SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDING SEPTEMBER 30, 1995.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM _____ TO _____.
Commission File Number 0-14908
TGC INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Texas 74-2095844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1304 Summit Avenue, Suite 2
Plano, Texas 75074
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 214/881-1099
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act 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.
X
Yes _____ NO _____
State the number of shares outstanding of each of the issuer's
classes of common equity as of the latest practicable date.
Class Outstanding at November 1, 1995
Common Stock ($.10 Par Value) 6,166,018
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial
information:
Consolidated Balance Sheet as of September 30, 1995.
Consolidated Statements of Operations for the three- and
nine-month periods ended September 30, 1995 and 1994
Consolidated Statements of Cash Flows for the nine-month
periods ended September 30, 1995 and 1994.
Notes to Consolidated Financial Statements.
TGC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
September 30, 1995
ASSETS
CURRENT ASSETS
<S> <C>
Cash and cash equivalents $ 118,663
Accounts receivable, net 3,184,404
Inventories 4,379,374
Prepaid expenses 627,826
Refundable income taxes 28,250
Total current assets 8,338,517
PROPERTY, PLANT, AND EQUIPMENT -- at cost
Buildings 1,400,951
Machinery and equipment 7,735,800
9,136,751
Less accumulated depreciation 3,399,272
5,737,479
Land 483,992
6,221,471
OTHER ASSETS
Intangible assets, net 715,358
Other 34,359
Total other assets 749,717
Total assets $15,309,705
See notes to consolidated financial statements.
</TABLE>
TGC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET -- CONTINUED
(Unaudited)
<TABLE>
September 30, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <S> <C> <S> <C>
CURRENT LIABILITIES
Trade accounts payable $ 3,084,240
Accrued liabilities 1,047,549
Advance billings 388,213
Current maturities of long-term obligations 740,321
Total current liabilities 5,260,323
LONG-TERM OBLIGATIONS, less current maturities 6,863,312
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value - authorized
shares, 4,000,000; issued and outstanding
shares, none -
Common stock, $.10 par value - authorized
shares, 25,000,000; issued shares,
6,232,152 623,215
Additional paid-in capital 4,699,642
Accumulated deficit (1,969,265)
Treasury stock, at cost, 66,134 shares (167,522)
Total stockholders' equity 3,186,070
Total liabilities
and stockholders' equity $15,309,705
See notes to consolidated financial statements.
</TABLE>
TGC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
REVENUE
<S> <C> <C> <C> <C> <C>
Service Revenue $1,758,053 $ 1,824,113 $ 5,490,505 $ 4,212,463
Sales 3,719,461 5,146,712 11,413,514 12,587,541
5,477,514 6,970,825 16,904,019 16,800,004
COSTS AND EXPENSES
Cost of services 1,827,525 1,317,326 4,992,381 3,024,694
Cost of sales 3,425,311 4,449,668 10,094,635 10,739,499
Selling, general
and administrative 772,143 821,639 2,329,332 2,199,318
Interest 210,525 180,520 599,037 446,707
6,235,504 6,769,153 18,015,385 16,410,218
INCOME (LOSS) BEFORE
INCOME TAXES (757,990) 201,672 (1,111,366) 389,786
Provision for income taxes - 69,057 - 133,016
NET INCOME (LOSS) $ (757,990) $ 132,615 $(1,111,366) $ 256,770
Earnings (loss) per
common share:
Primary $(.13) $ .02 $(.20) $ .05
Fully-diluted $(.13) $ .-- $(.20) $ .04
Weighted average number of
shares used in computing
earnings (loss) per share:
Primary 5,880,949 5,769,610 5,602,657 5,691,869
Fully-diluted 5,880,949 - 5,602,657 5,788,971
See notes to consolidated financial statements.
