0001477932-18-005023.txt : 20181026 0001477932-18-005023.hdr.sgml : 20181026 20181026114301 ACCESSION NUMBER: 0001477932-18-005023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 50 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181026 DATE AS OF CHANGE: 20181026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHASE PACKAGING CORP CENTRAL INDEX KEY: 0001025771 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE SERVICES [0700] IRS NUMBER: 931216127 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21609 FILM NUMBER: 181140884 BUSINESS ADDRESS: STREET 1: 636 RIVER ROAD CITY: FAIRHAVEN STATE: NJ ZIP: 07704 BUSINESS PHONE: 732-741-1500 MAIL ADDRESS: STREET 1: POB 6199 STREET 2: 636 RIVER ROAD CITY: FAIRHAVEN STATE: NJ ZIP: 07704 10-Q 1 cpka_10q.htm FORM 10-Q cpka_10q.htm

 

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 September 30, 2018

 

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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

o

Accelerated filer

¨

Non-accelerated filer

o

Smaller reporting company

x

(Do not check if a smaller reporting company)

Emerging growth company

o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

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 October 26, 2018

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 – September 30, 2018 (Unaudited) and December 31, 2017

 

3

 

Condensed Statements of Operations (Unaudited) – Nine Months and Three Months Ended September 30, 2018 and 2017

 

4

 

Condensed Statements of Cash Flows (Unaudited) – Nine Months Ended September 30, 2018 and 2017

 

5

 

Notes to Interim Condensed Financial Statements (Unaudited)

 

6-13

 

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

 

 
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PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

CHASE PACKAGING CORPORATION

CONDENSED BALANCE SHEETS

 

 

 

September 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$ 764,829

 

 

$ 805,743

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$ 764,829

 

 

$ 805,743

 

 

 

 

 

 

 

 

 

 

LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$ 3,979

 

 

$ 9,550

 

TOTAL CURRENT LIABILITIES

 

 

3,979

 

 

 

9,550

 

 

 

 

 

 

 

 

 

 

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; 36,562 shares issued and 36,562 shares outstanding as of September 30, 2018 and December 31, 2017; liquidation preference of $3,656,200 and $3,656,200 as of September 30, 2018 and December 31, 2017

 

 

2,067,776

 

 

 

2,067,776

 

Common stock, $.10 par value 200,000,000 shares authorized; 16,033,862 shares issued and 15,536,275 shares outstanding as of September 30, 2018 and December 31, 2017

 

 

1,603,387

 

 

 

1,603,387

 

Treasury Stock, $.10 par value 497,587 shares as of September 30, 2018 and December 31, 2017

 

 

(49,759 )

 

 

(49,759 )

Additional paid-in capital

 

 

2,623,189

 

 

 

2,623,189

 

Accumulated deficit

 

 

(5,483,743 )

 

 

(5,448,400 )

TOTAL STOCKHOLDERS’ EQUITY

 

 

760,850

 

 

 

796,193

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

 

$ 764,829

 

 

$ 805,743

 

 

See notes to interim condensed unaudited financial statements.

 

 
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CHASE PACKAGING CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

For The Nine Months Ended

 

 

For The Three Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expense

 

 

41,773

 

 

 

42,673

 

 

 

13,453

 

 

 

13,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(41,773 )

 

 

(42,673 )

 

 

(13,453 )

 

 

(13,211 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants modification expense

 

 

-

 

 

 

(27,707 )

 

 

-

 

 

 

(27,707 )

Interest and other income

 

 

6,430

 

 

 

1,561

 

 

 

3,233

 

 

 

1,519

 

TOTAL OTHER INCOME (EXPENSE)

 

 

6,430

 

 

 

(26,146 )

 

 

3,233

 

 

 

(26,188 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

 

(35,343 )

 

 

(68,819 )

 

 

(10,220 )

 

 

(39,399 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

 

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$ (35,343 )

 

$ (68,819 )

 

$ (10,220 )

 

$ (39,399 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS PER COMMON SHARE

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED

 

 

15,536,275

 

 

 

15,536,275

 

 

 

15,536,275

 

 

 

15,536,275

 

 

See notes to interim condensed unaudited financial statements.

 

 
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CHASE PACKAGING CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

For The Nine Months Ended

 

 

 

September 30,

 

 

 

2018

 

 

2017

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$ (35,343 )

 

 

(68,819 )

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

 

 

 

 

 

 

 

 

Warrants modification expense

 

 

-

 

 

 

27,707

 

 

 

 

 

 

 

 

 

 

Change in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

(5,571 )

 

 

(7,487 )

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(40,914 )

 

 

(48,599 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

 

(40,914 )

 

 

(48,599 )

 

 

 

 

 

 

 

 

 

Cash, at beginning of period

 

 

805,743

 

 

 

864,323

 

 

 

 

 

 

 

 

 

 

CASH, END OF PERIOD

 

$ 764,829

 

 

 

815,724

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

Interest

 

$ -

 

 

$ -

 

Income taxes

 

$ -

 

 

$ -

 

 

See notes to interim condensed unaudited financial statements.

 

 
5
 
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CHASE PACKAGING CORPORATION

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

September 30, 2018

(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 merger or acquisition, raising additional capital, and other strategies designed to optimize shareholder value. However, no assurance can be given that management will be successful in its efforts. The failure to achieve these plans will have a material adverse effect on the Company’s financial position, results of operations, and ability to continue as a going concern.

 

The interim condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to provide for fair presentation and a reasonable understanding of the information presented. The Interim Condensed Financial Statements 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, 2017, 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 September 30, 2018, results of operations for the nine months and three months ended September 30, 2018 and 2017, and cash flows for the nine months ended September 30, 2018 and 2017, as applicable, have been made. The results of operations for the nine months and three months ended September 30, 2018 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, 2017, 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:

 

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 Company’s present or future financial statements.

 

Going Concern

 

ASU 2014-15 – “Presentation of Financial Statements—Going Concern—Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).” In August 2014, the FASB issued ASU 2014-15 requiring management to assess an entity’s 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.

 

 
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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 believes that the adoption of this guidance will not have a material impact on our financial statements.

 

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 adopted the new revenue standards in its first quarter of 2018 utilizing the full retrospective transition method; the adoption of ASU 2016-10 has not had a material impact on the financial statements.

