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EX-21.1 - Plastinum Polymer Technologies Corp. | v180650_ex21-1.htm |
EX-31.1 - Plastinum Polymer Technologies Corp. | v180650_ex31-1.htm |
EX-31.2 - Plastinum Polymer Technologies Corp. | v180650_ex31-2.htm |
EX-32.1 - Plastinum Polymer Technologies Corp. | v180650_ex32-1.htm |
EX-32.2 - Plastinum Polymer Technologies Corp. | v180650_ex32-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
x
ANNUAL REPORT
UNDER SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the
year ended December 31, 2009
¨
TRANSITION REPORT UNDER SECTION
13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the
transition period from __________ to __________
Commission
file number 0-52128
PLASTINUM POLYMER TECHNOLOGIES
CORP.
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(Exact
name of registrant as specified in its
charter)
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Delaware
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20-4255141
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(State
or other jurisdiction of incorporation)
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(IRS
employer identification no.)
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10100
Santa Monica Blvd., Suite 300
Los Angeles, CA
90067
Address
of principal executive offices) (Zip Code)
Issuer's
telephone number: (310) 651-9972
Securities
registered pursuant to Section 12(b) of the Exchange Act:
Title of each class
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Name of each exchange on which
registered
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None
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None
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Securities
registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01
per share
Indicate
by check mark whether the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act. ¨ Yes þ No
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
þ Yes ¨ No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). ¨ Yes ¨ No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrants’ knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. þ
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
(Do
not check if a smaller reporting company)
|
Smaller
reporting company þ
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). ¨ Yes þ No
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates as of June 30, 2009 was approximately $15,859,761, computed by
reference to the closing sales price of the registrant’s common stock as
reported by the OTC Bulletin Board.
APPLICABLE
ONLY TO CORPORATE REGISTRANTS
The
number of shares outstanding of the registrant's Common Stock, par value $.01
per share (the "Common Stock"), as of March 31, 2010 was
100,562,251.
TABLE
OF CONTENTS
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Page
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PART I
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|||
Item 1.
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Business
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3
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Item 1A.
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Risk
Factors
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9
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Item 2.
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Properties
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13
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Item 3.
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Legal
Proceedings
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13
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Item 4.
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Submission
of Matters to a Vote of Security Holders
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13
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PART II
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|||
Item 5.
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Market
For Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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14
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Item 6.
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Selected
Financial Data
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15
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Item 7.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operation
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15
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Item 7A.
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Quantitative
and Qualitative Disclosures About Market Risk
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21
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Item 8.
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Financial
Statements and Supplementary Data
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21
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Item 9.
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Changes
In and Disagreements With Accountants on Accounting And Financial
Disclosure
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22
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Item 9A.
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Controls
And Procedures
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22
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Item 9A(T).
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Controls
And Procedures
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22
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Item 9B.
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Other
Information
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23
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PART III
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Item 10.
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Directors,
Executive Officers and Corporate Governance
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24
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Item 11.
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Executive
Compensation
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26
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Item 12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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28
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Item 13.
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Certain
Relationships and Related Transactions, Director
Independence
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30
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Item 14.
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Principal
Accounting Fees and Services
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31
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PART IV
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Item 15.
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Exhibits,
Financial Statement Schedules
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32
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Signatures
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34
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2
PART
I
FORWARD-LOOKING
STATEMENTS
Statements
used in this Form 10-K, in filings by the Company with the Securities and
Exchange Commission (the "SEC"), in the Company's press releases or other public
or stockholder communications, or made orally with the approval of an authorized
executive officer of the Company that utilize the words or phrases "would be,"
"will allow," "intends to," "will likely result," "are expected to," "will
continue," "is anticipated," "estimate," "project," or similar expressions
speaking to anticipated actions, results or projections in the future speak only
as of the date made, are based on certain assumptions and expectations which may
or may not be valid or actually occur, and which involve various risks and
uncertainties. The Company cautions readers not to place undue reliance on any
such statements and that the Company's actual results for future periods could
differ materially from those anticipated or projected.
