Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 05, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | CHASE PACKAGING CORP | |
Entity Central Index Key | 1,025,771 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer | No | |
Is Entity a Voluntary Filer | No | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 15,536,275 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS: | ||
Cash | $ 1,009,679 | $ 1,061,726 |
TOTAL ASSETS | 1,009,679 | 1,061,726 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 1,295 | 11,005 |
TOTAL CURRENT LIABILITIES | $ 1,295 | $ 11,005 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY : | ||
PREFERRED STOCK, $1.00 par value; 4,000,000 authorized: Series A 10% Convertible Preferred stock; 50,000 shares authorized; 27,466 shares issued and outstanding as of June 30, 2015 and December 31, 2014 : liquidation preference of $2,746,000 as of June 30, 2015 and December 31, 2014 | $ 2,058,680 | $ 2,058,680 |
Common stock, $.10 par value 200,000,000 shares authorized; 16,033,862 shares issued and 15,536,275 shares outstanding as of June 30, 2015 and December 31, 2014 | 1,603,387 | 1,603,387 |
Treasury Stock, $.10 par value 497,587 shares as of June 30, 2015 and December 31, 2014 | (49,759) | (49,759) |
Additional paid-in capital | 2,562,160 | 2,562,160 |
Accumulated deficit | (5,166,084) | (5,123,747) |
TOTAL STOCKHOLDERS' EQUITY | 1,008,384 | 1,050,721 |
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY | $ 1,009,679 | $ 1,061,726 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
PREFERRED STOCK : | ||
Preferred Stock, Par Value | $ 1 | $ 1 |
Preferred Stock, Shares Authorized | 4,000,000 | 4,000,000 |
STOCKHOLDERS' EQUITY : | ||
Common Stock, Par Value | $ 0.10 | $ 0.10 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares Issued | 16,033,862 | 15,536,275 |
Common Stock, Shares, Outstanding | 16,033,862 | 15,536,275 |
Treasury Stock, Par Value | $ 0.10 | $ 0.10 |
Treasury Stock, Shares | 497,587 | 497,587 |
Series A 10% Convertible Preferred Stock | ||
PREFERRED STOCK : | ||
Preferred Stock, Shares Authorized | 50,000 | 50,000 |
Preferred Stock, Shares Issued | 27,466 | 27,466 |
Preferred Stock, Shares Outstanding | 27,466 | 27,466 |
Preferred Stock, Liquidation Preference, Value | $ 2,746,000 | $ 2,746,000 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Statements Of Operations | ||||
NET SALES | ||||
EXPENSES: | ||||
General and administrative expense | $ 18,546 | $ 51,599 | $ 42,388 | $ 85,211 |
LOSS FROM OPERATIONS | $ (18,546) | $ (51,599) | $ (42,388) | $ (85,211) |
OTHER INCOME (EXPENSE) | ||||
Interest expense | ||||
Interest and other income | $ 25 | $ 29 | $ 51 | $ 62 |
TOTAL OTHER INCOME (EXPENSE) | 25 | 29 | 51 | 62 |
LOSS BEFORE INCOME TAXES | $ (18,521) | $ (51,570) | $ (42,337) | $ (85,149) |
Provision for income taxes | ||||
NET LOSS | $ (18,521) | $ (51,570) | $ (42,337) | $ (85,149) |
Accretion preferred stock to redemption value | ||||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (18,521) | $ (51,570) | $ (42,337) | $ (85,149) |
BASIC AND DILUTED LOSS PER COMMON SHARE | $ 0 | $ 0 | $ 0 | $ 0 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 15,536,275 | 15,536,275 | 15,536,275 | 15,536,275 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (42,337) | $ (85,149) |
Adjustment to reconcile to net loss to net cash used in operating activities: | ||
Stock based compensation | 2,078 | |
Change in assets and liabilities | ||
Accounts payable and accrued expenses | $ (9,710) | (2,852) |
Net cash used in operating activities | $ (52,047) | $ (85,923) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
NET INCREASE (DECREASE) IN CASH | $ (52,047) | $ (85,923) |
Cash, at beginning of year | 1,061,726 | 1,221,675 |
CASH, END OF YEAR | $ 1,009,679 | $ 1,135,752 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for: Interest | ||
Cash paid for: Income taxes |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
NOTE 1 - BASIS OF PRESENTATION | Chase Packaging Corporation ("the Company"), a Texas Corporation, previously manufactured woven paper mesh for industrial applications, polypropylene mesh fabric bags for agricultural use, and distributed agricultural packaging manufactured by other companies.Management's plans for the Company include securing a suitable merger partner wishing to go public or acquiring private companies to create investment value for the Company. However, no assurance can be given that management will be successful in its efforts. The failure to achieve these plans will have a material adverse effect on the Company's financial position, results of operations, and ability to continue as a going concern. The interim condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to provide for fair presentation and a reasonable understanding of the information presented. The Interim Condensed Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-Q should be read in conjunction with the financial statements and the related notes, as well as Management's Discussion and Analysis of Financial Condition and Results of Operations, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, 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, 2015, results of operations for the six months and three months ended June 30, 2015 and 2014, and cash flows for the six months ended June 30, 2015 and 2014, as applicable, have been made. The results of operations for the six months ended June 30, 2015 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, 2014, 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. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Note 2 - NEW ACCOUNTING PRONOUNCEMENTS | In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is the new, comprehensive revenue recognition standard that will supersede all existing revenue recognition guidance under U.S. GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for annual and interim periods beginning on or after December 15, 2016, and early adoption is not permitted. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in the ASU. The Company currently has no revenues and does not expect any impact of adopting this guidance. In June 2014 ASU 2014-10 removed the definition of a development stage entity from the Master Glossary of the Accounting StandardsCodification, thereby removing the financial reporting distinction between development stage entities and other reporting entities fromU.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-dateinformation in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a developmentstage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the firstyear in which the entity is no longer a development stage entity that in prior years it had been in the development stage. This ASU iseffective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. TheCompany adopted this ASU effective with the December 31, 2014 annual report on Form 10-K and its adoption resulted in the removalof previously required development stage disclosure. In June 2014, the FASB issued ASU 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period." This ASU provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on the financial statements. In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern (Topic 205-40)", which requires management to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending December 31, 2015 and the Company will continue to assess the impact on its financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2015 | |
Notes to 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, 2015, and December 31, 2014, the Company had cash and cash equivalents held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of $1,009,679 and $1,061,726, respectively. Income Taxes The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured assuming enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such asset will be realized. The Company adopted FASB Interpretation of "Accounting for Uncertainty in Income Taxes". There was no impact on the Company's financial position, results of operations, or cash flows as a result of implementing this guidance. As of June 30, 2015, and December 31, 2014, 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. |
BASIC AND DILUTED NET LOSS PER
BASIC AND DILUTED NET LOSS PER COMMON SHARE | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
NOTE 4 - BASIC AND DILUTED NET LOSS PER COMMON SHARE | Basic loss per common share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding. Diluted loss per share is computed by dividing the net loss by the sum of the weighted-average number of shares of common stock outstanding plus the dilutive effect of shares issuable through the exercise of common stock equivalents. We have excluded 32,030,000 common stock equivalents (preferred stock, warrants and stock options) from the calculation of diluted loss per share for the six months ended June 30, 2015 and 2014 respectively, which, if included, would have an antidilutive effect. |
PRIVATE PLACEMENT OFFERING
PRIVATE PLACEMENT OFFERING | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
