U.S. 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, 1996.
[ ] 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 No.)
1304 Summit, Suite 2
Plano, Texas 75074
(Address of principal executive (Zip Code)
offices)
Issuer's telephone number, including area code: 972/881-1099
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ____
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 October 31, 1996
Common Stock ($.10 Par Value) 6,188,018
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Incorporated herein is the following unaudited financial
information:
Consolidated Balance Sheet as of September 30, 1996.
Consolidated Statements of Operations for the three and nine
month periods ended September 30, 1996 and 1995.
Consolidated Statements of Cash Flows for the nine-month periods
ended September 30, 1996 and 1995.
Notes to Consolidated Financial Statements.
<TABLE>
TGC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<S> <C>
SEPTEMBER 30,
1996
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 818,655
Accounts receivable 793,321
Prepaid expenses 452,959
Total current assets 2,064,935
PROPERTY AND EQUIPMENT - at cost
Machinery and equipment 6,271,197
Automobiles and trucks 523,642
Furniture and fixtures 294,822
7,089,661
Less accumulated depreciation 3,087,883
4,001,778
Property held for sale 1,329,000
5,330,778
OTHER ASSETS 32,217
Total assets $7,427,930
See notes to Consolidated Financial Statements
</TABLE>
<TABLE>
TGC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET - CONTINUED
(UNAUDITED)
<S> <C>
SEPTEMBER 30,
1996
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 738,610
Accrued liabilities 422,275
Advance billings 847,275
Current maturities of long-term obligations 299,991
Total current liabilities 2,308,151
LONG-TERM OBLIGATIONS, less current maturities 500,000
PAYABLE TO CHASE PACKAGING 1,329,000
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value - authorized
share 4,000,000; issued and outstanding
shares 1,150,350 1,150,350
Common stock, $.10 par value - authorized
25,000,000; issued 6,254,152 shares 625,415
Additional paid-in capital 6,114,946
Accumulated deficit (4,432,410)
Treasury stock, at cost (66,134 shares) (167,522)
3,290,779
Total liabilities and stockholders' equity $ 7,427,930
See notes to Consolidated Financial Statements
</TABLE>
<TABLE>
TGC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenue $2,640,350 $1,758,053 $ 7,100,277 $ 5,490,505
Cost of
services 2,205,956 1,827,525 5,980,366 4,992,381
Selling,
general,
adm. 204,164 190,080 603,741 573,182
2,410,120 2,017,605 6,584,107 5,565,563
INCOME (LOSS)
FROM
OPERATIONS 230,230 (259,552) 516,170 (75,058)
Interest
Expense 2,391 11,615 35,534 40,031
INCOME (LOSS)
FROM CONTINUING
OPERATIONS 227,839 (271,167) 480,636 (115,089)
Discontinued
operations
Earnings (loss)
from
operations 2,409 (486,823) (1,402,706) (996,277)
NET EARNINGS
(LOSS) 230,248 (757,990) (922,070) (1,111,366)
Less dividend
requirement
on preferred
stock 100,975 - 100,975 -
EARNINGS (LOSS)
ALLOCABLE TO
COMMON
STOCKHOLDERS $ 129,273 $ (757,990) $(1,023,045) $(1,111,366)
Earnings (loss)
per common
and common
equivalent share
Continuing
operations $.02 $(.05) $ .06 $(.02)
Discontinued
operations - (.08) (.21) (.18)
$.02 $(.13) $(.15) $(.20)
Weighted average
number of
common and
common
equivalent
shares 6,870,252 5,880,949 6,859,146 5,602,657
See notes to Consolidated Financial Statements
</TABLE>
<TABLE>
TGC INDUSTRIES, INC.
