**Table of Contents**

** **

 

** **

**SECURITIES AND EXCHANGECOMMISSION**

**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 periodended March 31, 2009**

 

**OR**

 

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

 

**For the transition periodfrom                    to                    **

 

**CommissionFile Number: 0-21609**

 

# **CHASE PACKAGING CORPORATION**

(Exact name of registrant asspecified in its charter)

 

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

 

# **636 River Road, Fair Haven,New Jersey  07704**

(Address of principalexecutive offices)   (Zip Code)

 

**(732) 741-1500**

(Registrant’s telephonenumber, including area code)

 

Indicate by check mark whether the registrant: (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.   Yes x  No o

 

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

 

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

 

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

 

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

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.

 

| **Class**                              | ** ** | **Outstanding  at May 1, 2009** |
|----------------------------------------|------------|--------------------------------------|
| Common Stock, par value $.10 per share |       | 15,536,275 shares                    |

 

 

 

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**- INDEX -**

 
| ** **     | ** **                                                                                                                                                                                               | **Page(s)** |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|
|           |                                                                                                                                                                                                     |        |
| PART I    | Financial Information:                                                                                                                                                                                   |        |
|           |                                                                                                                                                                                                     |        |
| ITEM 1         | Financial Statements:                                                                                                                                                                                    |        |
|           |                                                                                                                                                                                                     |        |
|           | Condensed  Balance Sheets - March 31, 2009 (Unaudited) and December 31, 2008                                                                                                                   | 1           |
|           |                                                                                                                                                                                                     |        |
|           | Condensed  Statements of Operations (Unaudited) - Cumulative Period During the  Development Stage (January 1, 1999 to March 31, 2009) and the Three  Months Ended March 31, 2009 and 2008 | 2           |
|           |                                                                                                                                                                                                     |        |
|           | Condensed  Statements of Cash Flows (Unaudited) - Cumulative Period During the  Development Stage (January 1, 1999 to March 31, 2009) and the Three  Months Ended March 31, 2009 and 2008 | 3           |
|           |                                                                                                                                                                                                     |        |
|           | Notes to Interim Condensed Financial Statements  (Unaudited)                                                                                                                                             | 4           |
|           |                                                                                                                                                                                                     |        |
| ITEM 2         | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                                                                                              | 10          |
|           |                                                                                                                                                                                                     |        |
| ITEM 3         | Quantitative  and Qualitative Disclosures About Market Risk                                                                                                                                              | 11          |
|           |                                                                                                                                                                                                     |        |
| ITEM 4         | Controls and  Procedures                                                                                                                                                                                 | 11          |
|           |                                                                                                                                                                                                     |        |
| PART II   | Other Information                                                                                                                                                                                        | 12          |
|           |                                                                                                                                                                                                     |        |
| EXHIBITS INDEX | 12                                                                                                                                                                                                       |
|           |                                                                                                                                                                                                     |        |
| SIGNATURES     | 14                                                                                                                                                                                                       |
|           |                                                                                                                                                                                                     |        |
| EXHIBITS       |                                                                                                                                                                                                     |

 

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**PART I. FINANCIAL INFORMATION**

 

**Item1.  Financial Statements.**

 

**CHASE PACKAGING CORPORATION**

**(A Development Stage Company)**

**CONDENSED BALANCE SHEETS**

 
| ** **                                                                                                                                                                | ** ** | **March 31,  2009** | ** ** | **December 31, 2008** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|----------------------------|------------|
| ** **                                                                                                                                                                | ** ** | **(unaudited)**          | ** ** | ** **                 | ** ** |
| **- ASSETS  -**                                                                                                                                                           |       |                     |       |                       |       |
| **CURRENT ASSETS:**                                                                                                                                                       |       |                     |       |                       |       |
| Cash and cash equivalents                                                                                                                                                 |       | $                        | 1,755,468  |                       | $          | 1,769,739 |   |
|                                                                                                                                                                      |       |                     |       |                       |       |
| **TOTAL ASSETS**                                                                                                                                                          |       | $                        | 1,755,468  |                       | $          | 1,769,739 |   |
|                                                                                                                                                                      |       |                     |       |                       |       |
| **- LIABILITIES AND SHAREHOLDERS’  EQUITY -**                                                                                                                        |       |                     |       |                       |       |
|                                                                                                                                                                      |       |                     |       |                       |       |
| **CURRENT LIABILITIES:**                                                                                                                                                  |       |                     |       |                       |       |
| Accrued expenses                                                                                                                                                          |       | $                        | 25,533     |                       | $          | 7,354 |   |
|                                                                                                                                                                      |       |                     |       |                       |       |
| **TOTAL CURRENT LIABILITIES**                                                                                                                                             |       | 25,533                   |       | 7,354                      |       |
|                                                                                                                                                                      |       |                     |       |                       |       |
| **COMMITMENTS AND CONTINGENCIES**                                                                                                                                         |       |                     |       |                       |       |
|                                                                                                                                                                      |       |                     |       |                       |       |
| **SHAREHOLDERS’ EQUITY:**                                                                                                                                            |       |                     |       |                       |       |
| Preferred stock $1.00 par value; 4,000,000 shares authorized: Series A  10% Convertible; 15,536 shares issued and outstanding; liquidation preference  of $1,553,600 |       | 15,536                   |       | 15,536                     |       |
| Common stock, $.10 par value, 200,000,000 authorized; 15,536,275  issued and outstanding                                                                                  |       | 1,553,628                |       | 1,553,628                  |       |
| Additional paid-in capital                                                                                                                                                |       | 4,082,647                |       | 4,082,647                  |       |
| Accumulated deficit                                                                                                                                                       |       | (3,626,121               | )          | (3,626,121                 | )          |
| Deficit accumulated during the development stage                                                                                                                          |       | (295,755                 | )          | (263,305                   | )          |
| **TOTAL SHAREHOLDERS’ EQUITY**                                                                                                                                       |       | 1,729,935                |       | 1,762,385                  |       |
|                                                                                                                                                                      |       |                     |       |                       |       |
| **TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                                                                       |       | $                        | 1,755,468  |                       | $          | 1,769,739 |   |

