Company Quick10K Filing
Quick10K
Chase Packaging
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
10-Q 2013-09-30 Quarter: 2013-09-30
10-Q 2013-03-31 Quarter: 2013-03-31
10-Q 2013-03-31 Quarter: 2013-03-31
10-K 2012-12-31 Annual: 2012-12-31
8-K 2019-07-09 Enter Agreement
8-K 2019-07-02 Officers
8-K 2019-04-02 Officers
8-K 2018-12-31 Accountant, Other Events, Exhibits
SSC Seven Stars Cloud Group 234
PTRC Petro River Oil 26
DTRM Determine 22
MAGE Magellan Gold 9
TAUG Tauriga Sciences 2
ABCE Abco Energy 0
EETA Eco Energy Tech Asia 0
AGUSA AG Acquisition Group 0
TUFN Tufin Software 0
RIGHT Right of Reply 0
CPKA 2019-06-30
Part I. Financial Information
Item 1. Financial Statements.
Note 1 - Basis of Presentation:
Note 2 - New Accounting Pronouncements:
Note 3 -Summary of Significant Accounting Policies:
Note 4 - Basic and Diluted Net Loss per Common Share:
Note 5 - Private Placement Offering:
Note 6 - Dividends:
Note 7 - Stockholders' Equity:
Note 8 - Fair Value Measurements:
Note 9 - Commitments and Contingencies:
Note 10 - Subseqent Events:
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 cpka_311.htm
EX-32.1 cpka_321.htm

Chase Packaging Earnings 2019-06-30

CPKA 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cpka_10q.htm FORM 10-Q cpka_10q.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2019

 

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 incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

106 West River Road, Rumson NJ 07760

(Address of principal executive offices) (Zip Code)

 

(732) 741-1500

(Registrant’s telephone number, including area code)

 

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 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 x No ¨

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

(Do not check if a smaller reporting company)

Emerging growth company

¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes x No o

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

N/A

 

N/A

 

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 August 8, 2019

Common Stock, par value $.10 per share

 

61,479,759 shares

 

 
 
 
 

Table of Contents

 

- INDEX –

 

 

Page(s)

 

PART I Financial Information:

 

ITEM 1.

Financial Statements:

 

2

 

Condensed Balance Sheets (Unaudited) – June 30, 2019 (Unaudited) and December 31, 2018

 

2

 

Condensed Statements of Operations (Unaudited) – Three and Six Months Ended June 30, 2019 and 2018

 

3

 

Condensed Statements of Changes in Stockholders’ Equity - Three and Six Months Ended June 30, 2019 and 2018

 

4

 

Condensed Statements of Cash Flows (Unaudited) – Six Months Ended June 30, 2019 and 2018

 

5

 

Notes to Interim Condensed Financial Statements (Unaudited)

 

6

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

14

 

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

 

18

 

ITEM 4.

Controls and Procedures

 

18

 

PART II – Other Information:

 

ITEM 1.

Legal Proceedings.

 

19

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

19

 

ITEM 3.

Defaults upon Senior Securities.

 

19

 

ITEM 4.

Mine Safety Disclosures.

 

19

 

ITEM 5.

Other Information.

 

19

 

ITEM 6.

Exhibits.

 

19

 

SIGNATURES

 

20

 

EXHIBITS

 

 
 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

CHASE PACKAGING CORPORATION

CONDENSED BALANCE SHEETS

(Unaudited) 

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

ASSETS

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$720,677

 

 

$755,871

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$720,677

 

 

$755,871

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$554

 

 

$3,269

 

TOTAL CURRENT LIABILITIES

 

 

554

 

 

 

3,269

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Preferred Stock, $1.00 par value; 4,000,000 authorized:

Series A 10% Convertible Preferred stock; 50,000 shares authorized;

0 shares issued and 0 shares outstanding as of June 30, 2019 and December 31, 2018;

liquidation preference of $0 and $0 as of June 30, 2019 and December 31, 2018

 

