**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 period ended March 31,  2008** |
|                                                    |       | ** **                                                              |
| **OR**                                                  |
|                                                    |       |                                                                    |
| **o**                                                   | ** ** | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE** |
| ** **                                              | ** ** | **SECURITIES  EXCHANGE ACT OF 1934**                                    |

 

**For the transition periodfrom                    to                    **

 

**Commission File 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

 

Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, a non-accelerated filer, ora smaller reporting company. See the definitions of “large accelerated filer,”“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of theExchange Act. (Check one):

 

| 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 March 31, 2008** |
|----------------------------------------|------------|-----------------------------------------|
| Common Stock, par value $.10 per share |       | 15,536,275 shares                       |

 

 

----

 

**- INDEX -**

 
| ** **      | ** ** | ** **                                                                                                                                                                                               | ** ** | **Page(s)** |
|-----------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------|
|            |       |                                                                                                                                                                                                     |       |        |
| PART I     |       | Financial Information:                                                                                                                                                                                   |       |        |
|            |       |                                                                                                                                                                                                     |       |        |
| ITEM 1          |       | Financial Statements:                                                                                                                                                                                    |       |        |
|            |       |                                                                                                                                                                                                     |       |        |
|            |       | Condensed  Balance Sheets - March 31, 2008 (Unaudited) and December 31, 2007                                                                                                                   |       | 1           |
|            |       |                                                                                                                                                                                                     |       |        |
|            |       | Condensed  Statements of Operations (Unaudited) - Cumulative Period During the  Development Stage (January 1, 1999 to March 31, 2008) and the Three  Months Ended March 31, 2008 and 2007 |       | 2           |
|            |       |                                                                                                                                                                                                     |       |        |
|            |       | Condensed  Statements of Cash Flows (Unaudited) - Cumulative Period During the  Development Stage (January 1, 1999 to March 31, 2008) and the Three  Months Ended March 31, 2008 and 2007 |       | 3           |
|            |       |                                                                                                                                                                                                     |       |        |
|            |       | Notes to Interim Condensed Financial Statements  (Unaudited)                                                                                                                                             |       | 4           |
|            |       |                                                                                                                                                                                                     |       |        |
| ITEM 2          |       | Management’s Discussion and Analysis of Financial  Condition and Results of Operations                                                                                                              |       | 7           |
|            |       |                                                                                                                                                                                                     |       |        |
| ITEM 3          |       | Quantitative  and Qualitative Disclosures About Market Risk                                                                                                                                              |       | 8           |
|            |       |                                                                                                                                                                                                     |       |        |
| ITEM 4T         |       | Controls and  Procedures                                                                                                                                                                                 |       | 8           |
|            |       |                                                                                                                                                                                                     |       |        |
| PART II    |       | Other Information                                                                                                                                                                                        |       | 9           |
|            |       |                                                                                                                                                                                                     |       |        |
| EXHIBITS  INDEX |       | 9                                                                                                                                                                                                        |
|            |       |                                                                                                                                                                                                     |       |        |
| SIGNATURES      |       | 11                                                                                                                                                                                                       |
|            |       |                                                                                                                                                                                                     |       |        |
| EXHIBITS        |       | 12                                                                                                                                                                                                       |

 

----

 

**PART I. FINANCIAL INFORMATION**

 

**Item1.  Financial Statements.**

 