 

See notes to interim condensed financial statements.

 

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## **CHASE PACKAGING CORPORATION**

**(A Development Stage Company)**

## **CONDENSED STATEMENTS OFOPERATIONS**

**(Unaudited)**

 
| ** **                                                               | ** ** | **Cumulative During  the Development  Stage (January 1,  1999 to** | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                               | ** ** | **March 31, 2009)**                                                | ** ** | **2009**                               | ** ** | **2008** | ** ** |
|                                                                     |       |                                                                    |       |                                   |       |   |   |
| **NET SALES**                                                            |       | $                                                                       | —     |                                   | $          | — |   | $ | — |   |
|                                                                     |       |                                                                    |       |                                   |       |   |   |
| **EXPENSES:**                                                            |       |                                                                    |       |                                   |       |   |   |
|                                                                     |       |                                                                    |       |                                   |       |   |   |
| General and administrative expense                                       |       | 343,157                                                                 |       | 32,650                                 |       | 33,597 |   |
| ** **                                                               |       |                                                                    |       |                                   |       |   |   |
| **LOSS FROM OPERATIONS**                                                 |       |                                                                    |       |                                   |       |   |   |
| ** **                                                               |       |                                                                    |       |                                   |       |   |   |
| **OTHER INCOME (EXPENSE)**                                               |       | (343,157                                                                | )          | (32,650                                | )          | (33,597 | ) |
|                                                                     |       |                                                                    |       |                                   |       |   |   |
| Interest expense                                                         |       | (8,591                                                                  | )          | —                                 |       | — |   |
| Interest and other income                                                |       | 55,993                                                                  |       | 200                                    |       | 12,118 |   |
|                                                                     |       |                                                                    |       |                                   |       |   |   |
| **TOTAL OTHER INCOME**                                                   |       | 47,402                                                                  |       | 32,450                                 |       | 21,479 |   |
|                                                                     |       |                                                                    |       |                                   |       |   |   |
| **LOSS BEFORE INCOME TAXES**                                             |       | (295,755                                                                | )          | (32,450                                | )          | (21,479 | ) |
|                                                                     |       |                                                                    |       |                                   |       |   |   |
| Provision for income taxes                                               |       | —                                                                  |       | —                                 |       | — |   |
|                                                                     |       |                                                                    |       |                                   |       |   |   |
| **NET LOSS**                                                             |       | $                                                                       | (295,755   | )                                      | $          | (32,450 | ) | $ | (21,479 | ) |
|                                                                     |       |                                                                    |       |                                   |       |   |   |
| **BASIC AND DILUTED NET LOSS PER COMMON SHARE**                          |       |                                                                    |       | $                                      | —     |   | $ | — |   |
| ** **                                                               |       |                                                                    |       |                                   |       |   |   |
| **WEIGHTED AVERAGE COMMON SHARES OUTSTANDING –  BASIC AND DILUTED** |       |                                                                    |       | 15,536,275                             |       | 15,536,275 |   |

 

Seenotes to interim condensed financial statements.

 

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## **CHASE PACKAGING CORPORATION**

