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WHLT Chase Packaging

Filed: 10 Aug 21, 3:47pm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2021

 

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)

 

Delaware

 

93-1216127

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

PO Box 126, Rumson NJ 07760

(Address of principal executive offices) (Zip Code)

 

(732) 741-1500

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

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 ☒     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 ☒     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

 

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ☒     No ☐

 

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 10, 2021

Common Stock, par value $.00001 per share

 

61,882,172 shares

 

 

 

 

Table of Contents

 

- INDEX –

 

 

 

Page(s)

 

 

 

 

 

PART I – Financial Information:

 

 

 

 

 

 

 

 

ITEM 1.

Financial Statements:

 

3

 

 

 

 

 

 

 

Condensed Balance Sheets (Unaudited) – June 30, 2021 and December 31, 2020

 

3

 

 

 

 

 

 

 

Condensed Statements of Operations (Unaudited) – Three and Six Months Ended June 30, 2021 and 2020

 

4

 

 

 

 

 

 

 

Condensed Statement of Changes in Stockholders’ Equity (Unaudited) – Three and Six Months Ended June 30, 2021 and 2020

 

5

 

 

 

 

 

 

 

Condensed Statements of Cash Flows (Unaudited) – Six Months Ended June 30, 2021 and 2020

 

6

 

 

 

 

 

 

 

Notes to Interim Condensed Financial Statements (Unaudited)

 

7

 

 

 

 

 

 

ITEM 2.

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

 

11

 

 

 

 

 

 

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

 

14

 

 

 

 

 

 

ITEM 4.

Controls and Procedures

 

14

 

 

 

 

 

 

PART II ��� Other Information:

 

 

 

 

 

 

 

 

ITEM 1.

Legal Proceedings.

 

15

 

 

 

 

 

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

15

 

 

 

 

 

 

ITEM 3.

Defaults upon Senior Securities.

 

15

 

 

 

 

 

 

ITEM 4.

Mine Safety Disclosures.

 

15

 

 

 

 

 

 

ITEM 5.

Other Information.

 

15

 

 

 

 

 

 

ITEM 6.

Exhibits.

 

16

 

 

 

 

 

 

SIGNATURES

 

17

 

 

 

 

 

 

EXHIBITS

 

 

 

 

 
2

Table of Contents

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

CHASE PACKAGING CORPORATION

CONDENSED BALANCE SHEETS

(Unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

ASSETS

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$528,287

 

 

$570,671

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$528,287

 

 

$570,671

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$831

 

 

$2,477

 

TOTAL CURRENT LIABILITIES

 

 

831

 

 

 

2,477

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Preferred stock, $1.00 par value; 4,000,000 authorized: Series A 10% Convertible preferred stock; 50,000 shares authorized; no shares issued and outstanding

 

 

0

 

 

 

0

 

Common stock, $0.00001 par value 200,000,000 shares authorized; 62,379,759 shares issued and 61,882,172 outstanding as of June 30, 2021 and December 31, 2020

 

 

624

 

 

 

624

 

Treasury stock, $0.00001 par value 497,587 shares as of June 30, 2021 and December 31, 2020

 

 

(49,759)

 

 

(49,759)

Additional paid-in capital

 

 

7,043,022

 

 

 

7,043,022

 

Accumulated deficit

 

 

(6,466,431)

 

 

(6,425,693)

TOTAL STOCKHOLDERS’ EQUITY

 

 

527,456

 

 

 

568,194

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$528,287

 

 

$570,671

 

 

See notes to interim condensed unaudited financial statements.

 

 
3

Table of Contents

 

CHASE PACKAGING CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$0

 

 

$0

 

 

$0

 

 

$0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expense

 

 

16,428

 

 

 

106,494

 

 

 

40,792

 

 

 

133,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(16,428)

 

 

(106,494)

 

 

(40,792)

 

 

(133,328)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

32

 

 

 

16

 

 

 

54

 

 

 

973

 

TOTAL OTHER INCOME

 

 

32

 

 

 

16

 

 

 

54

 

 

 

973

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

 

(16,396)

 

 

(106,478)

 

 

(40,738)

 

 

(132,355)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$(16,396)

 

$(106,478)

 

$(40,738)

 

$(132,355)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS PER COMMON SHARE

 

$(0.00)

 

$(0.00)

 

$(0.00)

 

$(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED

 

 

61,882,172

 

 

 

61,681,073

 

 

 

61,882,172

 

 

 

61,331,623

 

 

See notes to interim condensed unaudited financial statements.

