 
|--------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  | - | ----------- |  |  | - | ----------- | 
|                                              |  | 1999 |            | 2000 |  | 2001 |            | 2002 |  | 2003
|                                              |  |      |            |      |  |      |            |      |  |     
|Operations Data:                              |  |      |            |      |  |      |            |      |  |      |            |  |  |   |             |  |  |   |             | 
|Net Sales                                     |  | $    | 61,506,207 |      |  | $    | 74,117,661 |      |  | $    | 96,208,411 |  |  | $ | 123,065,514 |  |  | $ | 120,460,870 | 
|Net Income (loss)                             |  |      | 774,352    |      |  |      | 931,317    |      |  |      | 1,246,945  |  |  |   | 1,676,442   |  |  |   | 617,831     | 
|                                              |  |      |            |      |  |      |            |      |  |      |            |  |  |   |             |  |  |   |             | 
|Earnings (loss) per
common share:             |  |      |            |      |  |      |            |      |  |      |            |  |  |   |             |  |  |   |             | 
|Net Income (loss)                             |  |      | 0.15       |      |  |      | 0.18       |      |  |      | 0.24       |  |  |   | 0.32        |  |  |   | 0.12        | 
|                                              |  |      |            |      |  |      |            |      |  |      |            |  |  |   |             |  |  |   |             | 
|Consolidated
Balance Sheet Data:              |  |      |            |      |  |      |            |      |  |      |            |  |  |   |             |  |  |   |             | 
|Total assets                                  |  |      | 33,084,378 |      |  |      | 39,383,548 |      |  |      | 62,202,597 |  |  |   | 66,971,864  |  |  |   | 56,336,300  | 
|Long-term debt
(excluding current
maturities) |  |      | 2,629,272  |      |  |      | 3,782,079  |      |  |      | 6,328,454  |  |  |   | 10,609,790  |  |  |   | 9,571,934   | 
|Stockholders Equity                          |  | $    | 12,573,273 |      |  | $    | 13,504,590 |      |  | $    | 14,712,643 |  |  | $ | 16,416,612  |  |  | $ | 17,040,890  | 
|                                              |  |      |            |      |  |      |            |      |  |      |            |  |  |   |             |  |  |   |             | 



| |  | (a) This schedule should be read in conjunction with our audited
Consolidated Financial Statements and related notes thereto.
| |  | -----------------------------------------------------------------------------------------------------------------------------

13



---



##### Table of Contents






ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

The accounting policies described below are those the Company considers
critical in preparing its consolidated financial statements . These policies
require the application of significant judgement by management in selecting the
appropriate assumptions for calculating financial estimates. By their nature,
these judgements are subject to an inherent degree of uncertainty. These
judgements are based on historical experience, the Companys observation of
trends in the industry, information provided by customers and information
available from other outside sources, as appropriate and available at the time
the estimates are made. However, as described below, these estimates could
change materially if different information or assumptions were used. The
Company believes that of its significant accounting policies, the following may
involve a higher degree of judgment or estimation than other accounting
policies.

Accounts Receivable (doubtful accounts) Reserves

The Company provides for losses on accounts receivable based upon their current
status, historical experience and managements evaluation of existing economic
conditions. Significant changes in customer profitability or general economic
conditions may have a significant effect on the Companys allowance for
doubtful accounts.

Revenue Recognition

TSTs sales are recorded when products are shipped to customers. TST is
reasonably assured a majority of the sales are collectible upon shipment due to
its credit policies and collection methods. For those accounts TST is not
reasonably assured of collection the Company reserves against doubtful accounts
based upon historical experience and managements evaluation of existing
economic conditions. Hotsheet.com, Inc. generates its revenue by click through
fee advertising revenues and commissions earned. Click through fees are
generated when traffic is sent from the Hotsheet.com website, via a link, to a
vendors website. Commissions are generated when the linked traffic makes
purchases. The revenue is recognized upon receipt.

Inventories

Inventories are valued at the lower of cost or market, cost being determined on
the first-in, first-out method. Reserves for slow moving, obsolete products, or
bad (damaged) products are based on
historical experience, acquisition activities, and secured lender policies. The
Company evaluates, and if necessary, adjusts reserves quarterly.

14



---



##### Table of Contents



Historically, the Company has not reserved for slow moving, obsolete or bad
inventories. Substantially all of the slow moving products can be repackaged
into different formats or labels. Demand for products that are associated with
obsolete technology slowly decline as sales of new hardware requiring new or
different consumables increase. The reduced demand for products which are
becoming obsolete is easily monitored and scheduled production of these items
is adjusted accordingly. If damage is caused to a product it is most often
minor in value and expensed as damage occurs.

The Company records reductions in revenue when products are returned. Returns
and allowances are monitored based on a historical percentage of sales. All
returns must be approved by the Company prior to the product being returned,
and in some instances a restocking fee is charged to the customer. The Company
also monitors reasons for return, such as quality, shipping errors or ordering
errors.

Commissions and Rebates

The Company reserves commissions and rebates paid to certain customers based on
specific contractual agreements. These reserves are calculated based upon
sales by customer, and adjusted quarterly to reflect increases and decreases in
each customers sales and payments of commissions and rebates.

RESULTS OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2003, AS COMPARED TO THE
YEAR ENDED AUGUST 31, 2002

Net SalesNet sales decreased from $123.1 million in Fiscal 2002 to $120.5
million in Fiscal 2003, a decrease of $2.6 million or 2.1%, due primarily to a
slowed economy.

Gross ProfitGross profit increased from $12.6 million in Fiscal 2002 to
$12.7 million in Fiscal 2003, an increase of $87,000 or 1.0%. Our gross
profit percentage increased from 10.3% for Fiscal 2002 to 10.5% for Fiscal
2003. The gross profit percentage increase was primarily the result of the
price of paper falling more rapidly than the reduction of our selling prices to
our customers.

Selling, General and Administrative ExpensesSG&A expenses for Fiscal 2003
were $10.2 million, 8.5 % of net sales, as compared to $9.3 million, or 7.6% of
net sales for Fiscal 2002. SG&A increased as a percentage of net sales in
Fiscal 2003, due to the rising cost of employee health benefits and bad debt
write off.

Interest ExpenseInterest expense increased from $1.7 million for Fiscal 2002
to $1.8 million for Fiscal 2003, an increase of $43,000 or 2.5%. This increase
is attributable to the United Computer Supplies, Inc. acquisition plants and
equipment financing.

Income TaxesIncome tax expense was $1.1 million for Fiscal 2002 as compared
to $400,100 for Fiscal 2003. The decrease in tax expense resulted primarily
from decreased profits and other
income for Fiscal 2003.

15



---



##### Table of Contents



RESULTS OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2002, AS COMPARED TO THE
YEAR ENDED AUGUST 31, 2001

Net SalesNet sales increased from $96.2 million in Fiscal 2001 to $123.1
million in Fiscal 2002, an increase of $26.9 million or 27.9%, due primarily to
the acquisition of United and fewer competitors in the marketplace.

Gross ProfitGross profit increased from $11.5 million in Fiscal 2001 to
$12.6 million in Fiscal 2002, an increase of $1.2 million or 10.1%. Our gross
profit percentage decreased from 11.9% for Fiscal 2001 to 10.3% for Fiscal
2002. The gross profit percentage decrease was primarily the result of
increased fixed costs from the acquisition of United and higher transportation
costs.

Selling, General and Administrative Expenses- SG&A expenses for Fiscal 2002
were $9.3 million, or 7.6% of net sales, as compared to $7.9 million, or 8.2%
of net sales for Fiscal 2001. SG&A decreased as a percentage of net sales in
Fiscal 2002, due to our acquisition of Uniteds customers, elimination of
duplicate marketing personnel and leveraging existing fixed costs.

Interest Expense- Interest expense increased from $1.6 million for Fiscal
2001 to $1.7 million for Fiscal 2002, an increase of $112,000 or 6.9%. This
increase is attributable to increased financing of plants and equipment.

Income Taxes- Income tax expense was $777,000 for Fiscal 2001, as compared to
$1.1 million for Fiscal 2002. The increase in tax expense resulted primarily
from increased profits and other income for Fiscal 2002.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents decreased from $203,000 at August 31, 2002 to $95,000
at August 31, 2003.

Borrowings under TSTs line of credit decreased from $17.9 million at August
31, 2002 to $14.4 at August 31, 2003, a decrease of $3.5 million, or 19.6%. The
decreased borrowing primarily resulted from TST decreasing its raw material
inventory.

Working capital increased to $12.7 million at August 31, 2003, from $11.9
million at August 31, 2002, an increase of $800,000 or 6.7%. This increase is
primarily attributable to a decrease in TSTs Accounts Payable of $5.2 million,
and a decrease in borrowings under its line of credit of $3.5 million.

Effective October 28, 2002, TST entered into an amended and restated loan
agreement with a commercial financial corporation, which matures in May 2004.
The agreement provides for a $25 million line of credit and an inventory
sub-limit of $21 million. The loan is secured by, among other things,
inventory, trade receivables, equipment and a personal guarantee of Marshall
Sorokwasz, our Chairman of the Board and President, and Trustee of a trust
which is a principal

16



---



##### Table of Contents



shareholder of our Company. A new provision in the amended and restated loan
agreement allows the Company to elect the application of a Eurodollar interest
rate plus 2.75% for 30, 60 or 90 day periods to specified amounts of the loan.
Available borrowings under this line of credit, which accrued interest since
July 3, 2003, on $12,000,000 at LIBOR plus 2.75% (3.86 % at August 31, 2003),
balance at prime plus .25% (4.25 % at August 31, 2003), are based upon
specified percentages of eligible accounts receivable and inventories. As of
August 31, 2003, there was a $5.8 million borrowing capacity remaining under
the $25 million revolving line of credit. The revolving credit line will
mature in May 2004.

On October 6, 2003, we executed another 90 day LIBOR interest rate election of
1.150 % plus 2.75%, to $10 million of our outstanding loan balance.

On April 22, 2003, we executed a one-year, $1.4 million construction loan with
the current mortgagee of the Itasca, Illinois building to expand the building
an additional 34, 800 square feet.

We believe that the funds available under the loans encumbering our California,
Texas, Pennsylvania, Illinois and West Virginia plants, the construction loan
for the expansion at the Itasca facility, the revolving credit facility, cash
and cash equivalents, trade credit and internally generated funds will be
sufficient to satisfy our requirements for working capital and capital
expenditures for at least the next twelve months. Such belief is based on
certain assumptions, including the continuation of current operations and no
extraordinary adverse events, and there can be no assurance that such
assumptions are correct. In addition, expansion of our operations due to an
increased demand for products TST manufactures or significant growth of
Hotsheet.com, Inc. may require us to obtain additional capital to add new
operations or manufacturing facilities. If that should occur, we anticipate
that the funds required would be generated through securities offerings or
additional debt. There can be no assurance that any additional financing will
be available if needed, or, if available, will be on acceptable terms.

At August 31, 2003, the Company had the following contractual obligations and
other commercial commitments*:

|                                |  |       |            |      |  |             |           |           |  |               |           |  |  |   |           |  |  |   |           | 
|------------------------------- |  | ----- | ---------- | ---- |  | ----------- | --------- | --------- |  | ------------- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                |  |       |            |      |  | Less than 1 |           |           |  |               |           |  |  |   |           |  |  |  
|                                |  | Total |            | year |  | 1-3 years   |           | 4-5 years |  | After 5 years
|                                |  |       |            |      |  |             |           |           |  |              
|Long-Term Debt**                |  | $     | 10,923,247 |      |  | $           | 1,351,315 |           |  | $             | 1,710,455 |  |  | $ | 1,371,577 |  |  | $ | 6,489,900 | 
|Operating Leases                |  |       | 273,506    |      |  |             | 121,226   |           |  |               | 98,316    |  |  |   | 53,964    |  |  |   | 0         | 
|Deferred
Compensation           |  |       | 187,000    |      |  |             | 37,400    |           |  |               | 74,800    |  |  |   | 74,800    |  |  |   | 0         | 
|                                |  |       |            |      |  |             |           |           |  |               |           |  |  |   |           |  |  |   |           | 
|Total
Obligations &
Commitments |  | $     | 11,383,753 |      |  | $           | 1,509,941 |           |  | $             | 1,883,571 |  |  | $ | 1,500,341 |  |  | $ | 6,489,900 | 

*This table does not include the balance on the revolving line of credit.

