UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

(Mark One)

 

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

 

For the fiscal year ended December 31, 2021 

OR

 

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

 

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

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

PO Box 126, Rumson, NJ 07760

(Address of principal executive offices and zip code)

 

(732) 741.1500

(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 ☐ No ☒

 

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 ☐ No ☒

 

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 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). Yes ☒ No ☐

 

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

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 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 ☒ No ☐

 

The aggregate market value of voting and non-voting common equity held by non-affiliates as of June 30, 2021 was approximately $8,138,568 based upon 41,951,379 shares held by non-affiliates and the last reported sales price of $0.194 per share on such date.

 

Number of shares of common stock outstanding as of March 24, 2022: 62,379,759

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, 2021

 

TABLE OF CONTENTS

 

 

 

 

PAGE NO

 

PART I

 

 

 

 

 

 

 

 

 

 

ITEM 1

BUSINESS

 

 

4

 

ITEM 1A

RISK FACTORS

 

 

4

 

ITEM 1B

UNRESOLVED STAFF COMMENTS

 

 

4

 

ITEM 2

PROPERTIES

 

 

4

 

ITEM 3

LEGAL PROCEEDINGS

 

 

4

 

ITEM 4

MINE SAFETY DISCLOSURES

 

 

4

 

 

 

 

 

 

 

PART II

 

 

 

 

 

 

ITEM 5

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

 

5

 

ITEM 6

SELECTED FINANCIAL DATA

 

 

5

 

ITEM 7

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

 

5

 

ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

 

7

 

ITEM 8

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

7

 

ITEM 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

 

7

 

ITEM 9A

CONTROLS AND PROCEDURES

 

 

7

 

ITEM 9B

OTHER INFORMATION

 

 

8

 

 

 

 

 

 

 

PART III

 

 

 

 

 

 

 

 

 

 

ITEM 10

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

 

9

 

ITEM 11

EXECUTIVE COMPENSATION

 

 

11

 

ITEM 12

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

 

12

 

ITEM 13

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

 

13

 

ITEM 14

PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

 

14

 

 

 

 

 

 

 

PART IV

 

 

 

 

 

 

 

 

 

 

ITEM 15

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

 

15

 

SIGNATURES

 

 

17

 

 

 
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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.

 

 
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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.

 

 
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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 trades in the Pink Sheets under the symbol “WHLT.” American Stock Transfer and Trust Company has determined that there were approximately 240 holders of record on December 31, 2021. Trading volume in the Company’s securities has been nominal. The last reported high and low prices on December 31, 2021 were $0.17 and $0.17, respectively, and the last trade was $0.17.

 

High and low closing stock prices for the Company’s common stock in the years ended December 31, 2021 and December 31, 2020 are displayed in the following table:

 

 

 

2021 Market Price

 

 

2020 Market Price

 

Quarter Ended

 

High

 

 

Low

 

 

High

 

 

Low

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31

 

$0.430

 

 

$0.100

 

 

$0.200

 

 

$0.100

 

June 30

 

$0.250

 

 

$0.100

 

 

$0.200

 

 

$0.100

 

September 30

 

$0.300

 

 

$0.140

 

 

$0.720

 

 

$0.150

 

December 31

 

$0.250

 

 

$0.170

 

 

$0.350

 

 

$0.100

 

 

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, 2021 and 2020

 

Revenue

 

The Company had no operations and no revenue for the years ended December 31, 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 years ended December 31, 2021 and 2020.

 

 

 

Year Ended

December 31,

 

 

 

2021

 

 

2020

 

Audit and professional fees

 

 

38,173

 

 

 

68,000

 

Payroll

 

 

20,582

 

 

 

20,502

 

Stock based compensation

 

 

-

 

 

 

90,000

 

Other general and administrative expense

 

 

12,898

 

 

 

13,542

 

 

 

$71,653

 

 

$192,044

 

 

Operating expenses consist mostly of audit and accounting fees and payroll. There were less operating expenses for the year ended December 31, 2021, mainly due to lower legal and professional fees than were incurred in 2021. There was no stock based compensation in 2021. 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.

 

 
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Loss from Operation

 

The Company incurred a loss from operations of $71,653 and $192,044 for the years ended December 31, 2021 and 2020, respectively.

