Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 04, 2017 | |
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 | Mar. 31, 2017 | |
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 | Q1 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 840,882 | $ 864,323 |
TOTAL ASSETS | 840,882 | 864,323 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 798 | 10,487 |
TOTAL CURRENT LIABILITIES | 798 | 10,487 |
STOCKHOLDERS' EQUITY : | ||
Common stock, $.10 par value 200,000,000 shares authorized; 16,033,862 shares issued and 15,536,275 shares outstanding as of March 31, 2017 and December 31, 2016 | 1,603,387 | 1,603,387 |
Treasury Stock, $.10 par value 497,587 shares as of March 31, 2017 and December 31, 2016 | (49,759) | (49,759) |
Additional paid-in capital | 2,595,035 | 2,595,035 |
Accumulated deficit | (5,373,031) | (5,359,279) |
TOTAL STOCKHOLDER'S EQUITY | 840,084 | 853,836 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 840,882 | 864,323 |
Series A ConvertiblePreferredStockMember | ||
STOCKHOLDERS' EQUITY : | ||
PREFERRED STOCK, $1.00 par value; 4,000,000 authorized: Series A 10% Convertible Preferred stock; 50,000 shares authorized; 33,238 shares issued and outstanding as of March 31, 2017 and December 31, 2016 : liquidation preference of $3,323,800 as of March 31, 2017 and December 31, 2016 | $ 2,064,452 | $ 2,064,452 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
STOCKHOLDERS' EQUITY : | ||
Preferred Stock, Par Value | $ 1 | $ 1 |
Preferred Stock, Shares Authorized | 4,000,000 | 4,000,000 |
Preferred Stock, Shares Outstanding | 33,238 | 33,238 |
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 ConvertiblePreferredStockMember | ||
STOCKHOLDERS' EQUITY : | ||
Preferred Stock, Shares Issued | 33,238 | 33,238 |
Preferred Stock, Shares Outstanding | 33,238 | 33,238 |
Preferred Stock, Liquidation Preference, Value | $ 3,323,800 | $ 3,323,800 |
Series A 10% Convertible Preferred stock, Shares Authorized | 50,000 | 50,000 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Condensed Statements Of Operations | ||
NET SALES | ||
EXPENSES: | ||
General and administrative expense | 13,774 | 40,255 |
LOSS FROM OPERATIONS | (13,774) | (40,255) |
OTHER INCOME (EXPENSE) | ||
Interest and other income | 22 | 25 |
TOTAL OTHER INCOME (EXPENSE) | 22 | 25 |
LOSS BEFORE INCOME TAXES | (13,752) | (40,230) |
Provision for income taxes | ||
NET LOSS | $ (13,752) | $ (40,230) |
LOSS PER COMMON SHARE - BASIC AND DILUTED | $ 0 | $ 0 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 15,536,275 | 15,536,275 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (13,752) | $ (40,230) |
Change in assets and liabilities | ||
Accounts payable and accrued expenses | (9,689) | 21,879 |
Net cash used in operating activities | (23,441) | (18,351) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
NET INCREASE (DECREASE) IN CASH | (23,441) | (18,351) |
Cash, at beginning of period | 864,323 | 973,470 |
CASH, END OF PERIOD | 840,882 | 955,119 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for: Interest | ||
Cash paid for: Income taxes |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2017 | |
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. Managements 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 Companys 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 Managements 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 Managements Discussion and Analysis of Financial Condition and Results of Operations, included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2016, 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 March 31, 2017, results of operations for the three months ended March 31, 2017 and 2016, and cash flows for the three months ended March 31, 2017 and 2016, as applicable, have been made. The results of operations for the three months ended March 31, 2017 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 Companys financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated herein by reference. Specific reference is made to that report for a description of the Companys securities and the notes to financial statements. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
Note 2 - NEW ACCOUNTING PRONOUNCEMENTS | Recent accounting pronouncements issued by FASB (including EITF), the AICPA and the SEC did not or are not believed by management to have a material impact on the Companys present or future financial statements. Going Concern ASU 2014-15 Presentation of Financial StatementsGoing ConcernDisclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU 2014-15). In August 2014, the FASB issued ASU 2014-15 requiring management to assess an entitys ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. ASU 2014-15 is effective for annual periods, and interim periods within those annual periods, starting December 15, 2016. Management believes that the adoption of this guidance will not have a material impact on our financial statements. Financial Instruments In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for the Company beginning in its first