SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
For Quarterly Period Ended Commission File Number
March 31, 1998 1-10648
BPI PACKAGING TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2997486
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
455 Somerset Avenue, North Dighton, Massachusetts 02764
(Address of principal executive offices) (Zip Code)
(508) 824-8636
(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:
Title of Class
Common Stock, $.01 par value
Series A Convertible Preferred Stock, $.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 Exhange 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 60 days. Yes X No___.
The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based upon the average of the bid and ask prices of the
Common Stock and Series A Convertible Preferred Stock as reported by NASDAQ/NMS
on May 11, 1998 was approximately $ 19,749,396 for the Common Stock and $213,583
for the Series A Convertible Preferred Stock. As of May 11, 1998, 21,025,396
shares of Common Stock, $.01 par value per share, were outstanding and 213,583
shares of Series A Convertible Preferred Stock, $.01 par value per share, were
outstanding.
<PAGE>
BPI PACKAGING TECHNOLOGIES, INC.
INDEX
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ -------
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of March 31, 1998
and May 30, 1997........................................... 2-3
Consolidated Statements of Operations for the three month
periods ended March 31, 1998 and May 30, 1997.............. 4
Consolidated Statements of Cash Flows for the three month
periods ended March 31, 1998 and May 30, 1997............. 5
Notes to Consolidated Financial Statements ..................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................... 14
Item 2. Changes in Securities........................................... 14
Item 3. Default Upon Senior Securities.................................. 14
Item 4. Submission of Matters to a Vote of Security Holders............. 14
Item 5. Other Information............................................... 14
Item 6. Exhibits and Reports on Form 8-K................................ 14
SIGNATURES............................................................... 15
<PAGE>
<TABLE>
<CAPTION>
Part I. Financial Information
Item I. Financial Statements
BPI Packaging Technologies, Inc.
Consolidated Balance Sheet
Assets
March 31, December 31,
1998 1997
------------ ------------
(unaudited)
<S> <C> <C>
Current assets
Cash $ 151,487 $ 125,220
Accounts receivable, net 763,585 721,239
Inventories, net 580,294 1,057,866
Prepaid expenses and other current assets, net 49,515 52,948
----------- -----------
Total current assets 1,544,881 1,957,273
----------- -----------
Property and equipment, net 17,191,683 17,828,860
----------- -----------
Deposits - leases and equipment purchases 141,284 141,284
Loans to officers, net 5,573 5,416
Other assets 949,271 1,037,907
----------- -----------
1,096,128 1,184,607
----------- -----------
$19,832,692 $20,970,740
=========== ===========
The accompanying notes are an integral part
of these consolidated financial statements.
2
<PAGE>
<CAPTION>
BPI Packaging Technologies, Inc.
Consolidated Balance Sheet
Liabilities and Stockholders' Equity
March 31, December 31,
1998 1997
------------ ------------
(unaudited)
<S> <C> <C>
Current liabilities
Note payable $ 340,662 $ 1,162,349
Trade note payable 584,433 584,433
Capital lease obligations due within one year 4,426,205 4,426,205
Accounts payable 6,760,793 6,714,870
Accrued expenses 2,950,757 2,967,348
------------ ------------
Total current liabilities 15,062,850 15,855,205
------------ ------------
Capital lease obligations-long-term portion -- --
------------ ------------
Stockholders' Equity
Series B convertible preferred stock, $.01 par value 1,466,954 1,466,954
Series A convertible preferred stock, $.01 par value 1,126,932 1,126,932
Common stock, $.01 par value; shares authorized -
60,000,000; shares issued and outstanding - 20,480,163 at
March 31, 1998 and 19,513,496 at December 31, 1997 204,802 195,135
Capital in excess of par value 43,944,036 43,076,603
Accumulated deficit (41,972,882) (40,750,089)
------------ ------------
4,769,842 5,115,535
------------ ------------
Commitments and contingencies
$ 19,832,692 $ 20,970,740
============ ============
The accompanying notes are an integral part
of these consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
BPI Packaging Technologies, Inc.