Consolidated Statements of Cash Flows (Unaudited)
<S> <C> <C>
Nine Months Ended
September 30
1996 1995
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss $ (922,070) $(1,111,366)
Adjustments to reconcile net loss
to net cash provided by (used
in) operating activities:
Loss from discontinued operations 1,402,706 996,277
Depreciation and amortization 574,003 596,261
Non-cash interest expense - 4,874
Gain on disposal of property
and equipment (11,585) (34,032)
Change in assets and liabilities:
Accounts receivable 242,014 (165,778)
Prepaid expenses (2,213) (66,633)
Accounts payable (117,496) 401,489
Accrued liabilities (49,493) 64,361
Advanced billings 611,055 210,000
NET CASH PROVIDED BY
CONTINUING OPERATIONS 1,726,921 895,453
NET (USED IN) DISCONTINUED
OPERATIONS (456,687) (1,447,524)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 1,270,234 (552,071)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to machinery
and equipment (2,405,690) (309,694)
Proceeds from sale of property
and equipment 14,500 54,067
Increase in other assets (31,019) -
INVESTING ACTIVITIES OF
DISCONTINUED OPERATIONS (92,442) (577,930)
NET CASH USED IN INVESTING
ACTIVITIES (2,514,651) (833,557)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt 125,813 -
Proceeds from issuance of stock 5,020,705 756,852
Principal payments of debt
obligations (115,563) -
Capital contribution to Chase
Packaging (2,716,403) -
FINANCING ACTIVITIES OF
DISCONTINUED OPERATIONS (366,348) 499,238
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 1,948,204 1,256,090
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 703,787 (129,538)
Cash and cash equivalents at
beginning of period 114,868 230,538
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 818,655 $ 101,000
Supplemental cash flow information
Cash paid during the year
Interest $ 27,513 $ -
Income taxes $ - $ -
Noncash investing and financing
activities
(1) 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 its
options.
(2) In July 1996, $365,813 of subordinated convertible debt was converted
into 73,162 shares of the Company's Series C 8% Convertible Exchangeable
Preferred Stock.
(3) In September 1996, the Company entered into a three year note agreement
with a major lender for $750,000 at an interest rate of 10%. The
$750,000 was paid directly by the lender to the Company's vendor as
partial payment for the purchase of an Opseis Eagle 24-BIT 1500 channel
recording system.
See notes to Consolidated Financial Statements.
</TABLE>
TGC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1996
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 PRESENTATION
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, 1995 filed on Form 10-KSB.
NOTE C -- EARNINGS (LOSS) PER SHARE
The computation of earnings (loss) per share is based on the weighted
average number of shares of common stock and common stock equivalents, if
dilutive, outstanding during the period. Net earnings (loss) used in the
computation of earnings (loss) per share for the three months and nine
months ended September 30, 1996, are reduced by preferred stock dividend
requirements. At September 30, 1996, the number of shares of common stock
obtainable upon the exercise of outstanding options and warrants exceeded 20%
of the number of common shares outstanding. As a result, all options and
warrants have been assumed to have been exercised for the computation of
earnings (loss) per share for the three months and nine months ended
September 30, 1996. The proceeds from the options and warrants have been
applied to repurchase outstanding common shares, at the end of the period
market price, but not to exceed 20% of the outstanding shares. Since
potential dilutive securities diluted earnings per share by less than 3
percent, the fully diluted computation is not required to be presented.
NOTE D -- DEBT OBLIGATIONS
On March 20, 1996, the Company received $30,000 in debt financing from an
executive officer of the Company. The financing consisted of a subordinated
note with a maturity date of March 20, 1998, bearing interest at a rate of
10% per annum.
On April 9, 1996, the Company received $62,813 in debt financing from an
executive officer of the Company. The financing consisted of a subordinated
note with a maturity date of April 9, 1998, bearing interest at a rate of 10%
per annum. On May 13, 1996, the Company received an additional $33,000 in
debt financing from an executive officer of the Company. This financing
consisted of a subordinated note with a maturity date of May 13, 1998,
bearing interest at a rate of 10% per annum.
On May 29 and May 30, 1996, the Company received $150,000 from certain
executive officers and directors of the Company as an advance on proceeds
from the private placement of Series C 8% Convertible Exchangeable Preferred
Stock ("Preferred Stock"). The proceeds are part of the closing in July 1996
of 1,150,350 shares of Preferred Stock (See Note E).