 

Other Income (Expense)

 

The following table presents our total Other Income (Expense) for the years ended December 31, 2021 and 2020.

 

 

 

Year Ended

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Interest and other income

 

$117

 

 

$1,010

 

Warrant modification expense

 

 

(1,450,890 )

 

 

-

 

 

 

$(1,450,773 )

 

$1,010

 

 

Other income (expense) increased by $(1,451,783) for the year ended December 31, 2021 as compared to the year ended December 31, 2020. The increase was caused by 2021 Warrant modification expenses (See Note 6 on the accompanying financial statements) and less interest income due to fewer investable funds and low interest rates.

 

Net Loss

 

The Company had a net loss of $1,522,426 for the year ended December 31, 2021, compared with a net loss of $191,034 for the year ended December 31, 2020. 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, 2021 and 2020 were $(0.02) 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, 2021 the Company had cash and cash equivalents of $497,135, consisting mostly of money market funds and 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,

 

 

 

2021

 

 

2020

 

Net cash used in operating activities

 

$(73,536 )

 

$(108,476 )

Net cash provided by investing activities

 

 

-

 

 

 

-

 

Net cash provided by financing activities

 

 

-

 

 

 

-

 

Net cash outflow

 

$(73,536 )

 

$(108,476 )

 

Net cash of $73,536 and $108,476 were used in operations during the year ended December 31, 2021 and 2020, respectively.

 

The use of cash of $73,536 used in operating activities for the year ended December 31, 2021, principally resulted from our net loss of $1,522,426, as adjusted for a non-cash charge for warrants modification expense of $1,450,890, and a change in accounts payable and accrued expenses of $2,000.

 

The use of cash of $108,476 used in operating activities for the year ended December 31, 2020, principally resulted from our net loss of $191,034, as adjusted for non-cash charges for stock-based compensation of $90,000, and changes in accounts payable and accrued expenses of $7,442.

 

No cash flows were used in or provided by investing activities during the years ended December 31, 2021 and 2020.

 

 
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Table of Contents

 

No cash proceeds were used in or provided by financing activities during the years ended December 31, 2021 and 2020.

 

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, 2021 and 2020 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 officer and chief financial officer concluded that as of December 31, 2021, our disclosure controls and procedures were effective.

 

 
7

Table of Contents

 

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.

 

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, 2021. 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.

 

Management has concluded that we did maintain effective internal control over financial reporting as of December 31, 2021 based on those criteria.

 

Management’s report was not subject to attestation by the Company’s independent registered public accounting firm since the Company is classified as a smaller reporting company.

 

Changes in Internal Controls over Financial Reporting.

 

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

 

During the year ended December 31, 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.

 

ITEM 9B. OTHER INFORMATION.

 

None

 

 
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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, 82

 

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 since 1980; 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, 82

 

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

 

 

 

Edward L. Flynn, 87

 

Director of the Company since 2007; Director of Dawson Geophysical Company (formerly TGC Industries, Inc.), a company engaged in the geophysical services industry, from 1999 until February 2015; Owner of Flynn Meyer Company, a management company for the restaurant industry, since 1976; and Director and Treasurer of Citri-Lite Co., a soft drink company, since 1994. Mr. Flynn is an experienced leader of large organizations and brings to the Board strong executive management skills and experience serving on the boards of other public companies.  Mr. Flynn became a Board Member Emeritus on March 9, 2022.

 

Director

 

 

 

John A. Forbes, 62

 

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 as a member of Patrick’s Audit Committee and Compensation Committee. Mr. Forbes has over 32 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

 

 
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Matthew W. Long CPA, MBA, 60

 

Joined the Board of Directors in 2019, Chairman of ARC American, a private electrical construction company, served as Chief Financial Officer of ARC American from August 2019 through December 2021, 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, 63

 

Joined the Board of Directors in 2019, Founder/Managing Partner of Accretive CFO Services of San Diego LLC and Accretive LLC (Indiana), a financial consulting services firm since December 2010; 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 since December 2016; Director of EVS, Ltd., a manufacturer of emergency vehicle safety seating products since 1999; 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, 70

 

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

 

80

 

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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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

 

2021

 

$17,000

 

 

-0-

 

$0

 

 

-0-

 

-0-

 

-0-

 

-0-

 

$17,000

 

 

 

2020

 

$17,000

 

 

-0-

 

$10,000

 

 

-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. In 2020 the members of the Board of Directors and the CFO received common stock in lieu of cash for services rendered in 2020.

