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U.S. SECURITIES AND EXCHANGE
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 MARCH
31, 2001.
[ ] 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 offices) (Zip Code)
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 May 10, 2001
Common Stock ($.30 Par Value) 2,369,225
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
Incorporated herein is the following unaudited financial
information:
Balance Sheet as of March 31, 2001.
Statements of Operations for the three month periods ended
March 31, 2001 and 2000.
Statements of Cash Flows for the three month periods ended
March 31, 2001 and 2000.
Notes to Financial Statements.
TGC INDUSTRIES, INC
BALANCE SHEET
(UNAUDITED)
MARCH 31,
2001
_________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $468,506
Accounts receivable 823,501
Cost and estimated earnings in excess
of billings on uncompleted contracts 13,104
Prepaid expenses and other 21,662
__________
Total current assets 1,326,773
PROPERTY AND EQUIPMENT - at cost
Machinery and equipment 11,218,773
Automobiles and trucks 757,111
Furniture and fixture 323,323
Other 18,144
_________
12,317,351
Less accumulated depreciation
and amortization (8,719,970)
___________
3,597,381
OTHER ASSETS 395
___________
Total assets $4,924,549
===========
See notes to Financial Statements
TGC INDUSTRIES, INC
BALANCE SHEET -- CONTINUED
(UNAUDITED)
MARCH 31,
2001
_________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable 269,752
Accrued liabilities 193,319
Billings in excess of costs and estimated
earnings on uncompleted contracts 542,791
Current maturities of long-term obligations 167,769
__________
Total current liabilities 1,173,631
LONG-TERM OBLIGATIONS, less current
maturities 116,662
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value; 4,000,000
shares authorized:
8-1/2% Senior convertible preferred stock;
2,355,935 shares issued and outstanding 2,355,935
8% Series C convertible exchangeable
preferred stock; 1,150,350 shares issued,
1,080,050 shares outstanding 1,080,050
Common stock, $.30 par value; 25,000,000
shares authorized; 2,392,182 shares issued 717,654
Additional paid-in capital 5,609,141
Accumulated deficit (5,913,210)
Treasury stock, at cost (31,944 shares) (215,314)
__________
3,634,256
__________
Total liabilities and stockholders' equity $4,924,549
===========
See notes to Financial Statements
TGC INDUSTRIES, INC
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31
___________________
2001 2000
________ ________
Revenue $ 882,152 $ 358,538
Cost of services 1,181,059 733,062
Selling, general, adm. 236,598 235,482
__________ _________
1,417,657 968,544
LOSS FROM OPERATIONS (535,505) (610,006)
Interest expense 5,865 76,199
_________ _________
NET LOSS (541,370) (686,205)
Less dividend requirements on
preferred stock 165,578 111,025
_________ _________
LOSS ALLOCABLE TO
COMMON STOCKHOLDERS $(706,948) $(797,230)
Loss per common share:
Basic and diluted $ (.30) $ (.35)
Weighted average number of
common shares:
Basic and diluted 2,340,374 2,262,577
See notes to Financial Statements
TGC INDUSTRIES, INC
STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
March 31,
___________________________
2001 2000
___________ __________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(541,370) $(686,205)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 396,581 408,272
Gain on disposal of property and
equipment - (3,901)
Changes in operating assets and liabilities
Trade accounts receivable 71,263 (1,245,715)
Billings in excess of cost and estimated
earnings on uncompleted contracts 359,187 941,443
Prepaid expenses 50,423 22,789
Accounts payable (67,124) 112,740
Accrued liabilities 52,784 30,481
__________ _________
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 321,744 (420,096)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (31,730) (48,699)
Proceeds from sale of property and equipment - 3,901
_____________ __________
NET CASH USED IN INVESTING ACTIVITIES (31,730) (44,798)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of warrants 3,766 -
Principal payments of debt obligations (84,405) (214,550)
_____________ ____________
NET CASH USED IN FINANCING ACTIVITIES (80,639) (214,550)
NET INCREASE (DECREASE) IN CASH _____________ ___________
AND CASH EQUIVALENTS 209,375 (679,444)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 259,131 1,898,674
_____________ ____________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 468,506 $1,219,230
============= ============
Supplemental cash flow information
Interest paid $ 5,865 $ 23,075
Income taxes paid $ - $ -
See notes to Financial Statements
TGC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2001
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited financial statements of TGC Industries,
Inc. (the
"Company")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 accounting principles generally
accepted
in the United States of America.
NOTE B -- MANAGEMENT PRESENTATION
In the opinion of management, all adjustments (consisting of normal
recurring
adjustments) 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, 2000 filed on
Form 10-
KSB.
NOTE C -- LOSS PER SHARE
Basic loss per common share is based upon the weighted average number
of
shares of common stock outstanding. Diluted loss per share is based
upon the
weighted average number of common shares outstanding and, when
dilutive,
common shares issuable for stock options, warrants and convertible
securities.
The effect of preferred stock dividends on the amount of loss
available to
common stockholders was $.07 and $.05 for the three months ended March
31,
2001 and 2000, respectively.