</TABLE>
TGC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Nine Months Ended
September 30,
1995 1994
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $(1,111,366) $ 256,770
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,016,742 517,829
Non-cash interest expense 4,874 -
Gain on disposal of equipment (34,044) (38,861)
Change in assets and liabilities:
Accounts receivable (88,894) (971,785)
Inventories (1,586,485) 351,737
Prepaid expenses (77,015) (343,529)
Trade accounts payable 877,044 954,500
Accrued liabilities 248,921 (97,287)
Advance billings 175,093 (204,187)
Income taxes payable - 153,624
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (575,130) 578,811
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to machinery
and equipment (886,339) (2,264,209)
Payment for purchase of acquired business - (1,083,145)
Proceeds from disposal of machinery
and equipment 54,877 38,861
Increase in other assets (2,095) (111,901)
NET CASH USED IN
INVESTING ACTIVITIES (833,557) (3,420,394)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from the issuance of stock 756,852 -
Principal payments of debt obligations (645,578) (142,991)
Net proceeds from line-of-credit 1,144,816 2,132,944
Proceeds from the issuance of debt - 650,000
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,256,090 2,639,953
NET DECREASE IN
CASH AND CASH EQUIVALENTS (152,597) (201,630)
Cash and cash equivalents at beginning of period 271,260 630,267
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 118,663 $ 428,637
CASH PAID DURING THE PERIOD FOR:
Interest $ 273,138 $ 439,904
Taxes - $ 12,016
</TABLE>
NON-CASH INVESTING AND FINANCING ACTIVITIES:
On January 9, 1995, options for 4,000 shares and 2,332 shares of
Common Stock at an
exercise price of $.875 and $1.00, respectively, per share were
exercised. The Company
received 1,458 shares of its Common Stock at a market value of
$4.00 per share as payment
for the exercise of the options.
On July 28, 1995, 64,676 shares of Common Stock were contributed to
the Company by a
director of TGC. The Company included these shares in its treasury
stock account at $2.50
per share which represents the fair market value of the Company's
Common Stock on the date of the transaction.
On August 1, 1995, 4,874 Units (as described in NOTE G) were issued
to certain executive
officers and directors of the Company as payment for accrued
interest on $200,000 in
short-term debt that were exchanged for private placement Units on
July 31, 1995.
In connection with the May 25, 1994 business acquisition of Fisher
Bag assets, the Company
paid cash at closing of $1,083,145, assumed liabilities of $93,500
and incurred notes
payable of $537,500 for the fair market value of certain current
assets and certain fixed
assets, and goodwill in the amount of $724,398. Also, on May 31,
1994, the 9% Convertible
Subordinated Debentures were converted into 26,666 shares of Common
Stock. On July 12,
1994, 500,000 shares of Convertible Preferred Stock were converted
into 1,530,000 shares
of Common Stock.
See notes to consolidated financial statements.
TGC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1995
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in
accordance with the instructions to Form 10-QSB and therefore do
not include all
information and footnotes necessary for a fair presentation of
financial position, results
of operations and changes in financial position in conformity with
generally accepted
accounting principles.
NOTE B -- MANAGEMENT REPRESENTATION
In the opinion of management, all adjustments (consisting of normal
recurring accruals)
considered necessary for a fair presentation of financial position,
results of operations,
and changes in financial position have been included. The results
of the interim periods
are not necessarily indicative of results to be expected for the
entire year. For further
information refer to the financial statements and the footnotes
thereto included in the
Company's Annual Report for the year ended December 31, 1994, filed
on Form 10-KSB.
NOTE C -- EARNINGS (LOSS) PER SHARE
Primary and fully-diluted loss per share for the quarter and nine
months ended
September 30, 1995, were calculated by dividing net loss for the
respective periods by the
weighted average number of shares of Common Stock outstanding for
the respective period.
Primary earnings per share for the quarter ended September 30,
1994, was calculated by
dividing net income for the quarter by the sum of shares issued and
outstanding for the
entire period plus 1,530,000 shares of Common Stock that were
converted from Convertible
Preferred Stock on July 12, 1994, and 415,964 shares which
represent Common Stock
equivalents from incentive stock options. There is no fully-diluted
earnings per share
calculation for the quarter ended September 30, 1994, as there are
only Common Stock and
Common Stock equivalents.
Primary earnings per share for the nine months ended September 30,
1994, was calculated by dividing net income for the period by the
sum of shares issued and outstanding for the
entire period plus 12,014 weighted average shares outstanding from
the May 31, 1994
conversion of 9% Convertible Subordinated Debentures, 1,530,000
shares of Common Stock
converted from Convertible Preferred Stock on July 12, 1994, and
352,875 shares which
represent Common Stock equivalents from incentive stock options.