 

 
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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)(5)

 

 

14.47

%

 

 

 

 

 

 

 

 

 

 

 

Herbert M. Gardner

PO Box 126, Rumson, NJ 07760

 

Common

 

 

5,842,683

(3)(5)

 

 

9.44

%

 

 

 

 

 

 

 

 

 

 

 

Edward L. Flynn

7511 Myrtle Avenue Glendale, NY 11385

 

Common

 

 

3,212,007

(4)(5)

 

 

5.19

%

 

 

 

 

 

 

 

 

 

 

 

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

(5)

 

 

0.76

%

 

 

 

 

 

 

 

 

 

 

 

Ann C. W. Green

PO Box 126, Rumson, NJ 07760

 

Common

 

 

1,557,541

(5)

 

 

2.52

%

 

 

 

 

 

 

 

 

 

 

 

All directors & officers as a group (5 persons)

 

Common

 

 

21,341,293

(2)(3)(4)(5)

 

 

34.49

%

____________

(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 1,372,824 shares of Common Stock (includes the Common Stock underlying warrants) owned by Edward L. Flynn’s wife. Mr. Flynn has disclaimed beneficial ownership of these shares.

 

 

(5)

Includes the Common Stock underlying warrants held by the following directors and executive officers:

 

 
12

Table of Contents

 

Beneficial Owner

 

Number of

Common

Shares

Underlying

Warrants

Beneficially

Owned

 

 

 

 

 

William J. Barrett (1)

 

 

245,500

 

Herbert M. Gardner (2)

 

 

712,500

 

Edward L. Flynn (3)

 

 

334,000

 

John A. Forbes

 

 

-

 

Matthew W. Long

 

 

-

 

Mark C. Neilson

 

 

-

 

Wayne A. Whitener

 

 

-

 

Ann C. W. Green

 

 

118,500

 

Total

 

 

1,410,500

 

_____________

(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.

 

 

(3)

Includes 167,000 shares of Common Stock underlying warrants, respectively, held by the named person’s spouse. Mr. Flynn has disclaimed beneficial ownership of the shares.

 

Depositories such as The Depository Trust Company (Cede & Company) as of March 3, 2022 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 Pink OTC Markets Inc., which does not impose any director independence requirements. Using the director independence requirements set forth in NASDAQ rule 5605(a)(2), the Company has five independent directors, Messrs. Edward L. Flynn, 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 2021 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.

 

 
13

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 since January 2019.

 

 

 

Fiscal year ended December 31,

 

 

 

2021

 

 

2020

 

1. Audit fees

 

$12,402

 

 

$12,500

 

2. Audit-related fees

 

 

-

 

 

 

-

 

3. Tax fees

 

 

500

 

 

 

500

 

4. All other fees

 

 

-

 

 

 

-

 

Totals

 

$12,902

 

 

$13,000

 

 

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.

 

 
14

Table of Contents

 

PART IV

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 

(a)

The following documents are filed as a part of this report:

 

 

 

 

(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:

 

 

 

 

 

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.

 

 

 

 

(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

 

 

 

3.1

 

Articles of Incorporation, as amended, of the Company filed as Exhibit 3.1 to the Company’s Form 10-SB, as amended, dated October 24, 1996, filed with the Securities and Exchange Commission and incorporated herein by reference.

 

 

 

3.2

 

Articles of Amendment to the Articles of Incorporation of the Company filed as Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 9, 2008, and incorporated herein by reference.

 

 

 

3.3

 

Amended and Restated Bylaws of the Company dated March 28, 2008, filed as Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on April 3, 2008, and incorporated herein by reference .