 

 
4

Table of Contents

 

CHASE PACKAGING CORPORATION

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited)

 

 

 

Preferred

 

 

Common

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Treasury Stock

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Shares

 

 

Amount

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three and Six Months Ended June 30, 2020

 

Balance at December 31, 2019

 

 

-

 

 

$0

 

 

 

61,479,759

 

 

$615

 

 

$6,953,031

 

 

$(6,234,659)

 

 

(497,587)

 

$(49,759)

 

$669,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three months ended March 31, 2020

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(25,877)

 

 

-

 

 

 

0

 

 

 

(25,877)

Balance at March 31, 2020

 

 

-

 

 

$0

 

 

 

61,479,759

 

 

$615

 

 

$6,953,031

 

 

$(6,260,536)

 

 

(497,587)

 

$(49,759)

 

$643,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Based Compensation

 

 

-

 

 

 

0

 

 

 

900,000

 

 

 

9

 

 

 

89,991

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

90,000

 

Net loss for the three months ended June 30, 2020

 

 

 

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(106,478)

 

 

-

 

 

 

0

 

 

 

(106,478)

Balance at June 30, 2020

 

 

-

 

 

$0

 

 

 

62,379,759

 

 

$624

 

 

$7,043,022

 

 

$(6,367,014)

 

 

(497,587)

 

$(49,759)

 

$626,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three and Six Months Ended June 30, 2021

Balance at December 31, 2020

 

 

-

 

 

$0

 

 

 

62,379,759

 

 

$624

 

 

$7,043,022

 

 

$(6,425,693)

 

 

(497,587)

 

$(49,759)

 

$568,194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three months ended March 31, 2021

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(24,342)

 

 

-

 

 

 

0

 

 

 

(24,342)

Balance at March 31, 2021

 

 

-

 

 

$0

 

 

 

62,379,759

 

 

$624

 

 

$7,043,022

 

 

$(6,450,035)

 

 

(497,587)

 

$(49,759)

 

$543,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three months ended June 30, 2021

 

 

-

 

 

 

0

 

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(16,396)

 

 

-

 

 

 

0

 

 

 

(16,396)

Balance at June 30, 2021

 

 

-

 

 

$0

 

 

 

62,379,759

 

 

$624

 

 

$7,043,022

 

 

$(6,466,431)

 

 

(497,587)

 

$(49,759)

 

$527,456

 

 

See notes to interim condensed unaudited financial statements.

 

 
5

Table of Contents

 

CHASE PACKAGING CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$(40,738)

 

 

(132,355)

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

 

 

 

 

 

 

 

 

Stock based compensation

 

 

0

 

 

 

90,000

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

(1,646)

 

 

(9,365)

 

 

 

 

 

 

��

 

 

Net cash used in operating activities

 

 

(42,384)

 

 

(51,720)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH

 

 

(42,384)

 

 

(51,720)

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

570,671

 

 

 

679,147

 

 

 

 

 

 

 

 

 

 

CASH, END OF PERIOD

 

$528,287

 

 

 

627,427

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

Interest

 

$0

 

 

$0

 

Income taxes

 

$0

 

 

$0

 

 

See notes to interim condensed unaudited financial statements.

 

 
6

Table of Contents

 

CHASE PACKAGING CORPORATION

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2021 AND DECEMBER 31, 2020

(Unaudited)

 

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.

 

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 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, 2020, 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, 2021, results of operations for the three and six months ended June 30, 2021 and 2020, and cash flows for the six months ended June 30, 2021 and 2020, as applicable, have been made. The results of operations for the three and six months ended June 30, 2021 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, 2020, 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

 

Intangibles, Goodwill and Other — In January 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, ASU 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 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 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 2017-04 is effective for fiscal years beginning after December 15, 2019. The Company adopted ASU 2017-04 commencing in the first quarter of fiscal 2020 and this ASU did not have a material impact on its financial statements and related footnote disclosures.