## **(A Development StageCompany)**

## **CONDENSED STATEMENTS OF CASHFLOWS**

## **(Unaudited)**

## ** **

| ** **                                                                                                            | ** ** | **Cumulative During  the Development  Stage (January 1,  1999 to** | ** ** | **Three Months Ended********March 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                                                                            | ** ** | **March 31, 2009)**                                                | ** ** | **2009**                                     | ** ** | **2008** | ** ** |
| ** **                                                                                                            | ** ** | ** **                                                              | ** ** | ** **                                   | ** ** | ** ** | ** ** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:**                                                                             |       |                                                                    |       |                                         |       |   |   |
| Net loss                                                                                                              |       | $                                                                       | (295,755   | )                                            | $          | (32,450 | ) | $ | (21,479 | ) |
|                                                                                                                  |       |                                                                    |       |                                         |       |   |   |
| **Change in assets and liabilities:**                                                                                 |       |                                                                    |       |                                         |       |   |   |
| Accrued expenses                                                                                                      |       | 10,354                                                                  |       | 18,179                                       |       | (1,908 | ) |
| **Net cash (used in) operating activities**                                                                           |       | (285,401                                                                | )          | (14,271                                      | )          | (23,387 | ) |
|                                                                                                                  |       |                                                                    |       |                                         |       |   |   |
| **CASH FLOWS FROM INVESTING ACTIVITIES**                                                                              |       | —                                                                  |       | —                                       |       | — |   |
|                                                                                                                  |       |                                                                    |       |                                         |       |   |   |
| **CASH FLOWS FROM FINANCING ACTIVITIES:**                                                                             |       |                                                                    |       |                                         |       |   |   |
| Proceeds from convertible debt                                                                                        |       | 56,500                                                                  |       |                                         |       |   |   |
| Proceeds from private placement/exercise of stock warrants                                                            |       | 5,500                                                                   |       | —                                       |       | — |   |
| Capital contribution                                                                                                  |       | 8,000                                                                   |       | —                                       |       | — |   |
| Proceeds from private placement                                                                                       |       | 1,962,358                                                               |       |                                         |       |   |   |
| Cash dividends paid on preferred stock                                                                                |       | (3,150                                                                  | )          | —                                       |       | — |   |
| **Net cash provided by financing activities**                                                                         |       | 2,029,208                                                               |       | —                                       |       | — |   |
|                                                                                                                  |       |                                                                    |       |                                         |       |   |   |
| **NET (DECREASE) INCREASE IN CASH AND CASH  EQUIVALENTS**                                                             |       | 1,743,807                                                               |       | (14,271                                      | )          | (23,387 | ) |
|                                                                                                                  |       |                                                                    |       |                                         |       |   |   |
| **CASH AND CASH EQUIVALENTS, AT BEGINNING OF  PERIOD**                                                                |       | 11,661                                                                  |       | 1,769,739                                    |       | 1,960,333 |   |
|                                                                                                                  |       |                                                                    |       |                                         |       |   |   |
| **CASH AND CASH EQUIVALENTS, AT END OF PERIOD**                                                                       |       | $                                                                       | 1,755,468  |                                         | $          | 1,755,468 |   | $ | 1,936,946 |   |
|                                                                                                                  |       |                                                                    |       |                                         |       |   |   |
| **SUPPLEMENTAL CASH FLOW INFORMATION:**                                                                               |       |                                                                    |       |                                         |       |   |   |
|                                                                                                                  |       |                                                                    |       |                                         |       |   |   |
| Cash paid for:                                                                                                        |       |                                                                    |       |                                         |       |   |   |
| Interest                                                                                                              |       | $                                                                       | —     |                                         | $          | — |   | $ | — |   |
| **Income taxes**                                                                                                      |       | $                                                                       | —     |                                         | $          | — |   | $ | — |   |
| ** **                                                                                                            |       |                                                                    |       |                                         |       |   |   |   |   |   |
| **NON-CASH INVESTING AND FINANCING ACTIVITIES:**                                                                      |       |                                                                    |       |                                         |       |   |   |
| Preferred stock issued as stock dividend                                                                              |       | $                                                                       | 1,718      |                                         | $          | — |   | $ | — |   |
| 416 Private Placement Units were issued in exchange for $56,500 of  convertible notes plus $5,900 of accrued interest |       | $                                                                       | 62,400     |                                         | $          | — |   | $ | — |   |
| 68 Private Placement Units were issued in exchange for $8,000 of  stock subscriptions plus $2,200 of accrued interest |       | $                                                                       | 10,200     |                                         | $          | — |   | $ | — |   |

 

Seenotes to interim condensed financial statements.

 

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## **CHASE PACKAGING CORPORATION**

## **(A Development StageCompany)**

## **NOTES TO INTERIM CONDENSEDFINANCIAL STATEMENTS**

## **MARCH 31, 2009**

## **(Unaudited)**

## ** **

**NOTE 1 — OPERATIONS AND BASIS OF PRESENTATION:**

 

ChasePackaging Corporation (“the Company”), a Texas Corporation, previouslymanufactured woven paper mesh for industrial applications, and polypropylenemesh fabric bags for agricultural use and distributed agricultural packagingmanufactured by other companies.

 

Since January 1, 1999, the Board of Directors of the Company, hasbeen devoting its efforts to establishing a new business and, accordingly, theCompany is considered a development stage company in accordance with Statementof Financial Accounting Standards No. 7.

 

Management’splans for the Company include securing a merger or acquisition, raisingadditional capital and other strategies designed to optimize shareholder value.However, no assurance can be given that management will be successful in itsefforts. The failure to achieve these plans will have a material adverse effecton the Company’s financial position, results of operations and ability tocontinue as a going concern.

 

The accompanying interim condensed financial statements of the Companyhave been prepared in accordance with the Rules and Regulations of theSecurities and Exchange Commission (“SEC”) for interim financial reporting andthe instructions to Form 10-Q. Accordingly, they do not include all of the information and disclosuresrequired by generally accepted accounting principles (“GAAP”) in the UnitedStates for complete financial statements. In the opinion of the Company’s management, all adjustments (consistingonly of normal recurring accruals) considered necessary for a fair presentationhave been included.  Operating resultsfor the three month period ended March 31, 2009, are not necessarilyindicative of the results that may be expected for the full fiscal year ending December 31,2009.  The accompanying interim condensedfinancial statements should be read in conjunction with the audited financialstatements of the Company for the fiscal year ended December 31, 2008.

