UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal year ended
OR
Commission file number:
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of |
| (I.R.S. Employer |
incorporation or organization) |
| Identification No.) |
(Address of principal executive offices and zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.00001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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.
Indicate by check whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
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 | ☐ |
☒ | 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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of voting and non-voting common equity held by non-affiliates as of June 30, 2023 was approximately $
Number of shares of common stock outstanding as of March 22, 2024:
Documents incorporated by reference
Listed below are documents, parts of which are incorporated herein by reference, and the part of this report into which the document is incorporated: None
CHASE PACKAGING CORPORATION
FORM 10-K
For the Fiscal Year ended December 31, 2023
TABLE OF CONTENTS
| 2 |
| Table of Contents |
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and Section 27A of the Securities Act of 1933. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors include our capital needs and our ability to find a suitable merger partner wishing to go public or a suitable private company to acquire to create investment value for the Company. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.
| 3 |
| Table of Contents |
PART I
ITEM 1. BUSINESS.
General
The Company is a Delaware corporation which, prior to 1998, was engaged in the specialty packaging business, primarily as a supplier of packaging products to the agricultural industry. During 1997, the Company commenced an orderly liquidation of its assets which was completed in 1997. At present, management of the Company is seeking to secure a suitable merger partner wishing to go public or to acquire private companies to create investment value for the Company. For purposes of Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is considered a shell company.
History
The Company was established in July of 1993 as a wholly-owned subsidiary of Dawson Geophysical Company (“Dawson” and formerly known TGC Industries, Inc.). On July 30, 1993, the Company purchased certain assets of Union Camp Corporation’s packaging division for a purchase price of approximately $6.14 million. Effective July 21, 1997, the Company sold its operations and completed liquidation during 1997.
Post-Liquidation Operations
Since 1999, the Board of Directors has devoted its efforts to establishing a new business or engaging in a merger or other reorganization transaction.
ITEM 1A. RISK FACTORS.
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
The Company neither rents nor owns any properties. The Company utilizes the office space and equipment of its management at no cost. The Company currently has no policy with respect to investment or interests in real estate, real estate mortgages, or securities of, or interests in, persons primarily engaged in real estate activities.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
| 4 |
| Table of Contents |
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
The Company’s common stock is quoted on the OTC Pink Market under the symbol “WHLT.” Equiniti Trust Company, LLC, formerly American Stock Transfer and Trust Company, has determined that there were approximately 230 holders of record on December 31, 2023. Trading volume in the Company’s securities has been nominal. The last reported high and low prices on December 31, 2023 were $0.045 and $0.045, respectively, and the last trade was $0.045
High and low closing stock prices for the Company’s common stock in the years ended December 31, 2023 and 2022 are displayed in the following table:
|
| 2023 Market Price |
|
| 2022 Market Price |
| ||||||||||
Quarter Ended |
| High |
|
| Low |
|
| High |
|
| Low |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
March 31 |
| $ | 0.100 |
|
| $ | 0.060 |
|
| $ | 0.500 |
|
| $ | 0.170 |
|
June 30 |
| $ | 0.100 |
|
| $ | 0.015 |
|
| $ | 0.250 |
|
| $ | 0.060 |
|
September 30 |
| $ | 0.168 |
|
| $ | 0.021 |
|
| $ | 0.060 |
|
| $ | 0.060 |
|
December 31 |
| $ | 0.148 |
|
| $ | 0.021 |
|
| $ | 0.300 |
|
| $ | 0.060 |
|
The Company has never paid cash dividends on its shares of common stock and does not anticipate the payment of dividends on its shares of common stock in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA.
Not Applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
Results of Operations
For the years ended December 31, 2023 and 2022
Revenue
The Company had no operations and no revenue for the years ended December 31, 2023 and 2022 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 years ended December 31, 2023 and 2022.
|
| Year ended December 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Audit and professional fees |
| $ | 33,638 |
|
| $ | 26,506 |
|
Payroll |
|
| 20,734 |
|
|
| 20,638 |
|
Other general and administrative expense |
|
| 17,887 |
|
|
| 12,978 |
|
|
| $ | 72,259 |
|
| $ | 60,122 |
|
Operating expenses consist mostly of audit and accounting fees and payroll. There were more operating expenses for the year ended December 31, 2023, mainly due to higher legal and professional fees than were incurred in 2023. 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.
Loss from Operation
The Company incurred a loss from operations of $72,259 and $60,122 for the years ended December 31, 2023 and 2022, respectively.