 

 
7

Table of Contents

 

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 is 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. The Company adopted ASU 2018-13 commencing in the first quarter of fiscal 2020 and this ASU did not have a material impact on the Company’s fair value disclosures in the Company’s financial statements.

 

Recent Accounting Pronouncements – To Be Adopted

 

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.

 

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, 2021 and December 31, 2020, the Company had cash in insured accounts in the amount of $28,287 and $70,671, respectively, and cash equivalents (Treasury and government securities) held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of approximately $500,000 and $500,000 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.” At June 30, 2021 and December 31, 2020, 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 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 718 as amended by ASU 2018-07. As such, the grant date is the measurement date of an award’s fair value.

 

 
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 and 6,909,000 common stock equivalents (warrants - Note 5) from the calculation of diluted loss per share for the three and six months ended June 30, 2021 and 2020, respectively, which, if included, would have an antidilutive effect.

 

NOTE 5 - WARRANTS AND PREFERRED STOCKS:

 

Warrants

 

2019 Extension of Warrant Terms

 

On July 9, 2019, 6,909,000 common share purchase warrants issued by the Company were modified to extend their maturity date to September 7, 2021. The exercise price and all other terms of the original warrant agreement remain the same. The warrants modification expense of $567,194 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:

 

Average risk-free interest rate

 

 

1.58%

Average expected life-years

 

 

2

 

Expected volatility

 

 

172.88%

Expected dividends

 

 

0%

 

 

 

Number of

Warrants

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Life (Years)

 

 

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2020

 

 

6,909,000

 

 

$0.15

 

 

 

0.68

 

Granted

 

 

 

 

 

 

 

 

 

Extended

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

Forfeited/expired

 

 

 

 

 

 

 

 

 

Outstanding at June 30, 2021

 

 

6,909,000

 

 

$0.15

 

 

 

0.19

 

Exercisable at June 30, 2021

 

 

6,909,000

 

 

$0.15

 

 

 

0.19

 

 

As of June 30, 2021 and December 31, 2020, 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, 2021.

 

Series A 10% Convertible Preferred Stock

 

The Company has authorized 4,000,000 shares of Series A 10% Convertible Preferred Stock. As of June 30, 2021 and December 31, 2020, there was no preferred stock outstanding.

 

NOTE 6 - 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).

 

 
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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, 2021 or 2020.

 

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, 2021 or 2020 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.

 

The following tables provide information on those assets measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020, respectively:

 

 

 

Carrying

Amount In

Balance Sheet

June 30,

 

 

Fair Value

June 30,

 

 

Fair Value

Measurement Using

 

 

 

2021

 

 

2021

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury and government securities

 

$500,000

 

 

$500,000

 

 

$500,000

 

 

$0

 

 

$0

 

Money market funds

 

 

28,287

 

 

 

28,287

 

 

 

28,287

 

 

 

0

 

 

 

0

 

Total Assets

 

$528,287

 

 

$528,287

 

 

$528,287

 

 

$0

 

 

$0

 

 

 

 

Carrying

Amount In

Balance Sheet

December 31,

 

 

Fair Value

December 31,

 

 

Fair Value

Measurement Using

 

 

 

2020

 

 

2020

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury and government securities

 

$500,000

 

 

$500,000

 

 

$500,000

 

 

$0

 

 

$0

 

Money market funds

 

 

70,671

 

 

 

70,671

 

 

 

70,671

 

 

 

0

 

 

 

0

 

Total Assets

 

$570,671

 

 

$570,671

 

 

$570,671

 

 

$0

 

 

$0

 

 

NOTE 7 - 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 cash compensation other than reimbursement of out-of-pocket expenses incurred in connection with Company business and development.

 

NOTE 8 - SUBSEQUENT EVENTS:

 

The Company has evaluated subsequent events from June 30, 2021 through the issuance date of these financial statements, and there are no events requiring disclosure.

 

 
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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, 2021 and 2020

 

Revenue

 

The Company had no operations and no revenue for the three months ended June 30, 2021 and 2020, 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, 2021 and 2020.