**Excludes related interest amounts.

17



---



##### Table of Contents



As of August 31, 2003, we did not own derivative or other financial instruments
for trading or speculative purposes. We do not use financial instruments and,
therefore, the implementation of Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities did not
have a material impact on our financial position or results of operations.

SUBSEQUENT EVENTS

In September 2003, the Company implemented numerous cost savings measures such
as an approximate 15% reduction in our workforce and reduction of various
benefits. We believe these actions, combined with our in-progress
reconfiguration and consolidation of our operations will have a significant
affect on income and profitability in the future. We intend to exit and sell
two plants and have exited four public warehouses, combining all of these
operations in a Chambersburg, Pennsylvania building we leased. The Landlord of
the building is renovating the project and we expect to fully occupy the
facility in January 2004. In addition, we are expanding our Itasca, Illinois
plant by 34,800 square feet, and intend to exit our leased building in Elk
Grove, Illinois, consolidating it in Itasca. We expect this construction to be
completed in March 2004. Once both projects are completed, the company will
have reduced the number of manufacturing locations the company operates from
six to four, with square footage increasing from approximately 420,000 to
690,000. From November 30, 2002, to December 9, 2003, our borrowings on our
line of credit decreased from approximately $23 million to $8.9 million. During
the same period, the Company reduced its inventory from approximately $40
million to $23.3 million.

On October 9, 2003, in the United States District Court Central District of
California Southern Division, Avery Dennison Office Products Company and Avery
Dennison Corporation (Avery) filed a patent infringement lawsuit against TST
claiming TSTs business cut card products infringed on patents and pending
patents owned by Avery. The parties have executed a standstill agreement
while TST investigated the claim and the parties negotiate settlement. If the
products do infringe on Averys patents, TST, under the Uniform Commercial
Code, will file a lawsuit against our suppliers for selling products that
infringed on a patent. We also filed claim with our insurance carrier
requesting coverage under the advertising endorsement. The insurance company
has reserved their decision pending their own investigation.

On November 5, 2003, we discovered the Companys payroll administrator was
fraudulently diverting Company funds into her personal bank account. The
payroll administrator admitted guilt to the FBI and our banks internal
investigator. The investigation by the FBI, the bank and the Company to date
has revealed an approximate loss of $580,000 over a period starting in
September 2000 until October 2003. The investigation is not complete. The
Company has notified its insurance Company of the loss under its employee theft
coverage and management believes that a majority of the losses will be
reimbursed by insurance. Management has recently hired a full time internal
audit specialist to lead its efforts to evaluate and improve its internal
accounting controls and this individual will be heading up the companys
efforts to establish more effective internal controls over the payroll
processing function. The Company is cooperating with the FBI in its
investigation and prosecution of the Companys former employee.

18



---



##### Table of Contents



IMPACT OF INFLATION

Inflation is not expected to have a significant impact on our business.

FORWARD-LOOKING STATEMENTS

Managements Discussion and Analysis of Financial Condition and the Results of
Operations and other sections of this Form 10-K contain forward-looking
statements about our prospects for the future, including but not limited to
our ability to generate sufficient working capital, our ability to continue to
maintain sales to justify capital expenses, and our ability to generate
additional sales to meet business expansion. Such statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially from those projected, including availability of raw materials,
availability of thermal facsimile, computer, laser and color ink jet paper, to
the cyclical nature of the industry in which we operate, the potential of
technological changes which would adversely affect the need for our products,
price fluctuations which could adversely impact the large inventory we require,
loss of any significant customer, and termination of contracts essential to
our business. Parties are cautioned not to rely on any such forward-looking
statements or judgments in making investment decisions.




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are not exposed to market risks such as foreign currency exchange rates, but
are exposed to risks such as variable interest rates. Market risk is the
potential loss arising from adverse changes in market prices and rates. Our
subsidiaries do not have supply contracts with any of their foreign vendors.
All foreign vendors are paid in United States currency. In addition, TSTs
international sales of finished goods is insignificant. Accordingly, there are
not sufficient factors to create a material foreign exchange rate risk;
therefore, we do not use exchange commitments to minimize the negative impact
of foreign currency fluctuations.

We had both fixed-rate and variable-rate debts as of August 31, 2003. The fair
market value of long-term variable interest rate debt is subject to interest
rate risk. Generally the fair market value of variable interest rate debt will
decrease as interest rates fall and increase as interest rates rise.

The estimated fair value of our total long-term fixed rate and floating rate
debt approximates carrying value. See Note 2 to Consolidated Financial
Statements. Based upon our market risk sensitive debt outstanding at August 31,
2003, there was no material exposure to our financial position or results of
operations.

19



---



##### Table of Contents






ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                                                                                   |  |  |          | 
|-------------------------------------------------------------------------------------------------- |  |  | -------- | 
|Index to Consolidated Financial Statements                                                         |  |  | F-1      | 
|Report of Independent Public Accountants                                                           |  |  |          | 
|Blackman Kallick Bartelstein, LLP                                                                  |  |  | F-2      | 
|Report of Independent Public Accountants                                                           |  |  |          | 
|Arthur Andersen, LLP                                                                               |  |  | F-3      | 
|Consolidated Balance Sheets as of August 31, 2003 and 2002                                         |  |  | F-4, F-5 | 
|Consolidated Statements of Operations for the Years
Ended August 31, 2003, 2002 and 2001           |  |  | F-6      | 
|Consolidated Statements of Stockholders Equity
for the Years Ended August 31, 2003, 2002 and 2001 |  |  | F-7      | 
|Consolidated Statements of Cash Flows for the Years
Ended August 31, 2003, 2002 and 2001           |  |  | F-8      | 
|Notes to Consolidated Financial Statements                                                         |  |  | F-9      | 




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.




ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of controls and procedures

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Companys
management, including the Companys Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Companys disclosure controls and procedures are effective
in timely alerting them to material information relating to the Company
(including its consolidated subsidiaries) required to be included in the
Companys periodic SEC filings. Subsequent to this review, the following issues
came to the attention of management.

Payroll Fraud

There was no change in the Companys internal control over financial reporting
that occurred during the Companys most recent fiscal quarter that has
materially affected the Companys internal control over financial reporting.
However on November 5, 2003, we discovered the Companys payroll administrator
was allegedly fraudulently diverting Company funds into her personal bank
account. The payroll administrator admitted guilt to the FBI and our banks
internal investigator. The investigation by the FBI, the bank and the Company
to date has revealed an approximate loss of $580,000 over a period starting in
September 2000 until October 2003. The investigation is not complete. The
Company has notified its insurance Company of the loss under its employee theft
coverage and management believes that a majority of the losses will be
reimbursed by insurance. Management has recently hired a full time internal
audit specialist to

20



---



##### Table of Contents



lead its efforts to evaluate and improve its internal accounting controls and
this individual will be heading up the companys efforts to establish more
effective internal controls over the payroll processing function. The Company
is cooperating with the FBI in its investigation and prosecution of the
Companys former employee.

(b)  Material weaknesses regarding credit memo issuance

During the course of the audit of our August 31, 2003 financial statements, our
auditors determined that credit memos in the amount of $500,000, for product
returned primarily during the fourth quarter of fiscal 2003, were issued
subsequent to year-end. An adjustment for this amount was made to the year-end
financial statements to reduce accounts receivable and increase returns and
allowances. Management has determined that this adjustment did not have a
material impact on the previous fiscal quarters.

In response to the credit memo issue, management has instituted a more thorough
reconciliation process to ensure proper cut-off regarding the issuance of
credit memos for product returns.

(c)  Other items

In addition to the above, in connection with their audit of our August 31, 2003
financial statements, our auditors communicated to the Audit Committee and to
management reportable conditions in the Companys internal control system.
These reportable conditions related to:



| |  |  | Accounting for revenue/accounts receivable transactions including
accounting for discounts taken by customers and for cash receipts and
lack of timely reconciliation of accounts receivable
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Segregation of duties in the accounting department                                                                                                                                          
|
| |  |  | The need for improvements to controls over cash disbursement transactions.                                                                                                                  

Corrective actions have been developed and are being implemented to eliminate
or reduce to an acceptable level the financial reporting risks associated with
the conditions noted. The company believes that it will correct all these
conditions during fiscal 2004. Our independent auditors did not modify their
report on the Companys August 31, 2003 audited financial statements as a
consequence of these reportable conditions.

As noted above, management has recently hired a full time internal audit
specialist to lead its efforts to improve internal controls and disclosure
controls. Management has directed the internal audit specialist to undertake a
comprehensive review of the companys internal accounting controls. It is
managements intention to aggressively address the above issues and to continue
to work to ensure the Company has in place rigorous internal and disclosure
controls.




PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

We have adopted a code of ethics that applies to all of our principal executive
officers and senior

21



---



##### Table of Contents



financial officers. This code of ethics is posted on our Website. The Internet
address for our Website is http://www.tstimpreso.com, and the code of ethics
may be found as follows:

1) From our main Web page, first click on Corporate Info.

2) then click on Corporate Compliance.

Or for a mailed copy call (972) 462-0100 ext 1117.

We intend to satisfy the disclosure requirement required under Item 10 of Form
8-K regarding an amendment to, or waiver from, a provision of this code of
ethics by posting such information on our website, at the address and location
specified above.

The remaining information required by this item is incorporated herein by
reference in the Companys definitive proxy statement to be filed with the
Commission not later than 120 days after August 31, 2003.




ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference in
the Companys definitive proxy statement to be filed with the Commission not
later than 120 days after August 31, 2003.




ITEM. 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated herein by reference in
the Companys definitive proxy statement to be filed with the Commission not
later than 120 days after August 31, 2003..




ITEM. 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference in
the Companys definitive proxy statement to be filed with the Commission not
later than 120 days after August 31, 2003.




ITEM. 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated herein by reference in
the Companys definitive proxy statement to be filed with the Commission not
later than 120 days after August 31, 2003.

22



---



##### Table of Contents






PART IV




ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



|(a) | 1. |  | Financial Statements:
|--- | -- |  | ---------------------

The financial statements of the Company filed in this Annual Report on Form
10-K are listed in Item 8.



| | 2. |  | Financial Statement Schedules:
| | -- |  | ------------------------------

The financial statement schedules of the Company filed in this Annual Report on
Form 10-K are listed in the attached Index to Financial Statement Schedules.



| | 3. |  | Exhibits:
| | -- |  | ---------

The exhibits required to be filed as part of this Annual Report on Form 10-K
are listed in the attached Index to Exhibits.



|(b) |  | Current Reports on Form 8-K
|--- |  | ---------------------------

No report on Form 8-K was filed during the last quarter of the period
covered by this report.

