-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RixSoC8CcOUg6hPaLgtcG6n/NLLwNt2CQT74Sp8gSyAGT1WSyOUBFvdCOKOEIDFS 5HJiVLJnpdII0iYGKnknRw== 0000929966-97-000027.txt : 19970912 0000929966-97-000027.hdr.sgml : 19970912 ACCESSION NUMBER: 0000929966-97-000027 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970903 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHASE PACKAGING CORP CENTRAL INDEX KEY: 0001025771 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE SERVICES [0700] IRS NUMBER: 931216127 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-21609 FILM NUMBER: 97674946 BUSINESS ADDRESS: STREET 1: 2550 NW NICOLAI STREET CITY: PORTLAND STATE: OR ZIP: 97210 BUSINESS PHONE: 5032284366 MAIL ADDRESS: STREET 1: 2550 NW NICOLAI STREET CITY: PORTLAND STATE: OR ZIP: 97210 10QSB 1 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 JUNE 30, 1997. [ ] 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 0-21609 CHASE PACKAGING CORPORATION (Exact name of small business issuer as specified in its charter) Texas 93-1216127 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2550 NW Nicolai Street Portland, Oregon 97210 (Address of principal executive (Zip Code) offices) Issuer's telephone number, including area code: 503/228-4366 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 July 31, 1997 Common Stock ($.10 Par Value) 7,002,964 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Incorporated herein is the following unaudited financial information: Statement of Net Assets in Liquidation as of June 30, 1997. Statement of Operations for the three and six month periods ended June 30, 1997 and 1996. Statements of Cash Flows for the six month periods ended June 30, 1997 and 1996. Statements of Changes in Net Assets in Liquidation for June 30, 1997. Notes to Consolidated Financial Statements. CHASE PACKAGING CORPORATION STATEMENT OF NET ASSETS IN LIQUIDATION (Unaudited) June 30, 1997 ASSETS Cash and cash equivalents $ 10,975 Accounts receivable, net of allowance for doubtful accounts of $97,853 830,511 Inventories, net of write-down of $870,995 1,004,924 Prepaid expenses 25,679 ASSETS HELD FOR SALE 767,400 OTHER ASSETS 3,495 --------- $ 2,642,984 ========= See notes to financial statements.
CHASE PACKAGING CORPORATION STATEMENT OF NET ASSETS IN LIQUIDATION -- CONTINUED (Unaudited) June 30, 1997 LIABILITIES AND STOCKHOLDERS' EQUITY Trade accounts payable $ 1,042,148 Accrued liabilities 274,065 Advance billings 86,222 Line-of-credit 1,517,551 STOCKHOLDERS' EQUITY Deficit of assets in liquidation (277,002) ---------- $ 2,642,984 ========= See notes to financial statements.
CHASE PACKAGING CORPORATION (a wholly-owned subsidiary of TGC Industries, Inc. through July 31, 1996 - see Note A) STATEMENTS OF OPERATIONS (Unaudited) Three months ended Six months ended June 30, June 30, ------------------- ------------------- 1997 1996 1997 1996 SALES $1,638,161 $2,317,866 $3,805,516 $4,714,683 COSTS AND EXPENSES Cost of sales 1,811,689 2,265,762 3,988,917 4,656,976 Selling, general and administrative 336,726 447,101 702,300 957,237 Interest expense 45,324 205,990 114,165 418,650 --------- -------- --------- --------- 2,193,739 2,918,853 4,805,382 6,032,863 LOSS BEFORE EXTRAORDINARY ITEM AND INCOME TAXES ( 555,578) (600,987) ( 999,866) (1,318,180) Income tax expense -- -- -- -- Loss before extraordinary item ( 555,578) (600,987) ( 999,866) (1,318,180) Extraordinary item - gain from extinguishment of debt -- -- 173,893 -- --------- -------- --------- --------- NET LOSS $( 555,578) $(600,987) $( 825,973) $(1,318,180) Weighted average shares 7,002,964 6,960,714 7,002,964 6,960,714 outstanding LOSS PER COMMON SHARE Loss per share before extraordinary item $(.08) $(.09) $(.14) $(.19) Extraordinary item -- -- .02 -- --------- -------- --------- --------- LOSS PER SHARE $(.08) $(.09) $(.12) $(.19) See notes to financial statements.