 

-

 

 

 

-

 

Common stock, $.10 par value 200,000,000 shares authorized;

61,479,759 shares issued (including 2,400,000 shares held in escrow)

and 58,582,172 outstanding as of June 30, 2019;

and 59,079,759 shares issued and 58,582,172 outstanding as of December 31, 2018

 

 

6,147,978

 

 

 

5,907,978

 

Treasury Stock, $.10 par value 497,587 shares as of June 30, 2019 and December 31, 2018

 

 

(49,759)

 

 

(49,759)

Additional paid-in capital

 

 

146,374

 

 

 

386,374

 

Accumulated deficit

 

 

(5,524,470)

 

 

(5,491,991)

TOTAL STOCKHOLDERS’ EQUITY

 

 

720,123

 

 

 

752,602

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$720,677

 

 

$755,871

 

 

See notes to interim condensed unaudited financial statements.

 

 
2
Table of Contents

 

CHASE PACKAGING CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

For The Three Months Ended

 

 

For The Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expense

 

 

11,857

 

 

 

14,846

 

 

 

36,963

 

 

 

28,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(11,857)

 

 

(14,846)

 

 

(36,963)

 

 

(28,320)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

2,354

 

 

 

1,669

 

 

 

4,484

 

 

 

3,197

 

TOTAL OTHER INCOME (EXPENSE)

 

 

2,354

 

 

 

1,669

 

 

 

4,484

 

 

 

3,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

 

(9,503)

 

 

(13,177)

 

 

(32,479)

 

 

(25,123)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$(9,503)

 

$(13,177)

 

$(32,479)

 

$(25,123)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS PER COMMON SHARE

 

$(0.00)

 

$(0.00)

 

$(0.00)

 

$(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED

 

 

59,582,172

 

 

 

15,536,275

 

 

 

60,582,172

 

 

 

15,536,275

 

  

See notes to interim condensed unaudited financial statements.

  

 
3
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CHASE PACKAGING CORPORATION

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’S EQUITY

(UNAUDITED)

 

Preferred

Common

Additional Paid-in

Accumulated

Treasury Stock

Shares

Amount

Shares

Amount

Capital

Deficit

Shares

Amount

Total

Balance at December 31, 2017

36,562$2,067,77616,033,862$1,603,387$2,623,189$(5,448,400)(497,587)$(49,759)$796,193

Net loss for the three months ended March 31, 2018

-----(11,946)--(11,946)

Balance at March 31, 2018

36,562$2,067,77616,033,862$1,603,387$2,623,189$(5,460,346)(497,587)$(49,759)$784,247
 

Net loss for the three months ended June 30, 2018

-----(13,177)--(13,177)

Balance at June 30, 2018

36,562$2,067,77616,033,862$1,603,387$2,623,189$(5,473,523)(497,587)$(49,759)$771,070

Balance at December 31, 2018

-$-59,079,759$5,907,978$386,374$(5,491,991)(497,587)$(49,759)$752,602
 

Net loss for the three months ended March 31, 2019

-----(22,976)--(22,976)

Balance at March 31, 2019

-$-59,079,759$5,907,978$386,374$(5,514,967)(497,587)$(49,759)$729,626
 

Shares held in escrow

--2,400,000240,000(240,000)----
 

Net loss for the three months ended June 30, 2019

-----(9,503)--(9,503)

Balance at June 30, 2019

-$-61,479,759$6,147,978$146,374$(5,524,470)(497,587)$(49,759)$720,123

 

See notes to interim condensed unaudited financial statements.