The fully-diluted earnings per share calculation for the nine
months ended September 30,
1994, is based on an increase of 9,768 shares from the primary
total of 12,014 to 21,782
weighted average shares from the May 31, 1994 conversion of 9%
Convertible Subordinated
Debentures and an increase in the number of Common Stock
equivalents from incentive stock options to 440,209 from the
primary total of 352,875.
NOTE D -- DEBT OBLIGATIONS
As of May 5, 1995, the Company received $200,000 in debt financing
from certain executive
officers and directors of the Company. The financing consisted of
short-term notes with a
maturity date of October 31, 1995, bearing interest at a rate of
10% per annum. As
discussed in NOTE G, on July 31, 1995, certain executive officers
and directors exchanged
the $200,000 of short-term notes for Units being offered by the
Company through a private
placement.
On June 14, 1995, Union Camp Corporation agreed to a forbearance of
the monthly principal payments on the $3,761,537 promissory note
for a period of three months. The $31,346.14 monthly principal
payments due on the first day of July, August and September of 1995
will be deferred with the agreement that the total amount thereof
($94,038.42) will be added to the outstanding principal balance
otherwise due and payable on July 30, 1998. On October 27, 1995,
Union Camp Corporation agreed to a forbearance of all but $1,000 of
the monthly principal payment of $31,346.14 due on November 1,
1995.
NOTE E -- PROFORMA - ACQUISITION OF ASSETS OF FISHER BAG COMPANY
On May 25, 1994, the Company, through its wholly-owned subsidiary
Chase Packaging
Corporation, acquired from Fisher Bag Company substantially all of
its business (located
in Seattle, Washington) of manufacturing and marketing agricultural
and industrial bags
and other packaging materials. This acquisition was accounted for
as a purchase and,
accordingly, the accompanying financial statements reflect the
assets, liabilities and
operating results of this purchase beginning May 25, 1994.
The following unaudited proforma information presents the
consolidated results for the
nine months ended September 30, 1994, as though the acquisition of
the Fisher assets had
been consummated on January 1, 1994. The proforma calculations and
adjustments have been made to reflect purchase accounting. All
significant inter-company balances and
transactions have been eliminated. The proforma data is reported
below in thousands of
dollars except per share data.
TGC Industries, Inc. Proforma Information (Unaudited)
(In 000's, except income per share)
<TABLE>
Nine months ended
September 30, 1994
<S> <C> <C>
Revenues $ 18,621
Net income $ 160
Proforma income per share $ .03
</TABLE>
NOTE F -- DEBT COVENANT NON-COMPLIANCE
As previously disclosed in the Company's annual report on Form
10-KSB for the period ended December 31, 1994, Chase was in
violation of the tangible net worth covenant on the note payable to
Union Camp. As a result of this violation, Chase was also in
violation of the bank line-of-credit. During the first quarter of
1995, Chase received waivers through
January 1, 1996, of the violation ("grace period").
During the second quarter of 1995, Chase received an extension of
the waiver from Union
Camp for an additional period of one year ending on January 1,
1997.
NOTE G -- PRIVATE PLACEMENT
Effective September 30, 1995, the Company concluded a private
placement offering of Units
pursuant to its terms having completed closings with total proceeds
of $742,300 in Units.
The private placement offering, which commenced in July of 1995,
was for a minimum of
400,000 and a maximum of 1,000,000 of Units, at $1.00 per Unit,
with each Unit consisting
of one share of the Company's Common Stock and one Warrant to
purchase one share of the Company's Common Stock for a period of
three years at $1.50 per share for the first
18 months and $2.00 per share thereafter. The private placement of
Units included the
exchange of $200,000 in short-term debt discussed in NOTE D held by
certain executive
officers and directors of the Company who exchanged such debt for
the Units offered in the
private placement. As privately-placed Units, such securities are
subject to restriction
against transfer. A Placement Agent received a commission equal to
6% of the gross
proceeds of the sale of the Units. Two directors of the Company,
because of their
affiliation with the Placement Agent, received compensation in
connection with this
private placement.
As previously disclosed, for shareholders of the Company who did
not participate in the
above private offering, the Company intends to make a distribution
of rights to such
holders of record on a record date to be established. The Company
had previously
disclosed that it had intended to establish a record date with
respect to such
distribution within fifteen days following the conclusion of the
above private placement.
