10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2016

OR

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

For the transition period from _________ to _________

Commission File Number: 0-21609

CHASE PACKAGING CORPORATION

(Exact name of registrant as specified in its charter)

Texas	93-1216127
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

106 West River Road, Rumson NJ 07760

(Address of principal executive offices) (Zip Code)

(732) 741-1500

(Registrant's telephone number, including area code)

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 x No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes  x No  o

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at April 29, 2016
Common Stock, par value $.10 per share	15,536,275 shares

Table of Contents

- INDEX -

		Page(s)
PART I - FINANCIAL INFORMATION:
ITEM 1.	Financial Statements:	3
	Condensed Balance Sheets - March 31, 2016 (Unaudited) and December 31, 2015	3
	Condensed Statements of Operations (Unaudited) - Three Months Ended March 31, 2016 and 2015	4
	Condensed Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2016 and 2015	5
	Notes to Interim Condensed Financial Statements (Unaudited)	6
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	17
ITEM 4.	Controls and Procedures	17
PART II - OTHER INFORMATION:
ITEM 1.	Legal Proceedings.	18
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	18
ITEM 3.	Defaults upon Senior Securities.	18
ITEM 4.	Mine Safety Disclosures.	18
ITEM 5.	Other Information.	18
ITEM 6.	Exhibits.	19
SIGNATURES		20
EXHIBITS

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CHASE PACKAGING CORPORATION

CONDENSED BALANCE SHEETS

	March 31,			December 31,
	2016			2015
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	955,119		$	973,470
TOTAL ASSETS	$	955,119		$	973,470
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	30,796		$	8,917
TOTAL CURRENT LIABILITIES		30,796			8,917
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 March 31, 2016 and December 31, 2015: liquidation preference of $2,746,000 as of March 31, 2016 and December 31, 2015		2,061,429			2,061,429
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, 2016 and December 31, 2015		1,603,387			1,603,387
Treasury Stock, $.10 par value 497,587 shares as of March 31, 2016 and December 31, 2015		(49,759	)		(49,759	)
Additional paid-in capital		2,598,058			2,598,058
Accumulated deficit		(5,288,792	)		(5,248,562	)
TOTAL STOCKHOLDERS' EQUITY		924,323			964,553
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY	$	955,119		$	973,470

See notes to interim condensed financial statements.

3

CHASE PACKAGING CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For The Three Months Ended
	March 31,
	2016			2015
NET SALES	$	-		$	-
EXPENSES:
General and administrative expense		40,255			23,842
LOSS FROM OPERATIONS		(40,255	)		(23,842	)
OTHER INCOME (EXPENSE)
Interest and other income		25			26
TOTAL OTHER INCOME		25			26
LOSS BEFORE INCOME TAXES		(40,230	)		(23,816	)
Provision for income taxes		-			-
NET LOSS	$	(40,230	)	$	(23,816	)
Accretion of preferred stock to redemption value		-			-
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(40,230	)	$	(23,816	)
BASIC AND DILUTED LOSS PER COMMON SHARE	$	(0.00	)	$	(0.00	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED		15,536,275			15,536,275

See notes to interim condensed financial statements.

4

CHASE PACKAGING CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For The Three Months Ended
	March 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(40,230	)	$	(23,816	)
Adjustment to reconcile to net loss to net cash used in operating activities:
Change in assets and liabilities:
Accounts payable and accrued expenses		21,879			167
Net cash used in operating activities		(18,351	)		(23,649	)
CASH FLOWS FROM INVESTING ACTIVITIES		-			-
CASH FLOWS FROM FINANCING ACTIVITIES		-			-
NET INCREASE (DECREASE) IN CASH		(18,351	)		(23,649	)
Cash, at beginning of period		973,470			1,061,726
CASH, END OF PERIOD	$	955,119		$	1,038,077
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest	$	-		$	-
Income taxes	$	-		$	-

See notes to interim condensed financial statements.

5

CHASE PACKAGING CORPORATION

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2016

(Unaudited)

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, 2015, 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, 2016, results of operations for the three months ended March 31, 2016 and 2015, and cash flows for the three months ended March 31, 2016 and 2015, as applicable, have been made. The results of operations for the three months ended March 31, 2016 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, 2015, which is incorporated herein by reference. Specific reference is made to that report for a description of the Company's securities and the notes to financial statements.

NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS:

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 does not expect the adoption of this guidance to have a material impact on the financial statements.

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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, 2016 and December 31, 2015, the Company had cash and cash equivalents held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of $955,119 and $973,470 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 March 31, 2016 and December 31, 2015, 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.

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 37,424,000 and 32,030,000 common stock equivalents (preferred stock, warrants and stock options) from the calculation of diluted loss per share for the three months ended March 31, 2016 and 2015 respectively, which, if included, would have an antidilutive effect.

7

NOTE 5 - INCOME TAXES:

No current provision for Federal income taxes was required for the three months ended March 31, 2016 and 2015, due to the Company's operating losses. At March 31, 2016 and December 31, 2015 the Company had unused net operating loss carry-forwards of approximately $1,083,000 and $1,043,000 which expire at various dates through 2036. 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, 2016 and December 31, 2015, 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,			December 31,
	2016			2015
Deferred tax assets and valuation allowances consist of:
Deferred tax assets:
Net operating loss carry forwards	$	433,000		$	417,000
Less valuation allowance		(433,000	)		(417,000	)
Net deferred tax assets	$	-		$	-

We file income tax returns in the U.S. Federal and Texas state jurisdictions. Tax years for fiscal 2008 through 2016 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,
	2016			2015
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.

8

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 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

2014 Extension of Warrant Terms

On August 31, 2014, 6,909,000 common share purchase warrants issued by the Company were modified to extend their maturity date to September 7, 2015. The exercise price and all other terms of the original warrant agreement remained the same. The warrants modification expense of $23,963 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	0.10	%
Average expected life-years	1
Expected volatility	56.64	%
Expected dividends	4.01	%

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	%

9

As of March 31, 2016 and December 31, 2015, 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, 2014		6,909,000		$	0.15		0.19
Granted		-
Exercised		-
Extended		6,909,000			0.15		2
Forfeited/expired		(6,909,000	)		0.15
Outstanding at December 31, 2015		6,909,000			0.15		1.69
Granted		-
Exercised		-
Forfeited/expired		-
Outstanding at March 31, 2016		6,909,000		$	0.15		1.44
Exercisable at March 31, 2016		6,909,000		$	0.15		1.44

As of March 31, 2016 and December 31, 2015, the average remaining contractual life of the outstanding warrants was 1.44 year and 1.69 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 – The Series A 10% Convertible Preferred Stock has voting rights (one vote per share) equal to those of the Company's common stock.

Dividend rights – The Series A 10% Convertible Preferred Stock carries a fixed cumulative dividend, as and when declared by our Board of Directors, of 10% per annum, accrued daily, compounded annually and payable in cash upon a liquidation event for up to five years, as well as the right to receive any dividends paid to holders of common stock.

Conversion rights – The holders of the Series A 10% Convertible Preferred Stock have the right to convert any or all of their Series A 10% Convertible Preferred Stock, at the option of the holder, at any time, into common stock on a one for one thousand basis.  

10

Redemption rights – The shares of the Series A 10% Convertible Preferred Stock may be redeemed by the Company, in whole or in part, at the option of the Company, upon written notice by the Company to the holders of Series A 10% Convertible Preferred Stock at any time in the event that the Preferred Stock of one or more holders has not been previously converted.  The Company shall redeem each share of Preferred Stock of such holders within thirty (30) days of the Company's delivery of notice to such holders and such holders shall surrender the certificate(s) representing such shares of Preferred Stock.

Liquidation entitlement – In the event of any liquidation, dissolution or winding up of the Company, the holders of the 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.

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 – There will be proportional adjustments for stock splits, stock dividends, recapitalizations and the like.

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.

NOTE 7 - DIVIDENDS:

On October 30, 2015, 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, 2015, and such shareholders received the stock dividend for each share of Series A Preferred Stock owned on that date, payable December 1, 2015. As of November 15, 2015, the Company had 27,466 shares of Preferred Stock outstanding; the total dividend paid consisted of 2,749 shares of Series A Preferred Stock (which are convertible into 2,749,000 shares of Common Stock) with a fair value of $274,900 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 $2,749 par value of Preferred Stock dividend was charged against Additional Paid-in Capital.