 

 
4
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CHASE PACKAGING CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For The Six Months Ended

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$(32,479)

 

 

(25,123)

Adjustment to reconcile to net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Change in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

(2,715)

 

 

(8,581)

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(35,194)

 

 

(33,704)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

 

(35,194)

 

 

(33,704)

 

 

 

 

 

 

 

 

 

Cash,  beginning of period

 

 

755,871

 

 

 

805,743

 

 

 

 

 

 

 

 

 

 

CASH, END OF PERIOD

 

$720,677

 

 

 

772,039

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

Interest

 

$-

 

 

$-

 

Income taxes

 

$-

 

 

$-

 

SCHEDULE OF NON-CASH INVESTING & FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Shares issued and held in escrow

 

$240,000

 

 

$-

 

 

See notes to interim condensed unaudited financial statements.

 

 
5
Table of Contents

 

CHASE PACKAGING CORPORATION

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

June 30, 2019

(Unaudited)

 

NOTE 1 - BASIS OF PRESENTATION:

 

Chase Packaging Corporation (“the Company”), a Texas Corporation, previously manufactured woven paper mesh for industrial applications, polypropylene mesh fabric bags for agricultural use, and distributed agricultural packaging manufactured by other companies. Management’s plans for the Company include securing a merger or acquisition, raising additional capital, and other strategies designed to optimize shareholder value. However, no assurance can be given that management will be successful in its efforts. The failure to achieve these plans will have a material adverse effect on the Company’s financial position, results of operations, and ability to continue as a going concern.

 

The interim condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to provide for fair presentation and a reasonable understanding of the information presented. The Interim Condensed Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-Q should be read in conjunction with the financial statements and the related notes, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, previously filed with the SEC.

 

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of financial position as of June 30, 2019, results of operations for the six months and three months ended June 30, 2019 and 2018, and cash flows for the six months ended June 30, 2019 and 2018, as applicable, have been made. The results of operations for the six months and three months ended June 30, 2019 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

 

The accounting policies followed by the Company are set forth in Note 3 to the Company’s financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated herein by reference. Specific reference is made to that report for a description of the Company’s securities and the notes to financial statements.

 

NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS:

 

Recently Adopted Accounting Pronouncements

 

Leases — In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 amends existing lease accounting guidance and requires recognition of most lease arrangements on the balance sheet. The adoption of this standard will result in the Company recognizing a right-of-use asset representing its rights to use the underlying asset for the lease term with an offsetting lease liability. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows.

 

 
6
 
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Recent Accounting Pronouncements – To Be Adopted

 

Intangibles, Goodwill and Other — In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment” (“ASU No. 2017-04”). To simplify the subsequent measurement of goodwill, ASU No. 2017-04 eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, ASU No. 2017-04 requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU No. 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU No. 2017-04 is effective for fiscal years beginning after December 15, 2019. The Company will adopt ASU No. 2017-04 commencing in the first quarter of fiscal 2021. The Company does not believe this standard will have a material impact on its financial statements or the related footnote disclosures.

 

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure FrameworkChanges to the Disclosure Requirements for Fair Value Measurement — This ASU modifies the disclosure requirements on fair value measurements in Topic 820, including the removal, modification to, and addition of certain disclosure requirements. This ASU will be effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The majority of the disclosure changes are to be applied on a prospective basis. Although this ASU has a significant impact to the Company’s fair value disclosures, no additional impact is expected to the Company’s condensed consolidated financial statements.

 

The Company does not believe that other standards, which have been issued but are not yet effective, will have a significant impact on its financial statements.

 

NOTE 3 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 

Use of Estimates:

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

   

 
7
 
Table of Contents

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments that are readily convertible into cash with a remaining maturity of three months or less at the time of acquisition to be cash equivalents. The Company maintains its cash and cash equivalents balances with high credit quality financial institutions. As of June 30, 2019 and December 31, 2018, the Company had cash in insured accounts in the amount of $220,677 and $46,713, respectively, and cash equivalents (US treasury bills) held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of approximately $500,000 and $709,158 respectively.

 

Income Taxes

 

The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured assuming enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such asset will be realized.