23



---



##### Table of Contents






INDEX TO EXHIBITS

|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|----------- | ------ | ----------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |        | Description of Exhibits
|            | 2.1    |                         | Plan and Agreement of Merger, dated as of December 1, 1999, among
TST/Impreso, Inc., Impreso, Inc. and TST Merger Corp. (incorporated by
reference to Appendix A of the Companys Registration Statement on Form
S-4, No. 333-92381)                                                                                                                                                  
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 2.2(a) |                         | Asset Purchase Agreement by and between TST/Impreso, Inc. and Durango
Georgia Converting LLC dated as of April 5, 2001 (incorporated by
reference to Exhibit 2.1 of the Companys Quarterly Report on Form
10-Q, for the quarter ended May 31, 2001)                                                                                                                                  
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 2.2(b) |                         | Asset Purchase Agreement by and between TST/Impreso, Inc. and Bank of
America, N.A. and consented to by United Computer Supplies, Inc.,
United Computer Supplies-East, Inc. and John R. Zimmerman dated as of
March 19, 2002 (incorporated by reference to Exhibit 2.1 of the
Companys Quarterly Report on Form 10-Q, for the quarter ended May 31,
2002)                            
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 2.2(c) |                         | Real Estate Purchase and Sale Agreement by and between United Computer
Supplies, Inc. and TST/Impreso, Inc. dated as of March 15, 2002
(incorporated by reference to Exhibit 2.21 of the Companys Quarterly
Report on Form 10-Q, for the quarter ended May 31, 2002)                                                                                                                 
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 3(a)   |                         | Certificate of Incorporation of the Company (incorporated by reference
to Exhibit 3(a) to the Companys Registration Statement on Form S-4,
No. 333-92381)                                                                                                                                                                                                                            
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 3(b)   |                         | By-laws of the Company (incorporated by reference to Exhibit 3(b) to the
Companys Registration Statement on Form S-4, No. 333-92381)                                                                                                                                                                                                                                                 
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 4.1    |                         | Form of Underwriters Warrant (incorporated by reference to Exhibit 4.1
to the Companys Registration Statement on Form S-1, No. 33-93814)                                                                                                                                                                                                                                            
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 10(a)  |                         | 1995 Stock Option Plan (incorporated by reference to Exhibit 10.1 to
the Companys Registration Statement on Form S-1, No. 33-93814)                                                                                                                                                                                                                                                  
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 10(b)  |                         | Employment Agreement dated January 27, 1999, between the Company and
Marshall Sorokwasz (incorporated by reference to Exhibit 10.2 to the
Companys Registration Statement on Form S-1, No. 33-93814)                                                                                                                                                                                 
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 10(c)  |                         | IBM Brand Paper Trademark Licensing Agreement, effective as of April 30,
1997 and Amendment No. 1 thereto, between TST/Impreso, Inc. and
International Business Machines Corporation (incorporated by reference to
Exhibit 10(c) of the Companys Quarterly Report on Form 10-Q/A, dated July
15, 1997) [Confidential treatment has been granted for certain portions of
this Exhibit]
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 10(d)  |                         | Amendment Number 2 to the IBM Brand Paper Trademark Licensing Agreement,
dated March 5, 1999, between TST/Impreso, Inc. and International Business
Machines Corporation (incorporated by reference to Exhibit 10(d) of the
Companys amended Quarterly Report on Form 10-Q/A, dated June 17, 1999)
[Confidential treatment has been granted for certain portions of this
Exhibit]     
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 10(e)  |                         | Crayola License Agreement made as of February 6, 2002, with an effective
date of March 1, 2002, by and between Binney & Smith Properties, Inc. and
TST/Impreso, Inc. (incorporated by reference to Exhibit 10(e) of the
Companys amended Quarterly Report on Form 10-Q/A dated May 1, 2002)
[Confidential treatment has been granted for certain portions of this
Exhibit]           
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 21     |                         | Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 of
the Companys Annual Report on Form 10-K dated August 31,2000)                                                                                                                                                                                                                                             
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 31.1   |                         | Certificate Pursuant to Section 302 of Sarbanes  Oxley Act of 2002 for CEO.                                                                                                                                                                                                                                                                                                          
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 31.2   |                         | Certificate Pursuant to Section 302 of Sarbanes  Oxley Act of 2002 for CFO.                                                                                                                                                                                                                                                                                                          
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 32.1   |                         | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                    
|            |        |                         |                                                                                                                                                                                                                                                                                                                                                                                       
|            | 32.2   |                         | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                    

24



---



##### Table of Contents






INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                   |  |      |          | 
|-------------------------------------------------------------------------------------------------- |  | ---- | -------- | 
|                                                                                                   |  | Page
|                                                                                                   |  |     
|Report of Independent Public Accountants                                                           |  |      |          | 
|Blackman Kallick Bartelstein, LLP                                                                  |  |      | F-2      | 
|Report of Independent Public Accountants                                                           |  |      |          | 
|Arthur Andersen, LLP                                                                               |  |      | F-3      | 
|Consolidated Balance Sheets as of August 31, 2003
and 2002                                         |  |      | F-4, F-5 | 
|Consolidated Statements of Operations for the Years
Ended August 31, 2003, 2002 and 2001           |  |      | F-6      | 
|Consolidated Statements of Stockholders Equity
for the Years Ended August 31, 2003, 2002 and 2001 |  |      | F-7      | 
|Consolidated Statements of Cash Flows for the Years
Ended August 31, 2003, 2002 and 2001           |  |      | F-8      | 
|Notes to Consolidated Financial Statements                                                         |  |      | F-9      | 

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of Impreso, Inc.:

We have audited the accompanying consolidated balance sheets of Impreso, Inc.
(a Delaware corporation) and subsidiaries as of August 31, 2003 and 2002, and
the related consolidated statements of operations, stockholders equity and
cash flows for the years then ended. These financial statements are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the 2003 and 2002 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Impreso, Inc. and subsidiaries as of August 31, 2003 and 2002, and the results
of their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.

Blackman Kallick Bartelstein, LLP
Chicago, Illinois
November 14, 2003

F-2



---



##### Table of Contents



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of Impreso, Inc.:

We have audited the accompanying consolidated balance sheets of Impreso, Inc.
(a Delaware corporation) and subsidiaries as of August 31, 2001 and 2000, and
the related consolidated statements of operations, stockholders equity and
cash flows for each of the years in the three-year period ended August 31,
2001. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Impreso, Inc. and subsidiaries
as of August 31, 2001 and 2000, and the results of their operations and their
cash flows for each of the years in the three-year period ended August 31,
2001, in conformity with accounting principles generally accepted in the United
States.



| | ARTHUR ANDERSEN LLP
| | -------------------

Dallas, Texas,
October 19, 2001

THIS REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS IS A COPY
AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN, LLP

F-3



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS

ASSETS

|                                       |                                                                                                                                        |                                   |            |             |            |            |            |             |            | 
|-------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | ---------- | ----------- | ---------- | ---------- | ---------- | ----------- | ---------- | 
|                                       |                                                                                                                                        |                                   |            | August 31,  |            | August 31,
|                                       |                                                                                                                                        |                                   |            | 2003        |            | 2002      
|                                       |                                                                                                                                        |                                   |            |             |            |           
|Current assets:                        |                                                                                                                                        |                                   |            |             |            |            |            |            
|                                       | Cash and cash equivalents                                                                                                              |                                   | $          | 95,129      |            |            | $          | 202,809     |           
|                                       | Trade accounts receivable, net of allowance for doubtful accounts
of $630,916 as of August 31, 2003 and $515,010 as of August 31, 2002 |                                   |            | 12,144,735  |            |            |            | 15,863,549  |           
|                                       | Inventories                                                                                                                            |                                   |            | 28,462,091  |            |            |            | 34,111,015  |           
|                                       | Prepaid expenses and other                                                                                                             |                                   |            | 141,729     |            |            |            | 226,065     |           
|                                       | Deferred income tax assets                                                                                                             |                                   |            | 574,924     |            |            |            | 513,950     |           
|                                       |                                                                                                                                        |                                   |            |             |            |            |            |             |           
|                                       |                                                                                                                                        | Total current assets              |            |             | 41,418,608 |            |            |             | 50,917,388 | 
|                                       |                                                                                                                                        |                                   |            |             |            |            |            |             |           
|Property, plant and equipment, at cost |                                                                                                                                        |                                   | 28,030,124 |             |            |            | 27,712,994 |            
|                                       | Less-Accumulated depreciation                                                                                                          |                                   |            | (13,196,099 | )          |            |            | (11,773,895 | )         
|                                       |                                                                                                                                        |                                   |            |             |            |            |            |             |           
|                                       |                                                                                                                                        | Net property, plant and equipment |            |             | 14,834,025 |            |            |             | 15,939,099 | 
|                                       |                                                                                                                                        |                                   |            |             |            |            |            |             |           
|Other assets                           |                                                                                                                                        |                                   | 83,667     |             |            |            | 115,377    |            
|                                       |                                                                                                                                        |                                   |            |             |            |            |            |             |           
|                                       |                                                                                                                                        | Total assets                      |            | $           | 56,336,300 |            |            | $           | 66,971,864 | 
|                                       |                                                                                                                                        |                                   |            |             |            |            |            |             |           

The accompanying notes are an integral part of the consolidated financial statements.

F-4



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

LIABILITIES AND STOCKHOLDERS EQUITY

|                      |                                                                  |                                            |   |            |            |            |   |            |            | 
|--------------------- | ---------------------------------------------------------------- | ------------------------------------------ | - | ---------- | ---------- | ---------- | - | ---------- | ---------- | 
|                      |                                                                  |                                            |   | August 31, |            | August 31,
|                      |                                                                  |                                            |   | 2003       |            | 2002      
|                      |                                                                  |                                            |   |            |            |           
|Current liabilities:  |                                                                  |                                            |   |            |            |            |   |           
|                      | Accounts payable                                                 |                                            | $ | 11,102,673 |            |            | $ | 16,301,801 |           
|                      | Accrued liabilities                                              |                                            |   | 1,892,686  |            |            |   | 3,702,838  |           
|                      | Current maturities of long-term debt                             |                                            |   | 1,343,231  |            |            |   | 1,122,614  |           
|                      | Line of credit                                                   |                                            |   | 14,355,445 |            |            |   | 17,861,824 |           
|                      | Current maturities of prepetition debt                           |                                            |   | 8,084      |            |            |   | 7,784      |           
|                      |                                                                  |                                            |   |            |            |            |   |            |           
|                      |                                                                  | Total current liabilities                  |   |            | 28,702,119 |            |   |            | 38,996,861 | 
|                      | Deferred income tax liability                                    |                                            |   | 1,021,357  |            |            |   | 948,601    |           
|                      | Long-term debt, net of current maturities                        |                                            |   | 9,342,784  |            |            |   | 10,372,474 |           
|                      | Long-term portion of prepetition debt, net of current maturities |                                            |   | 229,150    |            |            |   | 237,316    |           
|                      |                                                                  |                                            |   |            |            |            |   |            |           
|                      |                                                                  | Total liabilities                          |   |            | 39,295,410 |            |   |            | 50,555,252 | 
|                      |                                                                  |                                            |   |            |            |            |   |            |           
|Stockholders equity: |                                                                  |                                            |   |            |            |            |   |           
|                      | Preferred stock, $.01 par value; 5,000,000 shares authorized;    |                                            |   |            |            |            |   |            |           
|                      | 0 shares issued and outstanding                                  |                                            |   |           |            |            |   |           |           
|                      | Common stock, $.01 par value; 15,000,000 shares authorized;      |                                            |   |            |            |            |   |            |           
|                      | 5,292,780 issued and 5,278,780 outstanding                       |                                            |   | 52,928     |            |            |   | 52,928     |           
|                      | Treasury stock (14,000 shares, at cost)                          |                                            |   | (38,892    | )          |            |   | (38,892    | )         
|                      | Additional paid-in capital                                       |                                            |   | 6,353,656  |            |            |   | 6,347,209  |           
|                      | Retained earnings                                                |                                            |   | 10,673,198 |            |            |   | 10,055,367 |           
|                      |                                                                  |                                            |   |            |            |            |   |            |           
|                      |                                                                  | Total stockholders equity                 |   |            | 17,040,890 |            |   |            | 16,416,612 | 
|                      |                                                                  |                                            |   |            |            |            |   |            |           
|                      |                                                                  | Total liabilities and stockholders equity |   | $          | 56,336,300 |            |   | $          | 66,971,864 | 
|                      |                                                                  |                                            |   |            |            |            |   |            |           

The accompanying notes are an integral part of the consolidated financial statements.