Consolidated Statement of Operations
------Three Month Period Ended-------
March 31, May 30,
1998 1997
------------ -------------
(unaudited)
<S> <C> <C>
Net sales $ 2,232,897 $ 7,012,144
Cost of goods sold 2,233,039 6,905,395
------------ ------------
Gross profit (loss) (142) 106,749
Operating expenses:
Selling, general and administrative 1,095,071 1,622,506
------------ ------------
(Loss) income from operations (1,095,213) (1,515,757)
Other (expense) income:
Interest expense (144,935) (299,530)
Interest income 17,355 12,190
------------ ------------
Net loss ($ 1,222,793) ($ 1,803,097)
============ ============
Basic and diluted net loss per share ($ 0.06) ($ 0.13)
Shares used in computing basic and diluted
net loss per share 19,839,052 14,077,937
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
BPI Packaging Technologies, Inc.
Consolidated Statement of Cash Flows
----Three Month Period Ended----
March 31, May 30,
1998 1997
------------ -----------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss ($1,222,793) ($1,803,097)
----------- -----------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 637,177 692,956
Inventory reserve (215,000) --
Warrants granted for lease extension 120,200 --
Changes in assets and liabilities:
Increase in accounts receivable - trade (42,346) (669,248)
Decrease in inventories 692,572 1,952,755
Decrease in prepaid expenses and other current assets 3,433 82,722
Decrease in other assets, net 88,636 36,785
Increase in accounts payable 45,923 632,999
Decrease in other accrued expenses (16,591) (71,622)
----------- -----------
Total adjustments 1,314,004 2,657,347
----------- -----------
Net cash provided by operating activities 91,211 854,250
----------- -----------
Cash flows from investing activities:
Additions to property and equipment -- (64,139)
Increase in advances to officers (157) (30,851)
Increase in deposits, net -- (21,494)
----------- -----------
Net cash used in investing activities (157) (116,484)
----------- -----------
Cash flows from financing activities:
Net payments under note payable - bank (821,687) (157,098)
Principal payments on capital lease obligations -- (618,593)
Net proceeds from sales and issuances of stock
and exercise of warrants 756,900 --
----------- -----------
Net cash used in financing activities (64,787) (775,691)
----------- -----------
Net (decrease) increase in cash 26,267 (37,925)
Cash at beginning of period 125,220 58,134
----------- -----------
Cash at end of period $ 151,487 $ 20,209
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
5
<PAGE>
BPI Packaging Technologies, Inc.
Notes to Consolidated Financial Statements
Note 1: Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
consolidated financial statements.
In the opinion of management, all adjustments (consisting solely of
normal recurring adjustments) considered necessary for a fair statement of the
interim financial data have been included. Results from operations for the three
month period ended March 31, 1998 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1998.
For further information, refer to the consolidated financial statements
and the footnotes included in the annual report on Form 10-K for BPI Packaging
Technologies, Inc. (the "Company") for the year ended December 31, 1997.
Note 2. Going Concern and Management's Plan
As shown in the accompanying consolidated financial statements, the
Company has suffered recurring net losses, and has working capital deficiencies.
Additionally, significant trade credit balances are past due and operating and
capital lease obligations are in default at the balance sheet date. Further, as
discussed in Note 6, the Company's revolving credit facility is scheduled to
terminate on June 30, 1998.
The Company's ability to continue as a going concern is dependent on
its ability to successfully implement its business and financial plans as
discussed below. However, there can be no assurances the Company will be able to
successfully complete these plans. The financial statements do not include any
adjustments related to the recoverability and the classification of recorded
assets and liabilities that might be necessary should the Company be unable to
continue as a going concern.