 

The Company adopted FASB Interpretation of “Accounting for Uncertainty in Income Taxes.” There was no impact on the Company’s financial position, results of operations, or cash flows as a result of implementing this guidance. At June 30, 2019 and December 31, 2018, the Company evaluated its tax positions and did not have any unrecognized tax benefits. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company currently has no federal or state tax examinations in progress.

 

Accounting for Stock Based Compensation

 

The stock-based compensation expense incurred by the Company for employees and directors in connection with its stock option plan is based on the employee model of ASC 718, and the fair market value of the options is measured at the grant date. Under ASC 718 employee is defined as “An individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. “tax regulations.” Our consultants do not meet the employer-employee relationship as defined by the IRS and therefore are accounted for under ASC 505-50.

 

ASC 505-50-30-11 further provides that an issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date:

 

 

i.

The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); and

 

ii.

The date at which the counterparty’s performance is complete.

 

We have elected to use the Black-Scholes-Merton pricing model to determine the fair value of stock options on the dates of grant. Restricted stock units are measured based on the fair market values of the underlying stock on the dates of grant.

 

 
8
 
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NOTE 4 - BASIC AND DILUTED NET LOSS PER COMMON SHARE:

 

Basic loss per common share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding. Diluted loss per share is computed by dividing the net loss by the sum of the weighted-average number of shares of common stock outstanding plus the dilutive effect of shares issuable through the exercise of common stock equivalents.

 

We have excluded 6,909,000 common stock equivalents (preferred stock, warrants and stock options) from the calculation of diluted loss per share for the six months ended June 30, 2019 and 2018, which, if included, would have an antidilutive effect.

 

NOTE 5 – PRIVATE PLACEMENT OFFERING:

 

On September 7, 2007, the Company completed a private placement, pursuant to which 13,334 units (the “Units”) were sold at a per Unit cash purchase price of $150, for a total subscribed amount of $2,000,100. Each Unit consists of: (1) one share of Series A 10% convertible preferred stock, par value $1.00, stated value $100 (the “Preferred Stock”); (2) 500 shares of the Company’s common stock, par value $0.10 (the “Common Stock”); and (3) 500 warrants (the “Warrants”) exercisable into Common Stock on a one-for-one basis. The proceeds of $2,000,100 were allocated to the instruments as follows:

 

Warrant liabilities

 

$

141,027

 

Redeemable and Convertible Preferred Stock

 

1,388,367

 

Common Stock

 

470,706

 

Total allocated gross proceeds:

 

$

2,000,100

 

Warrants

 

2017 Extension of Warrant Terms

 

On August 24, 2017, 6,909,000 common share purchase warrants issued by the Company were modified to extend their maturity date to September 7, 2019. The exercise price and all other terms of the original warrant agreement remain the same. The warrants modification expense of $31,478 was computed as the incremental value of the modified warrants over the unmodified warrants on the modification date using a per share price of $0.15 per share, which was the contemporaneous private placement offering price. Assumptions used in the Black Scholes option-pricing model for these warrants were as follows:

 

 
9
 
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Average risk-free interest rate

 

 

1.27%

Average expected life-years

 

 

2

 

Expected volatility

 

 

135.42%

Expected dividends

 

 

0%

 

 

 

Number of Warrants

 

 

Weighted

Average

Exercise

Price

 

 

Weighted Average

Remaining Contractual

Life (Years)

 

 

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2018

 

 

6,909,000

 

 

$0.15

 

 

 

0.68

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited/expired

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding at June 30, 2019

 

 

6,909,000

 

 

$0.15

 

 

 

0.19

 

Exercisable at June 30, 2019

 

 

6,909,000

 

 

$0.15

 

 

 

0.19

 

 

As of June 30, 2019 and December 31, 2018, the average remaining contractual life of the outstanding warrants was 0.19 years and 0.68 year, respectively. The warrants will expire on September 7, 2019.