F-5



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF OPERATIONS

|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |            |           | 
|------------------------------------------- | --------------------- | ------------------------ | ----------- | ---------- | --------- | ---- | ----------- | ---------------------- | --------- | - | ---------- | ---------- | --------- | 
|                                            |                       |                          |             |            |           |      |             | Years Ended August 31, |           |   |            |           
|                                            |                       |                          |             | 2003       |           | 2002 |             | 2001                  
|                                            |                       |                          |             |            |           |      |             |                       
|Net sales                                   |                       | $                        | 120,460,870 |            |           | $    | 123,065,514 |                        |           | $ | 96,208,411 |           
|Cost of sales                               |                       |                          | 107,755,550 |            |           |      | 110,447,664 |                        |           |   | 84,752,004 |           
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           
|                                            | Gross Profit          |                          |             | 12,705,320 |           |      |             | 12,617,850             |           |   |            | 11,456,407 |          
|                                            |                       |                          |             |            |          
|Selling, General and administrative expense |                       |                          | 10,212,927  |            |           |      | 9,332,038   |                        |           |   | 7,872,633  |           
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           
|                                            | Operating Income      |                          |             | 2,492,393  |           |      |             | 3,285,812              |           |   |            | 3,583,774  |          
|                                            |                       |                          |             |            |          
|Other (income) expenses:                    |                       |                          |             |            |           |      |             |                        |           |   |            |           
|                                            | Interest expense      |                          |             | 1,787,950  |           |      |             | 1,744,774              |           |   |            | 1,632,581  |          
|                                            | Litigation Settlement |                          |             |           |           |      |             | (1,005,452             | )         |   |            |           |          
|                                            | Other income, net     |                          |             | (313,489   | )         |      |             | (183,348               | )         |   |            | (72,259    | )        
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           
|                                            |                       | Total other expense      |             |            | 1,474,461 |      |             |                        | 555,974   |   |            |            | 1,560,322 | 
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           
|Income before income tax expense (benefit)  |                       |                          | 1,017,932   |            |           |      | 2,729,838   |                        |           |   | 2,023,452  |           
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           
|Income tax expense:                         |                       |                          |             |            |           |      |             |                        |           |   |            |           
|                                            | Current               |                          |             | 388,319    |           |      |             | 1,428,875              |           |   |            | 725,560    |          
|                                            | Deferred              |                          |             | 11,782     |           |      |             | (375,479               | )         |   |            | 50,947     |          
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           
|                                            |                       | Total income tax expense |             |            | 400,101   |      |             |                        | 1,053,396 |   |            |            | 776,507   | 
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           
|Net income                                  |                       | $                        | 617,831     |            |           | $    | 1,676,442   |                        |           | $ | 1,246,945  |           
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           
|Net income per share (basic and diluted)    |                       | $                        | 0.12        |            |           | $    | 0 .32       |                        |           | $ | 0 .24      |           
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           
|Weighted average shares outstanding         |                       |                          | 5,278,780   |            |           |      | 5,278,780   |                        |           |   | 5,281,583  |           
|                                            |                       |                          |             |            |           |      |             |                        |           |   |            |           

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

F-6



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

|                         |                         |                  |           |                |   |            |        |         |   |          |           |          |       |          |     |       |      |   |            |           |         |   |         |         |   |   |            |           |         | 
|------------------------ | ----------------------- | ---------------- | --------- | -------------- | - | ---------- | ------ | ------- | - | -------- | --------- | -------- | ----- | -------- | --- | ----- | ---- | - | ---------- | --------- | ------- | - | ------- | ------- | - | - | ---------- | --------- | ------- | 
|                         |                         |                  |           | Common Stock   |   | Additional |        |         |   |          |           |          |       |          |     |       |      |   |            |           |         |  
|                         |                         |                  |           | $.01 Par Value |   | Paid-In    |        |         |   |          |           | Retained |       | Treasury |     |       |      |  
|                         |                         |                  |           | Shares         |   | Amount     |        | Capital |   | Warrants |           | Earnings |       | Stock    |     | Total
|                         |                         |                  |           |                |   |            |        |         |   |          |           |          |       |          |     |      
|Balance, August 31, 2000 |                         | $                | 5,292,780 |                |   | $          | 52,928 |         |   | $        | 6,319,572 |          |       | $        | 110 |       |      | $ | 7,131,980  |           |         | $ |        |         |   | $ | 13,504,590 |          
|                         |                         | Expired Warrants |           |                |  |            |        |         |  |          |           |          | 110   |          |     |       | (110 | ) |            |           |        |   |         |         |  |   |            |           |        | 
|                         | Purchased Treasury Stk. |                  |           |               |   |            |        |        |   |          |           |         |       |          |     |      |      |   |            |          |         |   |         | (38,892 | ) |   |            | (38,892   | )      
|                         | Net Income              |                  |           |               |   |            |        |        |   |          |           |         |       |          |     |      |      |   |            | 1,246,945 |         |   |         |        |   |   |            | 1,246,945 |        
|                         |                         |                  |           |                |   |            |        |         |   |          |           |          |       |          |     |       |      |   |            |           |         |   |         |         |   |   |            |          
|Balance, August 31, 2001 |                         |                  | 5,292,780 |                |   |            | 52,928 |         |   |          | 6,319,682 |          |       |          |    |       |      |   | 8,378,925  |           |         |   | (38,892 | )       |   |   | 14,712,643 |          
|                         | Other                   |                  |           |               |   |            |        |        |   |          |           | 27,527   |       |          |     |      |      |   |            |          |         |   |         |        |   |   |            | 27,527    |        
|                         | Net Income              |                  |           |               |   |            |        |        |   |          |           |         |       |          |     |      |      |   |            | 1,676,442 |         |   |         |        |   |   |            | 1,676,442 |        
|                         |                         |                  |           |                |   |            |        |         |   |          |           |          |       |          |     |       |      |   |            |           |         |   |         |         |   |   |            |          
|Balance, August 31, 2002 |                         |                  | 5,292,780 |                |   |            | 52,928 |         |   |          | 6,347,209 |          |       |          |    |       |      |   | 10,055,367 |           |         |   | (38,892 | )       |   |   | 16,416,612 |          
|                         |                         | Expired Warrants |           |                |  |            |        |         |  |          |           |          | 6,447 |          |     |       |     |   |            |           |        |   |         |         |  |   |            |           | 6,447   | 
|                         |                         | Net Income       |           |                |  |            |        |         |  |          |           |          |      |          |     |       |     |   |            |           | 617,831 |   |         |         |  |   |            |           | 617,831 | 
|                         |                         |                  |           |                |   |            |        |         |   |          |           |          |       |          |     |       |      |   |            |           |         |   |         |         |   |   |            |          
|Balance, August 31, 2003 |                         | $                | 5,292,780 |                |   | $          | 52,928 |         |   | $        | 6,353,656 |          |       | $        |    |       |      | $ | 10,673,198 |           |         | $ | (38,892 | )       |   | $ | 17,040,890 |          
|                         |                         |                  |           |                |   |            |        |         |   |          |           |          |       |          |     |       |      |   |            |           |         |   |         |         |   |   |            |          

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

F-7



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                     |                                                                                      |                                                       |                                                     |            |            |            |         |            |                        |           |         |             |            |           | 
|---------------------------------------------------- | ------------------------------------------------------------------------------------ | ----------------------------------------------------- | --------------------------------------------------- | ---------- | ---------- | ---------- | ------- | ---------- | ---------------------- | --------- | ------- | ----------- | ---------- | --------- | 
|                                                     |                                                                                      |                                                       |                                                     |            |            |            |         |            | Years Ended August 31, |           |         |             |           
|                                                     |                                                                                      |                                                       |                                                     |            | 2003       |            | 2002    |            | 2001                  
|                                                     |                                                                                      |                                                       |                                                     |            |            |            |         |            |                       
|Cash Flows From Operating Activities:                |                                                                                      |                                                       |                                                     |            |            |            |         |            |                        |           |         |            
|                                                     | Net income                                                                           |                                                       | $                                                   | 617,831    |            |            | $       | 1,676,442  |                        |           | $       | 1,246,945   |           
|                                                     | Adjustments to reconcile net income to net
cash provided by in operating activities- |                                                       |                                                     |            |            |            |         |            |                        |           |         |             |           
|                                                     |                                                                                      | Depreciation and amortization                         |                                                     |            | 1,438,791  |            |         |            | 1,262,003              |           |         |             | 873,976    |          
|                                                     |                                                                                      | Provision for Losses of Receivables                   |                                                     |            | 115,906    |            |         |            | 258,100                |           |         |             | 174,149    |          
|                                                     |                                                                                      | Provision for Losses on Inventory                     |                                                     |            |           |            |         |            | 390,651                |           |         |             | 363,064    |          
|                                                     |                                                                                      | Loss (Gain) on sale of property, plant and equipment  |                                                     |            |           |            |         |            |                       |           |         |             | 20,062     |          
|                                                     |                                                                                      | (Decrease) increase in Deferred income taxes          |                                                     |            | 11,782     |            |         |            | (375,479               | )         |         |             | 50,947     |          
|                                                     |                                                                                      | Decrease (Increase) in trade accounts receivable, net |                                                     |            | 3,602,908  |            |         |            | (4,373,561             | )         |         |             | 1,073,309  |          
|                                                     |                                                                                      | Decrease (increase) in inventory                      |                                                     |            | 5,648,924  |            |         |            | 6,933,246              |           |         |             | (8,555,387 | )        
|                                                     |                                                                                      | Decrease (increase) in prepaid expenses and other     |                                                     |            | 116,046    |            |         |            | 112,157                |           |         |             | 54,210     |          
|                                                     |                                                                                      | (Decrease) increase in accounts payable               |                                                     |            | (5,199,128 | )          |         |            | (2,270,399             | )         |         |             | 10,407,363 |          
|                                                     |                                                                                      | (Decrease) Increase in accrued liabilities            |                                                     |            | (1,803,705 | )          |         |            | 1,828,124              |           |         |             | (762,450   | )        
|                                                     |                                                                                      |                                                       |                                                     |            |            |            |         |            |                        |           |         |             |           
|                                                     |                                                                                      |                                                       | Net cash provided by operating activities           |            |            | 4,549,355  |         |            |                        | 5,441,284 |         |             |            | 4,946,188 | 
|Cash Flows From Investing Activities:                |                                                                                      |                                                       |                                                     |            |            |            |         |            |                        |           |         |            
|                                                     | Additions to property, plant and equipment                                           |                                                       |                                                     | (335,765   | )          |            |         | (1,540,505 | )                      |           |         | (1,200,101  | )         
|                                                     | Proceeds from sale of property, plant and equipment                                  |                                                       |                                                     | 2,048      |            |            |         |           |                        |           |         | 14,742      |           
|                                                     | Acquisition of United, Sky Assets                                                    |                                                       |                                                     |           |            |            |         | (3,377,496 | )                      |           |         | (12,357,031 | )         
|                                                     |                                                                                      |                                                       |                                                     |            |            |            |         |            |                        |           |         |             |           
|                                                     | Net cash used in investing activities                                                |                                                       |                                                     | (333,717   | )          |            |         | (4,918,001 | )                      |           |         | (13,542,390 | )         
|Cash Flows From Financing Activities:                |                                                                                      |                                                       |                                                     |            |            |            |         |            |                        |           |         |            
|                                                     | Net (payments) borrowings on line of credit                                          |                                                       |                                                     | (3,506,379 | )          |            |         | (446,514   | )                      |           |         | 5,838,948   |           
|                                                     | Principal payments on prepetition debt                                               |                                                       |                                                     | (7,866     | )          |            |         | (7,559     | )                      |           |         | (7,262      | )         
|                                                     | Principal payments on post-petition debt                                             |                                                       |                                                     | (809,073   | )          |            |         | (1,577,753 | )                      |           |         | 2,865,233   |           
|                                                     | Purchase of Treasury Stock                                                           |                                                       |                                                     |           |            |            |         |           |                        |           |         | (38,892     | )         
|                                                     | Proceeds from Issuance of Long-Term Debt                                             |                                                       |                                                     |           |            |            |         | 1,500,000  |                        |           |         |            |           
|                                                     |                                                                                      |                                                       | Net cash (used in) provided by financing activities |            |            | (4,323,318 | )       |            |                        | (531,826  | )       |             |            | 8,658,027 | 
|                                                     |                                                                                      |                                                       |                                                     |            |            |            |         |            |                        |           |         |             |           
|Net (decrease) Increase in cash and cash equivalents |                                                                                      |                                                       | (107,680                                            | )          |            |            | (8,543  | )          |                        |           | 61,825  |            
|Cash and cash equivalents, beginning of year         |                                                                                      |                                                       | 202,809                                             |            |            |            | 211,352 |            |                        |           | 149,527 |            
|                                                     |                                                                                      |                                                       |                                                     |            |            |            |         |            |                        |           |         |             |           
|Cash and cash equivalents, end of year               |                                                                                      | $                                                     | 95,129                                              |            |            | $          | 202,809 |            |                        | $         | 211,352 |            
|                                                     |                                                                                      |                                                       |                                                     |            |            |            |         |            |                        |           |         |             |           

The accompanying notes are an integral part of the consolidated financial statements.