NOTE 5 - PRIVATE PLACEMENT OFFERING | On September 7, 2007, the Company completed a private placement, pursuant to which 13,334 units (the "Units") were sold at a per Unit cash purchase price of $150, for a total subscribed amount of $2,000,100. Each Unit consists of: (1) one share of Series A 10% convertible preferred stock, par value $1.00, stated value $100 (the "Preferred Stock"); (2) 500 shares of the Company's common stock, par value $0.10 (the "Common Stock"); and (3) 500 warrants (the "Warrants") exercisable into Common Stock on a one-for-one basis. The proceeds of $2,000,100 were allocated to the instruments as follows: Warrant liabilities $ 141,027 Redeemable and Convertible Preferred Stock 1,388,367 Common Stock 470,706 Total allocated gross proceeds: $ 2,000,100 Warrants As of June 30, 2015 and December 31, 2014, warrants to purchase 6,909,000 shares were outstanding, having exercise prices at $0.15 and an expiration date of September 7, 2015. The Company entered into an amendment to its warrant agreements to extend the expiration date of the warrants from September 7, 2014 until September 7, 2015. June 30, 2015 December 31, 2014 Number of warrants Weighted average exercise price Number of warrants Weighted average exercise price Balance at January 1 6,909,000 $ 0.15 6,909,000 $ 0.15 Issued during the period - $ - - $ - Exercised during the period - $ - - $ - Extended during the period - $ - 6,909,000 $ 0.15 Expired during the period - $ - (6,909,000 ) $ 0.15 Balance at June 30, & December 31 6,909,000 $ 0.15 6,909,000 $ 0.15 As of June 30, 2015 and December 31, 2014, the average remaining contractual life of the outstanding warrants was 0.19 year and 0.68 years, respectively. The Warrants expire on September 7, 2015. The warrants, which were issued to investors in the September 7, 2007, private placement offering, contained a provision for net cash settlement in the event that there was a fundamental transaction (contractually defined as a merger, sale of substantially all assets, tender offer, or share exchange). If a fundamental transaction occurred in which the consideration issued consisted principally of cash or stock in a non-public company, then the warrant holder had the option to receive cash, equal to the fair value of the remaining unexercised portion of the warrant. Due to this contingent redemption provision, the warrants required liability classification in accordance with ASC Topic 480, "Distinguishing Liabilities from Equity," ("ASC 480") and were recorded at fair value. In addition, these warrants were not indexed to the Company's stock, and therefore also required liability classification under ASC 815, "Derivatives and Hedging," (ASC 815). ASC 820 provides requirements for disclosure of liabilities that are measured at fair value on a recurring basis in periods subsequent to the initial recognition. Fair values for warrants are determined using the Binomial Lattice valuation technique. The Binomial Lattice valuation model provides for dynamic assumptions regarding volatility and risk-free interest rates within the total period to maturity. Accordingly, within the contractual term, the Company provided multiple date intervals over which multiple volatilities and risk free interest rates were used. These intervals allow the Binomial Lattice valuation model to project outcomes along specific paths which consider volatilities and risk free rates that would be more likely in an early exercise scenario. Warrants Significant assumptions are determined as follows: Trading market values-Published trading market values; Exercise price-Stated exercise price; Term-Remaining contractual term of the warrant; Volatility-Historical trading volatility for periods consistent with the remaining terms; Risk-free rate-Yields on zero coupon government securities with remaining terms consistent with the remaining terms of the warrants. Due to the fundamental transaction provision, which could provide for early redemption of the warrants, the model also considered the probability the Company would enter into a fundamental transaction during the remaining term of the warrant. Since the Company is still in its development stage and is not yet achieving positive cash flow, management believes the probability of a fundamental transaction occurring over the term of the warrant is approximately ranging from 0.75% to 1.00%. For valuation purposes, the Company also assumed that if such a transaction did occur, it was more likely to occur towards the end of the term of the warrants. The warrants issued are not only subject to traditional anti-dilution protection, such as stock splits and dividends, but they were also subject to down-round anti-dilution protection. Accordingly, if the Company sold common stock or common stock indexed financial instruments below the stated exercise price, the exercise price related to these warrants would adjust to that lower amount. The Lattice model used to value the warrants with down-round anti-dilution