The Company exited the production of its traditional T-shirt bag
product lines during the 10 month period ended December 31, 1997. Increased
competition from large domestic and overseas competitors with significant
production economies of scale caused the Company to incur substantial losses on
these products during the past several years. The Company has shifted its
resources to the production of proprietary bag and plastic film product lines
which have the potential to have higher profit margins. In February 1998, one of
the five largest supermarket chains in the United States decided to use the
Fresh-Sac (R) Produce Profit Builder (TM) marketing program after successful
in-store testing and presently there are 17 other supermarket chains in various
stages of in-store testing. On March 31, 1998, the Company entered into a
Five-year Purchase Agreement to sell exclusively to an international company
thin, clear plastic film for tissue overwrap in North America and in certain
foreign countries. Additionally, the Company is negotiating a new revolving line
of credit and term loan to buy out the capital leases. In the first quarter of
1998, the Company received net proceeds from the sale of Common Stock of
$756,900. The Company plans to continue raising additional equity in 1998.
6
<PAGE>
Note 3: Basic and Diluted Net Loss Per Share
The Company is required to present "basic" and "diluted" earnings per
share. Basic earnings per share is computed by dividing the income available to
common stockholders by the weighted average number of common shares outstanding
for the period. For the purposes of calculating diluted earnings per share, the
denominator includes both the weighted average number of common shares
outstanding and potential dilutive common shares outstanding for the period.
For each of the periods presented the Company has recorded a net loss.
Therefore, basic and diluted earnings per share are the same due to the
antidilutive effect of potential common shares outstanding. Antidilutive
potential common shares excluded from the computation include common shares
issuable upon the exercise of stock options, common shares issuable upon the
conversion of redeemable convertible preferred stock or upon the exercise of
warrants.
Note 4: Accounts Receivable-Trade
Accounts receivable-trade consists of the following:
March 31, December 31,
1998 1997
------------- ------------
Accounts receivable-trade $ 1,053,090 $ 1,071,239
Allowance for doubtful accounts (214,505) (275,000)
Allowance for credits (75,000) (75,000)
----------- -----------
$ 763,585 $ 721,239
=========== ===========
Note 5: Inventories
Inventories, net of valuation reserves, consist of the following:
March 31, December 31,
1998 1997
----------- ------------
Raw materials $ 250,131 $ 285,058
Finished goods 405,163 1,062,808
Reserves (75,000) (290,000)
----------- -----------
$ 580,294 $ 1,057,866
=========== ===========
Note 6: Loans
As of December 31, 1997, the Company had an $8,000,000 revolving line
of credit secured by accounts receivable and inventory. Borrowings under the
line of credit are subject to 80% of qualifying accounts receivable and 35% of
qualifying inventories, less the aggregate amount utilized under all commercial
and standby letters of credit and bank acceptances, bearing interest at 5.0%
above the variable interest rate quoted by Norwest Bank of Minnesota with a
minimum rate of 8.0% (15.5% at March 31, 1998), and provides for a 1/2 of 1%
unused line fee. At March 31, 1998, the balance under the line of credit was
$340,662. The line of credit includes certain financial covenants that the
Company must maintain to avoid a default, including current ratio, debt to
equity ratio, maintaining a net worth of $14 million, limitation on capital
spending, and profitability. As of and during the three month period ended March
31, 1998, the Company failed to meet several of the financial covenants.
Subsequent to March 31, 1998, the lender informed the
7
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Company that it wanted repayment of the revolving line of credit and the Company
has agreed to repayment by June 30, 1998.
Note 7: Consolidated Statement of Changes in Stockholders' Equity for the
three month period ended March 31, 1998
<TABLE>
<CAPTION>
BPI Packaging Technologies, Inc.
Consolidated Statement of Changes in Stockholders' Equity
For the three month period ended March 31, 1998
Series A Convertible Series B Convertible
Common Stock Preferred Stock Preferred Stock Capital in
------------------------------------------------------------------ Excess of Accumulated
Shares Amount Shares Amount Shares Amount Par Value Deficit Total
---------- ---------- -------- --------- -------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1997 19,513,496 $195,135 325,483 $1,126,932 146,695 $1,466,954 $43,076,603 ($40,750,089) $5,115,535
Sale of common stock
pursuant to Regulation S
and Regulation D private
placement offerings, net
of issuance costs 966,667 9,667 747,233 756,900
Warrants granted for
lease extension 120,200 120,200
Net loss for the quarter
ended March 31, 1998 (1,222,793) (1,222,793)
=========== ======== ======= ========== ======= ========== =========== ============ ==========
Balance at March 31, 1998 20,480,163 $204,802 325,483 $1,126,932 146,695 $1,466,954 $43,944,036 ($41,972,882) $4,769,842
=========== ======== ======= ========== ======= ========== =========== ============ ==========
</TABLE>
Note 8. Related Party Transactions
In March, 1998 the Company received a notice from the Massachusetts
Department of Revenue requiring the Company to garnish the wages of the Chairman
of the Company. The amount subject to the levy totaled approximately $200,000.