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.

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.

11

Stock Option

The fair value of each option was estimated on June 25, 2013 (date of grant) using the following Black-Scholes assumptions:

	On June 25, 2013
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 50% of the optioned shares 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)
Outstanding at December 31, 2014		300,000	$	0.03		3.48
Granted		-
Exercised		-
Forfeited/expired		-
Outstanding at December 31, 2015		300,000		0.03		2.48
Granted		-
Exercised		-
Forfeited/expired		-
Outstanding at March 31, 2016		300,000	$	0.03		2.24
Exercisable at March 31, 2016		300,000	$	0.03		2.24

The Company recognized approximately $0 and $0 of stock based compensation costs related to stock options awards for the three months ended March 31, 2016 and 2015, respectively.

The weighted-average grant date fair value of options outstanding at March 31, 2016 was $0.03.

As of March 31, 2016, the unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan was $0.

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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, 2016 and the year ended December 31, 2015.

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 March 31, 2016 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 March 31, 2016 and December 31, 2015, respectively:

	Carrying Amount In Balance Sheet March 31,		Fair Value March 31,		Fair Value Measurement Using
	2016		2016		Level 1		Level 2		Level 3
Assets:
Money Market Funds	$	955,119	$	955,119	$	955,119	$	—	$	—

 

	Carrying Amount In Balance Sheet December 31,		Fair Value December 31,		Fair Value Measurement Using
	2015		2015		Level 1		Level 2		Level 3
Assets:
Money Market Funds	$	973,470	$	973,470	$	973,470	$	—	$	—

 

NOTE 10 - 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.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

The information in this report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about themselves provided they identify these statements as forward looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding future results of operations or financial position are forward-looking statements. Forward-looking statements reflect management's current expectations and are inherently uncertain. The Company's actual results may differ significantly from management's expectations as a result of many factors.

You should read the following discussion and analysis in conjunction with the financial statements of the Company, and notes thereto, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of management. The Company assumes no obligations to update any of these forward-looking statements.

Results of Operations

For the quarters ended March 31, 2016 and 2015

Revenue

The Company had no operations and no revenue for the quarters ended March 31, 2016 and 2015 and incurred operating expenses of $40,255 and $23,842 for the three months ended March 31, 2016 and 2015, respectively.  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 quarters ended March 31, 2016 and 2015.

	Quarter Ended March 31,
	2016		2015
Audit and accounting fees		8,300		5,625
Legal fees		21,777		9,547
Payroll		5,127		5,105
Other general and administrative expense		5,051		3,565
	$	40,255		23,842

Operating expenses consist mostly of audit and accounting fees and legal fees. 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. The increase in operating expenses in 2016 was mainly due to the increase in legal fees.

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Other Income (Expense)

The following table presents our total Other Income (Expense) for the quarters ended March 31, 2016 and 2015.

	Quarter Ended March 31,
	2016		2015
Interest and other income	$	25	$	26
Other Income (Expense), net	$	25	$	26

Net Loss

The Company had a net loss of $40,230 for the quarter ended March 31, 2016, compared with a net loss of $23,816 for the quarter ended March 31, 2015. Decreases in net loss were due primarily to the abovementioned effect.

Net loss attributable to common stockholders

Net loss attributable to common stockholders was $40,230 for the quarter ended March 31, 2016, compared to $23,816 for the quarter ended March 31, 2015. Decreases in net loss attributable to common stockholders were due primarily to the abovementioned effect.

Loss per share for the quarters ended March 31, 2016 and 2015 were approximately $(0.00) and $(0.00) based on the weighted-average shares issued and outstanding.

It is anticipated that future operating expenses will increase as the Company complies with its periodic reporting requirements and effects 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 March 31, 2016 the Company had cash and cash equivalents of approximately $955,000 consisting mostly of money market funds and U.S. Treasury Bills. Management believes that its cash and cash equivalents are sufficient for its business activities for at least the next twelve months and for the costs of seeking an acquisition of an operating business.

The following table provides detailed information about our net cash flow for all financial statements quarters presented in this Report.