 

Intangibles, Goodwill and Other

 

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment” (“ASU No. 2017-04”). To simplify the subsequent measurement of goodwill, ASU No. 2017-04 eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, ASU No. 2017-04 requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU No. 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU No. 2017-04 is effective for fiscal years beginning after December 15, 2019. The Company will adopt ASU No. 2017-04 commencing in the first quarter of fiscal 2021. The Company does not believe this standard will have a material impact on its financial statements or the related footnote disclosures.

 

Statement of Cash Flows

 

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)” (“ASU No. 2016-15”). ASU No. 2016-15 clarifies how certain cash receipts and payments should be presented in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company will adopt ASU No. 2016-15 commencing in the first quarter of fiscal 2019. The Company does not believe this standard will have a material impact on its financial statements or the related footnote disclosures.

 

 
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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 September 30, 2018, and December 31, 2017, the Company had cash in insured accounts in the amount of $45,195 and $156,160, respectively, and cash equivalents (US treasury bills) held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of approximately $719,634 and $649,583 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. At September 30, 2018, and December 31, 2017, the Company evaluated its tax positions and did not have any unrecognized tax benefits. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company currently has no federal or state tax examinations in progress.

 

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 43,471,000 and 40,447,000 common stock equivalents (preferred stock, warrants and stock options) from the calculation of diluted loss per share for the nine months ended September 30, 2018 and 2017 respectively, which, if included, would have an antidilutive effect.

 

NOTE 5 – INCOME TAXES:

 

In December 2017, the federal government enacted numerous amendments to the Internal Revenue Code of 1986 pursuant to an act known by the Tax Cuts and Jobs Act (the “TCJA”). The TCJA will impact the Company’s income tax expense (benefit) from continuing operations in future periods (approximate 25% effective combined Federal and State corporate tax rate). The Company has recorded a full valuation allowance on its net deferred tax assets and therefore any impact on the value of the company’s deferred tax assets will be offset by a change in the valuation allowance.

 

Our tax provision is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2017 and 2016 annual effective tax rate is estimated to be a combined 35% for the U.S. federal and state statutory tax rates. We review tax uncertainties in light of changing facts and circumstances and adjust them accordingly. As of September 30, 2018 and December 31, 2017, there were no tax contingencies or unrecognized tax positions recorded.

 

 
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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The significant components of deferred tax assets (at an approximate 25% effective tax rate) as of September 30, 2018 and December 31, 2017, respectively, are as follows:

 

 

 

September 30,

2018

 

 

December 31,

2017

 

Deferred tax assets and valuation allowances consist of:

 

 

 

 

 

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carry forwards

 

$ 320,000

 

 

$ 497,000

 

Less valuation allowance

 

 

(320,000 )

 

 

(497,000 )

Net deferred tax assets

 

$ -

 

 

$ -

 

 

We have a net operating loss carry forward for federal and state tax purposes of approximately $1,278,000 at September 30, 2018, that is potentially available to offset future taxable income. The TCJA changes the rules on net operating loss carry forwards. The 20-year limitation was eliminated, giving the taxpayer the ability to carry forward losses indefinitely. However, net operating loss carry forward arising after January 1, 2018, will now be limited to 80 percent of taxable income.

 

For financial reporting purposes, no deferred tax asset was recognized because at September 30, 2018 and December 31, 2017, management estimates that it is more likely than not that substantially all of the net operating losses will expire unused. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The timing and manner in which we can utilize our net operating loss carry forward and future income tax deductions in any year may be limited by provisions of the Internal Revenue Code regarding the change in ownership of corporations. Such limitation may have an impact on the ultimate realization of our carry forwards and future tax deductions. Section 382 of the Internal Revenue Code (“Section 382”) imposes limitations on a corporation’s ability to utilize net operating losses if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. Any unused annual limitation may be carried over to later years, and the amount of the limitation may under certain circumstances be increased by the built-in gains in assets held by us at the time of the change that are recognized in the five-year period after the change. Upon review of the ownership shifts, there has not been an ownership change as defined under Section 382.

 

On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 (SAB 118) which addresses income tax accounting implications of the 2017 Tax Act. The purpose of SAB 118 was to address any uncertainty or diversity of view in applying ASC Topic 740, Income Taxes in the reporting period in which the 2017 Tax Act was enacted. SAB 118 addresses situations where the accounting is incomplete for certain income tax effects of the 2017 Tax Act upon issuance of a company’s financial statements for the reporting period which include the enactment date. SAB 118 allows for a provisional amount to be recorded if it is a reasonable estimate of the impact of the 2017 Tax Act. Additionally, SAB 118 allows for a measurement period to finalize the impacts of the 2017 Tax Act, not to extend beyond one year from the date of enactment.

 

Due to the timing of the enactment and the complexity involved in applying the provisions of the 2017 Tax Act, we have made reasonable estimates for certain effects of the 2017 Tax Act and recorded provisional amounts in our financial statements as of December 31, 2017. As we collect and prepare necessary data and interpret the 2017 Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, we may make adjustments to the provisional amounts. Those adjustments may materially impact our provision for income taxes tax rate in the period in which the adjustments are made. We expect to complete our accounting for the tax effects of the 2017 Tax Act in 2018.

 

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:

 

 

 

Nine months ended

 

 

 

September 30,

 

 

 

2018

 

 

2017

 

Tax benefits (expense) at statutory rate

 

 

25 %

 

 

35 %

Unrecognized tax benefits (expense) of current period tax losses

 

 

(25 )%

 

 

(35 )%

Effective tax rate

 

 

-

 

 

 

-

 

 

The Company had no uncertain tax positions that would necessitate recording of a tax related liability.

 

 
9
 
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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

 

2017 Extension of Warrant Terms

 

On August 24, 2017, 6,909,000 common share purchase warrants issued by the Company were modified to extend their maturity date to September 7, 2019. The exercise price and all other terms of the original warrant agreement remain the same. The warrants modification expense of $31,478 was computed as the incremental value of the modified warrants over the unmodified warrants on the modification date using a per share price of $0.15 per share, which was the contemporaneous private placement offering price. Assumptions used in the Black Scholes option-pricing model for these warrants were as follows:

 

Average risk-free interest rate

 

 

1.27 %

Average expected life- years

 

 

2

 

Expected volatility

 

 

135.42 %

Expected dividends

 

 

0 %

 

As of September 30, 2018, warrants to purchase 6,909,000 shares were outstanding, having exercise prices at $0.15 and an expiration date of September 7, 2019.