In July of 1996 subordinated notes totaling $365,813 were exchanged for
Preferred Stock offered in the private placement described in Note E.
On August 29, 1996, the Company arranged for $750,000 in debt financing with
a major lender as part of the purchase monies required on the new Eagle
system. The assets purchased have been pledged as security against this note
and payments are in equal installments over a thirty-six month period. This
note bears an interest rate of 10%.
NOTE E -- REORGANIZATION PLAN
In May 1996, a formal plan was adopted to reorganize the Company. Pursuant
to the plan, the following actions have been taken:
a. In July of 1996, the Company closed the private placement of
1,150,350 shares of Series C 8% Convertible Exchangeable Preferred
Stock. The gross proceeds received from the closings were
$5,751,750, which amount includes the exchange by holders
of subordinated notes of the Company totalling $365,813 for
Preferred Stock.
The Preferred Stock sold in the private placement entitles the
holder to receive cumulative cash dividends as and when declared
by the Board of Directors at a rate of 8% per year prior to any
dividend or distribution in cash or other property on any class
or series of stock junior to the preferred stock. The dividends
on the preferred stock are payable as declared by the Board of
Directors on January 1 and July 1 of each year, commencing January
1, 1997. The dividends on the preferred stock are cumulative but
do not bear interest.
The holder of any shares of Preferred Stock has the right at any
time to convert the Preferred Stock into fully paid and
non-assessable shares of Common Stock of TGC at the conversion
price per share of (1) prior to the close of business on
July 1, 1998, the conversion price per share of common stock of
$.75; (2) after July 1, 1998 and prior to the close of business
on July 1, 1999, the conversion price per share of common stock
of $1.25, and (3) thereafter, the conversion price per share
of common stock of $2.00. A cash adjustment will be paid in lieu
of fractional shares.
Shares of the preferred stock are exchangeable in whole at the
sole option of the Company at any time after January 1, 1998 for
the Company's 8% Subordinated Convertible Debentures, Series A
("Debentures") due the later of July 1, 2000 or two years from
the date of exchange. This is conditioned upon the Company paying,
on or prior to the date of exchange, to the holders of the
outstanding shares of preferred stock all accumulated and unpaid
dividends to the date of exchange. The Debentures are convertible
into Common Stock at the same conversion rate as the Preferred
Stock.
b. Upon closing of the private placement, the Company contributed
$2,716,403 as a capital contribution to Chase Packaging.
c. Effective July 31, 1996, the Company spun-off its wholly owned
subsidiary, Chase Packaging Corporation, formerly New Chase
Corporation. Prior to the spin-off, TGC liquidated Chase
Packaging Corporation ("Old Chase") with TGC receiving all of
Chase's properties and liabilities in cancellation of the Chase
stock held by TGC. TGC then formed a new wholly-owned subsidiary,
New Chase Corporation, a Texas corporation, the name of which
TGC subsequently changed to Chase Packaging Corporation
("Chase"). TGC transferred to Chase all of the properties and
liabilities previously received by TGC as a result of the
liquidation of Old Chase, except TGC retained the Portland,Oregon
facility of Old Chase, which TGC intends to sell. TGC anticipates
that the sale proceeds from the Portland, Oregon facility will
be contributed to Chase to be applied against the mortgage
indebtedness currently encumbering such facility.
Effective July 31, 1996, TGC spun-off Chase to the holders of TGC's
Common Stock and, on an as-if-converted basis, to the holders of
TGC's Series C 8% Convertible Exchangeable Preferred Stock (the
"Preferred Stock"), which was sold in a private placement that
closed in July, 1996. The record date was July 15, 1996 ("Record
Date"); however, the TGC Common Stock has traded with "due bills"
since the Record Date and will continue to do so until the
distribution of Chase Common Stock, which date (the "Distribution
Date") will be the first business day following the effectiveness
of the Form 10-SB Registration Statement which Chase filed with the
Securities and Exchange Commission on October 24, 1996. The
holders of 6,188,018 shares of TGC Common Stock and 1,150,350
shares of TGC Preferred Stock will receive the spin-off
distribution of Chase Common Stock. An additional 539,837 shares
of Chase Common Stock will be held in escrow and distributed
upon the exercise, if any, of outstanding warrants and options of
TGC. On the Distribution Date, the holders of TGC Common Stock
will receive one-half share of Chase Common Stock for each share of
TGC Common Stock held, and the holders of TGC Preferred Stock will
receive one-half share of Chase Common Stock for each share of
Common Stock of TGC as if the preferred stockholders had converted.