15

Cash Flow

	Quarter Ended March 31,
	2016			2015
Net cash used in operating activities	$	(18,351	)	$	(23,649	)
Net cash provided by investing activities		-			-
Net cash provided by financing activities		-			-
Net cash outflow	$	(18,351	)	$	(23,649	)

Net cash of $(18,351) and $(23,649) were used in operations during the three-month period ended March 31, 2016 and 2015, respectively.

Cash used of $(18,351) used in operating activities for the three months ended March 31, 2016, consisted of a net loss of $(40,230). The cash used in working capital was $21,879 for the three months ended March 31, 2016.

Cash used of $(23,649) used in operating activities for the three months ended March 31, 2015, consisted of net loss of $(23,816). The cash used in working capital was $167 for the three months ended March 31, 2015.

No cash flows were used or provided by investing activities during the quarters ended March 31, 2016 and 2015.

No cash proceeds were used or provided by financing activities during the quarters ended March 31, 2016 and 2015.

New Accounting Pronouncements

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 does not expect the adoption of this guidance to have a material impact on the financial statements.

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 securing a suitable partner wishing to go public or acquiring private companies to create investment value for the Company.

16

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) 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 March 31, 2016, our disclosure controls and procedures were effective.

Changes in Internal Controls over Financial Reporting.

During the quarter ended March 31, 2016, 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.

17

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

18

Item 6. Exhibits.

Number	Description
31.1*	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of the Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	Financial Statements from the quarterly report on Form 10-Q of Chase Packaging Corporation for the quarter ended March 31, 2016, filed on May 12, 2016, formatted in XBRL: (i) the Condensed Balance Sheets (Unaudited); (ii) the Condensed Statements of Operations (Unaudited); (iii) the Condensed Statements of Cash Flows (Unaudited); and (iv) the Notes to Interim Condensed Financial Statements (Unaudited).

________

* Filed herewith

19

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CHASE PACKAGING CORPORATION
Date: May 12, 2016	By:	/s/ Allen T. McInnes
		Allen T. McInnes
		Chairman of the Board, President and Treasurer
		(Principal Executive Officer)
Date: May 12, 2016	By:	/s/ Ann C. W. Green
		Ann C. W. Green
		Chief Financial Officer and Assistant Secretary
		(Principal Financial and Accounting Officer)

20

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Allen T. McInnes, certify that:

1.	I have reviewed this report on Form 10-Q of Chase Packaging Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 12, 2016	By:	/s/ Allen T. McInnes
		Allen T. McInnes
		Chairman of the Board, President and Treasurer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ann C. W. Green, certify that:

1.	I have reviewed this report on Form 10-Q of Chase Packaging Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 12, 2016	By:	/s/ Ann C. W. Green
		Ann C. W. Green
		Chief Financial Officer and Assistant Secretary
		(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Chase Packaging Corporation (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the period ended March 31, 2016 (the "Form 10-Q") of the Company fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Date: May 12, 2016	By:	/s/ Allen T. McInnes
		Allen T. McInnes
		Chairman of the Board, President and Treasurer
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Chase Packaging Corporation (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the period ended March 31, 2016 (the "Form 10-Q") of the Company fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.

The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Date: May 12, 2016	By:	/s/ Ann C. W. Green
		Ann C. W. Green
		Chief Financial Officer and Assistant Secretary
		(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 29, 2016
Document And Entity Information
Entity Registrant Name	CHASE PACKAGING CORP
Entity Central Index Key	0001025771
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
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	2016

XML

CONDENSED BALANCE SHEETS - USD ($)	Mar. 31, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash	$ 955,119	$ 973,470
TOTAL ASSETS	955,119	973,470
CURRENT LIABILITIES:
Accounts payable and accrued expenses	30,796	8,917
TOTAL CURRENT LIABILITIES	30,796	$ 8,917
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 March 31, 2016 and December 31, 2015: liquidation preference of $2,746,000 as of March 31, 2016 and December 31, 2015	2,061,429	$ 2,061,429
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, 2016 and December 31, 2015	1,603,387	1,603,387
Treasury Stock, $.10 par value 497,587 shares as of March 31, 2016 and December 31, 2015	(49,759)	(49,759)
Additional paid-in capital	2,598,058	2,598,058
Accumulated deficit	(5,288,792)	(5,248,562)
TOTAL STOCKHOLDER'S EQUITY	924,323	964,553
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDER'S EQUITY	$ 955,119	$ 973,470