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| Table of Contents |
Other Income (Expense)
The following table presents our total Other Income (Expense) for the years ended December 31, 2023 and 2022.
|
| Year ended December 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Interest and other income |
| $ | 14,679 |
|
| $ | 4,230 |
|
Warrant modification expense |
|
| (345,450 | ) |
|
| — |
|
|
| $ | (330,771 | ) |
| $ | 4,230 |
|
Other expense increased by $330,771 for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The increase was caused by increase in warrant modification expenses (See Note 6 on the accompanying financial statements) and more interest income in 2023 as compared to 2022 due to higher interest rates.
Net Loss
The Company had a net loss of $403,030 for the year ended December 31, 2023, compared with a net loss of $55,892 for the year ended December 31, 2022. The increase in net loss was due to the above-mentioned effect of the warrant modification expense.
Losses per share for the years ended December 31, 2023 and 2022 were $(0.01) and $(0.00) per share, respectively, based on the weighted-average shares issued and outstanding.
It is anticipated that future operating expenses will decrease and then stabilize as the Company complies with its periodic reporting requirements; however, expenses may increase as the Company works to effect 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 December 31, 2023 the Company had cash and cash equivalents of $388,171, consisting of money market funds invested in U.S. Treasury and government securities maturing in 3 months or less. 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 years presented in this Report.
Cash Flow
|
| Year ended December 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Net cash used in operating activities |
| $ | (53,072 | ) |
| $ | (55,892 | ) |
Net cash provided by investing activities |
|
| — |
|
|
| — |
|
Net cash provided by financing activities |
|
| — |
|
|
| — |
|
Net cash outflow |
| $ | (53,072 | ) |
| $ | (55,892 | ) |
Net cash of $53,072 and $55,892 were used in operations during the year ended December 31, 2023 and 2022, respectively.
The use of cash of $53,072 used in operating activities for the year ended December 31, 2023, principally resulted from our net loss of $403,030, as adjusted for a non-cash charge for warrants modification expense of $345,450.
The use of cash of $55,892 used in operating activities for the year ended December 31, 2022, principally resulted from our net loss of $55,892.
No cash flows were used in or provided by investing activities during the years ended December 31, 2023 and 2022.
No cash proceeds were used in or provided by financing activities during the years ended December 31, 2023 and 2022.
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| Table of Contents |
New Accounting Pronouncements
Refer to the discussion of recently adopted/issued accounting pronouncements under Part II, Item 8, Notes to Financial Statements, Note 3: Significant Accounting Policies.
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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The full text of our audited financial statements as of and for the years ended December 31, 2023 and 2022 begins on page F-1 of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
ITEM 9A. 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-15I 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 and financial officer concluded that as of December 31, 2023, the company’s disclosure controls and procedures were effective with the exception of the Warrant Modification Expense mentioned below.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| · | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and the dispositions of the assets of the Company; |
|
|
|
| · | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and the board of directors of the Company; and |
|
|
|
| · | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions or because of declines in the degree of compliance with the policies or procedures.
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| Table of Contents |
Our management, with the participation of the Principal Executive and Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework 2013.
The Company’s Board of Directors has conducted an evaluation of the effectiveness of our internal controls over financial reporting as of December 31, 2023 in accordance with the criteria set forth by the Committee of Sponsoring Organizations of The Treadway Commission (“COSO”) in Internal Control – Integrated Framework. In the course of making our assessment, we identified a material weakness in our internal control over financial reporting. This material weakness consisted solely of Warrant Modification Expense. The Company will continue to enhance its review process of warrant expense remeasurement.
This annual report does not include an attestation report from our registered public accounting firm regarding internal control over financial reporting. The Board’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only the Boards’ report in this annual report.
Changes in Internal Controls over Financial Reporting.
We regularly review our system of internal control over financial reporting.
During the year ended December 31, 2023, 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.
ITEM 9B. OTHER INFORMATION.
None
ITEM 9B. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INPECTIONS.