CHASE PACKAGING CORPORATION (a wholly-owned subsidiary of TGC Industries, Inc. through July 31, 1996 - see Note A) STATEMENTS OF CASH FLOWS (Unaudited) Six-Months Ended June 30, 1997 1996 Increase (decrease) in cash Cash flows from operating activities Net Loss $ (825,973) (1,318,180) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Non-Cash Compensation -- 3,600 Depreciation and amortization 180,481 320,696 and equipment ( 42,988) 8,629 Gain from extinguishment of debt (173,893) -- Non-Cash Expenses 62,428 -- Change in assets and liabilities Accounts Receivable 499,413 24,380 Inventories 477,328 1,137,626 Prepaid Expenses 66,225 32,390 Accounts Payable (161,906) ( 206,430) Accrued Liabilities (147,930) 105,533 Advance Billings ( 28,109) ( 74,277) Net cash provided by (used in) operating activities ( 94,924) 33,967 Cash flows from investing activities Capital expenditures (113,360) ( 97,063) Proceeds from sale of property and equipment 886,250 9,000 Other assets 500 Net cash provided by (used in) investing activities 773,390 ( 88,063) Cash flows from financing activities Principal payments of debt obligations (350,000) ( 185,001) Net payments on line of credit (348,187) ( 720,160) Receivable from/payable to parent -- 935,607 Capital contributed 9,318 -- Net cash provided by (used in) financing activities (688,869) 30,446 NET DECREASE IN CASH ( 10,403) ( 23,650) Cash at beginning of period 21,378 25,123 Cash at end of period $ 10,975 $ 1,473 Supplemental cash flow information Cash paid during the year for Interest $ 94,156 $ 252,640
NON-CASH INVESTING AND FINANCING ACTIVITIES During the 1997 first quarter, Chase incurred rent expense of $55,427 for use of the manufacturing facility owned by TGC. TGC converted the rent receivable to equity in Chase. On March 18, 1997 TGC sold the Portland, Oregon facility occupied by Chase. Proceeds of $1,780,00 were applied against Chase's outstanding mortgage indebtedness to Union Camp. Proceeds of $284,500 were placed into escrow for future repairs and rental payments and recorded as a prepaid expense. Proceeds of $22,000 were utilized to repay Chase's rent on the Portland facility from the date of closing through April 30,1997 and proceeds of $133,129 were applied against property taxes on the Portland facility. See notes to financial statements. CHASE PACKAGING CORPORATION Statement of Changes in Net Assets in Liquidation (Unaudited) June 30, 1997 Sales -- Costs and Expenses Cost of sales -- Selling, general and administrative -- Write-down of assets in liquidation 1,962,533 --------- Interest Expense 1,962,533 ACCUMULATED LOSS ON ASSETS IN LIQUIDATION $(1,962,533) Net assets before write-down in liquidation (1,685,531) Deficit of assets in liquidation $( 277,002)
CHASE PACKAGING CORPORATION NOTES TO FINANCIAL STATEMENTS (UNAUDITED) June 30, 1997 NOTE A -- BASIS OF PRESENTATION On June 25, 1997 Chase Packaging Corporation ("Chase" or "the Company") announced to employees and creditors that Chase would begin an orderly liquidation of all Chase's assets beginning at the close of business on June 30, 1997. On July 25, 1997, the Company notified its creditors by mail that the Company would commence with an orderly liquidation of all its remaining assets outside of a formal bankruptcy or receivership proceeding in a manner intended to maximize asset values. The Company's Board of Directors determined that it is in the best interest of the Company and all of its creditors to liquidate in an orderly fashion. As a result of the plan of liquidation, the accompanying unaudited financial statements reflect a change in the basis of accounting used to determine the amounts at which assets and liabilities are carried from a going concern basis to a liquidation basis. The statement of net assets in liquidation, statements of operations, statements of cash flows and the statement of changes in net assets in liquidation 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 in conformity with generally accepted accounting principles. The statement of changes in net assets in liquidation contains only the write-down of assets as of the close of business on June 30, 1997. As previously disclosed, in May 1996 a formal plan was adopted to reorganize TGC Industries, Inc. (TGC) and Chase. Pursuant to the plan, the following actions were taken: 1. TGC liquidated Chase (Old Chase) with TGC receiving all of Old Chase's assets and liabilities in cancellation of the Old Chase stock held by TGC. TGC formed a new wholly-owned subsidiary, New Chase, and transferred to it all of the assets and liabilities received in the liquidation of Old Chase, except TGC retained the manufacturing facility located in Portland, Oregon and canceled Old Chase's net payable to TGC. 2. TGC contributed $2,716,403 as additional capital to New Chase. 