 

The accounting policies followed by theCompany are set forth in Note 2 to the Company’s financial statementsincluded in its Annual Report on Form 10-K for the year ended December 31,2008, which is incorporated herein by reference.  Specific reference is made to that report fora description of the Company’s securities and the notes to financialstatements.

 

**NOTE 2 — BASIC AND DILUTED NET LOSS PER COMMON SHARE:**

 

Basicnet loss per common share is computed by dividing the net loss by theweighted-average number of common shares outstanding.  Diluted netloss per share is computed by dividing the net loss by the sum of theweighted-average number of common shares outstanding plus the dilutive effectof shares issuable through the exercise of common stock equivalents.

 

Wehave excluded 22,445,000 and 20,727,000 common stock equivalents (warrants)from the calculation of diluted loss per share for the periods ended March 31,2009 and 2008, respectively, which, if included, would have an antidilutiveeffect.

 

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**NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS:**

 

InApril 2009, the Financial Accounting Standards Board (“FASB”) issued FSP No. FAS107-1 and APB 28-1, *Interim Disclosuresabout Fair Value of Financial Instruments*. This FSP amends FASBStatement No. 107, *Disclosures aboutFair Value of Financial Instruments,* to require disclosures aboutfair value of financial instruments for interim reporting periods of publiclytraded companies as well as in annual financial statements. This FSP alsoamends APB Opinion No. 28, *InterimFinancial Reporting,* to require those disclosures in summarizedfinancial information at interim reporting periods. This FSP shall be effectivefor interim reporting periods ending after June 15, 2009. The Company willcomply with the additional disclosure requirements beginning in the secondquarter of 2009.

 

InApril 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, *Recognition and Presentation of Other-Than-TemporaryImpairments*. This FSP amends the other-than-temporary impairmentguidance in U.S. GAAP for debt securities to make the guidance more operationaland to improve the presentation and disclosure of other-than-temporaryimpairments on debt and equity securities in the financial statements. The FSPdoes not amend existing recognition and measurement guidance related toother-than-temporary impairments of equity securities. The FSP shall beeffective for interim and annual reporting periods ending after June 15,2009. The Company currently does not have any financial assets that areother-than-temporary impaired.

 

InApril 2009, the FASB issued FSP No. FAS 141(R)-1, *Accounting for Assets Acquired and LiabilitiesAssumed in a Business Combination That Arise from Contingencies* , toaddress some of the application issues under SFAS 141(R). The FSP deals withthe initial recognition and measurement of an asset acquired or a liabilityassumed in a business combination that arises from a contingency provided theasset or liability’s fair value on the date of acquisition can be determined.When the fair value can’t be determined, the FSP requires using the guidanceunder SFAS No. 5, *Accounting forContingencies,* and FASB Interpretation (FIN) No. 14, *Reasonable Estimation of the Amount of a Loss*.. This FSP was effective for assets or liabilities arising from contingenciesin business combinations for which the acquisition date is on or after January 1,2009. The adoption of this FSP has not had a material impact on our financialposition, results of operations, or cash flows during the first quarter of2009.

 

InMarch 2008, the Financial Accounting Standards Board (FASB) issued SFAS No. 161,*Disclosures about Derivative Instruments andHedging Activities*. The new standard is intended to improvefinancial reporting about derivative instruments and hedging activities byrequiring enhanced disclosures to enable investors to better understand theireffects on an entity’s financial position, financial performance, and cashflows. It is effective for financial statements issued for fiscal years andinterim periods beginning after November 15, 2008, with early applicationencouraged. The adoption of this statement has not had a material impact on theCompany’s financial statements.

 

InDecember 2007, the FASB issued SFAS No. 160,  “*Noncontrolling Interests in Consolidated Financial Statements, anAmendment of ARB No. 51*.”  SFAS 160 establishes accountingand reporting standards pertaining to ownership interests in subsidiaries heldby parties other than the parent, the amount of net income attributable to theparent and to the noncontrolling interest, changes in a parent’s ownershipinterest, and the valuation of any retained noncontrolling equity investmentwhen a subsidiary is deconsolidated.  This statement also establishesdisclosure requirements that clearly identify and distinguish between theinterests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for fiscal years beginning on or after December 15,2008.  The adoption of this statement has not had a material impact on theCompany’s financial statements.

 

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**NOTE 3 -RECENT ACCOUNTING PRONOUNCEMENTS (continued):**

 

InDecember 2007, the FASB issued Statement of Financial Accounting Standards(“SFAS”) No. 141 (revised 2007), *Business Combinations*,which replaces SFAS No. 141. The statement retains the purchase method of accountingfor acquisitions, but requires a number of changes, including changes in theway assets and liabilities are recognized in the purchase accounting.   It also changes the recognition of assetsacquired and liabilities assumed arising from contingencies, requires thecapitalization of in-process research and development at fair value, andrequires the expensing of acquisition-related costs as incurred. SFAS No. 141Ris effective for business combinations for which the acquisition date is on orafter the beginning of the first annual reporting period beginning on or after December 15,2008.  The adoption of this statement hasnot had a material impact on the Company’s financial statements.