quarter of 2019. Management believes that the adoption of this guidance will not have a material impact on our financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which modifies the measurement of expected credit losses of certain financial instruments. ASU 2016-13 will be effective for the Company beginning in its first quarter of 2021 and early adoption is permitted. Management believes that the adoption of this guidance will not have a material impact on our financial statements. Leases In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For finance leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income; and repayments of the principal portion of the lease liability will be classified within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. Under Topic 842 the accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments in Topic 842 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management has been continuously assessing the impact of this guidance. Stock Compensation In March 2016, the FASB issued ASU No. 2016-09, Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which simplified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification on the statement of cash flows. ASU 2016-09 will be effective for the Company beginning in its first quarter of 2018. Management believes that the adoption of this guidance will not have a material impact on our financial statements. Income Taxes In October 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory ("ASU 2016-16"), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-06 will be effective for the Company in its first quarter of 2019. Management believes that the adoption of this guidance will not have a material impact on our financial statements. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2019, and early adoption is permitted. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (ASU 2016-08); ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (ASU 2016-10); and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (ASU 2016-12). The Company must adopt ASU 2016-08, ASU 2016-10 and ASU 2016-12 with ASU 2014-09 (collectively, the new revenue standards). The new revenue standards may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company currently expects to adopt the new revenue standards in its first quarter of 2018 utilizing the full retrospective transition method. Management believes that the adoption of this guidance will not have a material impact on our financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 and December 31, 2016, the Company had cash and cash equivalents held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of approximately $ 841,000 and $864,000 respectively. Income Taxes The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured assuming enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such asset will be realized. The Company adopted FASB Interpretation of Accounting for Uncertainty in Income Taxes. There was no impact on the Companys financial position, results of operations, or cash flows as a result of implementing this guidance. As of March 31, 2017 and December 31, 2016, the Company evaluated its tax positions and did not have any unrecognized tax benefits. The Companys practice is to recognize interest and/or penalties related to income tax matters in income tax expense. |
BASIC AND DILUTED NET LOSS PER
BASIC AND DILUTED NET LOSS PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2017 | |
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 40,447,000 and 37,424,000 common stock equivalents (preferred stock, warrants and stock options) from the calculation of diluted loss per share for the three ended March 31, 2017 and 2016 respectively, which, if included, would have an antidilutive effect. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 5 - INCOME TAXES | No current provision for Federal income taxes was required for the three months ended March 31, 2017 and 2016, due to the Companys operating losses. At March 31, 2017 and December 31, 2016 the Company had unused net operating loss carry-forwards of approximately $1,168,000 and $1,154,000 which expire at various dates through 2037. Most of this amount is subject to annual limitations under certain provisions of the Internal Revenue Code related to changes in ownership. As of March 31, 2017 and December 31, 2016, the deferred tax assets related to the aforementioned carry-forwards have been fully offset by valuation allowances, since it is more likely than not that significant utilization of such amounts will not occur in the foreseeable future. March 31, 2017 December 31, 2016 Deferred tax assets and valuation allowances consist of: Deferred tax assets: Net operating loss carry forwards $ 467,000 $ 462,000 Less valuation allowance (467,000 ) (462,000 ) Net deferred tax assets $ - $ - We file income tax returns in the U.S. Federal and Texas state jurisdictions. Tax years for fiscal 2008 through 2017 are open and potentially subject to examination by the Texas state taxing authority. The Company currently has no federal or state tax examinations in progress. 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: Three months ended March 31, 2017 2016 Tax benefits (expense) at statutory rate 35 % 35 % Unrecognized tax benefits (expense) of current period tax losses (35) % (35) % Effective tax rate - - The Company had no uncertain tax positions that would necessitate recording of a tax related liability. |