Unless
otherwise required by applicable law, the Company does not undertake, and
specifically disclaims any obligation, to update any forward-looking statements
to reflect occurrences, developments, unanticipated events or circumstances
after the date of such statement.
ITEM
1. BUSINESS.
Overview
Plastinum
Polymer Technologies Corp. ("we," "us,", “our”, "Plastinum" or “the Company") is
a Delaware corporation originally formed under the name NG Plastic, Inc. in
February of 2000. We changed our name to New Generation Plastic, Inc. in
May of 2000. On May 19, 2006, we changed our name to Plastinum Corp. On
June 26, 2007, we changed our name to Plastinum Polymer Technologies Corp. Prior
to February 20, 2007, we were a subsidiary of New Generation Holdings, Inc.
("NGH"), which owned approximately 94% of our outstanding common stock. On
February 20, 2007, NGH effected a pro rata distribution of our common stock
(commonly referred to as a "spin off") pursuant to which each stockholder of NGH
received one share of our common stock for each share of NGH owned by such
stockholder. As a result, NGH no longer has any ownership interest in
us.
Through
March 31, 2009 we were considered to be in the development stage as defined by
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 915 “Development
Stage Entities”. We began production and sales of products
during the second quarter of 2009 and exited the development stage. As of the
beginning of 2010, our first commercial plant has an operating capacity of
10,000 metric tons per year.
We own
and develop a patented and proprietary plastic blending technology (Blendymer™),
whereby various kinds of immiscible plastics can be mixed mechanically into a
new polymer compound (Infinymer™). Our
mission is to commercialize the technology through application in the virgin
plastic markets (polymer alloys) and the plastic recycling sector (compounds
made from post-consumer mixed plastic scrap).
Our
principal executive office is located at 10100 Santa Monica Blvd., Suite 300,
Los Angeles, CA 90067. Our telephone number is (310) 651-9972 and our internet
address is www.plastinum.com. Our common stock trades on the OTC Bulletin
Board under the symbol “PLNU”.
Our
common stock trades on the OTC Bulletin Board under the symbol
“PLNU”. On April 8, 2010, the last sales price of our common
stock as reported on the OTC Bulletin Board was $0.19 per share.
Our
Business
The
Plastinum Process and Compounds
We own
and develop a patented and proprietary plastic blending technology
(BlendymerTM),
whereby various kinds of immiscible plastics previously considered
non-compatible can be mechanically mixed into a new polymer compound
(InfinymerTM). The
uniqueness of this blending technology stems from its potential cost-effective
applications in many fields of the plastic industry, from the recycling of mixed
post-consumer plastic waste to the creation of new thermo plastic compounds
(InfinymersTM). With
the BlendymerTM we are
able to alter the physical properties of the InfinymerTM to meet
customer specifications.
Plastinum’s
mission is to commercialize the technology through application in the virgin
plastic markets (polymer alloys) and the plastic recycling sector (compounds
made from post-consumer mixed plastic waste).
3
The core
of the Plastinum technology consists of a mechano-chemical chamber that creates
in situ compatibilization of otherwise non-compatible polymers, resulting in a
continuous mix that offers similar properties as virgin polymers. The process
has the ability to mix multiple non-compatible polymers and create new, blended
compounds that can be used as ingredients in conventional plastic manufacturing
processes.
Our
patented proprietary process, the Plastinum technology, is capable of producing
homogeneous, commercially usable polymer products from mixed virgin plastic
and/or mixed waste plastic and we believe that we are currently the only
company in the world with availability of a technology with which mixed plastics
are formed into a single new plastic thermoplastic polymer.
During
October 2006, we opened a pilot plant in the EMMTEC Industry & Business
Park, Emmen, The Netherlands with a processing capacity of 1,500 metric tons
annually. This plant is our showcase for the recycling of different streams of
total post consumer mixed plastic waste, such as household waste. We
have changed this pilot plant in Emmen into our first commercial plant through
an increase in the workforce and commencement of production to fullfill our
customer orders.