3. Effective July 31, 1996, TGC spun-off New Chase by a dividend distribution to the stockholders of record of TGC common and preferred stock. At the same time, the name was changed from New Chase to Chase Packaging Corporation (Chase). The financial statements are presented on the basis that the principal operations of Old Chase continued with the formation of New Chase, therefore the statements of operations and cash flows for the three months and six months ended June 30, 1996 consist of three and six months operations of Old Chase as a wholly-owned subsidiary of TGC. NOTE B -- MANAGEMENT PRESENTATION In the opinion of management, all adjustments (consisting of write- downs to realizable value) considered necessary for a fair presentation of net assets in liquidation, statements of operations, statements of cash flows, and the related statement of changes in net assets in liquidation have been made. 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, 1996 filed on Form 10-KSB. NOTE C -- LOSS PER COMMON SHARE Loss per common share before and after extraordinary gain for the quarter and six months ended June 30, 1997 were calculated by dividing net loss for the period by the number of shares outstanding for the period. Loss per common share for the quarter and six months ended June 30, 1996 was based on the assumption that the 6,960,714 shares of common stock issued under the reorganization plan were issued at the beginning of the period. NOTE D -- EXTRAORDINARY ITEM - GAIN FROM EXTINGUISHMENT OF DEBT On March 18, 1997 TGC sold the Portland, Oregon facility for $2,430,000 with $1,780,000 of the proceeds applied against Chase's outstanding mortgage indebtedness to Union Camp with respect to such facility. The $1,780,000 payment to Union Camp, when combined with a principal payment of $350,000 made to Union Camp on January 7, 1997 from the sale proceeds of Chase's polypropylene weaving equipment, resulted in the Union Camp note being declared paid in full as of March 19, 1997. A gain from debt extinguishment of $173,893 was recognized in the 1997 first quarter as a result of these payments. The gain consisted of $4,383 in principal and $169,510 in interest carried on the Company's financial statements and forgiven by Union Camp. Due to the Company's net operating loss position there is no income tax applicable to the gain. NOTE E -- LOAN DEFAULTS As a result of the March 18, 1997 sale of the Portland facility by TGC and subsequent payment made to Union Camp, the Company cured its default condition under terms of the Union Camp Promissory Note as the Note was declared paid in full. The Company also cured its cross-default condition with the bank as a result of the payment to Union Camp. In addition, the Company resolved the violation of the tangible net worth covenant in the Accounts Financing Agreement with the bank due to the contribution made by TGC to the paid-in capital of Chase during the first quarter of 1997. NOTE F -- LIQUIDATION As part of the Company's plan of liquidation, effective July 21, 1997, Chase sold to Lockwood Packaging Corporation Idaho (Lockwood) the Company's operation at Idaho Falls, Idaho, as a going concern. The assets sold included substantially all of the Company's equipment, furniture, fixtures, and other assets located in the Company's Idaho Falls, Idaho facility for a total of $75,000.00. In addition, the Company sold inventory from the Idaho Falls operation to Lockwood for $255,000.00. The total proceeds of $330,000.00 were deposited with the Company's bank to pay down the Company's loan balance with the bank. Lockwood has entered into a lease with the Company for the Company's Idaho Falls facility. The Company intends to sell the Idaho Falls facility in the near future, and, upon such sale, it is intended that the new owner will lease the property to Lockwood and that the Company's lease with Lockwood will be terminated. On July 25, 1997, the Company notified its creditors by mail that the Company would commence with an orderly liquidation of all its remaining assets outside of a formal bankruptcy or receivership proceeding in a manner intended to maximize asset values. Inventory and equipment has been sold to other packaging concerns and an auction was held on August 14, 1997 to liquidate the remaining inventory, equipment and supplies at the Company's Portland, Oregon facility. The table below sets forth the assets of Chase on a going concern basis as of June 30, 1997 and the corresponding write-down to the estimated net realizable value at time of disposal: Going concern basis 6/30/97 Balance Liquidation Write-down Net Realizable Value ------------------- ---------------------- -------------------- Cash $ 10,975 -- $ 10,975 Accounts Receivable (net) 830,511 -- 830,511 Inventories 1,875,919 $ 870,995 1,004,924 Prepaid Expenses 292,068 266,389 25,679 Buildings (net book value) 332,319 80,209 325,000 Land 72,890 -- (included in above) Machinery & Equipment (n.b.v.) 1,181,654 739,254 442,400 Other Assets 9,181 5,686 3,495 TOTAL $4,605,517 $1,962,533 $2,642,984