protection provided for multiple, probability-weighted scenarios at the stated exercise price and at five additional decrements/scenarios on each valuation date in order to encompass the value of the anti-dilution provisions in the estimate of fair value of the warrants. Calculations were performed at the stated exercise price and at five additional decrements/scenarios on each valuation date. The calculations provide for multiple, probability-weighted scenarios reflecting decrements that result from declines in the market prices. Decrements are predicated on the trading market prices in decreasing ranges below the contractual exercise price. For each valuation date, multiple Binomial Lattice calculations were performed which were probability weighted by considering both the Company's (i) historical market pricing trends, and (ii) an outlook for whether or not the Company may need to issue equity or equity-indexed instruments in the future with a price less than the current exercise price. Effective June 30, 2012, the Company entered into an amendment to its Warrant Agreement. The amendment to remove the put and the down round protection feature allows for the Warrants to be treated as equity beginning with the quarter ended June 30, 2012. Effective August 31, 2014, the Company entered into an amendment to its Warrant Agreement to extend the expiration date of the warrants from September 7, 2014 to September 7, 2015. The following table summarizes the fair value of the warrants as of the balance sheet date: Fair values June 30, 2015 December 31, 2014 At transaction date September 7, 2007 financing $ - $ - $ 141,027 Warrants issued to the placement agents in the private placement are included with the warrants to investors as they have identical exercise prices and terms. As of June 30, 2015 and December 31, 2014, the number of shares indexed to the warrants was 0. The following are the assumptions for the valuation of the fair value of the warrant liability: June 30, 2015 December 31, 2014 At transaction date Warrants outstanding - - 6,909,000 Exercise price $ - $ - $ 0.15 Annual dividend yield - % - % 4.01 % Expected life (years) - - 5 Risk-free interest rate - % - % 4.14 % Expected volatility - % - % 53.94 % Series A 10% Convertible Preferred Stock The principal terms of the Series A 10% Convertible Preferred Stock were as follows: Voting rights Dividend rights Conversion rights Redemption rights - Liquidation entitlement At any time on or after August 2, 2011, the Holders of 66 2/3% or more of the Preferred Stock then outstanding could have requested liquidation of their Preferred Stock. In the event that, at the time of such requested liquidation, the Company's cash funds (in excess of a $50,000 reserve fund) then available to effect such requested liquidation were inadequate for such purpose, then such requested liquidation should have taken place (on a ratable basis) only to the extent such excess cash funds were available for such purpose. Other provisions Effective June 30, 2012, the holders of the Convertible Preferred Stock agreed to an amendment to the Series A 10% Convertible Preferred Stock which deleted the liquidation provisions. As a result, the Convertible Preferred Stock has been classified as equity (rather than temporary equity) in all filings beginning with the quarter ended June 30, 2012. |
DIVIDENDS
DIVIDENDS | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
NOTE 6 - DIVIDENDS | On October 31, 2014, the Company announced that the Board of Directors had declared a ten percent stock dividend on its outstanding Series A 10% Convertible Preferred Stock. Stockholders of record as of November 15, 2014 received the stock dividend for each share of Series A Preferred Stock owned on that date, payable December 1, 2014. As of October 31, 2014, the Company had 24,971 shares of Preferred Stock outstanding; the total dividend paid consisted of 2,495 shares of Series A Preferred Stock (which are convertible into 2,495,000 shares of Common Stock) with a fair value of $249,500 and a total of 14 fractional shares which will be accumulated until whole shares can be issued. Due to the absence of Retained Earnings, the $2,495 par value of Preferred Stock dividend was charged against Additional Paid-in Capital. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