 

On July 15, 2019, the warrants were modified to extend their maturity date to September 7, 2021. See NOTE 10 – SUBSEQUENT EVENTS

 

Series A 10% Convertible Preferred Stock

 

On December 31, 2018, all 36,562 Series A 10% Convertible Preferred Stocks were converted to 43,045,897 restricted Common stock, including 6,456,882 restricted Common stock paid for preferred shares dividend of $261,504. As of June 30, 2019, there was no preferred stock outstanding.

 

The principal terms of the Series A 10% Convertible Preferred Stock were as follows:

 

Voting rights – The Series A 10% Convertible Preferred Stock has voting rights (one vote per share) equal to those of the Company’s common stock.

 

Dividend rights – The Series A 10% Convertible Preferred Stock carries a fixed cumulative dividend, as and when declared by our Board of Directors, of 10% per annum, accrued daily, compounded annually and payable in cash upon a liquidation event for up to five years, as well as the right to receive any dividends paid to holders of common stock.

 

Conversion rights – The holders of the Series A 10% Convertible Preferred Stock have the right to convert any or all of their Series A 10% Convertible Preferred Stock, at the option of the holder, at any time, into common stock on a one for one thousand basis.

 

Redemption rights –The shares of the Series A 10% Convertible Preferred Stock may be redeemed by the Company, in whole or in part, at the option of the Company, upon written notice by the Company to the holders of Series A 10% Convertible Preferred Stock at any time in the event that the Preferred Stock of one or more holders has not been previously converted. The Company shall redeem each share of Preferred Stock of such holders within thirty (30) days of the Company’s delivery of notice to such holders and such holders shall surrender the certificate(s) representing such shares of Preferred Stock.

 

 
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Liquidation entitlement – In the event of any liquidation, dissolution or winding up of the Company, the holders of the Series A 10% Convertible Preferred Stock shall be entitled to receive, in preference to the holders of common stock, an amount equal to $100 per share of Series A 10% Convertible Preferred Stock plus all accrued and unpaid dividends.

 

At any time on or after August 2, 2011, the Holders of 66 2/3% or more of the Preferred Stock then outstanding could have requested liquidation of their Preferred Stock. In the event that, at the time of such requested liquidation, the Company’s cash funds (in excess of a $50,000 reserve fund) then available to effect such requested liquidation were inadequate for such purpose, then such requested liquidation should have taken place (on a ratable basis) only to the extent such excess cash funds were available for such purpose.

 

Other provisions – There will be proportional adjustments for stock splits, stock dividends, recapitalizations and the like.

 

NOTE 6 – DIVIDENDS:

 

On December 31, 2018, all 36,562 Series A 10% Convertible Preferred Stocks were converted to 43,045,897 restricted Common stock, including 6,456,882 restricted Common stock paid for preferred shares dividend of $261,504.

 

NOTE 7 – STOCKHOLDERS’ EQUITY:

 

The Company’s 2008 Stock Awards Plan was approved April 9, 2008 by the Board of Directors and ratified at the Company’s annual meeting of stockholders held on June 3, 2008. The 2008 Plan became effective June 24, 2008 and terminated on June 24, 2018. Subject to certain adjustments, the number of shares of Common Stock that could be issued pursuant to awards under the 2008 Plan was 2,000,000 shares. A maximum of 80,000 shares may be granted in any one year in any form to any one participant, of which a maximum of (i) 50,000 shares may be granted to a participant in the form of stock options and (ii) 30,000 shares may be granted to a participant in the form of Common Stock or restricted stock. The 2008 Plan was administered by a committee of the Board of Directors. Employees, including any employee who is also a director or an officer, consultants, and outside directors of the Company are eligible to participate in the 2008 Plan. The 2008 Stock Awards Plan expired June 24, 2018; the Board of directors has not adopted a new stock awards plan.