 

 

 

Three Months Ended

June 30,

 

 

 

2021

 

 

2020

 

Audit, accounting and legal fees

 

 

9,181

 

 

 

9,140

 

Payroll

 

 

5,160

 

 

 

5,062

 

Other general and administrative expense

 

 

2,087

 

 

 

92,292

 

 

 

$16,428

 

 

$106,494

 

 

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.

 

Loss from Operations

 

The Company incurred a loss from operations of $16,428 and $106,494 for the three months ended June 30, 2021 and 2020, respectively.

 

 
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Other Income

 

The following table presents our total Other Income for the three months ended June 30, 2021 and 2020.

 

 

 

Three Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Interest and other income

 

$32

 

 

$16

 

Other Income

 

$32

 

 

$16

 

 

Other income increased by $16 for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020. The increase in other income was related to the increase in interest and other income for the three months ended June 30, 2021.

 

Net Loss

 

The Company had a net loss of $16,396 for the three months ended June 30, 2021, compared with a net loss of $106,478 for the three months ended June 30, 2020. Decrease in net loss was due primarily to the decrease in stock-based compensation of $90,000.

 

Loss per share for the three months ended June 30, 2021 and 2020 was approximately $(0.00) and $(0.00) 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.

 

For the six months ended June 30, 2021 and 2020

 

Revenue

 

The Company had no operations and no revenue for the six months ended June 30, 2021 and 2020, 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 six months ended June 30, 2021 and 2020.

 

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

Audit, accounting and legal fees

 

 

22,123

 

 

 

25,784

 

Payroll

 

 

10,287

 

 

 

10,235

 

Other general and administrative expense

 

 

8,382

 

 

 

97,309

 

 

 

$40,792

 

 

$133,328

 

 

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.

 

Loss from Operations

 

The Company incurred a loss from operations of $40,792 and $133,328 for the six months ended June 30, 2021 and 2020, respectively.

 

 
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Other Income

 

The following table presents our total Other Income for the six months ended June 30, 2021 and 2020.

 

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Interest and other income

 

$54

 

 

$973

 

Other Income

 

$54

 

 

$973

 

 

Other income decreased by $919 for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The decrease in other income was related to the decrease in interest and other income for the six months ended June 30, 2021.

 

Net Loss

 

The Company had a net loss of $40,738 for the six months ended June 30, 2021, compared with a net loss of $132,355 for the six months ended June 30, 2020. Decrease in net loss was due primarily to the decrease in stock-based compensation of $90,000.

 

Loss per share for the six months ended June 30, 2021 and 2020 was approximately $(0.00) and $(0.00) 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 June 30, 2021, the Company had cash and cash equivalents of approximately $528,287 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 the periods presented in this Report.

 

Cash Flow

 

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

Net cash used in operating activities

 

$(42,384)

 

$(51,720)

Net cash provided by investing activities

 

 

-

 

 

 

-

 

Net cash provided by financing activities

 

 

-

 

 

 

-

 

Net decrease in cash

 

$(42,384)

 

$(51,720)

 

Net cash of $(42,384) and $(51,720) were used in operations during the six months period ended June 30, 2021 and 2020, respectively.

 

The use of cash of $(42,384) used in operating activities for the six months ended June 30, 2021, principally resulted from our net loss of $40,738, as adjusted for changes in our working capital accounts of $(1,646).

 

The use of cash of $(51,720) used in operating activities for the six months ended June 30, 2020, principally resulted from our net loss of $132,355, as adjusted for changes in our working capital accounts of $(9,365) and for the stock-based compensation of $90,000.

 

 
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No cash flows were used in or provided by investing activities during the six months ended June 30, 2021 and 2020.

 

No cash flows were used in or provided by financing activities during the six months ended June 30, 2021 and 2020.

 

New Accounting Pronouncements

 

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

 

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-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 officer and chief financial officer concluded that as of June 30, 2021, 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, 2021, 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.

 

 
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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

 

Interactive data files pursuant to Rule 405 of Regulation S-T.

_____________

* 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 10, 2021

By:

/s/ Ann C. W. Green

 

 

 

Ann C. W. Green

 

 

 

Chief Financial Officer and Assistant Secretary

 

 

 

(Principal Executive, Financial and Accounting Officer)

 

 

 
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