 

In September 2006, the FASB issuedStatement of Financial Accounting Standards (“SFAS”) No. 157, *Fair Value Measurements* (“SFAS 157”), to define how the fairvalue of assets and liabilities should be measured in accounting standardswhere it is allowed or required.  Inaddition to defining fair value, the Statement established a framework withinGAAP for measuring fair value and expanded required disclosures surroundingfair value measurements.  In February 2008,the FASB issued FASB Staff Position (FSP) FAS 157-2, *EffectiveDate of FASB Statement No. 157*, which delayed the effectivedate by one year for all nonfinancial assets and nonfinancial liabilities,except those that are recognized or disclosed at fair value in the financialstatements on a recurring basis.  In October 2008,the FASB issued FSP FAS 157-3, *Determining the Fair Valueof a Financial Asset When the Market for That Asset is Not Active*,to clarify the application of SFAS 157 in a market that is not active andprovide an example to illustrate key considerations in determining the fairvalue of a financial asset when the market for that financial asset is notactive. This FSP was effective immediately. In April 2009, the FASB issued FSP FAS 157-4, *DeterminingFair Value When the Volume and Level of Activity for the Asset or LiabilityHave Significantly Decreased and Identifying Transactions That Are Not Orderly*,to provide additional guidance for estimating fair value when the volume andlevel of activity for the asset or liability have significantly decreased.  This FSP will be effective for interim andannual reporting periods ending after June 15, 2009.  We adopted SFAS 157 for financial assets andfinancial liabilities on January 1, 2008, and the adoption did not have amaterial impact on our financial position, results of operations, or cashflows.  We adopted SFAS 157 fornonfinancial items on January 1, 2009, and the adoption did not have amaterial impact on our financial position, results of operations, or cashflows.  We currently do not have anyfinancial assets that are valued using inactive markets, and as such are notimpacted by the issuances of FSP 157-3 and FSP 157-4.  See Note 9 to the interim condensed financialstatements for additional discussion on fair value measurements.

 

**NOTE 4 - 2007 PRIVATE PLACEMENT UNITS (“UNIT”):**

 

OnSeptember 7, 2007, the Company completed a private placement, pursuant towhich 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) oneshare of Series A 10% convertible preferred stock, par value $1.00, statedvalue $100 (the “Preferred Stock”); (2) 500 shares of the Company’s commonstock, par value $0.10 (the “Common Stock”); and (3) 500 warrants (the “Warrants”)exercisable into the Company’s Common Stock on a one-for-one basis.

 

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**NOTE 4 - 2007 PRIVATE PLACEMENT UNITS (“UNIT”) (continued):**

 

EachWarrant contained in a Unit has a term of five years during which such Warrantmay be exercised, at $0.15 per share, into one share of the Company’s CommonStock. A total of 6,605 Units were purchased by related parties, includingsignificant shareholders. The exercise price of the Warrants is subject toadjustment to reflect recapitalizations, stock dividends, mergers, stocksplits, and similar events that would otherwise dilute the relative number ofshares of Common Stock into which the Warrants may be exercised.

 

Eachshare of Preferred Stock contained in a Unit has a stated value of $100 and isconvertible at any time into Common Stock at a rate of $0.10 per share. Theconversion price of the Preferred Stock is subject to adjustment to reflectrecapitalizations, stock dividends, mergers, stock splits, and similar eventsthat would otherwise dilute the relative number of shares of Common Stock intowhich the Preferred Stock may be converted.

 

Thereare 4,000,000 shares of Preferred Stock currently authorized for issuance. Atthe discretion of the Company’s Board of Directors, the Company may pay to theholders of the Preferred Stock a semi-annual dividend of ten percent payable incash or in kind (i.e., in additional shares of Preferred Stock) or anycombination thereof. The holder of each share of Preferred Stock has one votefor each underlying share of Common Stock as if such Preferred Stock had beenconverted. At any time prior to conversion, the Company’s Board of Directorsmay redeem any portion or all of the Preferred Stock at a price of $100 pershare of Preferred Stock. Each share of Preferred Stock will have a liquidationvalue of $100 per share. At any time after August 2, 2011, the holders of66 2/3% or more of the shares of Preferred Stock then outstanding may requestthe liquidation of their Preferred Stock. In the event that, at the time ofsuch requested liquidation, the Company’s cash funds (in excess of a $50,000reserve fund) then available to effect such liquidation are inadequate for suchpurpose, the requested liquidation shall take place (on a pro-rata basis) onlyto the extent such excess cash funds are available for such purpose. In theevent of a merger transaction approved by the holders of the Company’s CommonStock, the holders of the Preferred Stock will have the right to a cash paymentof $100 per share in connection with such merger, or the Preferred Stock willbe automatically converted at the then applicable conversion rate.

 

Therewas no beneficial conversion feature recorded as the Common Stock was sellingfor less than $0.10 per share at the time of the closing which approximatesfair value.

 

Legaland professional fees of approximately $38,000 were incurred in connection withthis private placement transaction resulting in net proceeds of approximately $1,962,000.