F-8



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. |  | ORGANIZATION AND NATURE OF BUSINESS:
|-- |  | ------------------------------------

Impreso, Inc., a Delaware corporation (referred to collectively with its
subsidiaries as the Company), is the parent holding company of TST/Impreso,
Inc. (TST), a manufacturer and distributor to dealers and other resellers of
paper and film products for commercial and home use in domestic and
international markets, and Hotsheet.com, Inc., the owner and operator of the
Hotsheet.com web portal. Currently, TST has one wholly owned subsidiary,
TST/Impreso of California, Inc., which was formed to support the activities of
the paper converting segment of the Companys business. For the years ended
August 31, 2003, 2002 and 2001, net sales of Hotsheet.com, Inc. amounted to
$158,755, $122,629 and $171,256, respectively.



|2. |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
|-- |  | -------------------------------------------

Principles of Consolidation

The consolidated financial statements include Impreso, Inc. and the accounts of
its wholly owned subsidiaries. All significant intercompany accounts and
transactions with its consolidated subsidiaries have been eliminated.

Use of Estimates and Concentration of Credit

The preparation of consolidated 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
as of the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

TST sells its paper and film products to dealers and resellers for commercial
and home use. TST reviews all existing customers financial condition
periodically and monitors average days outstanding in accounts receivable.
Receivables are generally due 30 days from the date of sale. There have been no
unusual credit losses relating to TSTs customers.

One TST customer accounted for approximately 22%, 20%, and 28% of gross sales,
and 26%, 16%, and 26% of accounts receivable as of, or for the years ended
August 31, 2003, 2002 and 2001, respectively. Another customer represented
approximately 8%, 11%, and 11% of gross sales and 15%, 9%, and 13% of accounts
receivable as of, or for the years ended August 31, 2003, 2002 and 2001,
respectively.

F-9



---



##### Table of Contents



Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.

Accounts Receivable (doubtful accounts) Reserves

The Company provides for losses on accounts receivable based upon their current
status, historical experience and managements evaluation of existing economic
conditions. Significant changes in customer profitability or general economic
conditions may have a significant effect on the Companys allowance for
doubtful accounts.

Inventories

Inventories are stated at the lower of cost (principally on a first-in,
first-out basis) or market, and include material, labor and factory overhead.

Historically, the Company has not reserved for slow moving, obsolete or bad
inventories. Substantially all of the slow moving products can be repackaged
into different formats or labels. Demand for products that are associated with
obsolete technology slowly decline as sales of new hardware requiring new or
different consumables increase. The reduced demand for products which are
becoming obsolete is easily monitored and scheduled production of these items
is adjusted accordingly. If damage is caused to a product it is most often
minor in value and expensed as damage occurs.

Property, Plant and Equipment

Property, plant and equipment are stated at acquisition or construction cost.
Expenditures for maintenance, repairs and improvements that do not extend the
useful lives of assets are charged to appropriate expense accounts in the year
incurred. Upon disposition of an asset, cost and accumulated depreciation are
removed from the accounts, and any gain or loss is included in the
results of operations. Depreciation is computed on the straight-line basis
using the estimated useful lives of the respective assets, five years for
furniture and fixtures, seven years for equipment and thirty years for
buildings.

Revenue Recognition

TSTs sales are recorded when products are shipped to customers. TST is
reasonably assured that its sales are collectible upon shipment due to its
credit policies and collection methods. For those accounts TST is not
reasonably assured of collection, the Company reserves against doubtful
accounts based upon historical experience and managements evaluation of
existing economic conditions.

Hotsheet.com, Inc. generates its revenue by click through fee advertising
revenues and commissions earned. Click through fees are generated when traffic
is sent from the Hotsheet.com website, via a link, to a vendors website.
Commissions are generated when the linked traffic makes purchases. The revenue
is recognized upon receipt.

F-10



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Commissions and Rebates

The Company reserves commissions and rebates paid to certain customers based on
specific contractual agreements. These reserves are calculated based upon
sales by customer, and adjusted quarterly to reflect increases and decreases in
each customers sales and payments of commissions and rebates.

Advertising

Advertising costs are expensed as incurred. Advertising costs were
approximately $1 million, $1.1 million, and $1.2 million for the years ended
August 31, 2003, 2002 and 2001, respectively, and are included in selling,
general and administrative expenses in the accompanying consolidated financial
statements.

Other Income, Net

Other income, net, consists primarily of interest income and billboard and
office space lease income at the Itasca, Illinois facility.

Litigation Settlement

In a United States class action lawsuit involving international and domestic
manufacturers attempt to fix jumbo roll thermal facsimile paper prices in the
United States, Impreso, Inc. was awarded over $1 million in November 2001. The
plaintiff class settled with the defendants for over $16 million. Impreso,
Inc. did not participate in the ongoing litigation, but was awarded over $1
million as its share of the settlement by the courts. The award was reported
as other income in the first quarter of the Fiscal year 2002.

Cash Flow Information

Cash paid for interest during fiscal years 2003, 2002 and 2001 was $1.8
million, $1.7 million, and $1.6 million, respectively.

Cash paid for income taxes during fiscal years 2003, 2002 and 2001 was
$801,377, $1,224,802, and $677,650, respectively.

Stock Based Compensation

In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation, which requires entities to measure compensation costs related to
awards of stock-based compensation using either the fair value method or the
intrinsic value method. Under the fair value method, compensation expense is
measured as of the grant date based on the fair value of the award. Under the
intrinsic value method, compensation is equal to the excess, if any, of the
quoted market price of the stock at the grant date over the amount the employee
must pay to acquire the stock. Entities electing to measure compensation costs
using the intrinsic value method must make

F-11



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

pro forma disclosures of net income
and earnings per share as if the fair value method had been
applied.

The Company accounts for the Incentive Stock Option Plan under the recognition
and measurement principles of APB Opinion No. 25, Accounting for Stock Issued
to Employees, and related Interpretations. No stock-based compensation costs
are reflected in net income, as all options granted under those plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant. The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value recognition
provisions of FASB Statement No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation.

|                                                      |                        |      |   |         |  |      |   |           |  |  |   |           | 
|----------------------------------------------------- | ---------------------- | ---- | - | ------- |  | ---- | - | --------- |  |  | - | --------- | 
|August 31                                             |                        | 2003 |   | 2002    |  | 2001
|                                                      |                        |      |   |         |  |     
|Net Earnings                                          |                        |      |   |         |  |      |   |           |  |  |   |          
|                                                      | As reported            |      | $ | 617,831 |  |      | $ | 1,676,442 |  |  | $ | 1,246,945 | 
|                                                      | Pro forma              |      |   | 575,831 |  |      |   | 1,592,442 |  |  |   | 1,174,945 | 
|Stock-based employee
compensation expense, net of tax |                        |      |   |         |  |      |   |           |  |  |   |          
|                                                      | As reported            |      |   |        |  |      |   |          |  |  |   |          | 
|                                                      | Pro forma              |      |   | 42,000  |  |      |   | 84,000    |  |  |   | 72,000    | 
|Net earnings per common and
Common equivalent share:  |                        |      |   |         |  |      |   |           |  |  |   |          
|                                                      | Basic  as reported    |      |   | 0.12    |  |      |   | 0.32      |  |  |   | 0.24      | 
|                                                      | Diluted  - as reported |      |   | 0.12    |  |      |   | 0.32      |  |  |   | 0.24      | 
|                                                      | Basic  Pro forma      |      |   | 0.11    |  |      |   | 0.29      |  |  |   | 0.22      | 
|                                                      | Diluted - Pro forma    |      | $ | 0.11    |  |      | $ | 0.29      |  |  |   | 0.22      | 

In determining the pro forma stock compensation expense, the fair value of each
option grant is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted-average assumptions used for grants
in Fiscal 2003, 2002 and 2001, respectively: expected volatility of 80%, 86.2%,
and 86.2%; risk-free interest rate of 5.23%, 4.32%, and 5.16% ; expected lives
of five years; and no expected dividends.

Net Income Per Share

Basic net income per share is based on the weighted-average number of common
shares outstanding. Common share equivalents have not been included in the
computation of diluted net income per share to the extent that they are
anti-dilutive. Excluded from the computation of diluted net income per share
are options to purchase 377,200, 379,400 and 379,400 shares of common stock as
of August 31, 2003, 2002 and 2001, respectively. These options were excluded
because the option exercise price was greater than the average market price of
the common stock. Dilutive common share equivalents did not have a material
effect on the income per share calculation.

F-12



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Disclosures about Fair Value of Financial Instruments

In accordance with SFAS No.107, Disclosures About Fair Value of Financial
Instruments, the following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which it is
practicable to estimate that value:



| |  | Cash and cash equivalents, accounts receivable, investments, accounts payable
and long-term debt - the carrying amount approximates fair value.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------

New Financial Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 141, Business Combinations, which
became effective for all acquisitions initiated after June 30, 2001. The
Company adopted SFAS No. 141 on June 30, 2001 as required. The implementation
of SFAS No. 141 does not have a material impact on the Companys financial
position or results of operations.

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets, which became become effective for fiscal years beginning after
December 15, 2001. The implementation of SFAS No. 142 in Fiscal 2003, did not
have a material impact on its financial position or results of operations.

In October 2001, the FASB issued SFAS No. 144 Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 replaces SFAS No. 121 Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of. SFAS No. 144 requires long-lived assets be measured at the lower
of selling amount or fair value less cost to sell, whether reported in
continuing operations or discontinued operations. SFAS No. 144 also broadens
the reporting of discontinued operations to include all components of an entity
with operations that can be distinguished from the rest of the entity and that
will be eliminated from the ongoing operations of the entity in a disposal
transaction. The provisions of SFAS No. 144 became effective for
consolidated financial statements issued for financial years beginning after
December 15, 2001. The adoption of SFAS No. 144 did not have a material impact
on the Companys financial statements.

In December 2002, the FASB issued SFAS No. 148 Accounting for Stock-Based
Compensation  Transition and Disclosure, an amendment to SFAS No. 123".This
statement provides alternative methods of transition for companies that elect
to voluntarily change to the fair value based method of accounting for
stock-based employee compensation. In addition, this statement amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The Company currently does not intend to change to the fair value
based method of accounting for stock-based compensation, but will adhere to the
disclosure requirements of the Statement. The Company has adopted the
disclosure requirements for the third quarter of Fiscal 2003.

F-13



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Reclassifications

Certain prior year amounts have been reclassified to conform with the current
year presentation.



|3. |  | INVENTORIES:
|-- |  | ------------

Inventories consisted of the following:

|                                 |  |            |            |      |  |   |            |  
|-------------------------------- |  | ---------- | ---------- | ---- |  | - | ---------- | -
|                                 |  | August 31,
|                                 |  | 2003       |            | 2002
|                                 |  |            |            |     
|Finished goods                   |  | $          | 15,409,606 |      |  | $ | 19,059,199 |  
|Raw materials                    |  |            | 12,345,769 |      |  |   | 14,684,869 |  
|Supplies                         |  |            | 1,008,103  |      |  |   | 1,011,967  |  
|Work-in-process                  |  |            | 86,731     |      |  |   | 108,695    |  
|Allowance for obsolete inventory |  |            | (388,118   | )    |  |   | (753,715   | )
|                                 |  |            |            |      |  |   |            |  
|Total                            |  | $          | 28,462,091 |      |  | $ | 34,111,015 |  
|                                 |  |            |            |      |  |   |            |  



|4. |  | PROPERTY, PLANT AND EQUIPMENT:
|-- |  | ------------------------------

Property, plant and equipment is comprised of the following:

|                                  |  |           |             |           |  |   |             |  
|--------------------------------- |  | --------- | ----------- | --------- |  | - | ----------- | -
|                                  |  | August 31 |             | August 31
|                                  |  |           |             |          
|                                  |  | 2003      |             | 2002     
|                                  |  |           |             |          
|Buildings and equipment           |  | $         | 25,730,786  |           |  | $ | 25,491,412  |  
|Furniture, fixtures and other     |  |           | 2,299,338   |           |  |   | 2,221,582   |  
|                                  |  |           |             |           |  |   |             |  
|                                  |  |           | 28,030,124  |           |  |   | 27,712,994  |  
|Less-Accumulated depreciation     |  |           | (13,196,099 | )         |  |   | (11,773,895 | )
|                                  |  |           |             |           |  |   |             |  
|Net property, plant and equipment |  | $         | 14,834,025  |           |  | $ | 15,939,099  |  
|                                  |  |           |             |           |  |   |             |  



|5. |  | LONG-TERM DEBT AND LINE OF CREDIT:
|-- |  | ----------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |            |            |            |  |   |            |  | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------- | ---------- | ---------- |  | - | ---------- |  | 
|The following is a summary of long-term debt and line of credit:                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | August 31, |            | August 31,
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2003       |            | 2002      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |            |            |           
|Line of Credit with a commercial financial corporation under
revolving credit line, maturing May 2004, secured by
inventories, trade accounts receivable, equipment, goodwill
associated with TSTs trademark IMPRESO (no value on
financial statements), and a personal guarantee by the trustee
of a trust which is a principal stockholder of the Company,
interest payable monthly since July 3, 2003, on $12,000,000 at
LIBOR plus 2.75% (3.86 % as of August 31, 2003), balance at
prime plus .25% (4.25 % as of August 31, 2003). |  | $          | 14,355,445 |            |  | $ | 17,861,824 | 