However, the Company has decided to postpone the setting of the
record date and the
distribution of the rights to a future date. Each such right would
entitle the holder
thereof to purchase one Unit having the same terms as the Unit
offered in the private
placement at $1.50 per Unit for a period of 30 days. The Company
intends to offer
1,000,000 Units by such distribution of rights to the shareholders
not participating in
the private placement. The distribution of rights would be subject
to regulatory
approval.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
OPERATING RESULTS
Revenues were $5,477,514 for the quarter ended September 30, 1995,
compared to revenues of $6,970,825 for the same period of the prior
year. Net loss was $757,990 for the third
quarter of 1995, as compared to net income of $132,615 for the
third quarter of 1994.
For the nine months ended September 30, 1995, revenues were
$16,904,019 compared to
revenues of $16,800,004 for the same period of 1994. Net loss for
the nine months ended
September 30, 1995, was $1,111,366 compared to net income of
$256,770 for the same period of the prior year.
Revenue declined in the 1995 third quarter when compared to the
same period of the prior
year primarily due to a 28% decrease in packaging revenues. Profit
margins for the 1995
third quarter decreased 81% from the 1994 third quarter primarily
due to higher crew
operating expenses in the geophysical operation and lower revenues
combined with an
unfavorable sales mix at the packaging operation. The reduced
profit margins, higher
selling expenses and additional interest expense from increased
borrowings resulted in
consolidated net losses for the quarter and nine months ended
September 30, 1995.
PACKAGING OPERATION
Revenues for Chase Packaging Corporation were $3,719,461 for the
third quarter of 1995 and $11,413,514 for the nine months
year-to-date in 1995 as compared to $5,146,712 for the
third quarter of 1994 and $12,587,541 for the nine months ended
September 30, 1994.
Operating losses before interest and taxes were $287,913 for the
third quarter of 1995 and
$437,271 for the nine months ended September 30, 1995 as compared
to an operating profit
before interest and taxes of $101,648 for the 1994 third quarter
and an operating profit
before interest and taxes of $175,207 for the nine months ended
September 30, 1994.
Interest expense for the 1995 third quarter increased $25,220 to
$198,910 from the 1994
third quarter expense of $173,690. Interest expense for the nine
months ended
September 30, 1995 increased to $559,006 as compared to $433,302
for the same period of
the prior year. The increase in interest expense was attributable
to increased borrowings
to finance working capital requirements, higher interest rates, and
additional borrowing
required for the May 1994 Fisher Bag asset acquisition.
Several factors contributed to the 1995 operating losses at Chase.
Low demand for Chase's
paper mesh and polyknit products as a result of large sizing and
low market prices for the
1994-95 Idaho potato crop reduced sales of Chase's consumer size
bags by 38% in the first
half of 1995 when compared to the same period of 1994. Incremental
benefit gained by
increased sales of burlap bags, multiwall paper bags and circular
woven polypropylene bags
during the first six months of 1995 was offset by the lower profit
contribution of these
products when compared to sales of Chase's consumer-size mesh
potato bags.
In the 1995 third quarter, package revenues dropped sharply when
compared to the 1994
third quarter as a cool summer delayed the 1995 harvest of both
onions and potatoes in the
Northwest. The 1994 onion crop came in early as a result of a dry
spring, placing high
demand on Chase's fabric and bag inventories as onion growers
shipped early last year. A strong export market to Asia also
supported sales in the 1994 third quarter. The delay in the 1995
onion harvest combined with a weak export market has increased
domestic onion supplies and lowered market prices for the 1995-96
crop. Sales of Chase's woven paper mesh and polypropylene fabric
to other converters, who also serve the onion and potato markets,
has decreased 25% for the nine months ended September 30, 1995,
when compared to the same period of 1994.