NOTE 7 - STOCKHOLDERS' EQUITY | The Company's 2008 Stock Awards Plan was approved April 9, 2008 by the Board of Directors and ratified at the Company's annual meeting of stockholders held on June 3, 2008. The 2008 Plan became effective April 9, 2008 and will terminate on April 8, 2018. Subject to certain adjustments, the number of shares of Common Stock that may be issued pursuant to awards under the 2008 Plan is 2,000,000 shares. A maximum of 80,000 shares may be granted in any one year in any form to any one participant, of which a maximum of (i) 50,000 shares may be granted to a participant in the form of stock options and (ii) 30,000 shares may be granted to a participant in the form of Common Stock or restricted stock. The 2008 Plan will be administered by a committee of the Board of Directors. Employees, including any employee who is also a director or an officer, consultants, and outside directors of the Company are eligible to participate in the 2008 Plan. On June 24, 2013, the Company's Board approved the granting of incentive stock options to the 4 officers and 2 outside directors under the Company's 2008 Stock Awards Plan for the purchase of 200,000 and 100,000 shares with grant date on June 25, 2013, respectively of the Company's common stock at an exercise price of $0.03 per share on June 25, 2013. Stock Option The fair value of each option was estimated on June 25, 2013 (date of grant) using the following Black-Scholes assumptions: Six Months ended June 30, 2014 Expected term (in years) 5 Expected stock price volatility 185.25 % Risk-free interest rate 1.48 % Expected dividend yield - The Company vested 50% of the optioned shares on date of granting the stock options and the remaining 50% of the optioned shares were vested on June 25, 2014. The following table summarizes all stock option activity under the plans: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 300,000 0.03 3.48 $ 9,000 Granted - - - - Exercised - - - - Forfeited/expired - - - - Outstanding at June 30, 2015 300,000 $ 0.03 3.23 $ 9,000 Exercisable at June 30, 2015 300,000 $ 0.03 3.23 $ 9,000 The Company recognized $0 and $1,068 of stock based compensation costs related to stock options awards for the six months ended June 30, 2015 and December 31, 2014, respectively. The weighted-average grant date fair value of options outstanding at June 30, 2015 and December 31, 2014 was $0.0289. As of June 30, 2015 and December 31, 2014, the unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan was approximately $0. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
NOTE 8 - FAIR VALUE MEASUREMENTS | ASC 820, "Fair Value Measurements and Disclosure," ("ASC 820") defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not adjusted for transaction costs. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels giving the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are described below: Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that is accessible by the Company; Level 2 Inputs - Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; Level 3 Inputs - Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants. There were no transfers in or out of any level during the six months ended June 30, 2015 and the year ended December 31, 2014. 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 quarter ended June 30, 2015 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, 2015 and December 31, 2014 respectively: Carrying Amount In Balance Sheet June 30, Fair Value June 30, Fair Value Measurement Using 2015 2015 Level 1 Level 2 Level 3 Assets: Money Market Funds $ 1,009,679 $ 1,009,679 $ 1,009,679 $ $ Carrying Amount In Balance Sheet December 31, Fair Value December 31, Fair Value Measurement Using 2014 2014 Level 1 Level 2 Level 3 Assets: Money Market Funds $ 1,061,726 $ 1,061,726 $ 1,061,726 $ $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
NOTE 9 - COMMITMENTS AND CONTINGENCIES | The Company's Board of Directors has agreed to pay the Company's Chief Financial Officer an annual salary of $17,000. No other officers or directors of the Company receive compensation other than reimbursement of out-of-pocket expenses incurred in connection with Company business and development. |
SUMMARY OF SIGNIFICANT ACCOUN15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Summary Of Significant Accounting Policies 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, 2015, and December 31, 2014, the Company had cash and cash equivalents held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of $1,009,679 and $1,061,726, respectively. |
Income Taxes | The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured assuming enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such asset will be realized. The Company adopted FASB Interpretation of "Accounting for Uncertainty in Income Taxes". There was no impact on the Company's financial position, results of operations, or cash flows as a result of implementing this guidance. As of June 30, 2015, and December 31, 2014, 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. |