 

**NOTE 5 — DIVIDENDS:**

 

On May 8, 2008, the Company announced that theBoard of Directors had declared a five percent stock dividend on itsoutstanding Series A 10% Convertible Preferred Stock for the periodcommencing September 7, 2007. Shareholders of record as of May 23, 2008 received the stockdividend for each share of Series A Preferred Stock owned on that date,payable May 30, 2008.  As of May 8,2008, the Company had 13,818 shares of Series A Preferred Stockoutstanding; the total dividend paid consisted of 994 shares of Series APreferred Stock with a fair value of $99,400 and $1,490 cash in lieu offractional shares.  Due to the absence ofRetained Earnings, the cash and $994 par value of Preferred Stock dividendtotaling $2,484 was charged against Additional Paid-in Capital.

 

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**NOTE 5 — DIVIDENDS (continued):**

 

On November 7, 2008, the Company announced thatthe Board of Directors had declared a five percent stock dividend on itsoutstanding Series A 10% Convertible Preferred Stock. Shareholders ofrecord as of November 17, 2008 received the stock dividend for each shareof Series A Preferred Stock owned on that date, payable December 1,2008.  As of November 6, 2008, theCompany had 14,812 shares of Series A Preferred Stock outstanding; thetotal dividend paid consisted of 724 shares of Series A Preferred Stockwith a fair value of $72,400 and $1,660 cash in lieu of fractional shares.  Due to the absence of Retained Earnings, thecash and $724 par value of Preferred Stock dividend totaling $2,384 was chargedagainst Additional Paid-in Capital.

 

**NOTE 6 - PRIOR STOCK SUBSCRIPTION:**

 

#### **In July 2002, the Company received $8,000($0.01 per share) as payment for 800,000 shares of Common Stock which werenever issued.  Through September 7,2007 (the date of the closing of the private placement), the $8,000 accrued$2,200 in compounded interest, which management recorded due to the nonissuance of shares for a five year period. The Board of Directors of theCompany approved the issuance on September 7, 2007 of 68 Private PlacementUnits (see Note 4) in exchange for the $10,200 of cash previously received andaccrued interest.**

#### ** **

**NOTE 7 - CONVERTIBLE DEBT - RELATED PARTY:**

 

Priorto June 30, 2007, the Company had issued 5% Convertible Notes aggregating$56,500 (“the Notes”). The note holders are directors and an officer of theCompany.  The Notes were convertible intocommon stock at par value $0.10 per share. The Company and the note holders had the option to mutually extend theterm of the Notes if the par value had not been reduced to $0.01.

 

Thenotes aggregating $62,400 including accrued interest of $5,900, were convertedinto 416 Private Placement Units (see Note 4) on September 7, 2007.

 

**NOTE 8 -SHAREHOLDERS’ EQUITY:**

 

The Company’s 2008 Stock Awards Plan (the “2008 Plan”) was approved atthe Company’s annual meeting of shareholders held on June 3, 2008.  The 2008 Plan became effective April 9,2008 and will terminate on April 8, 2018. Subject to certain adjustments, the number of shares of Common Stockthat may be issued pursuant to awards under the 2008 Plan is 2,000,000shares.  A maximum of 80,000 shares may begranted in any one year in any form to any one participant, of which a maximumof (i) 50,000 shares may be granted to a participant in the form of stockoptions and (ii) 30,000 shares may be granted to a participant in the formof Common Stock or restricted stock.  The2008 Plan will be administered by a committee of the Board of Directors.  Employees, including any employee who is alsoa director or an officer, consultants, and outside directors of the Company areeligible to participate in the 2008 Plan. ** **As of March 31, 2009, no options had been issued under the 2008Plan.

 

OnJune 3, 2008, the Company’s shareholders approved an amendment to theArticles of Incorporation and increased the number of authorized shares of theCommon Stock from 25,000,000 to 200,000,000.

 

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**NOTE 9 - FAIR VALUE MEASUREMENTS:**

 

EffectiveJanuary 1, 2008, the Company adopted Statement of Financial AccountingStandard No. 157, “Fair Value Measurements” (SFAS 157), as it applies toits financial instruments, and Statement of Financial Accounting Standard No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities — includingan amendment of FASB Statement No. 115” (SFAS 159). SFAS 157 defines fairvalue, outlines a framework for measuring fair value, and details the requireddisclosures about fair value measurements. SFAS 159 permits companies toirrevocably choose to measure certain financial instruments and other items atfair value. SFAS 159 also establishes presentation and disclosure requirementsdesigned to facilitate comparison between entities that choose differentmeasurement attributes for similar types of assets and liabilities.

 

UnderSFAS 157, fair value is defined as the price that would be received to sell anasset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date in the principal or most advantageousmarket. SFAS 157 establishes a hierarchy in determining the fair value of anasset or liability. The fair value hierarchy has three levels of inputs, bothobservable and unobservable. SFAS 157 requires the utilization of the lowestpossible level of input to determine fair value. Level 1 inputs include quotedmarket prices in an active market for identical assets or liabilities. Level 2inputs are market data, other than Level 1, that are observable either directlyor indirectly. Level 2 inputs include quoted market prices for similar assetsor liabilities, quoted market prices in an inactive market, and otherobservable information that can be corroborated by market data. Level 3 inputsare unobservable and corroborated by little or no market data.