Not applicable
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| Table of Contents |
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Board of Directors
Information concerning each member of Chase’s Board of Directors is set forth below:
Name, Age, and Business Experience |
| Positions with Company |
William J. Barrett, 84
Secretary of the Company since 2001, Director of the Company from 1996 to 1997, rejoined the Board of Directors in 2001; Director of Dawson Geophysical Company (formerly TGC Industries, Inc. (“TGC”)), a company engaged in the geophysical services industry, from 1980 to 2021; Secretary of TGC from 1986 to November 1997; President of W. J. Barrett Associates, Inc., a private merchant banking firm, since June 2009; President of Barrett-Gardner Associates, Inc., a private merchant banking firm, from November 2002 until June 2009; previously Senior Vice President of Janney Montgomery Scott LLC, an investment banking firm, from 1978 to 2002; Director, Executive Vice President, and Secretary of Supreme Industries, Inc. (“Supreme”), a manufacturer of specialized truck bodies, from 1979 through September 2017 when Supreme was acquired by Wabash National Corporation. Mr. Barrett brings to the Board keen business and financial judgment and an extraordinary understanding of the Company’s business, history, and organization, as well as extensive leadership experience. |
| Lead Director |
|
|
|
Herbert M. Gardner, 84
Vice President of the Company since 2001, Director of the Company from 1996 to 1997 and rejoined the Board of Directors in 2001; Director of TGC Industries, Inc. (“TGC”), a company engaged in the geophysical services industry, from 1980 until February 2015 when Dawson Geophysical Company acquired TGC; Executive Vice President of Barrett-Gardner Associates, Inc., a private merchant banking firm, from November 2002 until June 2009; previously Senior Vice President of Janney Montgomery Scott LLC, an investment banking firm, from 1978 to 2002; Chairman of the Board of Supreme Industries, Inc. (“Supreme”), a manufacturer of specialized truck bodies, from 1979 through September 2017 when Wabash National Corporation acquired Supreme, Chief Executive Officer of Supreme from 1979 to January 2011, President of Supreme from June 1992 to February 2006; former Director of Nu-Horizons Electronics Corp., an electronics component distributor, from 1984 until January 2011; and former Director of MKTG, Inc., a marketing and sales promotion company from 1997 until January 2010. Mr. Gardner was selected to serve as a director of the Company because of his strong executive management skills, his business acumen, and his experience as chief executive officer of another public company. |
| Director |
|
|
|
John A. Forbes, 64
Joined the Board of Directors in 2019, a partner with Outcomes LLC and Full Sails LLC, two firms engaged in new product development and strategic business consulting, since June 2017. Previously, Mr. Forbes was the President of Utilimaster, a business unit of Spartan Motors USA, Inc., from July 2010 to June 2017. Mr. Forbes currently serves on the board of Patrick Industries, Inc. (“PATK”) and serves as a member of its Audit, Governance and Compensation Committees. Mr. Forbes has over 35 years of experience in serving various manufacturing industries and has extensive experience with operations management, acquisitions, strategic planning, risk management, and banking relations. He has been determined to be an “audit committee financial expert” under the rules and regulations of the Securities and Exchange Commission (the "SEC"). |
| Director |
| 9 |
| Table of Contents |
Matthew W. Long CPA, MBA, 62
Joined the Board of Directors in 2019, Chairman of Ryker Holdings, Inc., a private electrical construction company, served as Chief Financial Officer of ARC American from August 2019 through December 2022, served as Interim Chief Financial Officer for Spartan Motors, Inc. a publicly traded manufacturer of specialty vehicles until their Chief Financial Officer returned from medical leave at the end of 2018. Mr. Long served as a member of Board of Directors of Skyline Corporation serving on the Audit and Compensation Committees in 2017 and 2018 until the company was acquired in 2018. Mr. Long served as Chief Financial Officer, Treasurer, and Assistant Secretary of Supreme Industries, Inc. a publicly traded leading manufacturer of truck bodies and specialized commercial vehicles from April 2011 until the company was acquired in September 2017 where he played a critical role in improving the company’s profitability. |
| Director |
|
|
|
Mark C. Neilson, 65
Joined the Board of Directors in 2019, Founder/Managing Partner of Accretive CFO Services of San Diego LLC, a financial consulting services firm since December 2010; part owner of REF007, LLC, a San Diego-based franchise of Executive Peer Groups since April 2020; Director of Supreme Industries, Inc. from May 2003 to September 2017; Director of SmokerCraft, Inc., a manufacturer of pontoon and fishing boats, since December 2010; Director of Earthway Products, Inc., a manufacturer of fertilizer spreaders from December 2016 to August 2023; and Director of PenChecks, Inc., a provider of retirement plan distribution services since July 2020. Mr. Neilson qualifies as an “audit committee financial expert” under guidelines of the Securities and Exchange Commission |
| Director |
|
|
|
Wayne A. Whitener, 72
Joined the Board of Directors in 2009. Mr. Whitener, was Director of Dawson Geophysical Company (formerly TGC Industries, Inc.), a company engaged in the geophysical services industry, from 1984 until retiring in 2019 ; Executive Vice Chairman of Dawson since February 2015 until retirement, President of Dawson from July 1986 until February 2015; and Chief Executive Officer of Dawson from 1999 until February 2015. As the principal executive officer of another public company, Mr. Whitener provides valuable insight and guidance on the issues of corporate strategy and risk management. |
| Director |
Executive Officers
The following table sets forth certain information concerning the persons who serve as executive officers of the Company and who will continue to serve in such positions at the discretion of the Board of Directors.