F-14



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

|                                                                                                                                                                                                                                                                                                                        |  |            |           |            |  |  |           |  | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- | --------- | ---------- |  |  | --------- |  | 
|                                                                                                                                                                                                                                                                                                                        |  | August 31, |           | August 31,
|                                                                                                                                                                                                                                                                                                                        |  | 2003       |           | 2002      
|                                                                                                                                                                                                                                                                                                                        |  |            |           |           
|Note payable to a commercial financial corporation, secured by
real property, payable in monthly installments of $15,151
(including interest at 7.75%, or 4.5% above the 11th District
cost of funds rate, whichever is greater; 7.75 % as of August
31, 2003), maturing June 2008.                                     |  |            | 1,638,448 |            |  |  | 1,657,436 | 
|                                                                                                                                                                                                                                                                                                                       
|Note payable to a commercial financial corporation, secured by
real property and equipment, payable in monthly installments of
$4,457 (including interest at 8.50%), maturing November 2009.                                                                                                                            |  |            | 257,641   |            |  |  | 284,546   | 
|                                                                                                                                                                                                                                                                                                                       
|Note payable to a commercial financial corporation, secured by
real property and equipment, payable in monthly installments of
$10,843 (including interest at 8.50%), maturing July 2010.
Revolving lenders blanket lien subordinated to notes
collateral.                                                            |  |            | 682,876   |            |  |  | 749,987   | 
|                                                                                                                                                                                                                                                                                                                       
|Note payable to a commercial financial corporation, secured by
real property, payable in monthly installments of $2,834
(including interest at 5.5%), maturing October 2010.                                                                                                                                            |  |            | 199,531   |            |  |  | 222,213   | 
|                                                                                                                                                                                                                                                                                                                       
|Notes payable to various commercial financial corporations,
secured by equipment, interest rates ranging from 5.25 % to
13.8 %, maturing at various dates from September 2003 through
July 2008.                                                                                                                        |  |            | 308,323   |            |  |  | 449,858   | 
|                                                                                                                                                                                                                                                                                                                       
|Notes payable to a commercial financial corporation, secured by
real property and a personal guarantee by the trustee of a
trust which is a principal stockholder of the Company, payable
in monthly installments of $21,407 (including interest at 8%),
maturing March 2011.                                           |  |            | 2,041,453 |            |  |  | 2,130,905 | 
|                                                                                                                                                                                                                                                                                                                       
|Acquisition note payable, unsecured, payable in quarterly
installments of $15,000 (including interest at 8%), maturing
April 2006. (See Footnote 8)                                                                                                                                                                     |  |            | 225,000   |            |  |  | 225,000   | 
|                                                                                                                                                                                                                                                                                                                       
|Acquisition note payable, secured by equipment, payable in
monthly installments of $16,024, no interest, matured May 2003.
(See Footnote 8)                                                                                                                                                                             |  |            | 352,145   |            |  |  | 368,169   | 
|                                                                                                                                                                                                                                                                                                                       
|Note payable to a commercial financial corporation, secured by
real property and a personal guarantee by the trustee of a
trust which is a principal stockholder of the Company, payable
in monthly installments of $22,827 (including a fixed scheduled
for interest, 7.25 % at August 31, 2003), maturing April 2007. |  |            | 3,135,614 |            |  |  | 3,184,468 | 
|                                                                                                                                                                                                                                                                                                                       
|Note payable to a commercial financial corporation, secured by
equipment, payable in monthly installments of $17,857 including
interest at a variable rate equal to 30 day LIBOR plus 350
basis points, 3.86 % at August 31, 2003), maturing February
2009.                                                             |  |            | 1,196,429 |            |  |  | 1,410,714 | 
|                                                                                                                                                                                                                                                                                                                       
|Acquisition notes payable, unsecured, payable in monthly
installments of 16,666, maturing February 2007.                                                                                                                                                                                                                |  |            | 648,556   |            |  |  | 811,792   | 
|                                                                                                                                                                                                                                                                                                                       
|Prepetition-                                                                                                                                                                                                                                                                                                            |  |            |           |            |  |  |           | 
|                                                                                                                                                                                                                                                                                                                       
|Note payable to a commercial financial corporation, secured by
real property and equipment and a personal guarantee by the
trustee of a trust which is a principal stockholder of the
Company, payable in monthly installments of $1,461 (including
interest at 4%), maturing May 2023.                                 |  |            | 237,234   |            |  |  | 245,100   | 
|                                                                                                                                                                                                                                                                                                                        |  |            |           |            |  |  |           | 

F-15



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

|               |                         |            |            |             |   |   |            |             |  
|-------------- | ----------------------- | ---------- | ---------- | ----------- | - | - | ---------- | ----------- | -
|               |                         | August 31, |            | August 31, 
|               |                         | 2003       |            | 2002       
|               |                         |            |            |            
|Total          |                         |            | 25,278,694 |             |   |   | 29,602,012 |            
|              
|               | Less Current Maturities |            |            | (15,706,760 | ) |   |            | (18,992,222 | )
|               |                         |            |            |             |   |   |            |            
|Long-Term Debt |                         | $          | 9,571,934  |             |   | $ | 10,609,790 |            
|               |                         |            |            |             |   |   |            |            

Prepetition amount listed above represents the renegotiated amounts and terms
under the 1993 plan of reorganization.

In April 2002, TST amended its revolving line of credit to increase the line
from $22 million to $25 million. The amended revolving credit line is limited
to the lesser of $25 million or a percentage of eligible trade accounts
receivable and inventories, as defined. The remaining availability under the
revolving credit line was $ 5.8 million as of August 31, 2003.

On October 6, 2003, TST elected to implement the Eurodollar interest rate of
1.150 % plus 2.75%, to $10,000,000 of the Companys outstanding loan balance.
This rate is locked for 90 days.

The line of credit, as amended, has a restrictive covenant requiring the
maintenance of a minimum tangible net worth, as defined in the agreement. One
of the notes payable contains restrictive covenants on current and debt to
worth ratio, and the payment of cash dividends. As of August 31, 2003, the
Company was in compliance with all covenants. Future maturities of long-term
debt and under the line of credit at August 31, 2003, are as follows:

|           |  |   |            |            | 
|---------- |  | - | ---------- | ---------- | 
|2004       |  |   | $          | 15,706,760 | 
|2005       |  |   | 877,713    |           
|2006       |  |   | 832,742    |           
|2007       |  |   | 727,954    |           
|2008       |  |   | 643,623    |           
|           |  |   |            |           
|Thereafter |  | $ | 6,489,902  |           
|           |  |   |            |           
|           |  | $ | 25,278,694 |           
|           |  |   |            |           



|6. |  | ACQUISITION:
|-- |  | ------------

On April 26, 2001, the Company, through its main operating subsidiary
TST/Impreso, Inc., acquired substantially all of the assets of the Sky Division
of Durango Georgia Converting LLC, a forms manufacturer, for an aggregate
acquisition cost of $13.3 million. The acquisition cost consists of $12.2
million paid in cash, $941,000 in notes payable to the seller, and $198,000 in
expenses attributable to the acquisition. The acquisition was accounted for
under the purchase method. Based on current estimates, there was no excess
consideration paid over the estimated fair value of tangible net assets
acquired. The Companys consolidated financial statements have incorporated
Skys operating results from the effective date of the acquisition (April 26,
2001). The following unaudited pro forma financial information combines the
results of operations of the Company and Sky as if the acquisition had taken
place as of September 1, 1999. These results are not intended to be a
projection of future results.

F-16



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

|                                         |  |                     |             | 
|---------------------------------------- |  | ------------------- | ----------- | 
|                                         |  | Twelve Months Ended
|                                         |  | August 31,         
|                                         |  | 2001               
|                                         |  |                    
|Net Sales                                |  | $                   | 125,126,000 | 
|Net Income                               |  |                     | 1,025,000   | 
|Net Income per share - Basic and Diluted |  | $                   | .19         | 
|                                         |  |                     |             | 

In conjunction with the acquisition, liabilities were assumed as follows:

|                               |  |   |            | 
|------------------------------ |  | - | ---------- | 
|Fair value of assets acquired  |  | $ | 15,400,000 | 
|Net cash paid and notes issued |  |   | 13,300,000 | 
|                               |  |   |            | 
|Liabilities assumed            |  | $ | 2,100,000  | 
|                               |  |   |            | 

On March 19, 2002, the Company, through its main operating subsidiary
TST/Impreso, Inc., acquired substantially all of the operating assets of the
United Computer Supplies, Inc. and United
Computer Supplies-East, Inc., a forms manufacturer, for an aggregate
acquisition cost of $4.5 million. The acquisition cost consists of $3.6 million
paid in cash and $900,000 notes payable to sellers. The acquisition was
accounted for under the purchase method. Based on current estimates, there was
no excess consideration paid over the estimated fair value of tangible net
assets acquired. The Companys consolidated financial statements have
incorporated Uniteds operating results from the effective date of the
acquisition (March 19, 2002). The following unaudited pro forma financial
information combines the results of operations of the Company and United as if
the acquisition had taken place as of September 1, 2000. These results are not
intended to be a projection of future results.

|                                         |  |                     |             |      |  |   |             |  
|---------------------------------------- |  | ------------------- | ----------- | ---- |  | - | ----------- | -
|                                         |  | Twelve Months Ended
|                                         |  | August 31,         
|                                         |  |                    
|                                         |  | 2002                |             | 2001
|                                         |  |                     |             |     
|Net Sales                                |  | $                   | 141,151,266 |      |  | $ | 129,829,170 |  
|Net Income                               |  |                     | 457,332     |      |  |   | (1,633,813  | )
|Net Income per share - Basic and Diluted |  | $                   | .09         |      |  | $ | (.31        | )

In addition, on April 19, 2002, the manufacturing facility was purchased for
$4.1 million.



|7. |  | TSTS EQUIPMENT LEASE AGREEMENTS:
|-- |  | ---------------------------------

TST is obligated under operating leases, which expire at various dates through
2005. Rental expenses under these operating leases were $ 461,946, $263,313,
and $386,408 for the years ended August 31, 2003, 2002 and 2001, respectively.
These expenses do not include the in-out public warehouse charges, which are
assessed on each box or pallet as it is brought into and out of the
warehouse. Future annual minimum lease payments as of August 31, 2003, are as
follows:

F-17



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

|     |  |   |         | 
|---- |  | - | ------- | 
|2004 |  | $ | 121,226 | 
|2005 |  |   | 62,340  | 
|2006 |  |   | 35,976  | 
|     |  |   |         | 
|2007 |  |   | 53,964  | 
|     |  |   |         | 
|     |  | $ | 273,506 | 
|     |  |   |         | 

8.     COMMITMENTS AND CONTINGENCIES:

Legal-

On September 18, 2002, TST filed a lawsuit against a vendor in the United
States District Court for the Northern District of Texas  Dallas Division.
TSTs general claim is that the vendor breached a Distributor Agreement entered
into with TST in several material respects, including the vendors late
delivery of paper products, the vendors delivery of defective product, and the
vendors failure to properly credit TSTs accounts based upon these and other
alleged breaches. The vendor responded to TSTs demand for arbitration by
generally denying TSTs claims and asserting a counterclaim seeking to recover
disputed accounts receivable and damages related to TSTs alleged interference
with the vendors relationship with its lender. The Trial is set for March
2005.

In Fiscal 2003 an employee filed suit under the Family Leave and Medical Act
claiming retaliatory treatment (firing) in violation of the FMLA. TST intends
to vigorously contest liability and believes the lawsuit is without merit. The
amount of the employees claim is not known at this time. There is no trial
setting.