 

 

 

Number of Warrants

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining Contractual

Life (Years)

 

 

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2017

 

 

6,909,000

 

 

$ 0.15

 

 

 

1.68

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited/expired

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding at September 30, 2018

 

 

6,909,000

 

 

$ 0.15

 

 

 

0.94

 

Exercisable at September 30, 2018

 

 

6,909,000

 

 

$ 0.15

 

 

 

0.94

 

 

As of September 30, 2018 and December 31, 2017, the average remaining contractual life of the outstanding warrants was 0.94 years and 1.68 year, respectively. The Warrants will expire on September 7, 2019.

 

 
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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.

 

NOTE 7 – DIVIDENDS:

 

On October 6, 2017, 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, 2017, and such shareholders will receive the stock dividend for each share of Series A Preferred Stock owned on that date, payable December 1, 2017. As of October 31, 2017, the Company had 33,238 shares of Preferred Stock outstanding; the total dividend to be paid consisted of 3,324 shares of Series A Preferred Stock (which are convertible into 3,324,000 shares of Common Stock) with a fair value of $332,400 and a total of 11.9 fractional shares which will be accumulated until whole shares can be issued.

 

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 June 24, 2008 and will terminate on June 24, 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.

 

 
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The 2008 Stock Awards Plan expired Jun 24, 2018; the Board of directors has not adopted a new stock awards plan. The following table summarizes all stock option activity under the expired plan:

 

 

 

Number of

Options

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining Contractual

Life (Years)

 

 

Aggregate

Intrinsic

Value

 

Outstanding at January 1, 2018

 

 

300,000

 

 

$ 0.03

 

 

 

0.48

 

 

$ -

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited/expired

 

 

(300,000 )

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding at September 30, 2018

 

 

-

 

 

$ -

 

 

 

-

 

 

$ -

 

Exercisable at September 30, 2018

 

 

-

 

 

$ -

 

 

 

-

 

 

$ -

 

 

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 nine months ended September 30, 2018 and the year ended December 31, 2017.

 

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 year ended December 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 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.

 

 
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The following tables provide information on those assets measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017, respectively:

 

 

 

Carrying

Amount In

Balance Sheet

September 30,

 

 

Fair Value

September 30,

 

 

Fair Value Measurement Using

 

 

 

2018

 

 

2018

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury Bills

 

$ 719,634

 

 

$ 719,634

 

 

$ 719,634

 

 

 

 

 

 

 

Money Market Funds

 

 

45,195

 

 

 

45,195

 

 

 

45,195

 

 

 

 

 

 

 

Total Assets

 

$ 764,829

 

 

$ 764,829

 

 

$ 764,829

 

 

$

 

 

$

 

 

 

 

Carrying

Amount In

Balance Sheet December 31,

 

 

Fair Value December 31,

 

 

Fair Value Measurement Using

 

 

 

2017

 

 

2017

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury Bills

 

$ 649,583

 

 

$ 649,583

 

 

$ 649,583

 

 

 

 

 

 

 

Money Market Funds

 

 

156,160

 

 

 

156,160

 

 

 

156,160

 

 

 

 

 

 

 

Total Assets

 

$ 805,743

 

 

$ 805,743

 

 

$ 805,743

 

 

$

 

 

$

 

 

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 three months ended September 30, 2018 and 2017

 

Revenue

 

The Company had no operations and no revenue for the three months ended September 30, 2018 and 2017 and its only income was from interest income and realized gains on its short-term investments which are classified as cash and cash equivalents.

 

Operating Expenses

 

The following table presents the Company’s total operating expenses for the three months ended September 30, 2018 and 2017.

 

 

 

Three Months Ended

September 30,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

Legal and professional fees

 

 

5,000

 

 

 

5,673

 

Payroll

 

 

5,137

 

 

 

4,816

 

Other general and administrative expense

 

 

3,316

 

 

 

2,722

 

 

 

$ 13,453

 

 

$ 13,211

 

 

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. Total operating expenses for the three-months ended September 30, 2018, as compared to the three months ended September 30, 2017, were substantially the same amounts.

 

The Company incurred loss from operation of $13,453 and $13,211 for the three months ended September 30, 2018 and 2017, respectively.

 

Other Income (Expense)

 

The following table presents our total Other Income (Expense) for the three months ended September 30, 2018 and 2017.

 

 

 

Three Months Ended

September 30,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

Warrants modification expense

 

$ -

 

 

$ (27,707 )

Interest income and realized gains

 

 

3,233

 

 

 

1,519

 

Other Income (Expense), net

 

$ 3,233

 

 

$ (26,188 )

 

Income (Expense) decreased by $29,421 for the three months ended September 30, 2018 as compared to the three months ended September 30, 2017. The decrease in other expense was related to the September 30, 2017. Warrant modification expense of $27,707 offset by the September 30, 2018 increase in realized gains.

 

 
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Net Loss

 

The Company had a net loss of $10,220 for the three months ended September 30, 2018, compared with a net loss of $39,399 for the three months ended September 30, 2017. Net loss attributable to common stockholders was $10,220 for the three months ended September 30, 2018, compared to $39,399 for the three months ended September 30, 2017. Decreases in net loss attributable to common stockholders were due primarily to the abovementioned effect.

 

Loss per share for the three months ended September 30, 2018 and 2017 were approximately $(0.00) and $(0.00) based on the weighted-average shares issued and outstanding.

 

It is anticipated that future operating expenses will decrease 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.

 

For the nine months ended September 30, 2018 and 2017

 

Revenue

 

The Company had no operations and no revenue for the nine months ended September 30, 2018 and 2017 and its only income was from interest income and realized gains 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 nine months ended September 30, 2018 and 2017.

 

 

 

Nine Months Ended

September 30,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

Legal and professional fees

 

 

15,688

 

 

 

20,358

 

Payroll

 

 

15,329

 

 

 

14,974

 

Other general and administrative expense

 

 

10,756

 

 

 

7,341

 

 

 

$ 41,773

 

 

$ 42,673

 

 

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. Total operating expenses for the nine-months ended September 30, 2018, as compared to the nine months ended September 30, 2017, were substantially the same amounts.