XML

CONDENSED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
STOCKHOLDERS' EQUITY :
Preferred Stock, Par Value	$ 1.00	$ 1.00
Preferred Stock, Shares Authorized	4,000,000	4,000,000
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	16,033,862
Common Stock, Shares, Outstanding	15,536,275	15,536,275
Treasury Stock, Par Value	$ 0.10	$ 0.10
Treasury Stock, Shares	497,587	497,587
Series A 10% Convertible Preferred stock
STOCKHOLDERS' EQUITY :
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	$ 2,746,600	$ 2,746,600

XML

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Condensed Statements Of Operations
NET SALES
EXPENSES:
General and administrative expense	$ 40,255	$ 23,842
LOSS FROM OPERATIONS	(40,255)	(23,842)
OTHER INCOME (EXPENSE)
Interest and other income	25	26
TOTAL OTHER INCOME	25	26
LOSS BEFORE INCOME TAXES	$ (40,230)	$ (23,816)
Provision for income taxes
NET LOSS	$ (40,230)	$ (23,816)
Accretion of preferred stock to redemption value
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (40,230)	$ (23,816)
BASIC AND DILUTED LOSS PER COMMON SHARE	$ (0.00)	$ (0.00)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED	15,536,275	15,536,275

XML

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (40,230)	$ (23,816)
Change in assets and liabilities
Accounts payable and accrued expenses	21,879	167
Net cash used in operating activities	$ (18,351)	$ (23,649)
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
NET INCREASE (DECREASE) IN CASH	$ (18,351)	$ (23,649)
Cash, at beginning of year	973,470	1,061,726
CASH, END OF YEAR	$ 955,119	$ 1,038,077
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for: Interest
Cash paid for: Income taxes

XML

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2016

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, 2015, 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, 2016, results of operations for the three months ended March 31, 2016 and 2015, and cash flows for the three months ended March 31, 2016 and 2015, as applicable, have been made. The results of operations for the three months ended March 31, 2016 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, 2015, 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.

XML

NEW ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Note 2 - NEW ACCOUNTING PRONOUNCEMENTS

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 does not expect the adoption of this guidance to have a material impact on the financial statements.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2016

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, 2016 and December 31, 2015, the Company had cash and cash equivalents held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of $955,119 and $973,470 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 March 31, 2016 and December 31, 2015, 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.

XML

BASIC AND DILUTED NET LOSS PER COMMON SHARE

3 Months Ended

Mar. 31, 2016

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 37,424,000 and 32,030,000 common stock equivalents (preferred stock, warrants and stock options) from the calculation of diluted loss per share for the three months ended March 31, 2016 and 2015 respectively, which, if included, would have an antidilutive effect.

XML

INCOME TAXES

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

NOTE 5 - INCOME TAXES

No current provision for Federal income taxes was required for the three months ended March 31, 2016 and 2015, due to the Company's operating losses. At March 31, 2016 and December 31, 2015 the Company had unused net operating loss carry-forwards of approximately $1,083,000 and $1,043,000 which expire at various dates through 2036. 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, 2016 and December 31, 2015, 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,			December 31,
	2016			2015
Deferred tax assets and valuation allowances consist of:
Deferred tax assets:
Net operating loss carry forwards	$	433,000		$	417,000
Less valuation allowance		(433,000	)		(417,000	)
Net deferred tax assets	$	-		$	-

We file income tax returns in the U.S. Federal and Texas state jurisdictions. Tax years for fiscal 2008 through 2016 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,
	2016			2015
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.