 

On April 11, 2019, the Board of Directors authorized the issuance of 300,000 shares each to 7 directors and to the CFO/Asst. Sect, valued at approximately $9,300 each based on the closing bid price as quoted on the OTC on April 22, 2019 at $0.03 per share, and on June 28, 2019 the Board of Directors authorized the issuance of 300,000 shares to Matthew W. Long, a newly appointed board member, valued at approximately $27,000 based on the closing bid price as quoted on the OTC on June 28, 2019 at $0.09 per share. The 2,400,000 shares, held in escrow, are for merger/acquisition services to be performed in 2019. The escrow is pending shareholder approval of an amendment to the Certificate of Incorporation reducing the par value of Common stock from $0.10 to $0.01.

 

 
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NOTE 8 – FAIR VALUE MEASUREMENTS:

 

ASC 820, “Fair Value Measurements and Disclosure,” (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not adjusted for transaction costs. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels giving the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

 

The three levels are described below:

 

Level 1 Inputs — Unadjusted quoted prices in active markets for identical assets or liabilities that is accessible by the Company;

 

Level 2 Inputs — Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;

 

Level 3 Inputs — Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.

 

There were no transfers in or out of any level during the six months ended June 30, 2019 or 2018.

 

Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in the Company’s balance sheets, the Company has elected not to record any other assets or liabilities at fair value, as permitted by ASC 820. No events occurred during the six months ended June 30, 2019 or 2018 which would require adjustment to the recognized balances of assets or liabilities which are recorded at fair value on a nonrecurring basis.

 

The Company determines fair values for its investment assets as follows:

 

Cash equivalents at fair value — the Company’s cash equivalents, at fair value, consist of money market funds — marked to market. The Company’s money market funds are classified within Level 1 of the fair value hierarchy since they are valued using quoted market prices from an exchange.

 

 
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The following tables provide information on those assets measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018, respectively:

 

 

 

Carrying

Amount In

Balance Sheet

June 30,

 

 

Fair Value

June 30,

 

 

Fair Value Measurement Using

 

 

 

2019

 

 

2019

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury Bills

 

$500,000

 

 

$500,000

 

 

$500,000

 

 

$

 

 

$

 

Money Market Funds

 

 

220,677

 

 

 

220,677

 

 

 

220,677

 

 

 

 

 

 

 

Total Assets

 

$720,677

 

 

$720,677

 

 

$720,677

 

 

$

 

 

$

 

 

 

 

Carrying

Amount In

Balance Sheet

December 31,

 

 

Fair Value

December 31,

 

 

Fair Value Measurement Using

 

 

 

2018

 

 

2018

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury Bills

 

$709,158

 

 

$709,158

 

 

$709,158

 

 

$

 

 

$

 

Money Market Funds

 

 

46,713

 

 

 

46,713

 

 

 

46,713

 

 

 

 

 

 

 

Total Assets

 

$755,871

 

 

$755,871

 

 

$755,871

 

 

$

 

 

$

 

 

NOTE 9 - COMMITMENTS AND CONTINGENCIES:

 

The Company’s Board of Directors has agreed to pay the Company’s Chief Financial Officer an annual salary of $17,000. No other officers or directors of the Company receive compensation other than reimbursement of out-of-pocket expenses incurred in connection with Company business and development.

 

NOTE 10 – SUBSEQENT EVENTS:

 

On July 15, 2019, 6,909,000 common share purchase warrants issued by the Company were modified to extend their maturity date to September 7, 2021. The Company has evaluated subsequent events from the balance sheet date through the date these financial statements were issued, and has determined there are no additional events that require disclosure in accordance with ASC 855 Subsequent Events.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward-Looking Statements

 

The information in this report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about themselves provided they identify these statements as forward looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding future results of operations or financial position are forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. The Company’s actual results may differ significantly from management’s expectations as a result of many factors.

 

You should read the following discussion and analysis in conjunction with the financial statements of the Company, and notes thereto, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of management. The Company assumes no obligations to update any of these forward-looking statements.

 

Results of Operations

 

For the three months ended June 30, 2019 and 2018

 

Revenue

 

The Company had no operations and no revenue for the three months ended June 30, 2019 and 2018 and its only income was from interest income on its short-term investments which are classified as cash and cash equivalents.