For the period through May 16, 1998, the Company did not comply with the terms
of the levy. Subsequently, the Company paid, on behalf of the Chairman,
approximately $36,000 of the levy and established an interest bearing note due
on or before June 30, 1998. The Chairman and the Company have agreed that all
wages, salaries, bonuses and other compensation that may be earned by the
Chairman shall be forwarded to the Massachusetts Department of Revenue in
accordance with the terms of the levy, until such time that the Company is
advised that compliance with the levy is no longer required.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements or Information
This Form 10-Q includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements in this Form 10-Q which address
activities, events and developments that the Company expects or anticipates will
or may occur in the future, including such things as future capital expenditures
(including the amount and nature thereof), expansion and other development
trends of industry segments in which the Company is active, business strategy,
expansion and growth of the Company's business and operations and other such
matters are forward-looking statements. Although the Company believes the
expectations expressed in such forward-looking statements are based on
reasonable assumptions within the bounds of its knowledge of its business, a
number of factors could cause actual results to differ materially from those
expressed in any forward-looking statements, whether oral or written, made by or
on behalf of the Company. Many of these factors have previously been identified
in filings of statements made by or on behalf of the Company.
All phases of the Company's operations are subject to influences
outside its control. Any one, or a combination, of these factors could
materially affect the results of the Company's operations. These factors
include: sales, competition, inflation, raw material price increases, rate of
market penetration for products, new product development and market acceptance,
litigation, interest rate fluctuations, availability of equity financing,
availability of capital and operating lease financing, availability of bank or
other financial institution lines of credit and other capital market conditions.
Forward-looking statements made by or on behalf of the Company are based on a
knowledge of its business and the environment in which it operates, but because
of the factors listed above, actual results may differ from those in the
forward-looking statements. Consequently, all of the forward-looking statements
made are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequences to or effects on the Company or its business or operations.
Results of Operations
First Quarter of 1998 Compared to First Quarter of the 10 month perood ended
December 31, 1997
On December 2, 1997, the Board of Directors of the Company adopted a
change of fiscal year, effective immediately, from a 52-53 week fiscal year
ending on the Friday closest to February 28 to a calendar year ending on
December 31. The Company's last fiscal year ended February 28, 1997. As a result
of the change, the Company filed a transition report on Form 10-K for the 10
month period ended December 31, 1997.
For the first quarter ended March 31, 1998, the Company had sales of
$2,232,897 compared to sales of $7,012,144 for the first quarter ended May 30,
1997.
9
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During the 10 month period ended December 31, 1997, the Company exited
the traditional plastic carry-out bag market. The exit occurred before the
Company's proprietary high performance tissue overwrap film and Fresh-Sac (TM)
Produce Profit Builder (TM), two major growth products for 1998 and beyond, were
ready to make the transition from marketing to sales. Sales are expected to
increase for these products in 1998.
Sales of the Company's proprietary bag products FRESH-SAC (TM) T-shirt
sack produce bag, HANDI-SAC (TM) and film products were $1,989,170 in the first
quarter of 1998 compared to sales of $3,374,754 in the first quarter of the 10
month period ended December 31, 1997, a decrease of 41%. The decrease in sales
was caused by exiting the Maxi-Sac market which had sales in the first quarter
of the 10 month period ended December 31, 1997 of $498,000 and a decrease in
film sales of $834,000 caused by exiting certain film markets. Sales of
traditional plastic carry-out bags decreased as planned and were $243,727 in the
first quarter of 1998 compared to sales of $2,985,459 in the first quarter of
the 10 month period ended December 31, 1997. Sales of traditional products will
remain at nominal levels. RC America, Inc. had no sales in the first quarter of
1998 compared to $651,931 in the first quarter of the 10 month period ended
December 31, 1997. RC America, Inc.'s sales may fluctuate significantly from
year to year due to the nature of its business and the timing of transactions.