Also depressing Chase's profit margins in 1995 are higher
polypropylene resin prices
which rose from $.28 per pound in March of 1994 to a high of $.52
per pound in June of
1995 before dropping back to $.47 per pound in September. As the
primary raw material in Chase's woven polypropylene fabric and bag
products for the onion and potato markets, each $.01 per pound
increase in polypropylene resin prices adds approximately $2,700 to
Chase's monthly manufacturing costs. Competitive pricing pressures
from domestic suppliers
and from foreign imports, primarily Mexico, have prevented Chase
from passing these
increased costs through to customers. These increased costs,
combined with lower fabric
sales volume, have been the primary factors contributing to a nine
percentage point drop
in profit margins for Chase's woven polypropylene products in the
first nine months of
1995 when compared to the corresponding nine-month results for
1994.
As a result of the reduced sales volume from the delayed 1995 onion
and potato harvest,
Chase management is scaling back production to bring inventory
levels in line with the
current reduced demand for fabric and bags. An aggressive
inventory reduction program has been initiated, labor costs are
being reduced and overhead expenses are being closely
scrutinized. The lower sales levels combined with these production
cut-backs will have a
negative impact and add to Chase's continuing losses in the 1995
fourth quarter. Lower
production of Chase's core products will result in underabsorption
of indirect and
overhead expenses, thereby increasing unit costs and reducing
profit margins to extremely
low levels.
The potato crop outlook for the 1995-96 season appears to be
favorable for Chase's
consumer-size bags due to the small size of the potatoes being
harvested and reasonably
steady market prices for the crop. An oversupply of domestic
onions, however, could
result in overall lower onion bag and fabric sales. Positive
factors for Chase are new
customers gained from the high quality of the new pre-print bags
and increased sales of
circular woven polypropylene bags to grass seed markets. Also,
polypropylene resin prices
have moderated and management believes that such prices should
decline for the foreseeable future.
Chase management's goal will be to bring manufacturing costs in
line with the level of
sales generated by current agricultural markets to ensure that the
packaging operation can
achieve consistent profitability. A new president commenced
employment at Chase in
October of 1995 and has initiated a program to reduce expenses and
increase efficiencies
to enable Chase to become a lower-cost producer of fabric and bags.
Chase will actively
pursue expansion of sales efforts into other geographic markets and
will continue to
search for new opportunities to expand its product lines. A new
film potato bag customer
has been added this season which should add significantly to
packaging revenues. The
Company is also working toward a sales/service arrangement with
several manufacturers of
packaging equipment. Due to competitive pressures and the
uncertain nature of predicting
agricultural crops, however, no assurance can be given that the
Company's plans will
achieve the intended results.
GEOPHYSICAL OPERATION
TGC's geophysical service revenue decreased to $1,758,053 for the
three months ended
September 30, 1995 compared to revenue of $1,824,113 for the same
period of 1994. Revenue for the first nine months of 1995 was
$5,490,505 as compared to revenue of $4,212,463 for the same period
of 1994. Operating loss before interest and taxes was $259,552 for
the 1995 third quarter as compared to operating profit before
interest and taxes of $280,544 for the third quarter of 1994.
Operating loss before interest and taxes for the nine months ended
September 30, 1995 was $75,058 as compared to an operating profit
before interest and taxes of $661,286 for the same period of 1994.
The 1995 third quarter
results were negatively impacted by unseasonably poor weather in
Texas and Oklahoma,
terrain access problems, and delays in advance preparatory work.
The ability of TGC's two
crews to record large quantities of seismic data in a short period
of time, which is
essential for profitability, was limited by these various problems
and resulted in crew
operating losses. Also, competition on available contracts has
increased significantly in
1995. In addition, financial results were negatively impacted in
1995 by a significant
increase in non-cash charges for depreciation ($596,261 for the
nine months ended
September 30, 1995, as compared to $209,179 for the same period of
1994) as a result of
the Company's capital expansion program in the 1994 third quarter.
The trend in oil and gas exploration for a number of years has been
to focus on the larger
potential of oil and gas fields outside the United States. In the
past two years more of the
Company's clients became familiar with 3-D surveys and have had
discoveries of oil and gas
in the United States using 3-D data. The result was an increase in
domestic exploration
activity from which the Company benefited in 1994 as one of the few
remaining domestic
geophysical contractors. In 1995, however, the increased activity
has attracted
additional geophysical contractors, primarily from Canada, to the
U.S. market. In
addition, several contracts were cancelled by clients due to lease
problems on their 3-D
areas of interest. As a result of these cancellations, the
Company's planned acquisition
schedule was interrupted during the past two quarters.