Ann C. W. Green |
| 82 |
| Principal Executive Officer, Chief Financial Officer and Assistant Secretary |
Ms. Green has served as Chief Financial Officer and Assistant Secretary of the Company since 2001. She is Vice President of W. J. Barrett Associates, Inc., a private merchant banking firm. Ms. Green previously served for over 20 years as Assistant Secretary of each of Supreme Corporation, a specialized manufacturer of truck bodies, and Dawson Geophysical Company (formerly known as TGC Industries, Inc.), a company engaged in the geophysical services industry, and for 15 years as Assistant Vice President of Janney Montgomery Scott, LLC, an investment banking firm.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, and persons who own more than 10% of the Company’s common stock, par value $.00001 per share (the “Common Stock“), to file with the SEC certain reports of beneficial ownership of Common Stock. Based solely on copies of such reports furnished to the Company and written representations that no other reports were required, the Company believes that all applicable Section 16(a) filing requirements were complied with by its directors, officers, and 10% shareholders during the last fiscal year.
Committees
The Board of Directors has not established a separate audit committee within the meaning of the Exchange Act. Instead, the entire Board acts as the audit committee and will continue to do so for the foreseeable future. The Board of Directors has determined that William J. Barrett qualifies as an audit committee financial expert. He is not an independent director.
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| Table of Contents |
Code of Ethics
The Board of Directors has not adopted a code of ethics that applies to its executive officers. Since the Company is a development stage company with no operations and since only one of its executive officers receives compensation, the Board of Directors believes that a code of ethics is not necessary to deter wrongdoing and to promote honest and ethical conduct and accurate disclosure in the Company’s public communications.
ITEM 11. EXECUTIVE COMPENSATION.
The Company’s Board of Directors has agreed to pay the Company’s Chief Financial Officer an annual salary of $17,000. Board members are reimbursed for out-of-pocket expenses incurred in connection with Company business and development. There were no equity awards at fiscal year-end.
Summary Compensation Table
Name and Principal Position |
| Year |
| Salary |
|
| Bonus |
| Stock Awards |
|
| Option Awards |
| Non-Equity Incentive Plan Compensation ($) |
| Nonqualified Deferred Compensation Earnings ($) |
| All Other Compensation |
| Total |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ann C.W. Green, Chief Financial Officer |
| 2023 |
| $ | 17,000 |
|
| -0- |
| $ | 0 |
|
| -0- |
| -0- |
| -0- |
| -0- |
| $ | 17,000 |
|
|
| 2022 |
| $ | 17,000 |
|
| -0- |
| $ | 0 |
|
| -0- |
| -0- |
| -0- |
| -0- |
| $ | 17,000 |
|
Director Compensation
Directors of the Company are not paid fees, but are reimbursed for expenses incurred in connection with attendance at meetings of the Board of Directors and out-of-pocket expenses incurred in connection with Company business and development..
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Name and Address of Beneficial Owner |
| Title of Class |
| Amount and Nature of Beneficial Ownership |
|
| Approximate Percentage of Class (1) |
| ||
|
|
|
|
|
|
|
|
| ||
William J. Barrett PO Box 126, Rumson, NJ 07760 |
| Common |
|
| 8,954,524 | (2)(4) |
|
| 14.47 | % |
|
|
|
|
|
|
|
|
|
|
|
Herbert M. Gardner PO Box 126, Rumson, NJ 07760 |
| Common |
|
| 5,842,683 | (3)(4) |
|
| 9.44 | % |
|
|
|
|
|
|
|
|
|
|
|
John A. Forbes 51820 Waterford Green Dr., Granger, IN 46530 |
| Common |
|
| 501,800 |
|
|
| 0.81 | % |
|
|
|
|
|
|
|
|
|
|
|
Matthew W. Long 25580 North Shore Dr., Elkhart, IN 46514 |
| Common |
|
| 400,000 |
|
|
| 0.65 | % |
|
|
|
|
|
|
|
|
|
|
|
Mark C. Neilson 7140 Calabria Court #B, San Diego, CA 92122 |
| Common |
|
| 400,000 |
|
|
| 0.65 | % |
|
|
|
|
|
|
|
|
|
|
|
Wayne A. Whitener 101 E. Park Blvd., Ste 955 Plano, TX 75074 |
| Common |
|
| 472,738 |
|
|
| 0.76 | % |
|
|
|
|
|
|
|
|
|
|
|
Ann C. W. Green PO Box 126, Rumson, NJ 07760 |
| Common |
|
| 1,557,541 | (4) |
|
| 2.52 | % |
|
|
|
|
|
|
|
|
|
|
|
All directors & officers as a group (5 persons) |
| Common |
|
| 18,129,286 | (2)(3)(4) |
|
| 29.3 | % |
| 11 |
| Table of Contents |