 

Loss from Operation

 

The Company incurred loss from operation of $41,773 and $42,673 for the nine months ended September 30, 2018 and 2017, respectively.

 

Other Income (Expense)

 

The following table presents our total Other Income (Expense) for the nine months ended September 30, 2018 and 2017.

 

 

 

Nine Months Ended

September 30,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

Warrants modification expense

 

$ -

 

 

$ (27,707 )

Interest income and realized gains

 

$ 6,430

 

 

$ 1,561

 

Other Income (Expense), net

 

$ 6,430

 

 

$ (26,146 )

 

Income (Expense) decreased by $32,576 for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017. The decrease in other expense was related to the September 30, 2017. Warrant modification expense of $27,707 offset by September 30, 2018 increase in realized gains.

  

 
15
 
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Net Loss

 

The Company had a net loss of $35,343 for the nine months ended September 30, 2018, compared with a net loss of $68,819 for the nine months ended September 30, 2017. Net loss attributable to common stockholders was $35,343 for the nine months ended September 30, 2018, compared to $68,819 for the nine months ended September 30, 2017. Decreases in net loss attributable to common stockholders were due primarily to the abovementioned effect.

 

Loss per share for the nine months ended September 30, 2018 and 2017 were approximately $(0.00) and $(0.00) based on the weighted-average shares issued and outstanding.

 

Liquidity and Capital Resources

 

At September 30, 2018 the Company had cash and cash equivalents of approximately $765,000 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 years presented in this Report.

 

Cash Flow

 

 

 

Nine Months Ended

September 30,

 

 

 

2018

 

 

2017

 

Net cash used in operating activities

 

$ (40,914 )

 

$ (48,599 )

Net cash provided by investing activities

 

 

-

 

 

 

-

 

Net cash provided by financing activities

 

 

-

 

 

 

-

 

Net cash outflow

 

$ (40,914 )

 

$ (48,599 )

 

Net cash of $(40,914) and $(48,599) were used in operations during the nine months period ended September 30, 2018 and 2017, respectively.

 

The use of cash of $(40,914) used in operating activities for the nine months ended September 30, 2018, principally resulted from our net loss of $(35,343), as adjusted for changes in our working capital accounts of $(5,571).

 

The use of cash of $(48,599) used in operating activities for the nine months ended September 30, 2017, principally resulted from our net loss of $(68,819), as adjusted for non-cash charges for warrants modification expense of $27,707, and changes in our working capital accounts of $(7,487).

 

No cash flows were used in or provided by investing activities during the nine months ended September 30, 2018 and 2017.

 

No cash proceeds were used in or provided by financing activities during the nine months ended September 30, 2018 and 2017.

 

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 identifying a merger partner or acquiring an operating business.

 

 
16
 
Table of Contents

 

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 September 30, 2018, our disclosure controls and procedures were effective.

 

Changes in Internal Controls over Financial Reporting.

 

During the quarter ended September 30, 2018, 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
 
Table of Contents

 

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

 
Table of Contents

  

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 September 30, 2018, filed on October 26, 2018, 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

 

 
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SIGNATURES

 

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

 

 

CHASE PACKAGING CORPORATION

 

 

Date: October 26, 2018

By:

/s/ William J. Barrett

 

William J. Barrett

 

Lead Director

 

 

(Principal Executive Officer)

 

     

Date: October 26, 2018

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 2 cpka_ex311.htm CERTIFICATION cpka_ex311.htm

EXHIBIT 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, William J. Barrett, 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: October 26, 2018

By:

/s/ William J. Barrett

 

William J. Barrett

 

Lead Director

 

(Principal Executive Officer)

 

EX-31.2 3 cpka_ex312.htm CERTIFICATION cpka_ex312.htm

 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: October 26, 2018

By:

/s/ Ann C. W. Green

 

Ann C. W. Green

 

Chief Financial Officer and Assistant Secretary

 

(Principal Financial and Accounting Officer)

EX-32.1 4 cpka_ex321.htm CERTIFICATION cpka_ex321.htm

 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 September 30, 2018 (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: October 26, 2018

By:

/s/ William J. Barrett

 

William J. Barrett

 

Lead Director

 

(Principal Executive Officer)

 

EX-32.2 5 cpka_ex322.htm CERTIFICATION cpka_ex322.htm

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 September 30, 2018 (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: October 26, 2018

By:

/s/ Ann C. W. Green

 

Ann C. W. Green

 

Chief Financial Officer and Assistant Secretary

 

(Principal Financial and Accounting Officer)

 