 

Operating Expenses

 

The following table presents our total operating expenses for the three months ended June 30, 2019 and 2018.

 

 

 

Three Months Ended

June 30,

 

 

 

2019

 

 

2018

 

Audit and accounting fees

 

$4,980

 

 

$5,663

 

Payroll expense

 

 

5,056

 

 

 

4,795

 

Other general and administrative expense

 

 

1,821

 

 

 

4,388

 

 

 

$11,857

 

 

$14,846

 

 

Operating expenses consist mostly of audit and accounting fees and payroll. Other general and administrative expenses are comprised of transfer agent and EDGAR filer services and other services. These expenses were directly related to the maintenance of the corporate entity and the preparation and filing of reports with the Securities and Exchange Commission. The increase in operating expenses in 2019 was mainly due to the increase in audit and accounting fees and legal fees.

 

 
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Loss from Operation

 

The Company incurred loss from operation of $11,857 and $14,846 for the three months ended June 30, 2019 and 2018, respectively.

 

Other Income (Expense)

 

The following table presents our total Other Income (Expense) for the three months ended June 30, 2019 and 2018.

 

 

 

Three Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

Interest and other income

 

$2,354

 

 

$1,669

 

Other Income (Expense), net

 

$2,354

 

 

$1,669

 

 

Income (Expense) increased by $685 for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018. The increase in other income (expense) was related to the increase in interest and other income for the three months ended June 30, 2019 as a result of an increase in our cash and cash equivalents.

 

Net Loss

 

The Company had a net loss of $9,503 for the three months ended June 30, 2019, compared with a net loss of $13,177 for the three months ended June 30, 2018. Net loss attributable to common stockholders was $9,503 for the three months ended June 30, 2019, compared to $13,177 for the three months ended June 30, 2018. Decreases in net loss attributable to common stockholders were due primarily to the decrease of general and administrative expense which was caused by the timing of when filing fee invoices were received.

 

Loss per share for the three months ended June 30, 2019 and 2018 were approximately $(0.00) and $(0.00) based on the weighted-average shares issued and outstanding.

 

It is anticipated that future operating expenses will increase as the Company complies with its periodic reporting requirements and effects a business combination, although there can be no assurance that the Company will be successful in effecting a business combination.

 

For the six months ended June 30, 2019 and 2018

 

Revenue

 

The Company had no operations and no revenue for the six months ended June 30, 2019 and 2018 and its only income was from interest income on its short-term investments which are classified as cash and cash equivalents.

 

 
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Operating Expenses

 

The following table presents our total operating expenses for the six months ended June 30, 2019 and 2018.

 

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

Audit and accounting fees

 

$21,664

 

 

$10,688

 

Payroll expense

 

 

10,219

 

 

 

10,192

 

Other general and administrative expense

 

 

5,080

 

 

 

7,440

 

 

 

$36,963

 

 

$28,320

 

 

Operating expenses consist mostly of audit and accounting fees and payroll. Other general and administrative expenses are comprised of transfer agent and EDGAR filer services and other services. These expenses were directly related to the maintenance of the corporate entity and the preparation and filing of reports with the Securities and Exchange Commission. The increase in operating expenses in 2019 was mainly due to the increase in stock-based compensation, audit and accounting fees and legal fees.

 

Loss from Operation

 

The Company incurred loss from operation of $36,963 and $28,320 for the six months ended June 30, 2019 and 2018, respectively.

 

Other Income (Expense)

 

The following table presents our total Other Income (Expense) for the six months ended June 30, 2019 and 2018.

 

 

Six Months Ended

June 30,

 

2019

 

2018

Interest and other income

 

$

4,484

 

$

3,197

 

Other Income (Expense), net

 

$

4,484

 

$

3,197

 

Income (Expense) increased by $1,287 for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018. The increase in other income (expense) was related to the increase in interest and other income for the six months ended June 30, 2019 as a result of an increase in our cash and cash equivalents.