**CHASE PACKAGING CORPORATION**

**(A Development Stage Company)**

**CONDENSED BALANCE SHEETS**

 
| ** **                                                                                                                   | ** ** | **March 31,  2008** | ** ** | **December 31,  2007** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                                                                   | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| **- ASSETS -**                                                                                                               |
| **CURRENT ASSETS:**                                                                                                          |       |                     |       |                        |       |
| Cash and cash equivalents                                                                                                    |       | $                        | 1,936,946  |                        | $          | 1,960,333 |   |
|                                                                                                                         |       |                     |       |                        |       |
| **TOTAL ASSETS**                                                                                                             |       | $                        | 1,936,946  |                        | $          | 1,960,333 |   |
|                                                                                                                         |       |                     |       |                        |       |
| **- LIABILITIES AND SHAREHOLDERS’ DEFICIT -**                                                                           |
| **CURRENT LIABILITIES:**                                                                                                     |       |                     |       |                        |       |
| Accrued expenses                                                                                                             |       | $                        | 16,699     |                        | $          | 18,607 |   |
|                                                                                                                         |       |                     |       |                        |       |
| **TOTAL CURRENT LIABILITIES**                                                                                                |       | 16,699                   |       | 18,607                      |       |
|                                                                                                                         |       |                     |       |                        |       |
| **COMMITMENTS AND CONTINGENCIES**                                                                                            |       |                     |       |                        |       |
|                                                                                                                         |       |                     |       |                        |       |
| **SHAREHOLDERS’ DEFICIT:**                                                                                              |       |                     |       |                        |       |
| Preferred stock $1.00 par value; 4,000,000  authorized:  Series A 10% Convertible; 13,818 shares issued and outstanding |       | 13,818                   |       | 13,818                      |       |
| Common stock, $.10 par value, 25,000,000  authorized;  15,536,275 shares issued and outstanding                              |       | 1,553,628                |       | 1,553,628                   |       |
| Additional paid-in capital                                                                                                   |       | 4,087,515                |       | 4,087,515                   |       |
| Accumulated deficit                                                                                                          |       | (3,626,121               | )          | (3,626,121                  | )          |
| Deficit accumulated during the development  stage                                                                            |       | (108,593                 | )          | (87,114                     | )          |
| **TOTAL SHAREHOLDER’S EQUITY (DEFICIT)**                                                                                |       | 1,920,247                |       | 1,941,726                   |       |
|                                                                                                                         |       |                     |       |                        |       |
| **TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                          |       | $                        | 1,936,946  |                        | $          | 1,960,333 |   |

 

See notes to financial statements.

 

1

----

 

## **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, 2008)**                                                               | ** ** | **2008**                                         | ** ** | **2007** | ** ** |
|                                                                     |       |                                                                                        |       |                                             |       |   |   |
| **NET SALES**                                                            |       | $                                                                                           | —     |                                             | $          | — |   | $ | — |   |
|                                                                     |       |                                                                                        |       |                                             |       |   |   |
| **COSTS AND EXPENSES:**                                                  |       |                                                                                        |       |                                             |       |   |   |
| General and administrative expense                                       |       | 136,437                                                                                     |       | 33,597                                           |       | 7,700 |   |
|                                                                     |       |                                                                                        |       |                                             |       |   |   |
| **LOSS FROM OPERATIONS**                                                 |       | (136,437                                                                                    | )          | (33,597                                          | )          | (7,700 | ) |
|                                                                     |       |                                                                                        |       |                                             |       |   |   |
| **OTHER INCOME (EXPENSE)**                                               |       |                                                                                        |       |                                             |       |   |   |
| Interest expense                                                         |       | (8,591                                                                                      | )          | —                                           |       | (698 | ) |
| Interest and other income                                                |       | 36,435                                                                                      |       | 12,118                                           |       | 40 |   |
| **TOTAL OTHER INCOME (EXPENSE)**                                         |       | 27,844                                                                                      |       | 12,118                                           |       | (658 | ) |
|                                                                     |       |                                                                                        |       |                                             |       |   |   |
| **LOSS BEFORE INCOME TAXES**                                             |       | (108,593                                                                                    | )          | (21,479                                          | )          | (8,358 | ) |
|                                                                     |       |                                                                                        |       |                                             |       |   |   |
| Provision for income taxes                                               |       | —                                                                                      |       | —                                           |       | — |   |
|                                                                     |       |                                                                                        |       |                                             |       |   |   |
| **NET LOSS**                                                             |       | $                                                                                           | (108,593   | )                                                | $          | (21,479 | ) | $ | (8,358 | ) |
|                                                                     |       |                                                                                        |       |                                             |       |   |   |
| **BASIC AND DILUTED LOSS PER COMMON SHARE**                              |       |                                                                                        |       | $                                                | —     |   | $ | — |   |
| ** **                                                               |       |                                                                                        |       |                                             |       |   |   |
| **WEIGHTED AVERAGE COMMON SHARES OUTSTANDING –  BASIC AND DILUTED** |       |                                                                                        |       | 15,536,275                                       |       | 8,627,275 |   |

 

See notes to financial statements.