 

Exceptfor those assets and liabilities which are required by authoritative accountingguidance to be recorded at fair value in the Company’s Balance Sheets, theCompany has elected not to record any other assets or liabilities at fairvalue, as permitted by SFAS 159. No events occurred during the three monthsended March 31, 2009 which would require adjustment to the recognizedbalances of assets or liabilities which are recorded at fair value on anonrecurring basis.

 

Thefollowing table provides information on those assets and liabilities measuredat fair value on a recurring basis.

 
| ** **             | ** ** | **Carrying  Amount** | ** ** | ** **         | ** ** | ** **                       | ** ** | ** **  | ** ** | ** **  | ** ** |
|------------------------|------------|----------------------|------------|--------------------|------------|----------------------------------|------------|-------------|------------|-------------|------------|
| ** **             | ** ** | **Amount****In**     | ** ** | ** **         | ** ** | ** **                       | ** ** |
| ** **             |       | **Balance Sheet**    |       | **Fair  Value**    |       |                             |       |
| ** **             | ** ** | **March 31,**   | ** ** | **March 31,** |       | **Fair Value Measurement Using** |       |
|                   |       | **2009**             |       | **2009**           |       | **Level 1**                      | ** ** | **Level 2** | ** ** | **Level 3** |       |
| Assets:                |       |                 |       |               |       |                             |       |        |       |        |       |
| Money Market Funds     |       | $                    | 1,493,000  |               | $          | 1,493,000                        |       | $           | 1,493,000  |        | $          | — |   | $ | — |   |
| Certificate of Deposit |       | $                    | 250,000    |               | $          | 250,000                          |       | $           | 250,000    |        | $          | — |   | $ | — |   |

 

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**Item 2.****                      ****Management’s****Discussion and Analysis of FinancialCondition and Results of Operations.**

 

**Forward-Looking Statements**

 

*The information in this report on Form 10-Q containsforward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995.  This Actprovides a “safe harbor” for forward-looking statements to encourage companiesto provide prospective information about themselves provided they identifythese statements as forward looking and provide meaningful cautionarystatements identifying important factors that could cause actual results todiffer from the projected results.  Allstatements other than statements of historical fact made in this report areforward looking.  In particular, thestatements herein regarding industry prospects and future results of operationsor financial position are forward-looking statements. Forward-lookingstatements reflect management’s current expectations and are inherentlyuncertain.  The Company’s actual resultsmay differ significantly from management’s expectations as a result of manyfactors.*

 

*You should read the following discussion and analysis in conjunctionwith the financial statements of the Company and notes thereto, included herewith.  This discussion should not be construed toimply that the results discussed herein will necessarily continue into thefuture, or that any conclusion reached herein will necessarily be indicative ofactual operating results in the future. Such discussion represents only the best present assessment ofmanagement.  The Company assumes noobligations to update any of these forward-looking statements.*

 

**Results of Operations**

 

During the quarter ended March 31, 2009, the Company had nooperations and its only income was from interest income on its short-terminvestments which are classified as cash and cash equivalents. General andadministrative expenses for the three-month periods ending March 31, 2009and 2008 were $32,650 and $33,597, respectively.  The Company had interest income of $200 and anet loss of $32,450 during the three-month period ended March 31, 2009,compared with interest income of $12,118 and a net loss of $21,479 during thecomparable period of 2008.  The interestincome decrease was due to lower interest rates and a decrease in cash and cashequivalent balances.

 

Commencing November 1, 2007, the Company’s Board agreed to pay theCompany’s Chief Financial Officer an annual salary of $17,000.  No other officers or directors of the Companyreceive compensation other than reimbursement of out-of-pocket expensesincurred in connection with Company business and development.

 

Due to the closing of a private placement of the Company’s securitiesin the third quarter 2007, the Company had a cash and cash equivalents balanceas of March 31, 2009 of $1,755,468. The proceeds from the 2007private placement will assist management with its plans to attempt to secure asuitable merger partner wishing to go public or attempt to acquire privatecompanies to create investment value for the Company’s shareholders.

 

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**Liquidity and Capital Resources**

 

AtMarch 31, 2009, the Company had cash and cash equivalents of approximately$1,755,000.  Cash and cash equivalentsconsist of cash held in banks and brokerage firms.  Working capital at March 31, 2009 wasapproximately $1,730,000.  Managementbelieves that its cash and cash equivalents are sufficient for its businessactivities for at least the next 12 months and for the costs of acquiring anoperating business.

 

Net cash used in operating activities amounted to approximately $14,300for the three-month period ended March 31, 2009, and approximately $23,400for the three-month period ended March 31, 2008.

 

No cash flows were used or provided by investing activities for each ofthe periods presented.

 

No cash proceeds were provided by financing activities during the firstquarter of 2009 or during the first quarter of 2008.

 

**Factors Which May AffectFuture Results**

 

Future earnings of theCompany are dependent on interest rates earned on the Company’s investedbalances and expenses incurred.  TheCompany expects to incur significant expenses in connection with its objectiveof identifying a merger partner or acquiring an operating business.

 

**Recent Accounting Pronouncements**

 

See Note 3 “Recent Accounting Pronouncements” in the Notes to FinancialStatements in Item 1 for a full description of recent accountingpronouncements, including the expected dates of adoption and estimated effectson results of operations and financial condition, which is incorporated herein.