However, for the first quarter of 1998, the Company did not have working capital
to fund its operations. As planned, Market Media, Inc. had no sales in both
periods.
In the first quarter of 1998, cost of goods sold was $2,233,039 or 100%
of sales compared to cost of goods sold in the first quarter of the 10 month
period ended December 31, 1997 of $6,905,395 or 98.5% of sales. The increase in
cost of goods sold as a percentage of sales is due primarily to the Comany's
inability to absorb fixed costs during periods of lower sales volume.
Selling, general and administrative expense for the first quarter of
1998 was $1,095,071 or 49% of sales compared to selling, general and
administrative expense of $1,622,506 or 51.9% of sales in the first quarter of
the 10 month period ended December 31, 1997.
For the first quarter of 1998, interest expense was $144,935 compared
to $299,530 for the first quarter of the 10 month period ended December 31,
1997.
The net loss was ($1,222,793) in the first quarter of 1998 compared to
a net loss of ($1,803,097) in the first quarter of the 10 month period ended
December 31, 1997. The noncash expense of depreciation and amortization was
$637,177 in the first quarter of 1998 compared to $692,956 for the first quarter
of the 10 month period ended December 31, 1997.
The Company incurred a loss of ($.06) per share in the first quarter of
1998 compared to a loss of ($.13) per share in the first quarter of the 10 month
period ended December 31, 1997.
10
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Operating profits (loss) for the various business units are as follows:
<TABLE>
<CAPTION>
First Quarter
First Quarter Ten Month Period
1998 Ended December 31, 1997
------------------ -----------------------
<S> <C> <C>
Proprietary, traditional and film products $ (605,480) $(1,053,971)
RC America, Inc. (65,593) 23,226
Market Media, Inc. (72,089) (142,647)
Unallocated corporate overhead (352,051) (342,365)
----------- -----------
Operating profit (loss) $(1,095,213) $(1,515,757)
Interest expense, net (127,580) (287,340)
----------- -----------
Net loss $(1,222,793) $(1,803,097)
=========== ===========
</TABLE>
Liquidity and Capital Resources
Since its initial public offering in October 1990, the Company has
generated funds to finance its activities through both public sales and private
placements of its securities, as well as bank loans, equipment lease financing
and cash from operations.
Sales of Securities
The Company received net proceeds from the sale of Common Stock from
January 1, 1998 to April 30, 1998 of $1,066,200. Management intends to further
increase its liquidity in the remaining quarters of 1998 through debt or equity
financing with long-term institutional investors subject to financial market
conditions. However, the Company has no commitments for such financing, and no
assurance can be given that additional financing will be successfully completed
or that such financing will be available on terms favorable to the Company, if
at all.
Equipment and Lease Financing
From March 1994 through August 1997, the Company acquired through
purchase or lease approximately $19.7 million in additional equipment to
increase manufacturing capacity and efficiency and to expand the Company's
product lines. The equipment was financed from the sale of equity securities,
equipment lease financing and bank loans.
The Company currently has outstanding commitments to purchase an
additional $275,000 in machinery and equipment.
As of December 31, 1997, the Company was in default on all of its
capital and operating leases. In March and April 1998, the Company entered into
settlement agreements with three lessors to remedy the defaults. The agreements
are as follows:
For one lessor, with which the Company has both capital and operating
leases, a payment of $517,000 was due upon execution of the settlement agreement
in April 1998 and interest only payments were scheduled from March to June 1998.
The $517,000 payment represented four months of past due payments plus interest
11
<PAGE>
and late fees. Commencing in July 1998, the Company's monthly payment schedule
under the leases would revert to the amounts identified in the original leases.
In consideration for the lease extension, the Company granted the lessor 200,000
warrants at an exercise price of $1.25 and a three year term. In addition, the
terms of the agreement require the Company to make three additional monthly
payments.