With the
exception of the Plastinum technology, machines and processes in a Plastinum
plant are standard for the plastics industry.
During
2009, we have generated only $555,649 in sales revenues, incurred significant
expenses and sustained significant recurring losses. Consequently, our
operations are subject to all the risks inherent in the establishment of a new
business enterprise.
Infinymer™
Our
Infinymer™ granulate is produced with the aid of the Blendymer™
technology. Our intention is for Infinymer™ plastics to become a
global brand well-known within the plastics industry. Infinymer™
boast stable, high-quality physical and mechanical properties. The
properties of the various Infinymer™ (depending from which waste streams they
originate, and any additives added) are comparable with those of polymers such
as:
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polypropylene
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polyethylene
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LLDPE
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LDPE
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MDPE
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HDPE
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polystyrene
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PET
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PS-ABS
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ABS-PC
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and
variations of these.
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Infinymer™
boasts properties ranging between those of “virgin” plastics material and
existing top-of-the-range plastic recyclates. These comprise recyclates
consisting of a single type of plastic such as bottle tops and wheelie bin
grindings. The current supply and quality of these recyclates is limited and
irregular. The supply can only be increased currently at relatively high cost by
utilizing hand-picking or expensive waste separation
systems. 3
The
material properties of Infinymer™ can be affected to a certain extent by the use
of additives. The color of the product can also be changed in the Blendymer™
process to meet customer requirements. Due to the composition and
structure, Infinymer™ is suitable for the production of boxes, crates,
storage containers, transport pallets, box pallets (bulk), buckets, grass tiles,
road planking, thermoform plates, wheelie bins, waste containers, barrels,
furniture, EEE sector components, vacuum cleaner parts, computer components and
more. Infinymer™ can also be used in the following industrial processes:
injection molding, blow extrusion, plate extrusion, plastic film extrusion and
pipe extrusion.
Infinymer™
has been submitted to SenterNovem in the Netherlands for labeling.
SenterNovem declared that Infinymer™ will no longer be considered waste,
but rather a new product. SenterNovem is an agency of the Dutch
Ministry of Economic Affairs that promotes developments and innovations in the
area of sustainability, both within the Netherlands and
abroad. We believe this is a strong message to regarding the purity
and quality of our products.
As
Infinymer™ is produced from waste streams, the cost price and therefore the
selling price is less dependent on fluctuations in the price of oil, which we
believe will be advantageous to us and our customers, inparticular to the extent
that oil prices rise in the future. We believe that one of the key
benefits of our Infinymer™ products is the price advantage over “virgin”
materials.
4
The
Thermoplastics Market
Plastics
play an important role in our society. We can no longer imagine a world
without plastics. Plastic can be found in many different kinds of products
and applications, due to the favorable properties of the material. The worldwide
production and consumption of plastics grew from less than five million tons in
1950 to 260 million tons in 2007. Plastics production has increased
by more than 500% over the past 30 years. Plastics consumption is presently
around 100 kg per capita in North America and Western Europe.
Thermoplastic
is a plastic that softens when heated. The global thermoplastics
market is 250 million ton per year, with the market for polyethylene and
polypropylene accounting for 100 million tons. Infinymer™ products are
thermoplastics. The Infinymer™ products can be used in a wide range of
industrial applications, such as injection molding, blow, plate and film
extrusion, as well as pipe extrusion.
Plastics
offer many benefits. However, they are not yet
environmentally-friendly:
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Large
quantities of raw materials, in particular fossil fuel, are required for
producing plastics.
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8%
of oil produced annually throughout the world is consumed by plastics
manufacturing.
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Manufacturing
plastics also demands other resources such as land and water, and brings
with it waste and emissions.
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Possible
harmful chemicals, such as stabilizers or dyes, are also added. The
risk of many of these substances to the environment has not been tested
and the effect these substances have on human health and the environment
are unknown.