Outstanding warrants that were not included in the diluted calculation
because
their effect would be anti-dilutive totaled 850,000 and 1,136,575 for
the
three month periods ended March 31, 2001, and 2000, respectively.
Outstanding
options that were not included in the diluted calculation because
their effect
would be anti-dilutive totaled 319,940 and 176,497 for the three month
periods
ended March 31, 2001 and 2000, respectively.
TGC INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2001
(Continued)
NOTE D DIVIDENDS
Holders of the Company's Series C 8% Convertible Exchangeable
Preferred Stock
("Series C Preferred Stock") will receive, when, as and if declared by
the
Board of Directors of the Company, dividends at a rate of 8% per
annum. The
dividends are payable semi-annually during January and July of each
year. At
March 31, 2001, cumulative dividends of approximately $864,000 were in
arrears
on the Company's Series C Preferred Stock.
Holders of the Company's 8-1/2% Senior Convertible Preferred Stock
(the
"Senior Preferred Stock") will receive, when, as and if declared by
the Board
of Directors of the Company, dividends at a rate of 8-1/2% per annum.
The
dividends are payable semi-annually during June and December of each
year.
Dividends paid during 2000, on the Senior Preferred Stock, were paid
in
additional shares of Senior Preferred Stock, in accordance with the
terms of
the agreement. At March 31, 2001, there were no dividends in arrears
on the
Company's Senior Preferred Stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
TGC Industries, Inc. (the "Company") reported revenue of $882,152 and
a net
loss, before dividend requirements on preferred stock, of $(541,370)
for the
three month period ended March 31, 2001, compared with revenue of
$358,538 and
a net loss, before dividend requirements on preferred stock, of
$(686,205) for
2000. Loss per common share, on a basic and diluted basis, was $(.30)
for the
three month period ended March 31, 2001, compared with a loss per
common share
of $(.35) for 2000. As a result of the Company reporting a loss for
the first
quarters of 2001 and 2000, the number of shares used in the loss per
share
computation does not include any common shares issuable for stock
options,
warrants or convertible securities because the effect of their
inclusion would
be anti-dilutive.
Though our seismic crew was not fully employed during the first
quarter of
2001, the Company was successful in securing $7,336,000 of contracts
which
will, if not canceled, keep its seismic crew employed throughout the
second
and third quarters of 2001. To secure these contracts in the
competitive
environment during the first quarter, the Company priced its services
at lower
than its traditional profit margins. Despite the recent difficult
industry
conditions, management believes that the geophysical services industry
has
favorable long-term prospects. Geophysical services should be in
greater
demand due to the recent increase in seismic bidding activity and the
prospect
of oil and natural gas prices remaining at or near their current
levels.
Though there can be no assurance, such conditions should enable the
Company to
secure contracts with higher margins for the fourth quarter which
should
improve the Company's performance in 2001.
Non-cash charges for depreciation and amortization were $396,581 in
the first
three months of 2001 compared with $408,272 for the same period of
2000.
At December 31, 2000, the Company had net operating loss carryforwards
of
approximately $7,800,000 available to offset future taxable income,
which
expire at various dates through 2020.
FINANCIAL CONDITION
Cash of $321,744 was provided from operations for the first three
months of
2001 compared with cash used in operations of $420,096 for the same
period of
2000. Cash used in investing activities for the first three months of
2001
and 2000, was for the addition of equipment in the amounts of $31,730
and
$48,699, respectively. Cash used in financing activities for the
first three
months of 2001 and 2000, was for principal payments of debt
obligations in the
amounts of $84,405 and $214,550, respectively.
Working capital decreased $176,392 to $153,142 from the December 31,
2000
balance of $329,534. The Company's current ratio was 1.13 at March
31, 2001,
compared with 1.36 at December 31, 2000. Stockholders' equity
decreased
$537,604 from the December 31, 2000 balance of $4,171,860 to
$3,634,256 at
March 31, 2001. This decrease was attributable to the net loss,
before
dividend requirements on preferred stock, of $541,370.
The Company anticipates that available funds, together with
anticipated cash
flows generated from future operations will be sufficient to meet the
Company's cash needs during 2001.
Forward-Looking Statements
This report contains forward-looking statements which reflect the view
of
Company's management with respect to future events. Although
management
believes that the expectations reflected in such forward-looking
statements
are reasonable; it can give no assurance that such expectations will
prove to
have been correct. Important factors that could cause actual results
to
differ materially from such expectations are disclosed in the
Company's
Securities and Exchange Commission filings, and include, without
limitation,
the unpredictable nature of forecasting weather, the potential for
contract
delay or cancellation, and the potential for fluctuations in oil and
gas
prices. The forward-looking statements contained herein reflect the
current
views of the Company's management and the Company assumes no
obligation to
update the forward-looking statements or to update the reasons actual
results
could differ from those contemplated by such forward-looking
statements.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -- None.
b. Reports -- None.
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: May 11, 2001 /s/ Wayne A. Whitener
Wayne A. Whitener
President & Chief
Executive Officer
(Principal Executive Officer)
Date: May 11, 2001 /s/ Kenneth W. Uselton
Kenneth W. Uselton
Treasurer (Principal Financial
and Accounting Officer)