-----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, Ge8aGleO4KNf3mZ7tQJ2gUGnx5LvMnPs936OtDLv4lhx2Ga7kiZqiC2ivPdtT8df lUz3q+U9S2cnPcaXuOeH5Q== 0001144204-02-000305.txt : 20020528 0001144204-02-000305.hdr.sgml : 20020527 20020528143323 ACCESSION NUMBER: 0001144204-02-000305 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 20020528 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: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-21609 FILM NUMBER: 02663393 BUSINESS ADDRESS: STREET 1: 26 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10004 MAIL ADDRESS: STREET 1: 2550 NW NICOLAI STREET CITY: PORTLAND STATE: OR ZIP: 97210 10QSB 1 doc1.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number: 0-21609 ------- CHASE PACKAGING CORPORATION (Exact name of registrant as specified in its charter) Texas 93-1216127 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation of organization) c/o Ann W. Green, 26 Broadway, 8th Floor, New York, NY 10004 ------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (212) 510-0686 -------------- (Issuer's telephone number, including area code) Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES___ NO _X_ --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at September 30, 1997 ------------------ ---------------------------------- Common Stock, par value $.10 per share 7,002,964 shares
- INDEX - PAGE(S) ------- PART I. Financial Information: ITEM 1. Financial Statements Statement of Net Assets in Liquidation as of September 30, 1997 3. Statements of Operations for the Three and Nine Month Periods Ended September 30, 1997 and 1996 4. Statements of Changes in Net Assets in Liquidation for September 30, 1997 5. Statements of Cash Flows for the Nine Month Periods Ended September 30, 1997 and 1996 6. Notes to Financial Statements. 8. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11. PART II. Other Information 12. SIGNATURES 13. EXHIBITS: Exhibit 27 - Financial Data Schedule
Page 2. PART I. FINANCIAL INFORMATION: ITEM I. FINANCIAL STATEMENTS: CHASE PACKAGING CORPORATION --------------------------- (A WHOLLY-OWNED SUBSIDIARY OF TGC INDUSTRIES, INC. THROUGH SEPTEMBER 30, 1996 - SEE NOTE 1) STATEMENT OF NET ASSETS IN LIQUIDATION ------------------------------------------- (UNAUDITED) - ASSETS -
SEPTEMBER, 30, 1997 ---------- ASSETS: Cash and cash equivalents $ 490,917 Accounts receivable, net of allowance for doubtful accounts of $-0- 155,417 Prepaid expenses 8,754 ---------- $ 655,088 ========== - LIABILITIES AND SHAREHOLDERS' DEFICIT - LIABILITIES: Trade accounts payable $ 774,922 Accrued expenses 120,736 SHAREHOLDERS' DEFICIT: Deficit of assets in liquidation (240,570) ---------- $ 655,088 ==========
See notes to financial statements. Page 3 CHASE PACKAGING CORPORATION --------------------------- (A WHOLLY-OWNED SUBSIDIARY OF TGC INDUSTRIES, INC. THROUGH SEPTEMBER 30, 1996 - SEE NOTE 1) STATEMENTS OF OPERATIONS ------------------------ (UNAUDITED)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ------------------------- 1997 1996 1997 1996 ---------- ----------- ------------ ------------ NET SALES $ 583,909 $2,646,303 $ 4,389,425 $ 7,360,986 ---------- ----------- ------------ ------------ COSTS AND EXPENSES: Cost of sales 252,561 2,597,931 4,241,478 7,254,907 Selling, general and administrative expense 294,916 409,424 997,216 1,366,661 Interest expense - 109,023 114,165 527,673 ---------- ----------- ------------ ------------ TOTAL COSTS AND EXPENSES 547,477 3,116,378 5,352,859 9,149,241 ---------- ----------- ------------ ------------ INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND INCOME TAXES 36,432 (470,075) (963,434) (1,788,255) Income tax expense - - - - ---------- ----------- ------------ ------------ INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 36,432 (470,075) (963,434) (1,788,255) Extraordinary item -gain from extinguishment of debt - - 173,893 - ---------- ----------- ------------ ------------ NET INCOME (LOSS) $ 36,432 $ (470,075) $ (789,541) $(1,788,255) ========== =========== ============ ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 7,002,964 6,960,714 7,002,964 6,960,714 ========== =========== ============ ============ INCOME (LOSS) PER COMMON SHARE Income (loss) per share before extraordinary item $ .01 $ (.07) $ (.13) $ (.26) Extraordinary item - - .02 - ---------- ----------- ------------ ------------ INCOME (LOSS) PER SHARE $ .01 $ (.07) $ (.11) $ (.26) ========== =========== ============ ============
See notes to financial statements. Page 4. CHASE PACKAGING CORPORATION --------------------------- (A WHOLLY-OWNED SUBSIDIARY OF TGC INDUSTRIES, INC. THROUGH SEPTEMBER 30, 1996 - SEE NOTE 1) STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION -------------------------------------------------------- (UNAUDITED)
SEPTEMBER 30, 1997 ------------ NET ASSETS BEFORE WRITE-DOWN IN LIQUIDATION $ 1,721,963 Write-down of assets in liquidation (1,962,533) ------------ DEFICIT OF ASSETS IN LIQUIDATION $ (240,570) ============
See notes to financial statements. Page 5. CHASE PACKAGING CORPORATION --------------------------- (A WHOLLY-OWNED SUBSIDIARY OF TGC INDUSTRIES, INC. THROUGH SEPTEMBER 30, 1996 - SEE NOTE 1) STATEMENTS OF CASH FLOWS ------------------------ (UNAUDITED)
Nine Months Ended September 30, --------------- 1997 1996 ------------ ------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (789,541) $(1,788,255) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: (Gain) loss on disposal of property and equipment (20,808) 8,629 Non-cash compensation - 3,600 Depreciation and amortization 180,481 474,854 Gain from extinguishment of debt (173,893) - Non-cash expenses 62,428 43,500 Change in assets and liabilities: Accounts receivable 1,478,968 (277,619) Inventories 764,664 1,362,974 Prepaid expenses 70,566 (10,433) Accounts payable (137,981) (765,644) Accrued liabilities (258,340) 126,636 Advance billings (37,382) (59,421) ------------ ------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,139,162 (881,179) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (113,360) (117,896) Proceeds from sale of property and equipment 1,176,461 9,000 Other assets (1,650) (1,125) ------------ ------------ NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,061,451 (110,021) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments of debt obligations (350,000) (1,704,168) Net payments on line of credit (1,390,392) (891,612) Received from parent - 858,542 Capital contributed 9,318 2,716,403 ------------ ------------ NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,731,074) 979,165 ------------ ------------ NET INCREASE (DECREASE) IN CASH 469,539 (12,035) CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD 21,378 25,123 ------------ ------------ CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 490,917 $ 13,088 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for: Interest $ 94,156 $ 430,208 See notes to financial statements.