____________
(1) | The percentage calculations have been made in accordance with Rule 13d-3(d)(1) promulgated under the Securities Exchange Act of 1934, as amended, based on number of shares outstanding plus the Common Stock underlying the warrants. |
|
|
(2) | Includes 1,492,169 shares of Common Stock (includes the Common Stock underlying warrants) owned by William J. Barrett’s wife. Mr. Barrett has disclaimed beneficial ownership of these shares. |
|
|
(3) | Includes 804,826 shares of Common Stock (includes the Common Stock underlying warrants) owned by the Generation Skipping Marital Trust U/W/O Mary K. Gardner. Mr. Gardner has disclaimed beneficial ownership of these shares. |
|
|
(4) | Includes the Common Stock underlying warrants held by the following directors and executive officers: |
Beneficial Owner |
| Number of Common Shares Underlying Warrants Beneficially Owned |
| |
|
|
|
| |
William J. Barrett (1) |
|
| 245,500 |
|
Herbert M. Gardner (2) |
|
| 712,500 |
|
John A. Forbes |
|
| - |
|
Matthew W. Long |
|
| - |
|
Mark C. Neilson |
|
| - |
|
Wayne A. Whitener |
|
| - |
|
Ann C. W. Green |
|
| 118,500 |
|
Total |
|
| 1,076,500 |
|
_____________
(1) | Includes 167,000 shares of Common Stock underlying warrants held by the named person’s spouse. Mr. Barrett has disclaimed beneficial ownership of the shares |
|
|
(2) | Includes 89,000 shares of Common Stock underlying warrants held by the Generation Skipping Marital Trust U/W/O Mary K. Gardner. Mr. Gardner has disclaimed beneficial ownership of the shares. |
Depositories such as The Depository Trust Company (Cede & Company) as of March 22, 2024 held, in the aggregate, more than 5% of the then outstanding Common Stock voting shares. The Company understands that such depositories hold such shares for the benefit of various participating brokers, banks, and other institutions which are entitled to vote such shares according to the instructions of the beneficial owners thereof. The Company has no reason to believe that any of such beneficial owners hold more than 5% of the Company’s outstanding voting securities.
EQUITY COMPENSATION PLANS
There are no equity compensation plans which have been approved by the Company’s stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Independence
The Common Stock is quoted on the over-the-counter market operated by OTC Pink Market, which does not impose any director independence requirements. Using the director independence requirements set forth in NASDAQ rule 5605(a)(2), the Company has four independent directors, Messrs. John A. Forbes, Matthew W. Long, Mark C. Neilson and Wayne A. Whitener.
Transactions and Relationships Involving Our Directors and Executive Officers
The Company did not engage in any transaction during the 2023 fiscal year, and does not currently propose to enter into any transaction, in which any related person had or will have a direct or indirect material interest in excess of $120,000.
| 12 |
| Table of Contents |
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The Company paid or accrued the following fees in the prior two fiscal years to Heaton & Company, PLLC (dba Pinnacle Accountancy Group of Utah), which has served as the Company’s independent registered public accounting firm from January 2019 to October 16, 2023, and to GreenGrowth CPAs which has served as the Company’s independent registered public accounting firm since October 17, 2023.
|
| Fiscal year ended December 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
1. Audit fees |
| $ | 12,668 |
|
| $ | 14,319 |
|
2. Audit-related fees |
|
| — |
|
|
| — |
|
3. Tax fees |
|
| 6,075 |
|
|
| — |
|
4. All other fees |
|
| — |
|
|
| — |
|
Totals |
| $ | 18,743 |
|
| $ | 14,319 |
|
We have considered whether the provision of any non-audit services, currently or in the future, is compatible with our auditors maintaining its independence and have determined that these services do not compromise their independence.
“Audit Fees” consisted of the fees billed for professional services rendered for the audit of our annual financial statements and the reviews of the financial statements included in our Forms 10-K and for any other services that were normally provided by our independent auditors in connection with our statutory and regulatory filings or engagements.
“Tax Fees” consisted of the fees billed for professional services rendered for tax compliance, tax advice and tax planning. Included in such Tax Fees were fees for preparation of our tax returns and consultancy and advice on other tax planning matters.