PRIVATE PLACEMENT OFFERING
PRIVATE PLACEMENT OFFERING | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 6 - 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 Companys 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 2015 Extension of Warrant Terms On August 31, 2015, 6,909,000 common share purchase warrants issued by the Company were modified to extend their maturity date to September 7, 2017. The exercise price and all other terms of the original warrant agreement remain the same. The warrants modification expense of $14,684 was computed as the incremental value of the modified warrants over the unmodified warrants on the modification date using a per share price of $0.15 per share, which was the contemporaneous private placement offering price. Assumptions used in the Black Scholes option-pricing model for these warrants were as follows: Average risk-free interest rate 0.71 % Average expected life-years 2 Expected volatility 49.01 % Expected dividends 4.01 % As of March 31, 2017 and December 31, 2016, warrants to purchase 6,909,000 shares were outstanding, having exercise prices at $0.15 and an expiration date of September 7, 2017. Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2015 6,909,000 0.15 1.69 Granted - - - Exercised - - - Forfeited/expired - - - Outstanding at December 31, 2016 6,909,000 $ 0.15 0.68 Granted - - - Exercised - - - Forfeited/expired - - - Outstanding at March 31, 2017 6,909,000 $ 0.15 0.44 Exercisable at March 31, 2017 6,909,000 $ 0.15 0.44 As of March 31, 2017 and December 31, 2016, the average remaining contractual life of the outstanding warrants was 0.44 year and 0.68 years, respectively. The Warrants expire on September 7, 2017. 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 | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 7 - DIVIDENDS | On October 29, 2016, the Board of Directors declared a ten percent stock dividend on its outstanding Series A 10% Convertible Preferred Stock for shareholders of record as of November 15, 2016, and such shareholders received the stock dividend for each share of Series A Preferred Stock owned on that date, payable December 1, 2016. As of November 15, 2016, the Company had 30,215 shares of Preferred Stock outstanding; the total dividend paid consisted of 3,023 shares of Series A Preferred Stock (which are convertible into 3,023,000 shares of Common Stock) with a fair value of $302,300 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 $3,023 par value of Preferred Stock dividend was charged against Additional Paid-in Capital. As of March 31, 2017 and December 31, 2016, the Company had 33,238 shares of Preferred Stock outstanding. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 8 - 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. 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, 2017 300,000 $ 0.03 1.48 $ - Granted - - - - Exercised - - - - Forfeited/expired - - - - Outstanding at March 31, 2017 300,000 $ 0.03 1.24 $ - Exercisable at March 31, 2017 300,000 $ 0.03 1.24 $ - |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 9 - 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 three months ended March 31, 2017 and the year ended December 31, 2016. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in the Companys 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 March 31, 2017 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 Companys cash equivalents, at fair value, consist of money market funds marked to market. The Companys 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 March 31, 2017 and December 31, 2016, respectively: Carrying Amount In Balance Sheet March 31, Fair Value March 31, Fair Value Measurement Using 2017 2017 Level 1 Level 2 Level 3 Assets: Money Market Funds $ 840,882 $ 840,882 $ 840,882 $ $ Carrying Amount In Balance Sheet December 31, Fair Value December 31, Fair Value Measurement Using 2016 2016 Level 1 Level 2 Level 3 Assets: Money Market Funds $ 864,323 $ 864,323 $ 864,323 $ $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | The Companys Board of Directors has agreed to pay the Companys 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 ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 and December 31, 2016, the Company had cash and cash equivalents held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of approximately $ 841,000 and $864,000 respectively. |