 

2

----

 

## **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, 2008)**                                                               | ** ** | **2008**                                           | ** ** | **2007** | ** ** |
| ** **                                                                                                            | ** ** | ** **                                                                                  | ** ** | ** **                                         | ** ** | ** ** | ** ** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:**                                                                             |       |                                                                                        |       |                                               |       |   |   |
| Net (loss)                                                                                                            |       | $                                                                                           | (108,593   | )                                                  | $          | (21,479 | ) | $ | (8,358 | ) |
|                                                                                                                  |       |                                                                                        |       |                                               |       |   |   |
| Change in operating assets and liabilities:                                                                           |       |                                                                                        |       |                                               |       |   |   |
| Accrued expenses                                                                                                      |       | 1,520                                                                                       |       | (1,908                                             | )          | 7,478 |   |
| **Net cash utilized by operating activities**                                                                         |       | (107,073                                                                                    | )          | (23,387                                            | )          | (880 | ) |
|                                                                                                                  |       |                                                                                        |       |                                               |       |   |   |
| **CASH FLOWS FROM INVESTING ACTIVITIES**                                                                              |       | —                                                                                      |       | —                                             |       | — |   |
|                                                                                                                  |       |                                                                                        |       |                                               |       |   |   |
| **CASH FLOWS FROM FINANCING ACTIVITIES:**                                                                             |       |                                                                                        |       |                                               |       |   |   |
| Proceeds from private placement/exercise of  stock warrants                                                           |       | 5,500                                                                                       |       | —                                             |       | — |   |
| Proceeds from convertible debt                                                                                        |       | 56,500                                                                                      |       | —                                             |       | 9,000 |   |
| Capital contribution                                                                                                  |       | 8,000                                                                                       |       | —                                             |       | — |   |
| Proceeds from private placement                                                                                       |       | 1,962,358                                                                                   |       | —                                             |       | — |   |
| **Net cash provided by financing activities**                                                                         |       | 2,032,358                                                                                   |       | —                                             |       | 9,000 |   |
|                                                                                                                  |       |                                                                                        |       |                                               |       |   |   |
| **NET INCREASE (DECREASE) IN CASH**                                                                                   |       | 1,925,285                                                                                   |       | (23,387                                            | )          | 8,120 |   |
|                                                                                                                  |       |                                                                                        |       |                                               |       |   |   |
| **CASH AND CASH EQUIVALENTS, AT BEGINNING OF  PERIOD**                                                                |       | 11,661                                                                                      |       | 1,960,333                                          |       | 2,691 |   |
|                                                                                                                  |       |                                                                                        |       |                                               |       |   |   |
| **CASH AND CASH EQUIVALENTS, AT END OF PERIOD**                                                                       |       | $                                                                                           | 1,936,946  |                                               | $          | 1,936,946 |   | $ | 10,811 |   |
|                                                                                                                  |       |                                                                                        |       |                                               |       |   |   |
| **SUPPLEMENTAL CASH FLOW INFORMATION**                                                                                |       |                                                                                        |       |                                               |       |   |   |
| Cash paid during the period for:                                                                                      |       |                                                                                        |       |                                               |       |   |   |
| Interest                                                                                                              |       | $                                                                                           | —     |                                               | $          | — |   | $ | — |   |
| Income taxes                                                                                                          |       | $                                                                                           | —     |                                               | $          | — |   | $ | — |   |
|                                                                                                                  |       |                                                                                        |       |                                               |       |   |   |
| 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     |                                               |       |   |   |   |

 

See notes to financial statements.