TST is the defendant in a suit filed in Fiscal 2003 for the collection of sums
due under two promissory notes. These liabilities are included on the
Companys balance sheet. TST recently filed a motion to stay the adversary
proceeding and to compel arbitration in Dallas, Texas under the terms of the
parties purchase agreement. TST asserts that liability does not exist because
of fraud and contractual breaches in connection with the agreements.

TSTs Significant Contracts-

In April 1997, TST entered into a non-exclusive Trademark Licensing Agreement
with International Business Machines Corporation (IBM) to manufacture and
distribute certain selected products carrying the IBM logo. In March 1999, the
Company extended its agreement with IBM from a four year contract with two
one-year automatic renewals, to a six year contract with two one-year automatic
renewals. In September 2003 the agreement was extended until April 2007.TST is
required to pay participation fees based upon a percentage of net profits of
these products (as defined by the agreement) and maintain certain sales volumes
and quality standards as required by the agreement. The agreement may be
canceled by either party upon 120 days written notice.

In February 2002, TST entered into a trademark licensing agreement with Binney
& Smith Properties, Inc., the owner of the Crayola trademark. The agreement
provides for TST to

F-18



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

manufacture and distribute a select line of Crayola®
imaging products such as Laser and Ink Jet paper, card stock, post cards,
magnets, and t-shirt transfers within the United States, Canada and Mexico
through specified channels of distribution.



|9. |  | INCOME TAXES:
|-- |  | -------------

The Company utilizes SFAS No. 109, Accounting for Income Taxes, which
requires among other things, an asset and liability approach for financial
accounting and reporting of income taxes.
Significant components of deferred income taxes at August 31, 2003 and 2002,
were as follows:

|                                         |                                             |                                  |          |            |         |      |          |          |         | 
|---------------------------------------- | ------------------------------------------- | -------------------------------- | -------- | ---------- | ------- | ---- | -------- | -------- | ------- | 
|                                         |                                             |                                  |          | 2003       |         | 2002
|                                         |                                             |                                  |          |            |         |     
|Deferred income tax assets-current:      |                                             |                                  |          |            |         |      |          |         
|                                         | Allowance for doubtful accounts receivable  |                                  | $        | 252,366    |         |      | $        | 175,103  |        
|                                         |                                             | Allowance for obsolete inventory |          |            | 155,247 |      |          |          | 301,487 | 
|                                         |                                             | Other                            |          |            | 167,311 |      |          |          | 37,360  | 
|Deferred income tax liability-long term: |                                             |                                  |          |            |         |      |          |         
|                                         | Tax over book depreciation and amortization |                                  |          | (1,021,357 | )       |      |          | (948,601 | )      
|                                         |                                             |                                  |          |            |         |      |          |         
|Net deferred income tax liabilities      |                                             | $                                | (446,433 | )          |         | $    | (434,651 | )       
|                                         |                                             |                                  |          |            |         |      |          |         

The Companys effective tax rate was different than the statutory federal
income tax rate for the years ended August 31, 2003, 2002 and 2001, as follows:

|                                               |  |      |         |      |  |      |           |   |  |   |         | 
|---------------------------------------------- |  | ---- | ------- | ---- |  | ---- | --------- | - |  | - | ------- | 
|                                               |  | 2003 |         | 2002 |  | 2001
|                                               |  |      |         |      |  |     
|Federal income taxes at statutory rate (34%)   |  | $    | 346,097 |      |  | $    | 941,590   |   |  | $ | 687,974 | 
|State taxes, net of federal income tax benefit |  |      | 72,600  |      |  |      | 73,830    |   |  |   | 56,100  | 
|Tax effect of nondeductible items              |  |      | 19,260  |      |  |      | 46,326    |   |  |   | 32,433  | 
|Other                                          |  |      | (37,856 | )    |  |      | (8,350    | ) |  |   |        | 
|                                               |  |      |         |      |  |      |           |   |  |   |         | 
|Income tax expense                             |  | $    | 400,101 |      |  | $    | 1,053,396 |   |  | $ | 776,507 | 
|                                               |  |      |         |      |  |      |           |   |  |   |         | 



|10. |  | RELATED PARTIES:
|--- |  | ----------------

The Sorokwasz Irrevocable Trust, whose trustee is Marshall Sorokwasz, the
President of the Company, and the Senior Vice President of the Company own
44.2% and 14.9%, respectively, of the outstanding shares of common stock as of
August 31, 2003 and 2002.

A company controlled by the spouse of the Companys President serves as both a
customer of and vendor to the Company. Sales to this related company were
$802,784, $1,183,902, and $1,040,325 for the years ended August 31, 2003, 2002,
and 2001 respectively. Purchases from the related company totaled $265,749,
$419,568, and $376,694 for the years ended August 31, 2003, 2002 and 2001,
respectively. In the opinion of management, these transactions were
consummated on terms equivalent to those that would prevail in arms-length
transactions. Accounts receivable balances as of year end related to this
company were $76,914, $80,778, and $47,434 for 2003, 2002 and 2001,
respectively. For the years ended 2003, 2002 and 2001, the accounts payable
balances to the related company were $ 7,531, $7,251, and $9,430, respectively.

F-19



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



|11. |  | STOCK OPTIONS:
|--- |  | --------------

The Company sponsors a stock option plan (the Plan) for certain employees and
directors of the Company. There are 400,000 shares of common stock reserved
for grants of options under the Plan. Options are granted at the sole
discretion of the Stock Option Committee of the Board of Directors of the
Company. The outstanding options generally vest ratably at various dates
through 2012 at an exercise price of not less than the fair market value at the
grant date. The options expire 10 years after the grant date.

In addition, the Company granted outside of the Plan 156,000 options to
employees during the fiscal year ended August 31, 2001. These options vest
ratably over two years at various dates through 2003 at an exercise price of
not less than fair market value at the grant date. These options expire five
years after the grant date.

The following tables summarize information about stock options outstanding at
August 31, 2003.

|                    |  |             |         |                       |  |                   |     |                  |  |   |       | 
|------------------- |  | ----------- | ------- | --------------------- |  | ----------------- | --- | ---------------- |  | - | ----- | 
|Options Outstanding
|                    |  |             |         |                       |  | Weighted Average  |     | Weighted Average
|Range of            |  | Number      |         | Remaining Contractual |  | Exercisable Price
|Exercise Prices     |  | Outstanding |         | Life (Years)          |  | Per Share        
|                    |  |             |         |                       |  |                  
|$1.70-2.20          |  |             | 98,000  |                       |  |                   | 3.3 |                  |  | $ | 1.71  | 
|$2.94-3.63          |  |             | 114,000 |                       |  |                   | 2.1 |                  |  | $ | 3.00  | 
|$5.38-6.75          |  |             | 242,700 |                       |  |                   | 2.2 |                  |  | $ | 5.96  | 
|$8.38-10.38         |  |             | 9,500   |                       |  |                   | 3.7 |                  |  | $ | 9.88  | 
|$12.75-12.75        |  |             | 3,000   |                       |  |                   | 3.7 |                  |  | $ | 12.75 | 



|                    |  |             |         |                   |  |   |      |                  |  | 
|------------------- |  | ----------- | ------- | ----------------- |  | - | ---- | ---------------- |  | 
|Options Exercisable
|                    |  |             |         |                   |  |   |      | Weighted Average
|Range of            |  | Number      |         | Exercisable Price
|Exercise Prices     |  | Exercisable |         | Per Share        
|                    |  |             |         |                  
|$1.70-2.20          |  |             |         | 90,000            |  |   | $    | 1.71             | 
|$2.94-3.63          |  |             |         | 113,000           |  |   | $    | 3.00             | 
|$5.38-6.75          |  |             |         | 242,200           |  |   | $    | 5.96             | 
|$8.38-10.38         |  |             |         | 9,500             |  |   | $    | 9.88             | 
|$12.75-12.75        |  |             |         | 3,000             |  |   | $    | 12.75            | 
|                    |  |             |         |                   |  |   |      |                  |  | 
|Total               |  |             | 457,700 |                   |  | $ | 4.52 |                 
|                    |  |             |         |                   |  |   |      |                  |  | 

The fair value of options granted during the years ended August 31, 2003, 2002
and 2001, calculated using the Black-Scholes option-pricing model, was
approximately $10,500 ($1.42 per

F-20



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

share), $6,500 ($ 2.35 per share), and
$233,000 ($1.58 per share), respectively. Exercisable options total 457,700,
383,650, and 304,650 shares as of August 31, 2003, 2002 and 2001, respectively.
These options are exercisable at a weighted-average exercise price of $4.52,
$5.03, and $5.78 for the years ended August 31, 2003, 2002 and 2001,
respectively.

The following table summarizes stock option activity:

|                |  |         |         |           |  |           |          |         |  |          |      | 
|--------------- |  | ------- | ------- | --------- |  | --------- | -------- | ------- |  | -------- | ---- | 
|                |  |         |         |           |  |           |          |         |  | Weighted
|                |  |         |         |           |  | Available |          | Average
|                |  | Granted |         | for Grant |  | Price    
|                |  |         |         |           |  |          
|August 31, 2000 |  |         | 311,400 |           |  |           | 78,550   |         |  | $        | 5.76 | 
|Made available  |  |         |        |           |  |           | 156,000  |         |  |          | N/A  | 
|Canceled        |  |         | 0       |           |  |           | 0        |         |  |          | N/A  | 
|Granted         |  |         | 159,000 |           |  |           | (159,000 | )       |  | $        | 2.24 | 
|                |  |         |         |           |  |           |          |         |  |          |      | 
|August 31, 2001 |  |         | 470,400 |           |  |           | 75,550   |         |  | $        | 4.57 | 
|Canceled        |  |         | (6,000  | )         |  |           | 6,000    |         |  | $        | 5.50 | 
|Granted         |  |         | 3,000   |           |  |           | (3,000   | )       |  | $        | 3.35 | 
|                |  |         |         |           |  |           |          |         |  |          |      | 
|August 31, 2002 |  |         | 467,400 |           |  |           | 78,550   |         |  | $        | 4.55 | 
|Canceled        |  |         | (8,200  | )         |  |           | 8,200    |         |  | $        | 6.00 | 
|Granted         |  |         | 8,000   |           |  |           | (8,000   | )       |  | $        | 2.17 | 
|                |  |         |         |           |  |           |          |         |  |          |      | 
|August 31, 2003 |  |         | 467,200 |           |  |           | 78,750   |         |  | $        | 4.48 | 
|                |  |         |         |           |  |           |          |         |  |          |      | 



|12. |  | EMPLOYEE 401(k) PLAN:
|--- |  | ---------------------

TST has an employee 401(k) plan (the Plan) administered by a national
brokerage firm. Administrative fees associated with the Plan are funded by the
Plan. TSTs contribution is discretionary. In Fiscal 2003, TST matched 10% of
the first 5% of the participating employees
contributions to their Plan accounts. Contributions by TST were $35,176,
$32,319, and $21,746 for the years ended August 31, 2003, 2002, and 2001,
respectively.



|13. |  | NON-CASH ACTIVITY:
|--- |  | ------------------

During 2002, the Company financed the purchase of a building by issuing debt in
the amount of $3,200,000.



|14. |  | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):
|--- |  | ----------------------------------------------

The following tabulation presents selected results of operations for the years
ended August 31,
2003 and 2002:

F-21



---



##### Table of Contents



IMPRESO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

|                                     |  |                |            |             |  |        |            |           |  |   |            |  |  |   |            |  
|------------------------------------ |  | -------------- | ---------- | ----------- |  | ------ | ---------- | --------- |  | - | ---------- |  |  | - | ---------- | -
|                                     |  | Quarters Ended
|                                     |  |               
|                                     |  | November 30    |            | February 28 |  | May 31 |            | August 31
|                                     |  |                |            |             |  |        |            |          
|2003                                 |  |                |            |             |  |        |            |           |  |   |            |  |  |   |            |  
|Net Sales                            |  | $              | 31,842,729 |             |  | $      | 31,639,782 |           |  | $ | 28,872,753 |  |  | $ | 28,105,606 |  
|Gross Profit                         |  |                | 3,244,382  |             |  |        | 3,175,704  |           |  |   | 3,248,456  |  |  |   | 3,036,778  |  
|Net Income                           |  |                | 304,620    |             |  |        | 216,395    |           |  |   | 324,515    |  |  |   | (227,699   | )
|Basic and Diluted Earnings per Share |  | $              | 0.06       |             |  | $      | 0.04       |           |  | $ | 0.06       |  |  | $ | (0.04      | )
|2002                                 |  |                |            |             |  |        |            |           |  |   |            |  |  |   |            |  
|Net Sales                            |  | $              | 25,401,360 |             |  | $      | 26,342,394 |           |  | $ | 33,025,115 |  |  | $ | 38,296,645 |  
|Gross Profit                         |  |                | 2,598,618  |             |  |        | 2,829,913  |           |  |   | 3,689,471  |  |  |   | 3,499,848  |  
|Net Income                           |  |                | 765,929    |             |  |        | 163,009    |           |  |   | 513,730    |  |  |   | 233,774    |  
|Basic and Diluted Earnings per Share |  | $              | 0.15       |             |  | $      | 0.03       |           |  | $ | 0.10       |  |  | $ | 0.04       |  

In the quarter ended May 31, 2003, the company wrote off $229,000 of a $458,000
bad debt expense due to the Chapter 11 bankruptcy of a large customer in that
quarter. In the quarter ended August 31, 2003, the Company wrote off the
balance of the receivable due in the amount of $229,000, based upon the
uncertainty of the customers ability to operate out of the Chapter 11.