Income Taxes | The asset and liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured assuming enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such asset will be realized. The Company adopted FASB Interpretation of Accounting for Uncertainty in Income Taxes. There was no impact on the Companys financial position, results of operations, or cash flows as a result of implementing this guidance. As of March 31, 2017 and December 31, 2016, the Company evaluated its tax positions and did not have any unrecognized tax benefits. The Companys practice is to recognize interest and/or penalties related to income tax matters in income tax expense. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Income Taxes Tables | |
Summary of deferred tax assets | March 31, 2017 December 31, 2016 Deferred tax assets and valuation allowances consist of: Deferred tax assets: Net operating loss carry forwards $ 467,000 $ 462,000 Less valuation allowance (467,000 ) (462,000 ) Net deferred tax assets $ - $ - |
Summary of income tax (expense) benefits | Three months ended March 31, 2017 2016 Tax benefits (expense) at statutory rate 35 % 35 % Unrecognized tax benefits (expense) of current period tax losses (35) % (35) % Effective tax rate - - |
PRIVATE PLACEMENT OFFERING (Tab
PRIVATE PLACEMENT OFFERING (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Schedule of Proceeds Allocated to the instruments | Warrant liabilities $ 141,027 Redeemable and Convertible Preferred Stock 1,388,367 Common Stock 470,706 Total allocated gross proceeds: $ 2,000,100 |
Schedule of Share-based Compensation, Warrant Options | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2015 6,909,000 0.15 1.69 Granted - - - Exercised - - - Forfeited/expired - - - Outstanding at December 31, 2016 6,909,000 $ 0.15 0.68 Granted - - - Exercised - - - Forfeited/expired - - - Outstanding at March 31, 2017 6,909,000 $ 0.15 0.44 Exercisable at March 31, 2017 6,909,000 $ 0.15 0.44 |
2015 Extension of Warrant Terms [Member] | |
Assumptions used in Black Scholes option-pricing model | Average risk-free interest rate 0.71 % Average expected life-years 2 Expected volatility 49.01 % Expected dividends 4.01 % |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Stockholders Equity Tables | |
Schedule of option activities | Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at January 1, 2017 300,000 $ 0.03 1.48 $ - Granted - - - - Exercised - - - - Forfeited/expired - - - - Outstanding at March 31, 2017 300,000 $ 0.03 1.24 $ - Exercisable at March 31, 2017 300,000 $ 0.03 1.24 $ - |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Measurements Tables | |
Assets and liabilities measured at fair value on a recurring basis | Carrying Amount In Balance Sheet March 31, Fair Value March 31, Fair Value Measurement Using 2017 2017 Level 1 Level 2 Level 3 Assets: Money Market Funds $ 840,882 $ 840,882 $ 840,882 $ $ Carrying Amount In Balance Sheet December 31, Fair Value December 31, Fair Value Measurement Using 2016 2016 Level 1 Level 2 Level 3 Assets: Money Market Funds $ 864,323 $ 864,323 $ 864,323 $ $ |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
State or Country of incorporation | Texas |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Summary Of Significant Accounting Policies Details Narrative | ||
Cash and Cash Equivalents | $ 840,882 | $ 864,323 |
BASIC AND DILUTED NET LOSS PE23
BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Basic And Diluted Net Loss Per Common Share Details Narrative | ||
Common stock equivalents excluded from the calculation of diluted earnings (loss) per share | 40,447,000 | 37,424,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss carry forwards | $ 467,000 | $ 462,000 |
Less valuation allowance | (467,000) | (462,000) |
Net deferred tax assets |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Taxes Details 1 | ||
Tax benefits (expense) at statutory rate | 35.00% | 35.00% |
Unrecognized tax benefits (expense) of current period tax losses | (35.00%) | (35.00%) |
Effective tax rate |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Details Narrative | ||
Net operating loss carry-forwards | $ 1,168,000 | $ 1,154,000 |
Expiration date | Various dates through 2037 |
PRIVATE PLACEMENT OFFERING (Det
PRIVATE PLACEMENT OFFERING (Details) | Mar. 31, 2017USD ($) |
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 (D28
PRIVATE PLACEMENT OFFERING (Details 1) - 2015 Extension of Warrant Terms [Member] | 3 Months Ended |
Mar. 31, 2017 | |
Average risk-free interest rate | 0.71% |
Average expected life- years | 2 years |
Expected volatility | 49.01% |
Expected dividends | 4.01% |
PRIVATE PLACEMENT OFFERING (D29
PRIVATE PLACEMENT OFFERING (Details 2) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Warrants | |||
Number of warrants/options, outstanding | 6,909,000 | ||
Number of warrants/options, outstanding | 6,909,000 | 6,909,000 | |
Weighted Average Remaining Contractual Life (Years) | |||
Outstanding | 5 months 9 days | 8 months 5 days | |
Weighted Average Exercise Price | |||
Weighted average exercise price, outstanding | $ 0.15 | ||
Weighted average exercise price, outstanding | $ 0.15 | $ 0.15 | |
Warrant (Member) | |||
Number of Warrants | |||
Number of warrants/options, outstanding | 6,909,000 | 6,909,000 | |
Granted | |||
Exercised | |||
Forfeited/expired | |||