The $5.00 per share Preferred Stock is initially convertible at
$.75 per share of Common Stock through July, 1998. As a result of
this spin-off, the operations of Chase have been reflected as
discontinued operations in the consolidated financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
GEOPHYSICAL OPERATIONS (CONTINUING OPERATIONS)
Geophysical service revenue increased to $2,640,350 for the three months
ended September 30, 1996, a 50% increase from revenue of $1,758,053 for the
same period of 1995. Revenue for the first nine months of 1996 was
$7,100,277, a 29% increase from revenue of $5,490,505 for the first nine
months of 1995. Operating profit before interest, taxes, and dividend
requirement on preferred stock was $230,230 for the 1996 third quarter as
compared to an operating loss before interest and taxes of $259,552 for the
third quarter of 1995. Operating profit before interest, taxes, and dividend
requirement on preferred stock for the nine months ended September 30, 1996
was $516,170 as compared to an operating loss before interest and taxes of
$75,058 for the same period of 1995. The increase in revenue was the result
of a diversified backlog which included seismic surveys with higher contract
prices in 1996 when compared to the Company's 1995 program. One of TGC's
seismic crews worked in the Gulf Coast region during the 1996 third quarter.
TGC's second seismic crew continued work in California (a new market for the
Company) during this same period. With minimal interruption of the Company's
planned data - acquisition schedules, both crews were profitable in the third
quarter of 1996.
The outlook for domestic 3-D data acquisition services remains positive at
this time due to the capability of this technology to provide higher quality
data at a lower cost, the increased acceptance of 3-D seismic techniques as
a viable risk management tool and the increased success rates using 3-D
surveys for exploration and development activities. The improved cost
effectiveness gained from the data acquisition and processing of 3-D surveys
has resulted in increased profits for the U.S. operations of major and
independent oil and gas companies. With these cost advantages and the
uncertainty of foreign operations, many of the major U.S. energy companies
are increasing participation in the domestic oil and gas industry. The
Company currently has a backlog that extends into the 1996 fourth quarter and
includes programs in the Gulf Coast and Mid-Continent regions and on the West
Coast. The backlog includes small and large surveys for major and
independent oil and gas companies.
In July of 1996, TGC purchased a 24-Bit Opseis Eagle recording system with
1,500 channels and also acquired support equipment (cables and geophones) for
this system. The equipment was delivered in late July and began producing
revenues in early August. This equipment replaced TGC's Sercel 368/348
system. The purchase of these assets will improve recording capacity and
marketability of TGC's seismic services, enabling the Company to take
advantage of the current favorable environment for domestic exploration. TGC
used $2,000,000 in proceeds from the July 1996 private placement of Series C
8% Convertible Exchangeable Preferred Stock ("Preferred Stock"), together
with outside financing, to purchase this system and support equipment. As a
result of the expanded recording capabilities and current backlog for the
Company, management anticipates a continuation of improved revenues and
profit margins for the remainder of 1996. However, a degree of risk is
inherent in the Company's operations, due to possible downtime from adverse
weather conditions and the nature of the Company's turnkey contracts which
are subject to the risk of delay or cancellation. With the unpredictable
nature of forecasting weather and the potential for contract delay or
cancellation, no assurance can be given that management's expectations can be
achieved.