The Board of Directors, which functions as the audit committee, makes reasonable inquiry as to the independence of the Company’s independent registered public accounting firm based upon the considerations set forth in Rule 2-01 of Regulation S-X, including the examination of representation letters furnished by the independent registered public accounting firm.
| 13 |
| Table of Contents |
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) | The following documents are filed as a part of this report: | |
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| (1) | Financial Statements included in Item 8 above are filed as part of this annual report. |
|
|
|
| (2) | Financial Statement Schedules included in Item 8 herein: |
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|
| All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore, have been omitted. |
|
|
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| (3) | Exhibits: The information required by this Item 15(a)(3) is set forth in the Index to Exhibits accompanying this Annual Report on Form 10-K. |
Number |
| Description |
| ||
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|
|
| State of Delaware Certificate of Incorporation and State of Delaware Certificate of Correction | |
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| ||
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|
| ||
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| ||
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|
| ||
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|
|
101.INS* |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
|
|
|
101.SCH* |
| Inline XBRL Taxonomy Extension Schema Document. |
|
|
|
101.CAL* |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|
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|
101.DEF* |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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|
101.LAB* |
| Inline XBRL Taxonomy Extension Labels Linkbase Document. |
|
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101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
|
|
|
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
_______________
* | filed herewith |
| 14 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CHASE PACKAGING CORPORATION |
| |
|
|
| |
Date: April 15, 2024 | By: | /s/ Ann C. W. Green |
|
|
| Ann C. W. Green |
|
|
| Principal Executive Officer |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: April 15, 2024 | By: | /s/ Ann C.W. Green |
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|
| Ann C. W. Green |
|
|
| Chief Financial Officer and Assistant Secretary |
|
|
| (Principal Executive, Financial and Accounting Officer) |
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|
|
Date: April 15, 2024 | By: | /s/ William J. Barrett |
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|
| William J. Barrett |
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| Lead Director |
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|
|
Date: April 15, 2024 | By: | /s/ John A. Forbes |
|
|
| John A. Forbes |
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| Director |
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|
|
Date: April 15, 2024 | By: | /s/ Herbert M. Gardner |
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| Herbert M. Gardner |
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|
| Director |
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|
|
Date: April 15, 2024 | By: | /s/ Matthew W. Long |
|
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| Matthew W. Long |
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| Director |
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|
Date: April 15, 2024 | By: | /s/ Mark C. Neilson |
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|
| Mark C. Neilson |
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| Director |
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|
Date: April 15, 2024 | By: | /s/ Wayne Whitener |
|
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| Wayne Whitener |
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| Director |
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| 15 |
| Table of Contents |
CHASE PACKAGING CORPORATION
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
- INDEX TO FINANCIAL STATEMENTS -
|
| Pages |
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Report of Independent Registered Public Accounting Firm (PCAOB ID: 6580) |
| F-2 |
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Report of Independent Registered Public Accounting Firm (PCAOB ID: 6117) |
| F-3 |
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| F-4 |
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| F-5 |
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| F-6 |
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| F-7 |
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| F-8 |
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| F-1 |
| Table of Contents |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
of Chase Packaging Corporation
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Chase Packaging Corporation (the Company) as of December 31, 2023, and the related statements of operations, stockholders’ equity, and cash flows for the year then ended and the related notes collectively referred to as the financial statements.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Warrants valuation
Stock-based compensation expense incurred by the Company for employees and directors is based on the employee model of ASC 718, and the fair market value of the award is measured at the grant date. Corresponding expenses for employee and non-employee services are recognized over the requisite service period, which is typically the vesting period.
We identified management’s assumptions used in the Black Scholes Model as a critical audit matter. Management made judgments in order to determine the inputs used in the model. Specifically, the judgments with the highest degree of impact and subjectivity in determining the warrants valuation include Stock Price, Exercise Price, Estimated Term of Exercise (years), Volatility, Annual Rate of Quarterly Dividend and Discount Rate - Bond Equivalent Yield. Auditing the judgments made by management required a high degree of auditor judgment and an increased extent of audit effort.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures comprised of evaluating the Company’s assumptions used in the Black Scholes Model and reviewing the calculations.
/s/
April 15 ,2024
We have served as the Company’s auditor since 2023.
PCAOB ID Number
| F-2 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Chase Packaging Corporation
Rumson, New Jersey
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Chase Packaging Corporation (the Company) as of December 31, 2022, and the related statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/s/ Pinnacle Accountancy Group of Utah
We have served as the Company’s auditor since 2018.