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Document and Entity Information - shares
9 Months Ended
Sep. 30, 2018
Oct. 26, 2018
Document And Entity Information    
Entity Registrant Name CHASE PACKAGING CORPORATION  
Entity Central Index Key 0001025771  
Document Type 10-Q  
Document Period End Date Sep. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
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 Q3  
Document Fiscal Year Focus 2018  
Entity Emerging Growth Company false  
Entity Small Business false  
Entity Ex Transition Period false  
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CONDENSED BALANCE SHEETS - USD ($)
Sep. 30, 2018
Dec. 31, 2017
CURRENT ASSETS:    
Cash and cash equivalents $ 764,829 $ 805,743
TOTAL ASSETS 764,829 805,743
CURRENT LIABILITIES:    
Accounts payable and accrued expenses 3,979 9,550
TOTAL CURRENT LIABILITIES 3,979 9,550
COMMITMENTS AND CONTINGENCIES
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 September 30, 2018 and December 31, 2017 1,603,387 1,603,387
Treasury Stock, $.10 par value 497,587 shares as of September 30, 2018 and December 31, 2017 (49,759) (49,759)
Additional paid-in capital 2,623,189 2,623,189
Accumulated deficit (5,483,743) (5,448,400)
TOTAL STOCKHOLDERS' EQUITY 760,850 796,193
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY 764,829 805,743
Series A Convertible Preferred stock [Member]    
STOCKHOLDERS' EQUITY:    
PREFERRED STOCK, value $ 2,067,776 $ 2,067,776
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CONDENSED BALANCE SHEETS (Parenthetical) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
STOCKHOLDERS' EQUITY:    
Preferred Stock, Par Value $ 1.00 $ 1.00
Preferred Stock, Shares Authorized 4,000,000 4,000,000
Preferred Stock, Liquidation Preference, Value $ 3,656,200 $ 3,656,200
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 Convertible Preferred stock [Member]    
STOCKHOLDERS' EQUITY:    
Preferred Stock, Shares Authorized 50,000 50,000
Preferred Stock, Shares Issued 36,562 36,562
Preferred Stock, Shares Outstanding 36,562 36,562
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CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Condensed Statements Of Operations        
NET SALES
EXPENSES:        
General and administrative expense 13,453 13,211 41,773 42,673
LOSS FROM OPERATIONS (13,453) (13,211) (41,773) (42,673)
OTHER INCOME (EXPENSE)        
Warrants modification expense (27,707) (27,707)
Interest and other income 3,233 1,519 6,430 1,561
TOTAL OTHER INCOME (EXPENSE) 3,233 (26,188) 6,430 (26,146)
LOSS BEFORE INCOME TAXES (10,220) (39,399) (35,343) (68,819)
Provision for income taxes    
NET LOSS $ (10,220) $ (39,399) $ (35,343) $ (68,819)
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED 15,536,275 15,536,275 15,536,275 15,536,275
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CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss $ (10,220) $ (39,399) $ (35,343) $ (68,819)
Adjustment to reconcile to net loss to net cash used in operating activities:        
Warrants modification expense 27,707 27,707
Change in assets and liabilities:        
Accounts payable and accrued expenses     (5,571) (7,487)
Net cash used in operating activities     (40,914) (48,599)
CASH FLOWS FROM INVESTING ACTIVITIES    
CASH FLOWS FROM FINANCING ACTIVITIES    
NET INCREASE (DECREASE) IN CASH     (40,914) (48,599)
Cash, at beginning of period     805,743 864,323
CASH, END OF PERIOD $ 764,829 $ 815,724 764,829 815,724
SUPPLEMENTAL CASH FLOW INFORMATION:        
Cash paid for: Interest    
Cash paid for: Income taxes    
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BASIS OF PRESENTATION
9 Months Ended
Sep. 30, 2018
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 merger or acquisition, raising additional capital, and other strategies designed to optimize shareholder value. However, no assurance can be given that management will be successful in its efforts. The failure to achieve these plans will have a material adverse effect on the Company’s financial position, results of operations, and ability to continue as a going concern.

 

The interim condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to provide for fair presentation and a reasonable understanding of the information presented. The Interim Condensed Financial Statements 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, 2017, 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 September 30, 2018, results of operations for the nine months and three months ended September 30, 2018 and 2017, and cash flows for the nine months ended September 30, 2018 and 2017, as applicable, have been made. The results of operations for the nine months and three months ended September 30, 2018 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, 2017, 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.

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NEW ACCOUNTING PRONOUNCEMENTS
9 Months Ended
Sep. 30, 2018
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 Company’s present or future financial statements.

 

Going Concern

 

ASU 2014-15 – “Presentation of Financial Statements—Going Concern—Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).” In August 2014, the FASB issued ASU 2014-15 requiring management to assess an entity’s 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 believes that the adoption of this guidance will not have a material impact on our financial statements.

 

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 adopted the new revenue standards in its first quarter of 2018 utilizing the full retrospective transition method; the adoption of ASU 2016-10 has not had a material impact on the financial statements.

 

Intangibles, Goodwill and Other

 

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment” (“ASU No. 2017-04”). To simplify the subsequent measurement of goodwill, ASU No. 2017-04 eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, ASU No. 2017-04 requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU No. 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU No. 2017-04 is effective for fiscal years beginning after December 15, 2019. The Company will adopt ASU No. 2017-04 commencing in the first quarter of fiscal 2021. The Company does not believe this standard will have a material impact on its financial statements or the related footnote disclosures.

 

Statement of Cash Flows

 

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)” (“ASU No. 2016-15”). ASU No. 2016-15 clarifies how certain cash receipts and payments should be presented in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company will adopt ASU No. 2016-15 commencing in the first quarter of fiscal 2019. The Company does not believe this standard will have a material impact on its financial statements or the related footnote disclosures.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2018
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 September 30, 2018, and December 31, 2017, the Company had cash in insured accounts in the amount of $45,195 and $156,160, respectively, and cash equivalents (US treasury bills) held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of approximately $719,634 and $649,583 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. At September 30, 2018, and December 31, 2017, the Company evaluated its tax positions and did not have any unrecognized tax benefits. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company currently has no federal or state tax examinations in progress.

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BASIC AND DILUTED NET LOSS PER COMMON SHARE
9 Months Ended
Sep. 30, 2018
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 43,471,000 and 40,447,000 common stock equivalents (preferred stock, warrants and stock options) from the calculation of diluted loss per share for the nine months ended September 30, 2018 and 2017 respectively, which, if included, would have an antidilutive effect.

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INCOME TAXES
9 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 5 - INCOME TAXES

In December 2017, the federal government enacted numerous amendments to the Internal Revenue Code of 1986 pursuant to an act known by the Tax Cuts and Jobs Act (the “TCJA”). The TCJA will impact the Company’s income tax expense (benefit) from continuing operations in future periods (approximate 25% effective combined Federal and State corporate tax rate). The Company has recorded a full valuation allowance on its net deferred tax assets and therefore any impact on the value of the company’s deferred tax assets will be offset by a change in the valuation allowance.

 

Our tax provision is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2017 and 2016 annual effective tax rate is estimated to be a combined 35% for the U.S. federal and state statutory tax rates. We review tax uncertainties in light of changing facts and circumstances and adjust them accordingly. As of September 30, 2018 and December 31, 2017, there were no tax contingencies or unrecognized tax positions recorded.

  

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The significant components of deferred tax assets (at an approximate 25% effective tax rate) as of September 30, 2018 and December 31, 2017, respectively, are as follows:

 

   

September 30,

2018

   

December 31,

2017

 
Deferred tax assets and valuation allowances consist of:            
Deferred tax assets:            
Net operating loss carry forwards   $ 320,000     $ 497,000  
Less valuation allowance     (320,000 )     (497,000 )
Net deferred tax assets   $ -     $ -  

 

We have a net operating loss carry forward for federal and state tax purposes of approximately $1,278,000 at September 30, 2018, that is potentially available to offset future taxable income. The TCJA changes the rules on net operating loss carry forwards. The 20-year limitation was eliminated, giving the taxpayer the ability to carry forward losses indefinitely. However, net operating loss carry forward arising after January 1, 2018, will now be limited to 80 percent of taxable income.