 

Net Loss

 

The Company had a net loss of $32,479 for the six months ended June 30, 2019, compared with a net loss of $ 25,123 for the six months ended June 30, 2018. Net loss attributable to common stockholders was $32,479 for the six months ended June 30, 2019, compared to $ 25,123 for the six months ended June 30, 2018. Increases in net loss attributable to common stockholders were due primarily to the increase of professional fees related to audit and accounting expenses.  

 

 
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Loss per share for the six months ended June 30, 2019 and 2018 were approximately $(0.00) and $(0.00) based on the weighted-average shares issued and outstanding.

 

It is anticipated that future operating expenses will increase as the Company complies with its periodic reporting requirements and effects a business combination, although there can be no assurance that the Company will be successful in effecting a business combination.

 

Liquidity and Capital Resources

 

At June 30, 2019 the Company had cash and cash equivalents of approximately $721,000 consisting mostly of money market funds and U.S. Treasury Bills. Management believes that its cash and cash equivalents are sufficient for its business activities for at least the next twelve months and for the costs of seeking an acquisition of an operating business.

 

The following table provides detailed information about our net cash flow for all financial statements years presented in this Report.

 

Cash Flow

 

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

Net cash used in operating activities

 

$(35,194)

 

$(33,704)

Net cash provided by investing activities

 

 

-

 

 

 

-

 

Net cash provided by financing activities

 

 

-

 

 

 

-

 

Net cash outflow

 

$(35,194)

 

$(33,704)

 

Net cash of $(35,194) and $(33,704) were used in operations during the six months period ended June 30, 2019 and 2018, respectively.

 

The use of cash of $(35,194) used in operating activities for the six months ended June 30, 2019, principally resulted from our net loss of $32,479, as adjusted for changes in accounts payable and accrued expenses of $(2,715).

 

The use of cash of $(33,704) used in operating activities for the six months ended June 30, 2018, principally resulted from our net loss of $25,123, as adjusted for changes in accounts payable and accrued expenses of $(8,581).

 

No cash flows were used in or provided by investing activities during the six months ended June 30, 2019 and 2018.

 

No cash proceeds were used in or provided by financing activities during the six months ended June 30, 2019 and 2018.

 

New Accounting Pronouncements

 

Refer to the discussion of recently adopted/issued accounting pronouncements under Part I, Note 2: New Accounting Policies Pronouncements.

 

 
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Factors Which May Affect Future Results

 

Future earnings of the Company are dependent on interest rates earned on the Company’s invested balances and expenses incurred. The Company expects to incur significant expenses in connection with its objective of identifying a merger partner or acquiring an operating business.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures.

 

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our chief executive officer and chief financial officer concluded that as of June 30, 2019, our disclosure controls and procedures were effective.

 

Changes in Internal Controls over Financial Reporting.

 

We regularly review our system of internal control over financial reporting.

 

During the quarter ended June 30, 2019, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to affect materially, our internal control over financial reporting.

 

 
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PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

Number

 

Description

 

31.1*

 

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1*

 

Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101*

 

Financial Statements from the quarterly report on Form 10-Q of Chase Packaging Corporation for the quarter ended June 30, 2019, filed on August 13, 2019, formatted in XBRL: (i) the Condensed Balance Sheets (Unaudited); (ii) the Condensed Statements of Operations (Unaudited); (iii) the Condensed Statements of Cash Flows (Unaudited); and (iv) the Notes to Interim Condensed Financial Statements (Unaudited).

________

* Filed herewith

 

 
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SIGNATURES

 

Pursuant to the requirements 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.

 

 

CHASE PACKAGING CORPORATION

 

Date: August 13, 2019

By:

/s/ Ann C. W. Green

 

Ann C. W. Green

 

Chief Financial Officer and Assistant Secretary

 

(Principal Executive, Financial and Accounting Officer)

 

20