DISCONTINUED OPERATIONS
Effective July 31, 1996, the Company spun-off its wholly-owned subsidiary,
Chase Packaging Corporation, formerly New Chase Corporation, to the holders
of TGC Common Stock and Preferred Stock. Prior to the spin-off, through
various corporate transactions, TGC liquidated Chase Packaging Corporation
("Old Chase") with TGC receiving all of Old Chase's properties and
liabilities in cancellation of Old Chase stock held by TGC. TGC then formed
a new subsidiary, New Chase Corporation, a Texas corporation, the name of
which TGC subsequently changed to Chase Packaging Corporation ("Chase"), and
transferred to Chase all of the properties and liabilities of Old Chase,
except TGC retained the Portland, Oregon facility of Old Chase, which TGC
intends to sell. TGC anticipates that the sale proceeds from the Portland,
Oregon facility will be contributed to Chase to be applied against the
mortgage indebtedness currently encumbering such facility. Effective July
31, 1996, TGC spun-off Chase to the holders of TGC's Common Stock, and, on an
as-if-converted basis, to the holders of TGC's Preferred Stock sold in the
private placement previously discussed. TGC obtained the approval of the
primary lenders to Chase of the spin-off transaction. The record date was
July 15, 1996 ("Record Date"); however, the TGC Common Stock has traded with
"due bills" since the Record Date and will continue to do so until the
distribution of Chase Common Stock, which date (the "Distribution Date") will
be the first business day following the effectiveness of the Form 10-SB
Registration Statement which Chase filed with the Securities and Exchange
Commission on October 24, 1996. Such effective date is currently expected to
take place in November, 1996. The holders of 6,188,018 shares of TGC Common
Stock outstanding and 1,150,350 shares of Preferred Stock outstanding will
receive the spin-off distribution of Chase Common Stock. An additional
539,837 shares of Chase Common Stock will be held in escrow and distributed
upon the exercise, if any, of outstanding warrants and options of TGC. On
the Distribution Date, the holders of TGC's Common Stock will receive one-
half share of Chase Common Stock for each share of TGC Common Stock held, and
the holders of TGC's Preferred Stock will receive common stock of Chase on
the basis of one-half share of Chase for each share of TGC Common Stock as if
the Preferred Stockholder converted. The $5.00 per share Preferred Stock is
initially convertible at $.75 per share of TGC Common Stock through July 1,
1998. With the spin-off, the Company anticipates that Chase's Common Stock
will trade over-the-counter and will be quoted on the OTC Bulletin Board.
However, no assurance can be given that a market in Chase common stock will
develop. As a result of the spin-off, the operations of Chase Packaging have
been accounted for as a discontinued operation in the accompanying
consolidated financial statements. Loss from discontinued operations for the
seven month period ended July 31, 1996 was $1,402,706.
The business plan includes the sale by TGC of the facility located in
Portland, Oregon. TGC anticipates that the proceeds from this sale will be
contributed to Chase to be applied against Chase's outstanding debt with
Union Camp. In addition, Chase management plans to sell Chase's woven
polypropylene extrusion and weaving equipment with proceeds to be utilized
for debt reduction and for working capital purposes at Chase. Chase will
continue to operate as a producer of paper mesh fabric and as a converter and
distributor of agricultural bags and other specialty packaging.
FINANCIAL CONDITION
GEOPHYSICAL OPERATION (CONTINUING OPERATIONS)
Cash of $1,726,921 was provided by continuing operations for the first nine
months of 1996 compared to cash provided by continuing operations of $895,453
for the first nine months of 1995. The funds generated in the first nine
months of 1996 were primarily attributable to net earnings before non-cash
depreciation charges for the Company's geophysical operation and to funds
received from advance billings on geophysical contracts. Cash used in
investing activities for the first nine months of 1996 was primarily for
additions to machinery and equipment for geophysical field operations. Cash
provided by financing activities were from the net proceeds of the private
placement of $5,020,705, proceeds from issuance of debt of $125,813, and
offset by principal payments of debt obligation of $115,563 and a capital
contribution to Chase Packaging of $2,716,403.