XML

PRIVATE PLACEMENT OFFERING

3 Months Ended

Mar. 31, 2016

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 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

2014 Extension of Warrant Terms

On August 31, 2014, 6,909,000 common share purchase warrants issued by the Company were modified to extend their maturity date to September 7, 2015. The exercise price and all other terms of the original warrant agreement remained the same. The warrants modification expense of $23,963 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	0.10	%
Average expected life-years	1
Expected volatility	56.64	%
Expected dividends	4.01	%

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, 2016 and December 31, 2015, 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, 2014		6,909,000		$	0.15		0.19
Granted		-
Exercised		-
Extended		6,909,000			0.15		2
Forfeited/expired		(6,909,000	)		0.15
Outstanding at December 31, 2015		6,909,000			0.15		1.69
Granted		-
Exercised		-
Forfeited/expired		-
Outstanding at March 31, 2016		6,909,000		$	0.15		1.44
Exercisable at March 31, 2016		6,909,000		$	0.15		1.44

As of March 31, 2016 and December 31, 2015, the average remaining contractual life of the outstanding warrants was 1.44 year and 1.69 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 – The Series A 10% Convertible Preferred Stock has voting rights (one vote per share) equal to those of the Company's common stock.

Dividend rights – The Series A 10% Convertible Preferred Stock carries a fixed cumulative dividend, as and when declared by our Board of Directors, of 10% per annum, accrued daily, compounded annually and payable in cash upon a liquidation event for up to five years, as well as the right to receive any dividends paid to holders of common stock.

Conversion rights – The holders of the Series A 10% Convertible Preferred Stock have the right to convert any or all of their Series A 10% Convertible Preferred Stock, at the option of the holder, at any time, into common stock on a one for one thousand basis.  

Redemption rights –The shares of the Series A 10% Convertible Preferred Stock may be redeemed by the Company, in whole or in part, at the option of the Company, upon written notice by the Company to the holders of Series A 10% Convertible Preferred Stock at any time in the event that the Preferred Stock of one or more holders has not been previously converted.  The Company shall redeem each share of Preferred Stock of such holders within thirty (30) days of the Company's delivery of notice to such holders and such holders shall surrender the certificate(s) representing such shares of Preferred Stock.

Liquidation entitlement – In the event of any liquidation, dissolution or winding up of the Company, the holders of the 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.

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 – There will be proportional adjustments for stock splits, stock dividends, recapitalizations and the like.

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.

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DIVIDENDS

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

NOTE 7 - DIVIDENDS

On October 30, 2015, 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, 2015, and such shareholders received the stock dividend for each share of Series A Preferred Stock owned on that date, payable December 1, 2015. As of November 15, 2015, the Company had 27,466 shares of Preferred Stock outstanding; the total dividend paid consisted of 2,749 shares of Series A Preferred Stock (which are convertible into 2,749,000 shares of Common Stock) with a fair value of $274,900 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 $2,749 par value of Preferred Stock dividend was charged against Additional Paid-in Capital.

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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2016

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.

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:

	On June 25, 2013
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 50% of the optioned shares 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)
Outstanding at December 31, 2014		300,000	$	0.03		3.48
Granted		-
Exercised		-
Forfeited/expired		-
Outstanding at December 31, 2015		300,000		0.03		2.48
Granted		-
Exercised		-
Forfeited/expired		-
Outstanding at March 31, 2016		300,000	$	0.03		2.24
Exercisable at March 31, 2016		300,000	$	0.03		2.24

The Company recognized approximately $0 and $0 of stock based compensation costs related to stock options awards for the three months ended March 31, 2016 and 2015, respectively.

The weighted-average grant date fair value of options outstanding at March 31, 2016 was $0.03.

As of March 31, 2016, the unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan was $0.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2016

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, 2016 and the year ended December 31, 2015.

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 March 31, 2016 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 March 31, 2016 and December 31, 2015, respectively:

	Carrying Amount In Balance Sheet March 31,		Fair Value March 31,		Fair Value Measurement Using
	2016		2016		Level 1		Level 2		Level 3
Assets:
Money Market Funds	$	955,119	$	955,119	$	955,119	$	—	$	—

	Carrying Amount In Balance Sheet December 31,		Fair Value December 31,		Fair Value Measurement Using
	2015		2015		Level 1		Level 2		Level 3
Assets:
Money Market Funds	$	973,470	$	973,470	$	973,470	$	—	$	—

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

NOTE 10 - 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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2016

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, 2016 and December 31, 2015, the Company had cash and cash equivalents held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of $955,119 and $973,470 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 March 31, 2016 and December 31, 2015, 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.