PRIVATE PLACEMENT OFFERING (Tab
PRIVATE PLACEMENT OFFERING (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Private Placement Offering Tables | |
Allocated to the instruments as follows | The proceeds of $2,000,100 were allocated to the instruments as follows: Warrant liabilities $ 141,027 Redeemable and Convertible Preferred Stock 1,388,367 Common Stock 470,706 Total allocated gross proceeds: $ 2,000,100 |
Warrants | The Company entered into an amendment to its warrant agreements to extend the expiration date of the warrants from September 7, 2014 until September 7, 2015. June 30, 2015 December 31, 2014 Number of warrants Weighted average exercise price Number of warrants Weighted average exercise price Balance at January 1 6,909,000 $ 0.15 6,909,000 $ 0.15 Issued during the period - $ - - $ - Exercised during the period - $ - - $ - Extended during the period - $ - 6,909,000 $ 0.15 Expired during the period - $ - (6,909,000 ) $ 0.15 Balance at June 30, & December 31 6,909,000 $ 0.15 6,909,000 $ 0.15 |
Summarizes the fair value of the warrants liabilities | The following table summarizes the fair value of the warrants as of the balance sheet date: Fair values June 30, 2015 December 31, 2014 At transaction date September 7, 2007 financing $ - $ - $ 141,027 |
Assumptions for the valuation of the fair value of the warrant liability | The following are the assumptions for the valuation of the fair value of the warrant liability: June 30, 2015 December 31, 2014 At transaction date Warrants outstanding - - 6,909,000 Exercise price $ - $ - $ 0.15 Annual dividend yield - % - % 4.01 % Expected life (years) - - 5 Risk-free interest rate - % - % 4.14 % Expected volatility - % - % 53.94 % |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Stockholders Equity Tables | |
Stock option valuation assumptions | The fair value of each option was estimated on June 25, 2013 (date of grant) using the following Black-Scholes assumptions: Six Months ended June 30, 2014 Expected term (in years) 5 Expected stock price volatility 185.25 % Risk-free interest rate 1.48 % Expected dividend yield - |
Schedule of option activities | The following table summarizes all stock option activity under the plans: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 300,000 0.03 3.48 $ 9,000 Granted - - - - Exercised - - - - Forfeited/expired - - - - Outstanding at June 30, 2015 300,000 $ 0.03 3.23 $ 9,000 Exercisable at June 30, 2015 300,000 $ 0.03 3.23 $ 9,000 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Measurements Tables | |
Assets and liabilities measured at fair value on a recurring basis | The following tables provide information on those assets measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014 respectively: Carrying Amount In Balance Sheet June 30, Fair Value June 30, Fair Value Measurement Using 2015 2015 Level 1 Level 2 Level 3 Assets: Money Market Funds $ 1,009,679 $ 1,009,679 $ 1,009,679 $ $ Carrying Amount In Balance Sheet December 31, Fair Value December 31, Fair Value Measurement Using 2014 2014 Level 1 Level 2 Level 3 Assets: Money Market Funds $ 1,061,726 $ 1,061,726 $ 1,061,726 $ $ |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Summary Of Significant Accounting Policies Details Narrative | ||
Cash and cash equivalents | $ 1,009,679 | $ 1,061,726 |
BASIC AND DILUTED NET LOSS PE20
BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details Narrative) - shares | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Basic And Diluted Net Loss Per Common Share Details Narrative | ||
Common stock equivalents (preferred stock and warrants) | 32,030,000 | 32,030,000 |
PRIVATE PLACEMENT OFFERING (Det
PRIVATE PLACEMENT OFFERING (Details) | Jun. 30, 2015USD ($) |
Private Placement Offering Details | |
Warrant liabilities | $ 141,027 |
Redeemable and Convertible Preferred Stock | 1,388,367 |
Common Stock | 470,706 |
Total allocated gross proceeds: | $ 2,000,100 |
PRIVATE PLACEMENT OFFERING (D22
PRIVATE PLACEMENT OFFERING (Details 1) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Warrants | ||
Number of Warrants\Options outstanding, beginning | 300,000 | |
Number of Warrants Issued during the period | ||
Number of Warrants Exercised during the period | ||
Number of Warrants Expired during the period | ||
Number of Warrants\Options outstanding, ending | 300,000 | 300,000 |
Weighted Average Exercise Price | ||
Weighted average exercise price outstanding, beginning | $ 0.03 | |
Weighted average exercise price Exercised during the period | ||
Weighted average exercise price Expired during the period | ||
Weighted average exercise price outstanding, ending | $ 0.03 | $ 0.03 |
Warrant [Member] | ||
Warrants | ||