F-22



---



##### Table of Contents



INDEX TO FINANCIAL STATEMENT SCHEDULES

|                                                                           |  |      |      | 
|-------------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                           |  | Page
|                                                                           |  |     
|Report
of Independent Public Accountants
Blackman Kallick Bartelstein, LLP |  |      | S -2 | 
|Report of Independent Public Accountants
Arthur Andersen, LLP              |  |      | S-3  | 
|Schedule II- Valuation and Qualifying Accounts                             |  |      | S-4  | 

S-1



---



##### Table of Contents



INDEPENDENT PUBLIC ACCOUNTANTS REPORT ON SUPPLEMENTAL INFORMATION

To the Stockholders of Impreso, Inc.:

We have audited, in accordance with auditing standards generally accepted in
the United States, the consolidated financial statements of Impreso, Inc. and
subsidiaries as of August 31, 2003, which are included in this Form 10-K and
have issued our report thereon dated October 18, 2003. Our audit was made for
the purpose of forming an opinion on the basic consolidated financial
statements taken as a whole of Impreso, Inc. and subsidiaries for the year
ended August 31, 2003. The 2003 information listed in the index to consolidated
financial statement schedules is the responsibility of the Companys management
and is presented for purposes of complying with the Securities and Exchange
Commissions rules and is not a required part of the basic consolidated
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic 2003 consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.

The 2001 and 2000 information listed in the index to consolidated financial
statement schedules was subjected to audit procedures by other auditors whose
report, dated October 19, 2001, stated that such information was fairly stated
in all material respects in relation to the basic consolidated financial
statements taken as a whole.

Blackman Kallick Bartelstein, LLP
Chicago, Illinois

November 14, 2003

S-2



---



##### Table of Contents



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



| |  | To the Stockholders of Impreso, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | We have audited, in accordance with auditing standards generally
accepted in the United States, the consolidated financial statements of
Impreso, Inc. and subsidiaries included in this Form 10-K and have issued our
report thereon dated October 19, 2001. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedule listed in the index to financial statement schedules is the
responsibility of the Companys management and is presented for purposes of
complying with the Securities and Exchange Commissions rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial
data required to be set forth therein in relation to the basic financial
statements taken as a whole.



| | ARTHUR ANDERSEN LLP
| | -------------------

Dallas, Texas
October 19, 2001

THIS REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS IS A COPY
AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN, LLP

S-3



---



##### Table of Contents



SCHEDULE II

IMPRESO, INC. AND SUBSIDIARIES (a)

VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED AUGUST 31, 2003, 2002 AND 2001

|                 |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |         |           | 
|---------------- | ------------------------------- | ----------------------------- | - | ---------- | --------- | --------- | - | -------- | ------- | ---------- | - | --------- | - | ---------- | - | -------- | ---------- | - | - | ------- | --------- | 
|                 |                                 |                               |   |            |           |           |   |          |         |            |   | Additions |   |            |   |          |            |   |   |        
|                 |                                 |                               |   | Balance at |           | Additions |   | Charged  |         |            |   |           |   | Balance at
|                 |                                 |                               |   | Beginning  |           | Charged   |   | to other |         |            |   |           |   | End of    
|                 |                                 |                               |   | of Period  |           | to Income |   | Accounts |         | Deductions |   | Period   
|                 |                                 |                               |   |            |           |           |   |          |         |            |   |          
|August 31, 2003: |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |        
|                 | Allowance for doubtful accounts |                               | $ | 515,010    |           |           | $ | 684,459  |         |            | $ |          |   |            | $ | (568,553 | )          |   | $ | 630,916 |          
|                 | Inventory Reserves              |                               |   | 753,715    |           |           |   | 191,581  |         |            |   |          |   |            |   | (557,178 | )          |   |   | 388,118 |          
|                 |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |        
|                 |                                 | Total reserves and allowances |   |            | 1,268,725 |           |   |          | 876,040 |            |   |           |  |            |   |          | (1,125,731 | ) |   |         | 1,019,034 | 
|                 |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |        
|August 31, 2002: |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |        
|                 | Allowance for doubtful accounts |                               |   | 342,780    |           |           |   | 258,100  |         |            |   |          |   |            |   | (85,870  | ) (b)      |   |   | 515,010 |          
|                 | Inventory Reserves              |                               |   | 363,064    |           |           |   | 390,651  |         |            |   |          |   |            |   |         |            |   |   | 753,715 |          
|                 |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |        
|                 |                                 | Total reserves and allowances |   |            | 705,844   |           |   |          | 648,751 |            |   |           |  |            |   |          | (85,870    | ) |   |         | 1,268,725 | 
|                 |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |        
|August 31, 2001: |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |        
|                 | Allowance for doubtful accounts |                               |   | 168,631    |           |           |   | 304,980  |         |            |   |          |   |            |   | (130,831 | ) (b)      |   |   | 342,780 |          
|                 | Inventory Reserves              |                               |   |           |           |           |   | 363,064  |         |            |   |          |   |            |   |         |            |   |   | 363,064 |          
|                 |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |        
|                 |                                 | Total reserves and allowances |   | $          | 168,631   |           |   | $        | 668,044 |            |   | $         |  |            |   | $        | (130,831   | ) |   | $       | 705,844   | 
|                 |                                 |                               |   |            |           |           |   |          |         |            |   |           |   |            |   |          |            |   |   |        



|(a) |  | This schedule should be read in conjunction with the Companys audited consolidated financial
statements and related notes thereto.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Write-off of uncollectible receivables.                                                                                            

S-4



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

| |  |                                  |  |                         
| |  | -------------------------------- |  | ------------------------
| |  | Impreso, Inc.                   
|
| |  | By:                              |  | /s/Marshall D. Sorokwasz
| |  |                                  |  |                         
| |  | Marshall D. Sorokwasz, President

Dated: December 16, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|                                                |  |                                                                                      |  |                  
|----------------------------------------------- |  | ------------------------------------------------------------------------------------ |  | -----------------
|Signature                                       |  | Title                                                                                |  | Date             
|                                                |  |                                                                                      |  |                  
|/s/Marshall D. Sorokwasz

Marshall D. Sorokwasz |  | Chairman of the Board, 
President, Principal Executive
Officer and Treasurer         |  | December 16, 2003
|                                                |  |                                                                                      |  |                  
|/s/Richard D. Bloom

Richard D. Bloom           |  | Senior Vice President of Operations,
Director                                        |  | December 16, 2003
|                                                |  |                                                                                      |  |                  
|/s/Donald E. Jett

Donald E. Jett               |  | Secretary, Director                                                                  |  | December 16, 2003
|                                                |  |                                                                                      |  |                  
|/s/Susan M. Atkins

Susan M. Atkins             |  | Vice President of Finance,
Principal Financial Officer,
Principal Accounting Officer |  | December 16, 2003
|                                                |  |                                                                                      |  |                  
|/s/Jay W. Ungerman

Jay W. Ungerman             |  | Director                                                                             |  | December 16, 2003
|                                                |  |                                                                                      |  |                  
|/s/Robert F. Troisio

Robert F. Troisio         |  | Director                                                                             |  | December 16, 2003
|                                                |  |                                                                                      |  |                  
|/s/Nickolas S. Kokoron

Nickolas S. Kokoron     |  | Director                                                                             |  | December 16, 2003





---



##### Table of Contents






INDEX TO EXHIBITS

|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibits                                                                                                                                                                                                                                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|2.1         |  | Plan and Agreement of Merger, dated as of December 1, 1999, among
TST/Impreso, Inc., Impreso, Inc. and TST Merger Corp. (incorporated by
reference to Appendix A of the Companys Registration Statement on Form
S-4, No. 333-92381)                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|2.2(a)      |  | Asset Purchase Agreement by and between TST/Impreso, Inc. and Durango
Georgia Converting LLC dated as of April 5, 2001 (incorporated by reference
to Exhibit 2.1 of the Companys Quarterly Report on Form 10-Q, for the
quarter ended May 31, 2001)                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|2.2(b)      |  | Asset Purchase Agreement by and between TST/Impreso, Inc. and Bank of
America, N.A. and consented to by United Computer Supplies, Inc., United
Computer Supplies-East, Inc. and John R. Zimmerman dated as of March 19,
2002 (incorporated by reference to Exhibit 2.1 of the Companys Quarterly
Report on Form 10-Q, for the quarter ended May 31, 2002)                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|2.2(c)      |  | Real Estate Purchase and Sale Agreement by and between United Computer
Supplies, Inc. and TST/Impreso, Inc. dated as of March 15, 2002
(incorporated by reference to Exhibit 2.21 of the Companys Quarterly
Report on Form 10-Q, for the quarter ended May 31, 2002)                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|3(a)        |  | Certificate of Incorporation of the Company (incorporated by reference to
Exhibit 3(a) to the Companys Registration Statement on Form S-4, No.
333-92381)                                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|3(b)        |  | By-laws of the Company (incorporated by reference to Exhibit 3(b) to the
Companys Registration Statement on Form S-4, No. 333-92381)                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|4.1         |  | Form of Underwriters Warrant (incorporated by reference to Exhibit 4.1 to
the Companys Registration Statement on Form S-1, No. 33-93814)                                                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|10(a)       |  | 1995 Stock Option Plan (incorporated by reference to Exhibit 10.1 to the
Companys Registration Statement on Form S-1, No. 33-93814)                                                                                                                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|10(b)       |  | Employment Agreement dated January 27, 1999, between the Company and
Marshall Sorokwasz (incorporated by reference to Exhibit 10.2 to the
Companys Registration Statement on Form S-1, No. 33-93814)                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|10(c)       |  | IBM Brand Paper Trademark Licensing Agreement, effective as of April 30,
1997 and Amendment No. 1 thereto, between TST/Impreso, Inc. and
International Business Machines Corporation (incorporated by reference to
Exhibit 10(c) of the Companys Quarterly Report on Form 10-Q/A, dated July
15, 1997) [Confidential treatment has been granted for certain portions of
this Exhibit]
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|10(d)       |  | Amendment Number 2 to the IBM Brand Paper Trademark Licensing Agreement,
dated March 5, 1999, between TST/Impreso, Inc. and International Business
Machines Corporation (incorporated by reference to Exhibit 10(d) of the
Companys amended Quarterly Report on Form 10-Q/A, dated June 17, 1999)
[Confidential treatment has been granted for certain portions of this
Exhibit]     
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|10(e)       |  | Crayola License Agreement made as of February 6, 2002, with an effective
date of March 1, 2002, by and between Binney & Smith Properties, Inc. and
TST/Impreso, Inc. (incorporated by reference to Exhibit 10(e) of the
Companys amended Quarterly Report on Form 10-Q/A dated May 1, 2002)
[Confidential treatment has been granted for certain portions of this
Exhibit]           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|21          |  | Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 of
the Companys Annual Report on Form 10-K dated August 31,2000)                                                                                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|31.1        |  | Certificate Pursuant to Section 302 of Sarbanes  Oxley Act of 2002 for CEO.                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|31.2        |  | Certificate Pursuant to Section 302 of Sarbanes  Oxley Act of 2002 for CFO.                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|32.1        |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                       
|32.2        |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.