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INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2016

Income Taxes Tables

Summary of deferred tax assets

	March 31,			December 31,
	2016			2015
Deferred tax assets and valuation allowances consist of:
Deferred tax assets:
Net operating loss carry forwards	$	433,000		$	417,000
Less valuation allowance		(433,000	)		(417,000	)
Net deferred tax assets	$	-		$	-

Summary of income tax (expense) benefits

	Three months ended
	March 31,
	2016			2015
Tax benefits (expense) at statutory rate		35	%		35	%
Unrecognized tax benefits (expense) of current period tax losses		(35	)%		(35	)%
Effective tax rate		-			-

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PRIVATE PLACEMENT OFFERING (Tables)

3 Months Ended

Mar. 31, 2016

Private Placement Offering Tables

Allocated to the instruments as follows

Average risk-free interest rate	0.10	%
Average expected life-years	1
Expected volatility	56.64	%
Expected dividends	4.01	%

Warrants

2014 Extension of Warrant Terms

Average risk-free interest rate	0.10	%
Average expected life- years	1
Expected volatility	56.64	%
Expected dividends	4.01	%

2015 Extension of Warrant Terms

Average risk-free interest rate	0.71	%
Average expected life- years	2
Expected volatility	49.01	%
Expected dividends	4.01	%

Assumptions for the valuation of the fair value of the warrant liability

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2014		6,909,000		$	0.15		0.19
Granted		-
Exercised		-
Extended		6,909,000			0.15		2
Forfeited/expired		(6,909,000	)		0.15
Outstanding at December 31, 2015		6,909,000			0.15		1.69
Granted		-
Exercised		-
Forfeited/expired		-
Outstanding at March 31, 2016		6,909,000		$	0.15		1.44
Exercisable at March 31, 2016		6,909,000		$	0.15		1.44

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STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2016

Stockholders Equity Tables

Stock option valuation assumptions

	On June 25, 2013
Expected term (in years)		5
Expected stock price volatility		185.25	%
Risk-free interest rate		1.48	%
Expected dividend yield		-

Schedule of option activities

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2014		300,000	$	0.03		3.48
Granted		-
Exercised		-
Forfeited/expired		-
Outstanding at December 31, 2015		300,000		0.03		2.48
Granted		-
Exercised		-
Forfeited/expired		-
Outstanding at March 31, 2016		300,000	$	0.03		2.24
Exercisable at March 31, 2016		300,000	$	0.03		2.24

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2016

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 March 31, 2016 and December 31, 2015, respectively:

	Carrying Amount In Balance Sheet March 31,		Fair Value March 31,		Fair Value Measurement Using
	2016		2016		Level 1		Level 2		Level 3
Assets:
Money Market Funds	$	955,119	$	955,119	$	955,119	$	—	$	—

	Carrying Amount In Balance Sheet December 31,		Fair Value December 31,		Fair Value Measurement Using
	2015		2015		Level 1		Level 2		Level 3
Assets:
Money Market Funds	$	973,470	$	973,470	$	973,470	$	—	$	—

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Summary Of Significant Accounting Policies Details Narrative
Cash and Cash Equivalents	$ 955,119	$ 973,470	$ 1,038,077	$ 1,061,726

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BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details Narrative) - shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Basic And Diluted Net Loss Per Common Share Details Narrative
Common stock equivalents (preferred stock and warrants)	37,424,000	32,030,000

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INCOME TAXES (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Deferred tax assets:
Net operating loss carry forwards	$ 433,000	$ 417,000
Less valuation allowance	$ 433,000	$ (417,000)
Net deferred tax assets

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INCOME TAXES (Details 1)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
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

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INCOME TAXES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Income Taxes Details Narrative
Unused net operating loss carry-forwards	$ 1,083,000	$ 1,043,000
Expiration date	various dates through 2036

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PRIVATE PLACEMENT OFFERING (Details)	Mar. 31, 2016 USD ($)
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