Number of Warrants\Options outstanding, beginning | 6,909,000 | 6,909,000 |
Number of Warrants Issued during the period | ||
Number of Warrants Exercised during the period | ||
Number of Warrants Extended during the period | 6,909,000 | |
Number of Warrants Expired during the period | (6,909,000) | |
Number of Warrants\Options outstanding, ending | 6,909,000 | 6,909,000 |
Weighted Average Exercise Price | ||
Weighted average exercise price outstanding, beginning | $ 0.15 | $ 0.15 |
Weighted average exercise price Issued during the period | ||
Weighted average exercise price Exercised during the period | ||
Weighted average exercise price Extended during the period | $ 0.15 | |
Weighted average exercise price Expired during the period | 0.15 | |
Weighted average exercise price outstanding, ending | $ 0.15 | $ 0.15 |
PRIVATE PLACEMENT OFFERING (D23
PRIVATE PLACEMENT OFFERING (Details 2) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Fair values of September 7, 2007 financing | ||
At transaction date | ||
Fair values of September 7, 2007 financing | $ 141,027 |
PRIVATE PLACEMENT OFFERING (D24
PRIVATE PLACEMENT OFFERING (Details 3) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Warrants outstanding | ||
Exercise price | ||
Annual dividend yield | ||
Risk-free interest rate | ||
Expected volatility | ||
At transaction date | ||
Warrants outstanding | 6,909,000 | |
Exercise price | $ 0.15 | |
Annual dividend yield | 4.01% | |
Expected life (years) | 5 years | |
Risk-free interest rate | 4.14% | |
Expected volatility | 53.94% |
PRIVATE PLACEMENT OFFERING (D25
PRIVATE PLACEMENT OFFERING (Details Narrative) - $ / shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Outstanding warrants | 300,000 | 300,000 | |
Exercise price | $ 0.03 | $ 0.03 | |
Warrant [Member] | |||
Outstanding warrants | 6,909,000 | 6,909,000 | 6,909,000 |
Exercise price | $ 0.15 | $ 0.15 | $ 0.15 |
Expiry date | September 7, 2015 | September 7, 2015 | |
Contractual life of the outstanding warrants | 2 months 9 days | 8 months 5 days | |
Shares indexed to the warrants | 0 | 0 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Expected stock price volatility | ||
Risk-free interest rate | ||
Expected dividend yield | ||
Stock Option [Member] | ||
Expected term (in years) | 5 years | |
Expected stock price volatility | 185.25% | |
Risk-free interest rate | 1.48% | |
Expected dividend yield |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) - USD ($) | 6 Months Ended |
Jun. 30, 2015 | |
Number of Options | |
Number of Warrants\Options outstanding, beginning | 300,000 |
Number of Options, Granted | |
Number of Options, Exercised | |
Number of Options, Forfeited/expired | |
Number of Warrants\Options outstanding, ending | 300,000 |
Number of Options, Exercisable | 300,000 |
Weighted Average Exercise Price | |
Weighted average exercise price outstanding, beginning | $ 0.03 |
Weighted Average Exercise Price, Granted | |
Weighted Average Exercise Price, Exercised | |
Weighted Average Exercise Price, Forfeited/expired | |
Weighted average exercise price outstanding, ending | $ 0.03 |
Weighted Average Exercise Price, Exercisable | $ 0.03 |
Weighted Average Remaining Contractual Life (Years) | |
Weighted Average Remaining Contractual Life (Years), Beginning | 3 years 5 months 23 days |
Weighted Average Remaining Contractual Life (Years), Ending | 3 years 2 months 23 days |
Weighted Average Remaining Contractual Life (Years), Exercisable | 3 years 2 months 23 days |
Aggregate Intrinsic Value | |
Aggregate Intrinsic Value, Outstanding, Beginning | $ 9,000 |
Aggregate Intrinsic Value, Granted | |
Aggregate Intrinsic Value, Exercised | |
Aggregate Intrinsic Value, Forfeited/expired | |
Aggregate Intrinsic Value, Outstanding, Ending | $ 9,000 |
Aggregate Intrinsic Value, Exercisable | $ 9,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Stockholders Equity Details Narrative | ||
Stock based compensation costs related to stock and stock options awards | $ 0 | $ 1,068 |
Weighted-average grant date fair value of options outstanding | $ 0.0289 | $ 0.0289 |
Unrecognized compensation cost related to non-vested share based compensation | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Money Market Funds [Member] - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Assets at fair value on recurring basis | $ 1,009,679 | $ 1,061,726 |
Fair Value, Inputs, Level 1 [Member] | ||
Assets at fair value on recurring basis | $ 1,009,679 | $ 1,061,726 |
Fair Value, Inputs, Level 2 [Member] | ||
Assets at fair value on recurring basis | ||
Fair Value, Inputs, Level 3 [Member] | ||
Assets at fair value on recurring basis | ||
Carrying Value [Member] | ||
Assets at fair value on recurring basis | $ 1,009,679 | $ 1,061,726 |