 

For financial reporting purposes, no deferred tax asset was recognized because at September 30, 2018 and December 31, 2017, management estimates that it is more likely than not that substantially all of the net operating losses will expire unused. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The timing and manner in which we can utilize our net operating loss carry forward and future income tax deductions in any year may be limited by provisions of the Internal Revenue Code regarding the change in ownership of corporations. Such limitation may have an impact on the ultimate realization of our carry forwards and future tax deductions. Section 382 of the Internal Revenue Code (“Section 382”) imposes limitations on a corporation’s ability to utilize net operating losses if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. Any unused annual limitation may be carried over to later years, and the amount of the limitation may under certain circumstances be increased by the built-in gains in assets held by us at the time of the change that are recognized in the five-year period after the change. Upon review of the ownership shifts, there has not been an ownership change as defined under Section 382.

 

On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 (SAB 118) which addresses income tax accounting implications of the 2017 Tax Act. The purpose of SAB 118 was to address any uncertainty or diversity of view in applying ASC Topic 740, Income Taxes in the reporting period in which the 2017 Tax Act was enacted. SAB 118 addresses situations where the accounting is incomplete for certain income tax effects of the 2017 Tax Act upon issuance of a company’s financial statements for the reporting period which include the enactment date. SAB 118 allows for a provisional amount to be recorded if it is a reasonable estimate of the impact of the 2017 Tax Act. Additionally, SAB 118 allows for a measurement period to finalize the impacts of the 2017 Tax Act, not to extend beyond one year from the date of enactment.

 

Due to the timing of the enactment and the complexity involved in applying the provisions of the 2017 Tax Act, we have made reasonable estimates for certain effects of the 2017 Tax Act and recorded provisional amounts in our financial statements as of December 31, 2017. As we collect and prepare necessary data and interpret the 2017 Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, we may make adjustments to the provisional amounts. Those adjustments may materially impact our provision for income taxes tax rate in the period in which the adjustments are made. We expect to complete our accounting for the tax effects of the 2017 Tax Act in 2018.

 

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:

 

    Nine months ended  
    September 30,  
    2018     2017  
Tax benefits (expense) at statutory rate     25 %     35 %
Unrecognized tax benefits (expense) of current period tax losses     (25 )%     (35 )%
Effective tax rate     -       -  

 

The Company had no uncertain tax positions that would necessitate recording of a tax related liability.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
PRIVATE PLACEMENT OFFERING
9 Months Ended
Sep. 30, 2018
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

 

2017 Extension of Warrant Terms

 

On August 24, 2017, 6,909,000 common share purchase warrants issued by the Company were modified to extend their maturity date to September 7, 2019. The exercise price and all other terms of the original warrant agreement remain the same. The warrants modification expense of $31,478 was computed as the incremental value of the modified warrants over the unmodified warrants on the modification date using a per share price of $0.15 per share, which was the contemporaneous private placement offering price. Assumptions used in the Black Scholes option-pricing model for these warrants were as follows:

 

Average risk-free interest rate     1.27 %
Average expected life- years     2  
Expected volatility     135.42 %
Expected dividends     0 %

 

As of September 30, 2018, warrants to purchase 6,909,000 shares were outstanding, having exercise prices at $0.15 and an expiration date of September 7, 2019.

 

    Number of Warrants    

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining Contractual

Life (Years)

 
                   
Outstanding at December 31, 2017     6,909,000     $ 0.15       1.68  
Granted     -       -       -  
Exercised     -       -       -  
Forfeited/expired     -       -       -  
Outstanding at September 30, 2018     6,909,000     $ 0.15       0.94  
Exercisable at September 30, 2018     6,909,000     $ 0.15       0.94  

 

As of September 30, 2018 and December 31, 2017, the average remaining contractual life of the outstanding warrants was 0.94 years and 1.68 year, respectively. The Warrants will expire on September 7, 2019.

 

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.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
DIVIDENDS
9 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 7 - DIVIDENDS

On October 6, 2017, 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, 2017, and such shareholders will receive the stock dividend for each share of Series A Preferred Stock owned on that date, payable December 1, 2017. As of October 31, 2017, the Company had 33,238 shares of Preferred Stock outstanding; the total dividend to be paid consisted of 3,324 shares of Series A Preferred Stock (which are convertible into 3,324,000 shares of Common Stock) with a fair value of $332,400 and a total of 11.9 fractional shares which will be accumulated until whole shares can be issued.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCKHOLDERS' EQUITY
9 Months Ended
Sep. 30, 2018
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 June 24, 2008 and will terminate on June 24, 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 2008 Stock Awards Plan expired Jun 24, 2018; the Board of directors has not adopted a new stock awards plan. The following table summarizes all stock option activity under the expired plan:

 

   

Number of

Options

   

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining Contractual

Life (Years)

   

Aggregate

Intrinsic

Value

 
Outstanding at January 1, 2018     300,000     $ 0.03       0.48     $ -  
Granted     -       -       -       -  
Exercised     -       -       -       -  
Forfeited/expired     (300,000 )     -       -       -  
Outstanding at September 30, 2018     -     $ -       -     $ -  
Exercisable at September 30, 2018     -     $ -       -     $ -  

 

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
FAIR VALUE MEASUREMENTS
9 Months Ended
Sep. 30, 2018
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 nine months ended September 30, 2018 and the year ended December 31, 2017.