The second settlement agreement resulted in a reduction of the monthly
payments from $42,000 to $21,000 and an increase in the number of future monthly
payments. In consideration for the lease extension, a fee of $60,000 was built
into the remaining payments.
The third settlement agreement requires a payment of $296,000 on or
before June 1, 1998. The payment represents past due amounts as well as interest
and late fees. Commencing in July 1998, the Company's monthly payment schedule
under the leases would revert to the amounts identified in the original leases.
In consideration for the lease extension, the Company granted the lessor 200,000
warrants at an exercise price of $1.25 and a three year term.
As of May 21, 1998, the Company had not made the required payments
under the terms of the three settlement agreements. Management plans to make
these payments from the funds expected to be provided by the sale of Common
Stock and the exercise of warrants and short term options in the second quarter
of 1998.
All capital leases, operating leases and real estate leases were in
default as of May 21, 1998. Management believes that all settlement agreements
will be funded and all other leases will be restructured without any further
litigation subject to receiving the funds from the expected sale of Common Stock
and the exercise of warrants and short term options in the second quarter of
1998. However, any litigation with lessors could have a materially adverse
effect on the Company.
Cash Flow
In the first quarter of 1998, the Company had noncash charges of
$637,177 relating to depreciation and amortization and $756,900 from the sale of
Common Stock. The Company also raised $29,332 from an increase in accounts
payable and accrued expenses, and $692,572 from a decrease in inventory. The
Company used $821,687 for payments on its revolving line of credit, $215,000
from a reduction in inventory reserve and $1,222,793 to finance the net loss. At
March 31, 1998, stockholders' equity was $4,769,842 as compared to $5,115,535 at
December 31, 1997. The Company's current ratio was 0.10:1 at March 31, 1998
compared to 0.12:1 at December 31, 1997. The net book value of property and
equipment was $17,191,683 at March 31, 1998 compared to $17,828,860 at December
31, 1997.
To date, the Company has generated cash flows from operations including
depreciation, financing activities, including sales of equity securities, lines
of credit, term loan facilities, equipment leasing arrangements and loans from
raw material suppliers. In management's opinion, the Company will have
sufficient capital to finance the Company's operations for the next twelve
months subject to the following: the Company obtains a new revolving line of
credit, receives the expected proceeds of $3.0 to $4.0 million from the sale of
Common Stock, the exercise of warrants and short term options in the second
quarter of 1998 and the anticipated cash from operations. However, the Company
may require additional debt or equity financing. The Company has no commitments
for financing, and no assurance can be given that additional financing will be
12
<PAGE>
successfully completed or that such financing will be available or, if
available, will be on terms favorable to the Company.
Impact of Inflation
Inflation during the first quarter of 1998 did not have any impact on
operating results. nor did it have any impact on operating results in the past
three fiscal periods.
Year 2000
The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures. Software failures due to
processing errors potentially arising from calculations are a known risk. The
Company has not addressed this risk as to the availability and integrity of
financial systems and the reliability of operational systems. The cost of
achieving Year 2000 conversion has not been determined as of the date of this
filing.
13
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in pending commercial legal proceedings with
equipment lessors and trade suppliers because of lease defaults and overdue
trade accounts. Management believes these legal proceedings will be settled by
negotiation; however, the failure to settle these proceedings by negotiation
could have material adverse effects on the Company's business.
Item 2. Changes in securities. None
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K. None
14
<PAGE>
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.
BPI PACKAGING TECHNOLOGIES, INC.
Date: May 29, 1998
By: /s/ Dennis N. Caulfield
Dennis N. Caulfield, Chairman, Chief Executive
Officer and Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 151,487
<SECURITIES> 0
<RECEIVABLES> 1,053,090
<ALLOWANCES> 289,505
<INVENTORY> 580,294
<CURRENT-ASSETS> 1,544,881
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,832,692
<CURRENT-LIABILITIES> 15,062,850
<BONDS> 0
0
2,593,886
<COMMON> 204,802
<OTHER-SE> 43,944,036
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