 

**Item 3.****                      ****Quantitativeand Qualitative Disclosures About Market Risk.**

 

Not applicable.

 

**Item 4.****                      ****Controlsand Procedures.**

 

(a) Evaluationof Disclosure Controls and Procedures.

 

Underthe supervision and with the participation of our management, including ourprincipal executive officer and principal financial and accounting officer, weconducted an evaluation of the effectiveness of the design and operation of ourdisclosure controls and procedures, as defined in Rules 13a-15(e) and15d-15(e) under the Securities Act of 1934, as of the end of the periodcovered by this report.  Based on thisevaluation, our principal executive officer and principal financial andaccounting officer concluded that, as of the period covered by this report, ourdisclosure controls and procedures were effective to provide reasonableassurance that the information required to be included in our SEC reports isrecorded, processed, summarized, and reported within the time periods specifiedin SEC rules and forms.

 

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b)Changes in Internal Controls over Financial Reporting.

 

In connection with the evaluation required byparagraph (d) of Rule 13a-15 under the Exchange Act, there was nochange identified in our internal control over financial reporting thatoccurred during the last fiscal quarter that has materially affected, or isreasonably likely to materially affect, our internal control over financialreporting.

 

**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.** | ** ** | **Submission  of Matters to a Vote of Security Holders.**         |
|        |       |                                                              |
|        |       | None.                                                             |
|        |       |                                                              |
| **Item 5.** | ** ** | **Other  Information.**                                           |
|        |       |                                                              |
|        |       | None.                                                             |
|        |       |                                                              |
| **Item 6.** | ** ** | **Exhibits.**                                                     |

 
| **Number** | ** ** | **Description**                                                                                                                                                                                                                                            |
|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |       |                                                                                                                                                                                                                                                       |
| 3.1        |       | Articles of Incorporation, as amended, of the Company filed as  Exhibit 3.1 to the Company’s Form 10-SB, as amended, dated  October 24, 1996, filed with the Securities and Exchange Commission and  incorporated herein by reference. |
|       |       |                                                                                                                                                                                                                                                       |
| 3.2        |       | Articles of Amendment to the Articles of Incorporation of the Company  filed as Exhibit 3.1 to the Company’s Form 8-K filed with the  Securities and Exchange Commission on June 9, 2008, and incorporated  herein by reference.       |
|       |       |                                                                                                                                                                                                                                                       |
| 3.3        |       | Amended and Restated Bylaws of the Company dated March 28, 2008,  filed as Exhibit 3.1 to the Company’s Form 8-K filed with the  Securities and Exchange Commission on April 3, 2008, and incorporated herein  by reference*.*    |

 

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| 4.1    |   | Form of Registration Rights Amendment, dated as of  September 7, 2007, by and among the Company and certain purchasers named  therein, filed as Exhibit 4.1 to the Company’s Form 10-QSB/A for  the quarterly period ended September 30, 2007, filed with the Securities  and Exchange Commission on May 5, 2008, and incorporated herein by  reference. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.2    |   | Form of Amendment Number One to Registration Rights Agreement,  dated as of April 30, 2008, by and among the Company and certain  purchasers named therein, filed as Exhibit 4.1 to the Company’s  Form 8-K filed with the Securities and Exchange Commission on  May 5, 2008, and incorporated herein by reference.                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.3    |   | Form of Securities Purchase and Subscription Agreement, dated as  of September 7, 2007, by and among the Company and certain purchasers  named therein, filed as Exhibit 10.1 to the Company’s Form 8-K  filed with the Securities and Exchange Commission on September 11, 2007,  and incorporated herein by reference.                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.4    |   | Statement of Resolution Establishing Series A 10% Convertible  Preferred Stock of the Company, filed as Exhibit 10.3 to the Company’s  Form 8-K filed with the Securities and Exchange Commission on  September 11, 2007, and incorporated herein by reference.                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.5    |   | Form of Warrant Agreement and Warrant Certificate dated as of  September 7, 2007, filed as Exhibit 10.4 to the Company’s  Form 8-K filed with the Securities and Exchange Commission on  September 11, 2007, and incorporated herein by reference.                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.6    |   | Statement of Resolution Regarding Series of Preferred Stock of  the Company dated November 9, 2007.                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.7    |   | Statement of Resolution Regarding Series of Preferred Stock of  the Company, filed as Exhibit 4.1 to the Company’s Form 8-K filed  with the Securities and Exchange Commission on May 21, 2008, and  incorporated herein by reference.                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |
| 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.                                                                                                                                                                                                      |

 

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*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 theundersigned, thereunto duly authorized.

 

 
|                     | **CHASE  PACKAGING CORPORATION**                 |
|--------------------------|--------------------------------------------------|
|                     |                                             |
|                     |                                             |
| Date:  May 15, 2009 | /s/  Allen T. McInnes                            |
|                     | Allen  T. McInnes                                |
|                     | Chairman  of the Board, President and Treasurer  |
|                     | (Principal  Executive Officer)                   |
|                     |                                             |
| Date:  May 15, 2009 | /s/  Ann C. W. Green                             |
|                     | Ann  C. W. Green                                 |
|                     | Chief  Financial Officer and Assistant Secretary |
|                     | (Principal  Financial and Accounting Officer)    |

 

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