 

 

 

3.4*

 

State of Delaware Certificate of Incorporation and State of Delaware Certificate of Correction

 

 

 

4.1

 

Form of Registration Rights Amendment, dated as of September 7, 2007, by and among the Company and certain purchasers named therein, filed as Exhibit 4.1 to the Company’s Form 10-QSB/A for the quarterly period ended September 30, 2007, filed with the Securities and Exchange Commission on May 5, 2008, and incorporated herein by reference.

 

 

 

4.2

 

Form of Amendment Number One to Registration Rights Agreement, dated as of April 30, 2008, by and among the Company and certain purchasers named therein, filed as Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 5, 2008, and incorporated herein by reference.

 

 

 

4.3

 

Form of Securities Purchase and Subscription Agreement, dated as of September 7, 2007, by and among the Company and certain purchasers named therein, filed as Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on September 11, 2007, and incorporated herein by reference.

 

 

 

4.4

 

Statement of Resolution Establishing Series A 10% Convertible Preferred Stock of the Company, filed as Exhibit 10.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on September 11, 2007, and incorporated herein by reference.

 

 

 

4.5

 

Form of Warrant Agreement and Warrant Certificate dated as of September 7, 2007, filed as Exhibit 10.4 to the Company’s Form 8-K filed with the Securities and Exchange Commission on September 11, 2007, and incorporated herein by reference.

 

 

 

4.6

 

Statement of Resolution Regarding Series of Preferred Stock of the Company dated November 9, 2007, filed as Exhibit 4.6 to the Company’s Form 10-Q for the quarterly period ended June 30, 2008, filed with the Securities and Exchange Commission on August 13, 2008, and incorporated herein by reference.

 

 

 

4.7

 

Statement of Resolution Regarding Series of Preferred Stock of the Company, filed as Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 21, 2008, and incorporated herein by reference:

 

 

 

4.8

 

Form of Agreement dated March 30, 2012, among the Company and various holders of Chase Packaging Corporation’s Series A 10% Convertible Preferred Stock, filed as Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on April 5, 2012, and incorporated herein by reference.

 

 
15

Table of Contents

 

4.9

 

Statement of Resolution Regarding Series of Preferred Stock of the Company, filed as Exhibit 4.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on September 10, 2012, and incorporated herein by reference.

 

 

 

4.10

 

Form of Amendment No. 2 to Warrant Agreement filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended September 30, 2014, filed with the Securities and Exchange Commission on November 13, 2014, and incorporated herein by reference.

 

 

 

4.11

 

Form of Amendment No. 3 to Warrant Agreement filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended September 30, 2015, filed with the Securities and Exchange Commission on October 22, 2015, and incorporated herein by reference.

 

 

 

31.1*

 

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1*

 

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

 

 

 

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.

 

 

 

101.DEF*

 

Inline XBRL Taxonomy Extension Definition Linkbase Document.

 

 

 

101.LAB*

 

Inline XBRL Taxonomy Extension Labels Linkbase Document.

 

 

 

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

 

 
16

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: March 25, 2022

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: March 25, 2022

By:

/s/ Ann C.W. Green

 

 

 

Ann C. W. Green

 

 

 

Chief Financial Officer and Assistant Secretary

 

 

 

(Principal Executive, Financial and Accounting Officer)

 

 

 

 

 

Date: March 25, 2022

By:

/s/ William J. Barrett

 

 

 

William J. Barrett

 

 

 

Lead Director

 

 

 

 

 

Date: March 25, 2022

By:

/s/ Edward L. Flynn

 

 

 

Edward L. Flynn

 

 

 

Director

 

 

 

 

 

Date: March 25, 2022

By:

/s/ John A. Forbes

 

 

 

John A. Forbes

 

 

 

Director

 

 

 

 

 

Date: March 25, 2022

By:

/s/ Herbert M. Gardner

 

 

 

Herbert M. Gardner

 

 

 

Director

 

 

 

 

 

Date: March 25, 2022

By:

/s/ Matthew W. Long

 

 

 

Matthew W. Long

 

 

 

Director

 

 

 

 

 

Date: March 25, 2022

By:

/s/ Mark C. Neilson

 

 

 

Mark C. Neilson

 

 

 

Director

 

 

 

 

 

Date: March 25, 2022

By:

/s/ Wayne Whitener

 

 

 

Wayne Whitener

 

 

 

Director

 

 