 

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 year ended December 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 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 September 30, 2018 and December 31, 2017, respectively:

 

   

Carrying

Amount In

Balance Sheet

September 30,

   

Fair Value

September 30,

    Fair Value Measurement Using  
    2018     2018     Level 1     Level 2     Level 3  
Assets:                              
Treasury Bills   $ 719,634     $ 719,634     $ 719,634              
Money Market Funds     45,195       45,195       45,195              
Total Assets   $ 764,829     $ 764,829     $ 764,829     $     $  
                                         

 

   

Carrying

Amount In

Balance Sheet December 31,

    Fair Value December 31,     Fair Value Measurement Using  
    2017     2017     Level 1     Level 2     Level 3  
Assets:                              
Treasury Bills   $ 649,583     $ 649,583     $ 649,583              
Money Market Funds     156,160       156,160       156,160              
Total Assets   $ 805,743     $ 805,743     $ 805,743     $     $  
                                         

 

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
COMMITMENTS AND CONTINGENCIES
9 Months Ended
Sep. 30, 2018
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.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.10.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2018
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 September 30, 2018, and December 31, 2017, the Company had cash in insured accounts in the amount of $45,195 and $156,160, respectively, and cash equivalents (US treasury bills) held in financial institutions that were uninsured by Federal Deposit Insurance Corporation in the amount of approximately $719,634 and $649,583 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. At September 30, 2018, and December 31, 2017, the Company evaluated its tax positions and did not have any unrecognized tax benefits. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company currently has no federal or state tax examinations in progress.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
INCOME TAXES (Tables)
9 Months Ended
Sep. 30, 2018
Income Taxes Tables Abstract  
Summary of deferred tax assets

   

September 30,

2018

   

December 31,

2017

 
Deferred tax assets and valuation allowances consist of:            
Deferred tax assets:            
Net operating loss carry forwards   $ 320,000     $ 497,000  
Less valuation allowance     (320,000 )     (497,000 )
Net deferred tax assets   $ -     $ -  

Summary of income tax (expense) benefits

    Nine months ended  
    September 30,  
    2018     2017  
Tax benefits (expense) at statutory rate     25 %     35 %
Unrecognized tax benefits (expense) of current period tax losses     (25 )%     (35 )%
Effective tax rate     -       -  

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
PRIVATE PLACEMENT OFFERING (Tables)
9 Months Ended
Sep. 30, 2018
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  

Schedule of Share-based Compensation, Warrant Options

    Number of Warrants    

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining Contractual

Life (Years)

 
                   
Outstanding at December 31, 2017     6,909,000     $ 0.15       1.68  
Granted     -       -       -  
Exercised     -       -       -  
Forfeited/expired     -       -       -  
Outstanding at September 30, 2018     6,909,000     $ 0.15       0.94  
Exercisable at September 30, 2018     6,909,000     $ 0.15       0.94  

2017 Extension of Warrant Terms [Member]  
Assumptions used in Black Scholes option-pricing model

Average risk-free interest rate     1.27 %
Average expected life- years     2  
Expected volatility     135.42 %
Expected dividends     0 %

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCKHOLDERS' EQUITY (Tables)
9 Months Ended
Sep. 30, 2018
Stockholders Equity  
Schedule of option activities

   

Number of

Options

   

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining Contractual

Life (Years)

   

Aggregate

Intrinsic

Value

 
Outstanding at January 1, 2018     300,000     $ 0.03       0.48     $ -  
Granted     -       -       -       -  
Exercised     -       -       -       -  
Forfeited/expired     (300,000 )     -       -       -  
Outstanding at September 30, 2018     -     $ -       -     $ -  
Exercisable at September 30, 2018     -     $ -       -     $ -  

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
FAIR VALUE MEASUREMENTS (Tables)
9 Months Ended
Sep. 30, 2018
Fair Value Measurements  
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 September 30, 2018 and December 31, 2017, respectively:

 

   

Carrying

Amount In

Balance Sheet

September 30,

   

Fair Value

September 30,

    Fair Value Measurement Using  
    2018     2018     Level 1     Level 2     Level 3  
Assets:                              
Treasury Bills   $ 719,634     $ 719,634     $ 719,634              
Money Market Funds     45,195       45,195       45,195              
Total Assets   $ 764,829     $ 764,829     $ 764,829     $     $  
                                         

 

   

Carrying

Amount In

Balance Sheet December 31,

    Fair Value December 31,     Fair Value Measurement Using  
    2017     2017     Level 1     Level 2     Level 3  
Assets:                              
Treasury Bills   $ 649,583     $ 649,583     $ 649,583              
Money Market Funds     156,160       156,160       156,160              
Total Assets   $ 805,743     $ 805,743     $ 805,743     $     $  
                                         

 