 

3

----

 

## **CHASE PACKAGING CORPORATION**

## **(A Development StageCompany)**

## **NOTES TO INTERIM CONDENSEDFINANCIAL STATEMENTS**

## **MARCH 31, 2008**

## **(Unaudited)**

 

**NOTE 1 - BASIS OF PRESENTATION:**

 

Chase Packaging Corporation (the “Company”),a Texas Corporation, manufactured woven paper mesh for industrial applicationsand polypropylene mesh fabric bags for agricultural use and distributedagricultural packaging manufactured by other companies.  The Company was a wholly-owned subsidiary ofTGC Industries, Inc. through July 31, 1996.

 

The Company had experienced losses for pastyears, and the Company’s secured lender decided not to renew the Company’soperating line of credit.  As a result,the Company’s Board of Directors (the “Board”) determined that it was in thebest interest of the Company and all of its creditors to liquidate in anorderly fashion.

 

On June 25, 1997, the Company announcedto employees and creditors that it would begin an orderly liquidation of allits assets beginning at the close of business on June 30, 1997.  On July 25, 1997, the Company notifiedits creditors by mail that it would commence with an orderly liquidation of allits remaining assets outside of a formal bankruptcy or receivership proceedingin a manner intended to maximize asset values. Liquidation of the Company’s assets was completed as of December 31,1997.

 

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

 

Management’s plans for the Company include securing a merger oracquisition, raising additional capital and other strategies designed tooptimize shareholder value.  However, noassurance can be given that management will be successful in its efforts.  The failure to achieve these plans will havea material adverse effect on the Company’s financial position, results ofoperations and ability to continue as a going concern.

 

The accompanying financial statements of the Company have been preparedin accordance with accounting principles generally accepted in the UnitedStates (“US GAAP”) for interim financial information and the instructions to Form 10-Q.  Accordingly, they do not include all of theinformation and footnotes required by US GAAP for complete financialstatements.  In the opinion of theCompany’s management, all adjustments (consisting only of normal recurringaccruals) considered necessary for a fair presentation have been included.  Operating results for the three-month periodended March 31, 2008, are not necessarily indicative of the results thatmay be expected for the full fiscal year ending December 31, 2008.  The accompanying financial statements shouldbe read in conjunction with the audited financial statements of the Company forthe fiscal year ended December 31, 2007.

 

**NOTE 2 - LOSS PER COMMON SHARE:**

 

Lossper common share, both basic and diluted, was calculated by dividing net lossby the weighted average number of shares outstanding for each reportingperiod.  The diluted loss per share isthe same as the basic loss per share because the Company has incurred a netloss in all periods presented.  Theoutstanding common 

 

4

----

 

stockequivalents which consist of warrants that could potentially dilute basic lossper share in the future that were not included in diluted loss per sharebecause their effect on the periods presented was antidilutive were 20,727,000and 1,095,000 as of March 31, 2008 and 2007, respectively.

 

**NOTE 3 -RECENT ACCOUNTING PRONOUCEMENTS:**

 

The accountingpolicies followed by the Company are set forth in Note 2 to the Company’sfinancial statements included in its Annual Report on Form 10-KSB for theyear ended December 31, 2007, which is incorporated herein byreference.  Specific reference is made tothis report for a description of the Company’s securities and the notes tofinancial statements.

 

In September 2006, the FASB issued SFAS No. 157,*Fair Value Measurements*, which definesfair value, establishes a framework for measuring fair value in generallyaccepted accounting principles, and expands disclosures about fair valuemeasurements. This statement does not require any new fair value measurements,but provides guidance on how to measure fair value by providing a fair valuehierarchy used to classify the source of the information. SFAS No. 157 iseffective for fiscal years beginning after November 15, 2007, and allinterim periods within those fiscal years. In February 2008, the FASBreleased FASB Staff Position (FSP FAS 157-2 – *EffectiveDate of FASB Statement No. 157*) which delays the effective dateof SFAS No. 157   for allnonfinancial assets and nonfinancial liabilities, except those that arerecognized or disclosed at fair value in the financial statements on arecurring basis (at least annually), to fiscal years beginning after November 15,2008 and interim periods within those fiscal years. The implementation of SFAS No. 157for financial assets and liabilities, effective January 1, 2008, did nothave an impact on  the Company’sfinancial position and results of operations. The Company is currently evaluating the impact of adoption of thisstatement on its  non-financial assetsand liabilities in the first quarter of fiscal 2009.