 
17

Table of Contents

 

CHASE PACKAGING CORPORATION

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

 

- INDEX TO FINANCIAL STATEMENTS -

 

 

 

Pages

 

 

 

 

 

Report of Independent Registered Public Accounting Firm (PCAOB ID: 6117) 

 

F-2

 

 

 

 

 

 

Balance Sheets

 

F-3

 

 

 

 

 

 

Statements of Operations

 

F-4

 

 

 

 

 

 

Statements of Stockholders’ Equity

 

F-5

 

 

 

 

 

 

Statements of Cash Flows

 

F-6

 

 

 

 

 

 

Notes to Financial Statements

 

F-7

 

 

 
F-1

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, 2021 and 2020, 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, 2021 and 2020, 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 provide a reasonable basis for our opinion.

 

Critical Audit Matters

 

The critical audit matters communicated below 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. 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 

Warrant Modification Expense

 

As described in Note 6 to the financial statements, the Company amended and extended the expiration date of its outstanding warrants and recorded warrant modification expense. Management uses a valuation model requiring various inputs to establish their estimates for the value of the warrant modification expense.

 

The principal considerations for our determination that performing procedures relating to the warrant modification expense is a critical audit matter are due to the material impact it has on the financial statements.

 

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included, among others, evaluating the reasonableness of the input’s management used in the valuation model related to the warrants to determine the warrant modification expense.

 

/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 16, 2022

 

 
F-2

Table of Contents

 

CHASE PACKAGING CORPORATION

BALANCE SHEETS

 

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

ASSETS

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$497,135

 

 

$570,671

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$497,135

 

 

$570,671

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$477

 

 

$2,477

 

TOTAL CURRENT LIABILITIES

 

 

477

 

 

 

2,477

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

-

 

 

 

-

 

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

 

 

624

 

 

 

624

 

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

 

 

(49,759 )

 

 

(49,759 )

Additional paid-in capital

 

 

8,493,912

 

 

 

7,043,022

 

Accumulated deficit

 

 

(7,948,119 )

 

 

(6,425,693 )

TOTAL STOCKHOLDERS’ EQUITY

 

 

496,658

 

 

 

568,194

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$497,135

 

 

$570,671

 

 

The accompanying notes are an integral part of these financial statements.

 

 
F-3

Table of Contents

 

CHASE PACKAGING CORPORATION

STATEMENTS OF OPERATIONS

 

 

 

For The Year Ended

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

NET SALES

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

General and administrative expense

 

 

71,653

 

 

 

192,044

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(71,653 )

 

 

(192,044 )

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

Warrant modification expense

 

 

(1,450,890 )

 

 

-

 

Interest and other income

 

 

117

 

 

 

1,010

 

 

 

 

 

 

 

 

 

 

TOTAL OTHER INCOME (EXPENSE)

 

 

(1,450,773 )

 

 

1,010

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

 

(1,522,426 )

 

 

(191,034 )

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$(1,522,426 )

 

$(191,034 )

 

 

 

 

 

 

 

 

 

LOSS PER COMMON SHARE – BASIC AND DILUTED

 

$(0.02 )

 

$(0.00 )

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED

 

 

61,882,172

 

 

 

61,608,402

 

 

The accompanying notes are an integral part of these financial statements.

 

 
F-4

Table of Contents

 

CHASE PACKAGING CORPORATION

STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

 

 

 

Preferred

 

 

Common

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Treasury Stock

 

 

Total Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Shares

 

 

Amount

 

 

 Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

-

 

 

$-

 

 

 

61,479,759

 

 

$615

 

 

$6,953,031

 

 

$(6,234,659 )

 

 

(497,587 )

 

$(49,759 )

 

$669,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation expense

 

 

 

 

 

 

-

 

 

 

900,000

 

 

 

9

 

 

 

89,991

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

90,000

 

Net loss for the year ended December 31, 2020

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(191,034 )

 

 

-

 

 

 

-

 

 

 

(191,034 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

-

 

 

$-

 

 

 

62,379,759

 

 

$624

 

 

$7,034,022

 

 

$(6,425,693 )

 

 

(497,587 )

 

$(49,759 )

 

$568,194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modification of warrants, expiration of 6,909,000 warrants extended to March 7, 2023

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,450,890

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,450,890

 

Net loss for the year ended December 31, 2021

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,522,426 )

 

 

-

 

 

 

-

 

 

 

(1,522,426 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

-

 

 

$-

 

 

 

62,379,759

 

 

$624

 

 

$8,493,912

 

 

$(7,948,119 )

 

 

(497,587 )

 

$(49,759 )

 

$496,658

 

 

The accompanying notes are an integral part of these financial statements.