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
Farmington, Utah
March 30, 2023
| F-3 |
| Table of Contents |
CHASE PACKAGING CORPORATION
BALANCE SHEETS
|
| December 31, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
ASSETS |
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| ||
CURRENT ASSETS: |
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| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
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|
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TOTAL ASSETS |
| $ |
|
| $ |
| ||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
|
|
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|
|
|
|
|
Accounts payable and accrued expenses |
| $ |
|
| $ |
| ||
TOTAL CURRENT LIABILITIES |
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| ||
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COMMITMENTS AND CONTINGENCIES (Note 9) |
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STOCKHOLDERS’ EQUITY: |
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|
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|
|
|
|
| - |
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|
| - |
|
Preferred stock, $ |
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| ||
Treasury stock, $ |
|
| ( | ) |
|
| ( | ) |
Additional paid-in capital |
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| ||
Accumulated deficit |
|
| ( | ) |
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| ( | ) |
TOTAL STOCKHOLDERS’ EQUITY |
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| ||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these financial statements.
| F-4 |
| Table of Contents |
CHASE PACKAGING CORPORATION
STATEMENTS OF OPERATIONS
|
| For The Year ended December 31, |
| |||||
|
| 2023 |
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| 2022 |
| ||
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NET SALES |
| $ |
|
| $ |
| ||
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OPERATING EXPENSES: |
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General and administrative expense |
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LOSS FROM OPERATIONS |
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| ( | ) |
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| ( | ) |
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OTHER INCOME (EXPENSE) |
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Interest and other income |
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Warrant modification expense |
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| ( | ) |
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TOTAL OTHER INCOME (EXPENSE) |
|
| ( | ) |
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LOSS BEFORE INCOME TAXES |
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| ( | ) |
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| ( | ) |
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Provision for income taxes |
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NET LOSS |
| $ | ( | ) |
| $ | ( | ) |
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LOSS PER COMMON SHARE - BASIC AND DILUTED |
| $ | ( | ) |
| $ | ( | ) |
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED |
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| ||
The accompanying notes are an integral part of these financial statements.
| F-5 |
| Table of Contents |
CHASE PACKAGING CORPORATION
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
|
| Common |
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| Additional Paid-in |
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| Accumulated |
|
| Treasury Stock |
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| Total Stockholders’ |
| |||||||||||||
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Shares |
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| Amount |
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| Equity |
| |||||||
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Balance at December 31, 2021 |
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| $ |
|
| $ |
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| $ | ( | ) |
|
| ( | ) |
| $ | ( | ) |
| $ |
| ||||
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Net loss for the year ended December 31, 2022 |
|
| — |
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|
| ( | ) |
|
| — |
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| ( | ) | |||
Balance at December 31, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
|
| ( | ) |
| $ | ( | ) |
| $ |
| ||||
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Modification of warrants, expiration of 6,909,000 warrants extended to March 8, 2026 |
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| — |
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| — |
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| |||||
Net loss for the year ended December 31, 2023 |
|
| — |
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|
|
|
|
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|
| ( | ) |
|
| — |
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|
|
|
|
| ( | ) | |||
Balance at December 31, 2023 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
|
| ( | ) |
| $ | ( | ) |
| $ |
| ||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
| Table of Contents |
CHASE PACKAGING CORPORATION
STATEMENTS OF CASH FLOWS
|
| For The Year Ended December 31, |
| |||||
|
| 2023 |
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| 2022 |
| ||
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| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Warrant modification expense |
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| ||
Change in assets and liabilities: |
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Accounts payable and accrued expenses |
|
|
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| ||
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Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
| ( | ) |
|
| ( | ) |
|
|
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|
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Cash and cash equivalents, at beginning of year |
|
|
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| ||
|
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|
|
CASH AND CASH EQUIVALENTS, END OF YEAR |
| $ |
|
| $ |
| ||
|
|
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|
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|
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
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|
|
Cash paid for: |
|
|
|
|
|
|
|
|
Interest |
| $ |
|
| $ |
| ||
Income taxes |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these financial statements.
| F-7 |
| Table of Contents |
CHASE PACKAGING CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
NOTE 1 - BASIS OF PRESENTATION:
Chase Packaging Corporation (“the Company”), a Delaware Corporation, previously manufactured woven paper mesh for industrial applications and 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.
NOTE 2 - LIQUIDITY:
At December 31, 2023 and 2022, the Company had cash and cash equivalents of $
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates:
The preparation of financial statements in conformity with U.S. GAAP 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.