 

In February 2007, the FASB issued SFAS No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”).SFAS No. 159 permits entities to choose to measure, on an item-by-itembasis, specified financial instruments and certain other items at fairvalue.  Unrealized gains and losses onitems for which the fair value option has been elected are required to bereported in earnings at each reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15,2007, the provisions of which are required to be applied prospectively.  The Company adopted this Statement as of January 1,2008 and has elected not to apply the fair value option to any of its financialinstruments.

 

In December 2007, the FinancialAccounting Standards Board (“FASB”) issued Statement of Financial AccountingStandards (“SFAS”) No. 141 (revised 2007), Business Combinations, whichreplaces 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 alsochanges the recognition of assets acquired and liabilities assumed arising fromcontingencies, requires the capitalization of in-process research anddevelopment at fair value, and requires the expensing of acquisition-relatedcosts as incurred. SFAS No. 141R is effective for business combinationsfor which the acquisition date is on or after the beginning of the first annualreporting period beginning on or after December 15, 2008.

 

In December 2007, the FASB issued SFAS No. 160.  “Noncontrolling Interests in ConsolidatedFinancial Statements-and Amendment of ARB No. 51.”  SFAS 160 establishes accounting and reportingstandards pertaining to ownership interests in subsidiaries held by partiesother than the parent, the amount of net income attributable to the parent andto the noncontrolling interest, changes in a parent’s ownership interest, andthe valuation of any retained noncontrolling equity investment when asubsidiary is deconsolidated.  Thisstatement also establishes disclosure requirements that clearly identify anddistinguish between the interests of 

 

5

----

 

the parent and the interests of thenoncontrolling owners.  SFAS 160 iseffective for fiscal years beginning on or after December 15, 2008.  The adoption of SFAS 160 is not currentlyexpected to have a material effect on the Company’s financial position, resultsof operations, or cash flows.

 

In March 2008, the Financial AccountingStandards Board (FASB) issued FASB Statement No. 161, *Disclosuresabout Derivative Instruments and Hedging Activities*. The newstandard is intended to improve financial reporting about derivativeinstruments and hedging activities by requiring enhanced disclosures to enableinvestors to better understand their effects on an entity’s financial position,financial performance, and cash flows. It is effective for financial statementsissued for fiscal years and interim periods beginning after November 15,2008, with early application encouraged. The company is currently evaluatingthe impact of adopting SFAS. No. 161 on its financial statements.

 

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

 

The Company closed a private placement of 13,334 Units on September 7,2007.  Each Unit was sold for $150 andconsists of: one share of Series A 10% Convertible Preferred Stock ($100stated value), convertible into 1,000 shares of Common Stock; 500 shares ofCommon Stock; and 500 5-year warrants, each of which is exercisable for oneshare of Common Stock at $0.15 per share. There was no beneficial conversion feature recorded as the Common Stockwas selling for less than $0.10 per share at the time of the closing whichapproximates fair value.  Gross proceedsfrom the offering were $2,000,100, less approximately $38,000 of offeringexpenses, resulting in net proceeds of approximately $1,962,000.

 

Dividends on the Series A Preferred Stock are payable semi-annuallyin cash or in kind at the discretion of the Board.

 

**NOTE 5 -SHAREHOLDERS’ EQUITY:**

 

The Company currently has no stock optionplan.  All previously issued stockoptions have expired without being exercised. The Company intends to submit a new stock option plan for approval byits shareholders at its annual meeting to be held June 3, 2008.