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Summary Of Significant Accounting Policies Details Narrative Abstract    
FDIC uninsured amount $ 719,634 $ 649,583
FDIC insured amount $ 45,195 $ 156,160
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details Narrative) - shares
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Disclosure Basic And Diluted Net Loss Per Common Share Details Narrative Abstract    
Common stock equivalents (preferred stock and warrants) 43,471,000 40,447,000
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
INCOME TAXES (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Deferred tax assets:    
Net operating loss carry forwards $ 320,000 $ 497,000
Less valuation allowance (320,000) (497,000)
Net deferred tax assets
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
INCOME TAXES (Details 1)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Income Taxes Details 1Abstract        
Tax benefits (expense) at statutory rate 25.00% 35.00% 35.00% 35.00%
Unrecognized tax benefits (expense) of current period tax losses (25.00%) (35.00%)    
Effective tax rate    
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
INCOME TAXES (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Income Taxes Details Narrative Abstract        
Federal statutory income tax rate, percent 25.00% 35.00% 35.00% 35.00%
Net operating loss carry-forwards $ 1,278,000      
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
PRIVATE PLACEMENT OFFERING (Details)
Sep. 30, 2018
USD ($)
Private Placement Offering  
Warrant liabilities $ 141,027
Redeemable and Convertible Preferred Stock 1,388,367
Common Stock 470,706
Total allocated gross proceeds: $ 2,000,100
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
PRIVATE PLACEMENT OFFERING (Details 1)
9 Months Ended
Sep. 30, 2018
Private Placement Offering Details 1Abstract  
Average risk-free interest rate 1.27%
Average expected life- years 2 years
Expected volatility 135.42%
Expected dividends 0.00%
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
PRIVATE PLACEMENT OFFERING (Details 2) - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Number of Warrants    
Number of warrants/options outstanding, beginning 6,909,000  
Granted  
Exercised  
Forfeited/expired  
Number of warrants/options outstanding, ending 6,909,000 6,909,000
Weighted Average Exercise Price    
Weighted average exercise price outstanding, beginning $ 0.15  
Granted  
Exercised  
Forfeited/expired  
Weighted average exercise price outstanding, ending $ 0.15 $ 0.15
Weighted Average Remaining Contractual Life (Years)    
Weighted Average Remaining Contractual Life (Years), Beginning 1 year 8 months 5 days  
Weighted Average Remaining Contractual Life (Years), Outstanding 11 months 8 days 1 year 8 months 5 days
Weighted Average Remaining Contractual Life (Years), Exercisable 11 months 8 days  
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
PRIVATE PLACEMENT OFFERING (Details Narrative)
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 07, 2007
USD ($)
Unit
$ / shares
shares
Aug. 24, 2017
USD ($)
$ / shares
shares
Sep. 30, 2018
USD ($)
$ / shares
shares
Sep. 30, 2017
USD ($)
Sep. 30, 2018
USD ($)
$ / shares
shares
Sep. 30, 2017
USD ($)
Dec. 31, 2017
$ / shares
shares
Number of warrants/options outstanding, beginning | shares     6,909,000   6,909,000   6,909,000
Weighted average exercise price outstanding     $ 0.15   $ 0.15   $ 0.15
Expiry date         September 7, 2019    
Number of units sold | Unit 13,334            
Number of units sold, per unit $ 150            
Number of units sold for gross proceeds | $ $ 2,000,100            
Percentage of convertible preferred stock 10.00%            
Preferred Stock, Par Value $ 1.00   1.00   $ 1.00   1.00
Preferred Stock, Stated value | $ $ 100            
Common Stock, Par Value $ 0.10   $ 0.10   $ 0.10   $ 0.10
Shares issued | shares 500            
Warrants exercisable into common stock | shares 500            
Warrants modification expense | $     $ 27,707 $ 27,707  
Average remaining contractual life         11 months 8 days   1 year 8 months 5 days
Series A 10% Convertible Preferred Stock [Member]              
Liquidation entitlement description         <p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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</font></p> <p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p> <p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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 </font></p>    
Warrant (Member) | 2017 Extension of Warrant Terms [Member]              
Number of warrants/options outstanding, beginning | shares   6,909,000          
Expiry date   September 7, 2019          
Warrants modification expense | $   $ 31,478          
Per share price   $ 0.15          
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
DIVIDENDS (Details Narrative) - Series A Preferred Stock [Member]
Oct. 31, 2017
USD ($)
shares
Preferred Stock, Shares Outstanding 33,238
Dividend payable | $ $ 3,324
Common shares, converted 3,324,000
Common shares, converted, fair value | $ $ 332,400
Fractional shares 11.9
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCKHOLDERS' EQUITY (Details) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Number of Options    
Number of warrants/options outstanding, beginning 6,909,000  
Number of Options, Granted  
Number of Options, Exercised  
Number of Options, Forfeited/expired  
Number of warrants/options outstanding, ending 6,909,000 6,909,000
Weighted Average Exercise Price    
Weighted average exercise price outstanding, beginning $ 0.15  
Weighted Average Exercise Price, Forfeited/expired  
Weighted average exercise price outstanding, ending $ 0.15 $ 0.15
Weighted Average Remaining Contractual Life (Years)    
Weighted Average Remaining Contractual Life (Years), Beginning 1 year 8 months 5 days  
Weighted Average Remaining Contractual Life (Years), Outstanding 11 months 8 days 1 year 8 months 5 days
Weighted Average Remaining Contractual Life (Years), Exercisable 11 months 8 days  
Stock options [Member]    
Number of Options    
Number of warrants/options outstanding, beginning 300,000  
Number of Options, Granted  
Number of Options, Exercised  
Number of Options, Forfeited/expired (300,000)  
Number of warrants/options outstanding, ending 300,000
Number of warrants/options, Exercisable  
Weighted Average Exercise Price    
Weighted average exercise price outstanding, beginning $ 0.03  
Weighted Average Exercise Price, Granted  
Weighted Average Exercise Price, Exercised  
Weighted Average Exercise Price, Forfeited/expired  
Weighted average exercise price outstanding, ending $ 0.03
Weighted Average Exercise Price, Exercisable  
Weighted Average Remaining Contractual Life (Years)    
Weighted Average Remaining Contractual Life (Years), Beginning 5 months 23 days  
Weighted Average Remaining Contractual Life (Years), Outstanding 0 years  
Weighted Average Remaining Contractual Life (Years), Exercisable 0 years  
Aggregate Intrinsic Value    
Aggregate Intrinsic Value outstanding, beginning  
Aggregate Intrinsic Value outstanding, ending
Aggregate Intrinsic Value , Exercisable  
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
STOCKHOLDERS' EQUITY (Details Narrative) - shares
Sep. 30, 2018
Dec. 31, 2017
Apr. 09, 2008
Common stock, shares issued 16,033,862 16,033,862  
2008 Stock Awards Plan [Member]      
Common stock, shares issued     2,000,000
Maximum shares granted     80,000
Restricted Stock [Member]      
Maximum shares granted     30,000
Stock options [Member]      
Maximum shares granted     50,000
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
FAIR VALUE MEASUREMENTS (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Fair Value [Member]    
Assets at fair value on recurring basis $ 764,829 $ 805,743
Fair Value, Inputs, Level 1 [Member]    
Assets at fair value on recurring basis 764,829 805,743
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 764,829 805,743
Treasury Bills [Member]    
Assets at fair value on recurring basis 719,634 649,583
Treasury Bills [Member] | Fair Value, Inputs, Level 1 [Member]    
Assets at fair value on recurring basis 719,634 649,583
Treasury Bills [Member] | Fair Value, Inputs, Level 2 [Member]    
Assets at fair value on recurring basis
Treasury Bills [Member] | Fair Value, Inputs, Level 3 [Member]    
Assets at fair value on recurring basis
Treasury Bills [Member] | Carrying Value [Member]    
Assets at fair value on recurring basis 719,634 649,583
Money Market Funds [Member]    
Assets at fair value on recurring basis 45,195 156,160
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member]    
Assets at fair value on recurring basis 45,195 156,160
Money Market Funds [Member] | Fair Value, Inputs, Level 2 [Member]    
Assets at fair value on recurring basis
Money Market Funds [Member] | Fair Value, Inputs, Level 3 [Member]    
Assets at fair value on recurring basis
Money Market Funds [Member] | Carrying Value [Member]    
Assets at fair value on recurring basis $ 45,195 $ 156,160
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
COMMITMENTS AND CONTINGENCIES (Details Narrative)
9 Months Ended
Sep. 30, 2018
USD ($)
Chief Financial Officer [Member]  
Annual salary $ 17,000
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