See notes to financial statements. Page 6. CHASE PACKAGING CORPORATION --------------------------- (A WHOLLY-OWNED SUBSIDIARY OF TGC INDUSTRIES, INC. THROUGH SEPTEMBER 30, 1997 - SEE NOTE 1) STATEMENTS OF CASH FLOWS (CONTINUED) ------------------------------------ (UNAUDITED) NON-CASH INVESTING AND FINANCING ACTIVITIES: (i) 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. See notes to financial statements. Page 7. CHASE PACKAGING CORPORATION --------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- SEPTEMBER 30, 1997 ------------------ (UNAUDITED) NOTE 1 - 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 of its 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 was in the best interest of the Company and all of its creditors to liquidate in an orderly fashion. As a result of this 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 September 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 note 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. 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 and nine months ended September 30, 1996 consist of three and nine months operations of Old Chase as a wholly-owned subsidiary of TGC. Page 8. CHASE PACKAGING CORPORATION --------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- SEPTEMBER 30, 1997 ------------------ (UNAUDITED) NOTE 2 - 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 3 - LOSS PER COMMON SHARE: Loss per common share before and after extraordinary gain for the quarter and nine months ended September 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 nine months ended September 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 4 - EXTRAORDINARY ITEM - GAIN FROM EXTINGUISHMENT OF DEBT: On March 18, 1997, TGC sold its Portland, Oregon facility for $2,430,000 with $1,780,000 of the proceeds applied against Chase's outstanding mortgage indebtedness to Union Camp Corporation 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 extinguishments 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 5 - LOAN DEFAULTS: As a result of the March 18, 1997 sale of the Portland facility to TGC and subsequent payment made to Union Camp, the Company cured its default condition under the 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. Page 9. CHASE PACKAGING CORPORATION --------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- SEPTEMBER 30, 1997 ------------------ (UNAUDITED) ----------- NOTE 6 - 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. In addition, the Company sold inventory from the Idaho Falls operation to Lockwood for $255,000. The total proceeds of $330,000 were deposited with the Company's bank to pay down the Company's loan balance with this bank. 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 September 30, 1997 and the corresponding write-down to the estimated net realizable value at time of disposal:
Going concern basis Liquidation 9/30/97 balance write-down Net realizable value ---------------- ----------- --------------------- Cash $ 490,917 $ - $ 490,917 Accounts receivable (net) 155,417 - 155,417 Inventories 870,995 870,995 - Prepaid expenses 280,829 272,075 8,754 Land and building 80,209 80,209 - Machinery and equipment 739,254 739,254 -___ ---------------- ----------- --------------------- TOTAL $ 2,617,621 $ 1,962,533 $ 655,088 ================ =========== =====================
Page 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: Revenues were $583,909 for the three months ended September 30, 1997, compared to revenues of $2,646,303 for the same period of 1996. Net income for the three months ended September 30, 1997 was $36,432 as compared to a net loss of $470,075 for the three months ended September 30, 1996. Revenues for the first nine months of 1997 was $4,389,425 as compared to revenues of $7,360,986 for the first nine months of 1996. Net loss for the first nine months of 1997 was $789,541 as compared to a net loss of $1,788,255 for the first nine months of 1996. The 40% reduction in revenues for the nine months ended September 30, 1997 when compared to the same period 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 operations 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 and retained the firm of Edward Hostmann, Inc. to assist the Company in such liquidation. As part of the liquidation progress, 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. The Company also sold the Idaho Falls real estate (land and building). 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 an August 14 auction for gross proceeds of approximately $340,000. As a result of the orderly liquidation, the Company paid down its loan balance with its secured lender. 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. Page 11 PART II. OTHER INFORMATION Item 15 Other Information a. On June 23, 1997, Mr. William J. Barrett and Mr. Herbert M. Gardner resigned as directors of Chase Packaging Corporation. The resignation 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 None Page 12 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: May 6, 2002 Ann W. Green (Assistant Secretary and Principal Financial and Accounting Officer) Page 13 -----END PRIVACY-ENHANCED MESSAGE-----