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS Revenues were $1,638,161 for the three months ended June 30, 1997, compared to revenues of $2,317,866 for the same period of 1996. Net loss for the three months ended June 30, 1997 was $555,578 as compared to net loss of $600,987 for the three months ended June 30, 1996. Revenue for the first six months of 1997 was $3,805,516 as compared to revenue of $4,714,683 for the first six months of 1996. Net loss for the first half of 1997 was $825,973 as compared to net loss of $1,318,180 for the first half of 1996. The 29% reduction in revenues in the 1997 second quarter when compared to the second quarter of 1996 was the result of continued sluggish demand for the Company's woven polypropylene onion bags and consumer-size mesh potato bags, Competition from cheap import onion bags and low market prices for potatoes were the primary factors impacting the lower demand for Chase's products. Although costs throughout the operation were lower in 1997 than in 1996, the expense reductions could not offset rapidly declining revenues. The continuation in operating losses, when combined with the decision of the Company's secured lender not to renew the Company's operating line of credit, resulted in the decision of Chase's Board of Directors to liquidate the Company in an orderly fashion. Financial Condition Chase Packaging experienced cash losses for the past four years in spite of numerous infusions of working capital and an aggressive program of inventory and expense reduction. The Board of Directors therefore determined that an orderly liquidation of Chase was in the best interest of the Company and all of its creditors. Chase has retained the firm of Edward Hostmann, Inc. to assist the Company in such liquidation. As part of the liquidation program, effective July 21, 1997, Chase sold most of its assets in Idaho Falls, Idaho (excluding real estate) to Lockwood Packaging Corporation Idaho for $330,000. As discussed earlier, the Company intends to sell the Idaho Falls real estate (land and building) in the near future. During July and August of 1997 Chase sold most of its inventory in Portland to other packaging companies. The Company also sold its band label extruder for $125,000 with remaining inventory and machinery and equipment sold at the August 14 auction for gross proceeds of approximately $340,000. Closure of the Idaho Falls real estate sale and collection of outstanding auction proceeds and accounts receivable are the remaining items to be completed in the Company's liquidation program as of August 21. As a result of the orderly liquidation, the loan balance with the Company's secured lender has been paid down from a June 30, 1997 balance of $1,517,551 to $131,259 as of August 21, 1997. Although it is difficult to determine the final return to unsecured creditors from such liquidation, the Company estimates at the present time that general creditors will receive a distribution equal to ten to fifteen percent (10-15%) of each creditor's claim. PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION a. On June 23, 1997, Mr. William J. Barrett and Mr. Herbert M. Gardner resigned as directors of Chase Packaging Corporation. The resignations of Mr. Barrett and Mr. Gardner were not due to any disagreement with the Company on any matter relating to the Company's operations, policies or practices. 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. However, the following report on Form 8-K has been filed subsequent to June 30, 1997: (1) A report under Item 2 and Item 5 was filed on July 31, 1997. Such reporting under Item 2 was to disclose the sale of the Company's Idaho Falls operation as a going concern to Lockwood Packaging Corporation Idaho effective July 21, 1997. Such reporting under Item 5 was to disclose that the Company notified its creditors on July 25, 1997 that Chase was beginning an orderly liquidation of all of its remaining assets outside of a formal bankruptcy or receivership proceeding. 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. CHASE PACKAGING CORPORATION Date: August 28, 1997 /s/ Doug Kirkpatrick ______________________________ Doug Kirkpatrick, President and Treasurer (Principal Executive Officer and Principal Financial and Accounting Officer) H:\DOCS3\C5541\001\69297.1 EX-27 2
5 6-MOS DEC-31-1997 JUN-30-1997 10,975 0 928,364 97,853 1,004,924 1,872,089 0 0 2,642,984 2,919,986 0 700,296 0 0 (977,298) 2,642,984 3,805,516 3,805,516 3,988,917 3,988,917 2,652,833 12,000 114,165 (2,962,399) 0 (2,962,399) 0 173,893 0 (2,788,506) (.40) (.40) Includes write-down for assets to be liquidated.
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