Number of warrants/options, outstanding | 6,909,000 | 6,909,000 | 6,909,000 |
Number of warrants/options, exercisable | 6,909,000 | ||
Weighted Average Remaining Contractual Life (Years) | |||
Outstanding | 5 months 9 days | 8 months 5 days | 1 year 8 months 9 days |
Weighted Average Exercise Price | |||
Weighted average exercise price, outstanding | $ 0.15 | ||
Granted | |||
Exercised | |||
Forfeited/expired | |||
Weighted average exercise price, outstanding | 0.15 | $ 0.15 | |
Weighted average exercise price, exercisable | $ 0.15 | ||
Exercisable | 5 months 9 days |
PRIVATE PLACEMENT OFFERING (D30
PRIVATE PLACEMENT OFFERING (Details Narrative) | Sep. 07, 2007Unit | Aug. 31, 2015USD ($)$ / sharesshares | Mar. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2015 |
Number of warrants/options, outstanding | shares | 6,909,000 | |||
Weighted average exercise price, outstanding | $ / shares | $ 0.15 | |||
Expiry date | September 7, 2017 | |||
Number of units sold | Unit | 13,334 | |||
Private placement description | 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 Companys 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. | |||
Percentage of convertible preferred stock | 10.00% | |||
Total allocated gross proceeds | $ | $ 2,000,100 | |||
Average remaining contractual life | 5 months 9 days | 8 months 5 days | ||
Series A 10% Convertible Preferred Stock [Member] | ||||
Liquidation entitlement description | Series A 10% Convertible Preferred Stock shall be entitled to receive, in preference to the holders of common stock, an amount equal to $100 per share of Series A 10% Convertible Preferred Stock plus all accrued and unpaid dividends | |||
Series A 10% Convertible Preferred Stock [Member] | Board of Directors [Member] | ||||
Dividend rate per annum | 10.00% | |||
Warrant (Member) | 2015 Extension of Warrant Terms [Member] | ||||
Maturity date | Sep. 7, 2017 | |||
Warrants issued | shares | 6,909,000 | |||
Warrants modification expense | $ | $ 14,684 | |||
Per share price | $ / shares | $ 0.15 |
DIVIDENDS (Details Narrative)
DIVIDENDS (Details Narrative) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Nov. 15, 2016 |
Dividends Details Narrative | |||
Preferred Stock, Shares Outstanding | 33,238 | 33,238 | 30,215 |
Shares consisted dividend payable | 3,023 | ||
Converted common shares | 3,023,000 | ||
Converted common shares fair value | $ 302,300 | ||
Fractional shares | 14 | ||
Preferred Stock dividend charged against Additional Paid-in Capital | $ 3,023 |
STOCKHOLDERS' EQUITY (Details )
STOCKHOLDERS' EQUITY (Details ) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2015 | |
Number of Options | ||
Number of warrants/options, outstanding | 6,909,000 | |
Number of warrants/options, outstanding | 6,909,000 | |
Weighted Average Exercise Price | ||
Weighted average exercise price, outstanding | $ 0.15 | |
Weighted average exercise price, outstanding | $ 0.15 | |
Weighted Average Remaining Contractual Life (Years) | ||
Weighted average remaining contractual life (Years), outstanding | 5 months 9 days | 8 months 5 days |
Stock options [Member] | ||
Number of Options | ||
Number of warrants/options, outstanding | 300,000 | |
Number of options, granted | ||
Number of options, exercised | ||
Number of options, forfeited/expired | ||
Number of warrants/options, outstanding | 300,000 | |
Number of warrants/options, exercisable | 300,000 | |
Weighted Average Exercise Price | ||
Weighted average exercise price, outstanding | $ 0.03 | |
Weighted average exercise price, granted | ||
Weighted average exercise price, exercised | ||
Weighted average exercise price, forfeited/expired | ||
Weighted average exercise price, outstanding | 0.03 | |
Weighted average exercise price, exercisable | $ 0.03 | |
Weighted Average Remaining Contractual Life (Years) | ||
Weighted average remaining contractual life (Years), beginning | 1 year 5 months 23 days | |
Weighted average remaining contractual life (Years), outstanding | 1 year 2 months 27 days | |
Weighted average remaining contractual life (Years), exercisable | 1 year 2 months 27 days | |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value outstanding, beginning | ||
Aggregate intrinsic value outstanding, ending | ||
Aggregate intrinsic value, exercisable |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) | Apr. 09, 2008shares |
2008 Stock Awards Plan [Member] | |
Common Stock, shares issuable | 2,000,000 |
Maximum shares granted | 80,000 |
Restricted Stock [Member] | |
Maximum shares granted | 30,000 |
Stock options [Member] | |
Maximum shares granted | 50,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Money Market Funds [Member] - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Assets at fair value on recurring basis | $ 840,882 | $ 864,323 |
Fair Value, Inputs, Level 1 [Member] | ||
Assets at fair value on recurring basis | 840,882 | 864,323 |
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 | $ 840,882 | $ 864,323 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Chief Financial Officer [Member] | |
Annual salary | $ 17,000 |