 

 
F-5

Table of Contents

 

CHASE PACKAGING CORPORATION

STATEMENTS OF CASH FLOWS

 

 

 

For The Year Ended

December 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$(1,522,426 )

 

$(191,034 )

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Warrant modification expense

 

 

1,450,890

 

 

 

-

 

Stock based compensation

 

 

-

 

 

 

90,000

 

Change in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

(2,000 )

 

 

(7,442 )

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(73,536 )

 

 

(108,476 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(73,536 )

 

 

(108,476 )

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, at beginning of year

 

 

570,671

 

 

 

679,147

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF YEAR

 

$497,135

 

 

$570,671

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

Interest

 

$-

 

 

$-

 

Income taxes

 

$-

 

 

$-

 

 

The accompanying notes are an integral part of these financial statements.

 

 
F-6

Table of Contents

 

CHASE PACKAGING CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

 

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 - 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.

 

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes 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 December 31, 2021 and 2020, the Company had cash in insured accounts in the amount of $47,135 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 $450,000 and $500,000 respectively.

  

 

 
F-7

Table of Contents

 

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, 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.

 

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 6) from the calculation of diluted loss per share for the years ended December 31, 2021 and 2020, respectively, which, if included, would have an antidilutive effect.

 

NOTE 5 - INCOME TAXES:

 

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed U.S. tax law. The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on previously deferred foreign income. The Act also created a new minimum tax on certain future foreign earnings. The Act will impact the Company’s income tax expense (benefit) from continuing operations in future periods (approximate 25% effective combined federal and state corporate tax rate). 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.

 

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 2021 and 2020 annual effective tax rate is estimated to be a combined 25%, respectively for the U.S. combined federal and state statutory tax rates. We review tax uncertainties in light of changing facts and circumstances and adjust them accordingly. As of December 31, 2021 and 2020, there were no tax contingencies or unrecognized tax positions recorded.

 

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, 2021 and 2020, respectively, are as follows:           

 

 
F-8

Table of Contents

 

 

 

 

 

 

 

 

 

 

December 31,

2021

 

 

December 31,

2020

 

Deferred tax assets and valuation allowances consist of:

 

 

 

 

 

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carry forwards

 

$315,000

 

 

$310,000

 

Less valuation allowance

 

 

(315,000 )

 

 

(310,000 )

Net deferred tax assets

 

$-

 

 

$-

 

 

The Company has a net operating loss carry forward for federal and state tax purposes of approximately $1,259,000 and $1,241,000 as of December 31, 2021 and 2020, respectively, that is potentially available to offset future taxable income. The Company, had approximately $1,000 in net operating losses expire in the current year. The Act changes the rules on net operating loss carry forwards. The 20-year limitation was eliminated for losses incurred after January 1, 2018, giving the taxpayer the ability to carry forward losses indefinitely. However, net operating loss carry forward arising after January 1, 2018, will now be limited to 80 percent of taxable income.

 

For financial reporting purposes, no deferred tax asset was recognized because at December 31, 2021 and 2020, 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 our 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 following is a reconciliation of the tax derived by applying the statutory rate to the earnings before income taxes, and comparing that to the recorded income tax (expense) benefits:

 

 

 

Year ended

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

Tax benefits (expense) at statutory rate

 

 

25%

 

 

25%

Unrecognized tax benefits (expense) of current period tax losses

 

 

(25 )%

 

 

(25 )%

Effective tax rate

 

 

-

 

 

 

-

 

 

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, 2021, 2020 and 2019 are open for examination under Federal Statute of Limitations.