 

6

----

 

**Item 2.****       ****Management’s****Discussion and Analysis ofFinancial Condition 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, includedherewith.  This discussion should not beconstrued to imply that the results discussed herein will necessarily continueinto the future, or that any conclusion reached herein will necessarily beindicative of actual operating results in the future.  Such discussion represents only the bestpresent assessment of management.*

 

**Results of Operations**

 

During the quarter ended March 31, 2008, the Company had no operationsand its only income was from interest income on its short-term investmentswhich are classified as cash and cash equivalents. General and administrativeexpenses were $33,597 during the first quarter of 2008 compared to $7,700during the first quarter of 2007.  Theincrease of $25,897 was primarily due to increased professional fees.  The Company had interest income of $12,118and a net loss of $21,479 during the first quarter of 2008, compared withinterest income of $40 and a net loss of $8,358 during the first quarter of2007.  This interest income increase wasdue to interest earned on cash balances invested in cash equivalents.

 

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 of 2007, the Company’s cash and cash equivalents balanceas of March 31, 2008 was $1,936,946 compared with $10,811 at March 31,2007.  The proceeds from the 2007 privateplacement will assist management with its plans to secure a suitable mergerpartner wishing to go public or attempt to acquire private companies to createinvestment value for the Company.

 

**Liquidity and Capital Resources**

 

At March 31, 2008, theCompany had cash and cash equivalents of approximately $1,930,000.  Cash and cash equivalents consist of cashheld in banks and brokerage firms. Working capital at March 31, 2008 was approximately$1,921,000.  Management believes that itscash and cash 

 

7

----

 

equivalents are sufficientfor its business activities for at least the next 12 months and for the costsof seeking an acquisition of an operating business.

 

Net cash of approximately $23,400 was used in operations during thefirst quarter of 2008, an increase of approximately $22,500 over the $880 usedin operations during the first quarter of 2007.****Thisincrease resulted primarily from an increase in professional fees.

 

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 2008 or during the first quarter of 2007.

 

**Factors Which May Affect Future Results**

 

Future earnings of the Company are dependent on interest rates earnedon the Company’s invested balances and expenses incurred.  The Company expects to incur significantexpenses in connection with its objective of identifying a merger partner oracquiring 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.  Quantitative andQualitative Disclosures About Market Risk.**

 

Not applicable.

 

**Item 4T.  Controls andProcedures.**

 

(a) Evaluation of Disclosure Controls and Procedures.

 

Under the supervision and with the participation of our management,including our principal executive officer and principal financial 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 this evaluation, our principal executiveofficer and principal financial officer concluded that, as of the periodcovered by this report, our disclosure controls and procedures were effectiveto provide reasonable assurance that the information required to be included inour Securities and Exchange Commission (“SEC”) reports is recorded, processed,summarized and reported within the time periods specified in SEC rules andforms.

 

(b) Changes in Internal Controls over Financial Reporting.

 

In connection with the evaluation required by paragraph (d) of Rule 13a-15under the Exchange Act, there was no change identified in our internal controlover financial reporting that occurred during the last fiscal quarter that hasmaterially affected, or is reasonably likely to materially affect, our internalcontrol over financial reporting.

 

8

----

 

**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        |       | 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*.*                                                                                                                                     |
| 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.                                       |

 

9

----

 
| 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.         |
| 31.1* |   | Certification of the Chief 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 Chief 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 Officer pursuant to 18  U.S.C. Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                                                                                                                  |

 

----

*filed herewith

 

10

----

 

**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 14, 2008 | /s/  Allen T. McInnes                            |
|                     | Allen  T. McInnes                                |
|                     | Chairman  of the Board, President and Treasurer  |
|                     |                                             |
|                     |                                             |
| Date:  May 14, 2008 | /s/  Ann W. Green                                |
|                     | Ann  W. Green                                    |
|                     | Chief  Financial Officer and Assistant Secretary |
|                     | (Principal  Financial and Accounting Officer)    |

 

11

----