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 December 31, 2023 and 2022, the Company had cash in insured accounts in the amount of $
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 follows FASB Interpretation of “Accounting for Uncertainty in Income Taxes.” At December 31, 2023 and 2022, 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
Stock-based compensation expense incurred by the Company for employees and directors is based on the employee model of ASC 718, and the fair market value of the award 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 718 as amended by ASU 2018-07. As such, the grant date is the measurement date of an award’s fair value. Corresponding expenses for employee and non-employee services are recognized over the requisite service period, which is typically the vesting period.
| F-8 |
| Table of Contents |
Treasury Stock
The Company accounts for treasury stock using the cost method. There were
Recently Adopted Accounting Pronouncements
The FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). This standard requires a financial asset to be presented at the net amount expected to be collected. We expect the financial assets of the Company in scope of ASU 2016-13 will primarily be accounts receivable. The Company will estimate an allowance for expected credit losses on accounts receivable that result from the inability of customers to make required payments. In estimating the allowance for expected credit losses, consideration will be given to the current aging of receivables, historical experience, and a review for potential bad debts. The Company adopted this guidance in the second quarter of fiscal 2023 and it did not have a material impact on its results of operations, financial position, and disclosures.
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 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
NOTE 5 - INCOME TAXES:
The Company has recorded a full valuation allowance on its net deferred tax assets and therefore any impact on the value of the Company’s deferred tax assets will be offset by a change in the valuation allowance, which increased by $
Our tax provision is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2023 and 2022 annual effective tax rate is estimated to be a combined
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The significant components of deferred tax assets (at an approximate 25% effective tax rate) as of December 31, 2023 and 2022, respectively, are as follows:
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Deferred tax assets and valuation allowances consist of: |
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Deferred tax assets: |
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Net operating loss carry forwards |
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Less valuation allowance |
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Net deferred tax assets |
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| F-9 |
| Table of Contents |
The income tax provision differs from the amount of income tax determined by applying the combined U.S federal and state tax rate (25%) for the years ended December 31, 2023 and 2022 due to the following:
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Book income |
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Warrant modification expense |
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Valuation allowance |
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Income tax expense |
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The Company has a net operating loss carry forward for federal and state tax purposes of approximately $
For financial reporting purposes, no deferred tax asset was recognized because at December 31, 2023 and 2022, management estimates that it is more likely than not that substantially all of the net operating losses will expire unused. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The timing and manner in which we can utilize our net operating loss carry forward and future income tax deductions in any year may be limited by provisions of the Internal Revenue Code regarding the change in ownership of corporations. Such limitation may have an impact on the ultimate realization of the Company’s carry forwards and future tax deductions. Section 382 of the Internal Revenue Code (“Section 382”) imposes limitations on a corporation’s ability to utilize net operating losses if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. Any unused annual limitation may be carried over to later years, and the amount of the limitation may under certain circumstances be increased by the built-in gains in assets held by us at the time of the change that are recognized in the five-year period after the change. Upon review of the ownership shifts, there has not been an ownership change as defined under Section 382.
The Company had no uncertain tax positions that would necessitate recording of a tax related liability.
The Company’s tax returns for the years ended December 31, 2023 and 2022 are open for examination under Federal Statute of Limitations.
NOTE 6 WARRANTS AND PREFERRED STOCK:
Warrants
2023 Extension of Warrant Terms
The Company, acting by resolution of its Board of Directors,
Average risk-free interest rate |
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Outstanding at December 31, 2022 |
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Granted |
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Extended |
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Exercised |
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| F-10 |
| Table of Contents |
As of December 31, 2023 and December 31, 2022, the average remaining contractual life of the outstanding warrants was
Series A 10% Convertible Preferred Stock
The Company has authorized
NOTE 7 - STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION:
At December 31, 2023 and 2022, the Company had
The Company did not incur any stock-based compensation or issue common or preferred stock or any other equity instruments during the year ended December 31, 2023 or 2022.
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 year ended December 31, 2023 or 2022.
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 years ended December 31, 2023 or 2022 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 on reporting dates. 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.
| F-11 |
| Table of Contents |
The following tables provide information on those assets measured at fair value on a recurring basis as of December 31, 2023 and 2022, respectively:
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| Carrying Amount In Balance Sheet December 31, |
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| Fair Value December 31, |
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| Fair Value Measurement Using |
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Assets: |
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Total Assets |
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| Carrying Amount In Balance Sheet December 31, |
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| Fair Value December 31, |
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Assets: |
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Treasury and government securities |
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Money market funds |
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Total Assets |
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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 $
NOTE 10 - SUBSEQUENT EVENTS:
On February 7, 2024, the Company signed a non-binding indication of interest to acquire the three subsidiaries of Roseville Partners, LLC, a privately owned company, primarily through issuance of shares of common stock. The three subsidiaries are currently engaged in tiny home sales and tiny home and RV community development in Pennsylvania and Florida. There can be no assurance that the parties will enter into definitive agreements or that the parties will consummate the transactions contemplated by the non-binding indication of interest. A press release announcing this non-binding letter of intent was issued on February 14, 2024.
| F-12 |