The domestic demand for 3-D data acquisition services remains
positive at this time. The
additional capacity achieved with the second crew's Sercel 368/348
data gathering system
and the remote seismic units for the Opseis system should allow the
Company to meet the
demand for its services. The Company currently has a backlog that
extends into the first
quarter of 1996. The backlog includes a variety of small and large
surveys for major and
independent oil and gas companies. The Company generally works
under turn-key contracts
which have more profit potential than fixed term contracts,
however, turn-key contracts
involve more risk because of the potential downtime from
unfavorable weather and other
types of delay. With improvements in existing contracts and
advance preparatory work,
management anticipates a return to favorable revenues with an
improvement in profit
margins. Due to competitive forces and the unpredictable nature of
forecasting
weather, however, no assurance can be given that management's
expectations can be
achieved.
FINANCIAL CONDITION
Cash of $575,130 was used in operating activities in the first nine
months of 1995
compared to cash provided by operating activities of $578,811 for
the same period of the
prior year. The use of funds in 1995 is primarily attributable to
the Company's net loss
in 1995 and the build-up of inventory at Chase Packaging for the
1995-96 onion and potato
seasons, partially offset by increased non-cash charges for
depreciation and amortization,
and vendor financing through increased trade accounts payable.
Cash used in investing
activities was primarily additions to seismic equipment for field
operations at the
geophysical division and additions to machinery and equipment at
the packaging operation.
Cash provided by financing activities consisted of proceeds from
Chase's
revolving line-of-credit, proceeds from the issuance of 125,000
shares of Common Stock
issued upon exercise of stock options, and proceeds from the
private placement of Units,
offset by $645,578 in principal payments of debt obligation. The
loan balance on Chase's
revolving line-of-credit was $3,626,069 at September 30, 1995.
Working capital increased $503,611 to $3,078,194 from the December
31, 1994 balance of
$2,574,583 primarily due to the inventory build-up at Chase
Packaging being funded by its
long-term revolving line-of-credit. Total accounts receivable (net
of allowances) for the
period ending September 30, 1995 of $3,184,404 consisted of the
packaging operation's
accounts receivable of $2,206,227 and the geophysical division's
accounts receivable of
$978,177. The current ratio of 1.6 to 1 at September 30, 1995 was
the same as the ratio
at December 31, 1994.
Stockholders' equity decreased $344,767 from the December 31, 1994
balance to $3,186,070.
The decrease was attributable to the Company's net loss of
$1,111,366 for the nine months
ended September 30, 1995, partially offset by proceeds from the
issuance of Common Stock
of $756,852. The stock proceeds consisted of $100,000 from the
exercise of stock options
by the Company's chairman (125,000 shares of Common Stock at a
price of $.80 per share)
and $656,852 net proceeds (after sales commissions and other
expenses) from the sale of
Units as described in NOTE G.
The decreased liquidity position at Chase resulting from
expenditures for the 1994
equipment and expansion programs, the build-up of inventory for the
potato and onion
harvests, and the operating losses for the fourth quarter of 1994
and first half of 1995
has required the Company to seek additional equity financing to
meet the packaging
operation's ongoing working capital requirements. As a result, in
July of 1995 the
Company commenced an offering for the private placement of Units
(as described in NOTE G) which concluded effective September 30,
1995, with total proceeds of $742,300. The net
proceeds of this offering (after deducting commissions and expenses
associated with the
offering, including legal and accounting fees) were used to fund
working capital
requirements at Chase.
Management at the packaging operation has initiated a plan to
aggressively reduce
inventory, cut expenses, reduce trade payables and improve supply
terms with vendors. The objective of this plan will be to bring
manufacturing expenses in line with projected levels of sales,
thereby ensuring a positive cash flow.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits -- None.
b. Reports -- No reports on Form 8-K have been filed
during the quarter for
which this report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
TGC INDUSTRIES, INC.
Date: November 8, 1995 By: /s/ Allen T. McInnes
Allen T. McInnes
Chairman of the Board, President
(Principal Executive Officer)
Date: November 8, 1995 By: /s/ Doug Kirkpatrick
Doug Kirkpatrick
Vice President and
Treasurer
(Principal Financial
and Accounting Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> TGC INDUSTRIES, INC.
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