 

NOTE 6 - WARRANTS AND PREFERRED STOCKS:

 

Warrants

 

2021 Extension of Warrant Terms

 

On September 7, 2021, the Company, acting by resolution of its Board of Directors, amended and extended the expiration date of its outstanding warrants to purchase up to 6,909,000 shares of common stock. In addition to extending the expiration date to March 7, 2023, the Company removed (i) a provision automatically exercising the Warrants on a “cashless” basis of its stock traded above the exercise price for the five (5) days prior to expiration and (ii) the right of warrant holders to participate in any distribution to its stockholders by the Company, to the extent the warrants were unexercised at the time of such a distribution; the exercise price and all other terms of the original warrant agreement remain the same. The warrants modification expense of $1,450,890 was computed as the incremental value of the modified warrants over the unmodified warrants on the modification date. Assumptions used in the Black Scholes option-pricing model for these warrants were as follows:

 

Average risk-free interest rate

 

 

0.15%

Average expected life-years

 

 

1.5

 

Expected volatility

 

 

238.97%

Expected dividends

 

 

0%

 

 

 
F-9

Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Warrants

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Life (Years)

 

 

 

 

 

 

 

 

 

 

 

 Outstanding at December 31, 2019

 

6,909,000

 

 

 0.15

 

 

1.69

 

     Granted

 

 -

 

 

 -

 

 

 -

 

     Extended

 

 -

 

 

 -

 

 

 -

 

     Exercised

 

 -

 

 

 -

 

 

 -

 

     Forfeited/expired

 

 -

 

 

 -

 

 

 -

 

Outstanding at December 31, 2020

 

 

6,909,000

 

 

$0.15

 

 

 

0.68

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

Extended

 

 

6,909,000

 

 

 

0.15

 

 

 

1.5

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited/expired

 

 

(6,909,000 )

 

 

0.15

 

 

 

-

 

Outstanding at December 31, 2021

 

 

6,909,000

 

 

$0.15

 

 

 

1.18

 

Exercisable at December 31, 2021

 

 

6,909,000

 

 

$0.15

 

 

 

1.18

 

 

As of December 31, 2021 and 2020, the average remaining contractual life of the outstanding warrants was 1.18 years and 0.68 year, respectively. The warrants will expire on March 7, 2023.

 

Series A 10% Convertible Preferred Stock

 

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

 

NOTE 7 - EQUITY TRANSACTION:

 

On April 20, 2020, the Board of Directors authorized the issuance of 100,000 shares of restricted common stock each to 7 directors and to the Chief Finance officer/ Secretary, valued at approximately $10,000 each for a total of $80,000 based on the closing bid price as quoted on the OTC on April 17, 2020 of $0.10 per share reflecting the last trade on April 8, 2020.

 

On April 23, 2020, the Board of Directors authorized a consulting fee to be paid to William R. Cast in the form of 100,000 shares of restricted common stock valued at approximately $10,000 based on the closing bid price as quoted on the OTC on April 22, 2020 of $0.10 per share reflecting the last trade on April 8, 2020.

 

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 years ended December 31, 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 years ended December 31, 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 December 31, 2021 and December 31, 2020, respectively:

  

 

 
F-10

Table of Contents

 

 

 

Carrying

Amount In

Balance Sheet

December 31,

 

 

Fair Value

December 31,

 

 

Fair Value

Measurement Using

 

 

 

2021

 

 

2021

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury and government securities

 

$450,000

 

 

$450,000

 

 

$450,000

 

 

$

 

 

$

 

Money market funds

 

 

47,135

 

 

 

47,135

 

 

 

47,135

 

 

 

 

 

 

 

Total Assets

 

$497,135

 

 

$497,135

 

 

$497,135

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$-

 

 

$-

 

Money market funds

 

 

70,671

 

 

 

70,671

 

 

 

70,671

 

 

 

-

 

 

 

-

 

Total Assets

 

$570,671

 

 

$570,671

 

 

$570,671

 

 

$-

 

 

$-

 

 

NOTE 9 - COMMITMENTS AND CONTINGENCIES:

 

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

 

NOTE 10 - SUBSEQUENT EVENTS:

 

The Company has evaluated subsequent events from December 31, 2021 through the issuance date of these financial statements, and there are no events requiring disclosure.

 

 
F-11

 

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