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PRIVATE PLACEMENT OFFERING (Details 1)	1 Months Ended	3 Months Ended
	Jun. 25, 2013	Mar. 31, 2016	Mar. 31, 2015
Private Placement Offering Details 1
Average risk-free interest rate	1.48%	0.10%	0.71%
Average expected life- years	5 years	1 year	2 years
Expected volatility	185.25%	56.64%	49.01%
Expected dividends		4.01%	4.01%

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PRIVATE PLACEMENT OFFERING (Details 2) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Number of Warrants
Number of warrants/options outstanding, beginning	6,909,000
Number of warrants/options outstanding, ending	6,909,000	6,909,000
Warrant (Member)
Number of Warrants
Number of warrants/options outstanding, beginning	6,909,000	6,909,000
Number of Options, Granted
Number of Options, Exercised
Number of Options, Extended		6,909,000
Number of Options, Forfeited/expired		(6,909,000)
Number of warrants/options outstanding, ending	6,909,000	6,909,000
Number of Options, Exercisable	6,909,000
Weighted Average Exercise Price
Weighted average exercise price outstanding, beginning	$ 0.15	$ 0.15
Weighted Average Exercise Price, Extended		0.15
Weighted Average Exercise Price, Forfeited/expired		0.15
Weighted average exercise price outstanding, ending	0.15	$ 0.15
Weighted Average Exercise Price, Exercisable	$ 0.15
Weighted Average Remaining Contractual Life (Years)
Weighted Average Remaining Contractual Life (Years), Beginning	1 year 8 months 9 days	2 months 9 days
Weighted Average Remaining Contractual Life (Years), Extended		2 years
Weighted Average Remaining Contractual Life (Years), Outstanding	1 year 5 months 9 days	1 year 8 months 9 days
Weighted Average Remaining Contractual Life (Years), Exercisable	1 year 5 months 9 days

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PRIVATE PLACEMENT OFFERING (Details Narrative) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Private Placement Offering Details Narrative
Number of warrants/options outstanding, beginning	6,909,000
Exercise price	$ 0.15	$ 0.15
Expiry date	September 7, 2017
Contractual life of the outstanding warrants	1 year 5 months 9 days	1 year 8 months 9 days

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STOCKHOLDERS' EQUITY (Details)	1 Months Ended	3 Months Ended
	Jun. 25, 2013	Mar. 31, 2016	Mar. 31, 2015
Stockholders Equity Details
Expected term (in years)	5 years	1 year	2 years
Expected stock price volatility	185.25%	56.64%	49.01%
Risk-free interest rate	1.48%	0.10%	0.71%
Expected dividend yield		4.01%	4.01%

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STOCKHOLDERS' EQUITY (Details 1) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Number of Options
Number of warrants/options outstanding, beginning	6,909,000
Number of warrants/options outstanding, ending	6,909,000	6,909,000
Stock Option [Member]
Number of Options
Number of warrants/options outstanding, beginning	300,000	300,000
Number of Options, Granted
Number of Options, Exercised
Number of Options, Forfeited/expired
Number of warrants/options outstanding, ending	300,000	300,000
Number of Options, Exercisable	300,000
Weighted Average Exercise Price
Weighted average exercise price outstanding, beginning	$ 0.03	$ 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	$ 0.03
Weighted Average Exercise Price, Exercisable	$ 0.03
Weighted Average Remaining Contractual Life (Years)
Weighted Average Remaining Contractual Life (Years), Beginning	2 years 5 months 23 days	3 years 5 months 23 days
Weighted Average Remaining Contractual Life (Years), Outstanding	2 years 2 months 27 days	2 years 5 months 23 days
Weighted Average Remaining Contractual Life (Years), Exercisable	2 years 2 months 27 days

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STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Stockholders Equity Details Narrative
Stock based compensation costs related to stock and stock options awards	$ 0	$ 0
Weighted-average grant date fair value of options outstanding	$ 0.03
Unrecognized compensation cost related to non-vested share based compensation	$ 0

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FAIR VALUE MEASUREMENTS (Details) - Money Market Funds [Member] - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Assets at fair value on recurring basis	$ 955,119	$ 973,470
Fair Value, Inputs, Level 1 [Member]
Assets at fair value on recurring basis	$ 955,119	$ 973,470
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	$ 955,119	$ 973,470