Working capital decreased $114,533 to $(243,216) from the December 31, 1995
balance of $(128,683) primarily as a result of the debt incurred in the
recent purchase of the Eagle system. The Company's current ratio was .9 to
1 at September 30, 1996 and December 31, 1995, respectively. Stockholders'
equity increased to $3,290,779 at September 30, 1996 from the December 31,
1995 of $1,643,127 due primarily to proceeds from the private placement and
net income from continuing operations for the period.
In July of 1996, TGC closed the private placement of 8% Convertible
Exchangeable Preferred Stock. TGC's geophysical operation received
approximately $2,000,000 from the private placement and utilized the
proceeds, together with outside financing and internally generated funds, to
purchase a state-of-the-art geophysical recording system. The Company placed
this system into service in early August 1996. The expanded recording
capabilities provided by this system should increase revenue and profit
margins thereby improving the Company's operating cash flow for the remainder
of 1996. However, due to the potential for downtime from contract delays or
cancellations and the uncertainty of weather conditions, no assurance can be
given that the Company's liquidity will improve to levels anticipated by
management.
DISCONTINUED OPERATIONS
As previously discussed, the operations of Chase Packaging have been
accounted for as a discontinued operation in the accompanying consolidated
statements due to the July 31, 1996 spin-off of Chase to TGC shareholders.
As part of the Company's reorganization plan, TGC made a capital contribution
of $2,716,403 to Chase.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
a. In July of 1996, TGC Industries, Inc. ("TGC") closed the private
placement of 1,150,350 shares of Series C 8% Convertible
Exchangeable Preferred Stock (the "Preferred Stock"). The gross
proceeds received from the private placement were $5,751,750, which
included the exchange by certain holders of subordinated notes of
TGC totalling $365,813 for Preferred Stock. From the proceeds, the
Company made a capital contribution to Chase Packaging Corporation
("Chase") of $2,716,403. (See "Note E - Reorganization Plan to the
Financial Statements" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained herein.)
b. Effective July 31, 1996, TGC spun off Chase to the holders of TGC's
Common Stock and, on an as-if converted basis, to the holders of
TGC's Preferred Stock. The record date was July 15, 1996 ("Record
Date"); however, the TGC Common Stock has traded with "due bills"
since the record date and will continue to do so until the
distribution of Chase Common Stock, which date will be the first
business day following the effectiveness of the Form 10-SB
Registration Statement which Chase filed with the Securities and
Exchange Commission on October 24, 1996. The holders of 6,188,018
shares of TGC Common Stock and 1,150,350 shares of TGC Preferred
Stock will receive the spin-off distribution of Chase common stock,
and an additional 539,837 shares of Chase common stock will be held
in escrow and distributed upon the exercise, if any, of outstanding
warrants and options of TGC. (See "Note E - Reorganization Plan to
the Financial Statements" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" contained
herein.)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits - none.
b. Reports -
1. A report under Item 5 of Form 8-K was filed on July 15, 1996
to report the completion of the initial closing of the
Company's private placement of preferred stock. Such report
contains pro forma financial statements of the Company
reflecting the private placement and a spin-off of the
Company's Chase Packaging Corporation's subsidiary at May 31,
1996; and
2. A report under Item 2 of Form 8-K was filed on August 15, 1996
to report the effective date of the spin-off by the Company of
its Chase Packaging Corporation subsidiary. Such report
contains pro forma financial statements of the Company
reflecting the private placement and a spin-off transaction at
June 30, 1996.
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 13, 1996
/s/ Robert J. Campbell
Robert J. Campbell
Vice Chairman of the Board
(Principal Executive Officer)
Date: November 13, 1996
/s/ Kenneth W. Uselton
Kenneth W. Uselton
Treasurer (Principal Financial
and Accounting Officer)
H:\DOCS3\T9140\001\57958.1
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 818,655
<SECURITIES> 0
<RECEIVABLES> 793,321
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,064,935
<PP&E> 8,418,661
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<BONDS> 1,829,000
<COMMON> 625,415
0
1,150,350
<OTHER-SE> 0
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<NET-INCOME> (1,023,045)
<EPS-PRIMARY> (.15)
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</TABLE>