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The waste
processing of plastic products also has considerable consequences for the
environment. Most plastics are not biodegradable and it takes a very long time
– estimated at centuries – before they disappear from landfill.
Moreover, the amount of land required for landfill is increasingly a
source of concern. Plastic waste also has a harmful effect on nature.
It is estimated that plastic waste in the oceans is annually responsible
for the death of more than one million sea birds and 100,000 sea mammals
(estimation from the UN environmental program).
The
increasing effects of plastics production and plastic waste on the environment
render recovery and recycling of plastics increasingly
necessary.
Our
BlendymerTM
technology and InfinymerTM
products address this need.
Market
and Business Development
The
strategies for commercial implementation of the Plastinum technology range from
stand-alone plants, such as the plant in Emmen, to units integrated within an
existing plastic or waste processing facility. Plastinum anticipates achieving
this through joint venture contracts with large parties in the waste material or
the plastic processing industry, or through stand-alone plants with strategic
contracts. In a later stage we anticipate that independent parties will approach
us for licensing contracts, or machine leasing arrangements in order to enable
them to make use of the Plastinum technology.
We have
concluded multiple sales contracts and the orders have been, and are being
delivered and invoiced to clients from The Netherlands. Test materials have been
shipped to the parties in both the United States and Europe, to enable various
potential customers to continue testing our materials. Our R&D group are
continuing to test alternative waste streams being generated and collected world
wide.
Production
and delivery in the Netherlands of our InfinymerTM
recycled plastic compounds began during the second quarter of
2009. Demand for InfinymerTM has
risen and as of December 31, 2009 exceeded the capacity of our Emmen
plant. We recently successfully increased the production capacity of
our plant in Emmen to 10,000 metric tons per year. Due to the increasing demand
of our Infinymer, we are furthering the expansion of our plant in Emmen to
30,000 metric tons per year, which we anticipate completing by May
2011.
We are
currently discussing various possibilities for the acquisition of source
materials with interested parties in the EU as well as in the U.S. and Asia. The
potential acquisition strategies would involve either profit sharing
(joint-venture) collaboration or the straight purchase of source
materials.
In the
EU, it is anticipated that source materials will be obtained from various
parties. We have reached an agreement with a Dutch company regarding household
waste from The Netherlands and we recently signed a second supply agreement with
Nedvang. Nedvang was founded by producers and importers and appointed
by the Dutch Government to coordinate and finance the process of collection and
processing of waste in the Netherlands.
We
believe that our advantage in the recycling sector is our unique capability of
taking in the total mixed plastic scrap from complex waste systems, such as the
WEEE (waste electrical and electronic equipment) and general household waste,
and creating new polymer compounds, which we call "Infymers", to compete with
virgin polymers. Currently, virtually none of the plastic scrap from the WEEE is
being recycled in a responsible manner (approximately 99% is exported or
land-filled) and approximately less than 4% of the plastic scrap from household
waste is recycled through inefficient and expensive polymer sorting. Also, there
currently does not exist a commercial plastic compound developed from pure mixed
post-consumer plastic materials. We intend to develop virgin compounds, which we
call "Ultrymers", by fusing previously incompatible polymers, creating new
unique properties with completely new applications.
We
believe that our blending technology is unique since it can treat various types
of plastic scrap, and it does not require separation of the different polymers.
More importantly, we believe that the process is environmentally friendly and
can be undertaken on economically viable terms. We believe that the cost to
manufacturers or other users of our recycled plastic compound will be lower than
comparable virgin materials.
On March
3, 2008, we announced that we were set to produce top-quality thermoplastic from
electronic and electrical waste with the commercialization of
our first compounds made from recycled mixed post-consumer plastics and
utilizing our proprietary Blendymer technology: the Infinymer Sml 31.1 and the
Infinymer Ssl 31.1. The Sml 31.1 is formed by a polystyrenic base and the Ssl
31.1 by a polyolefinic base. Both Blendymer compounds have the advantage that
their composition and structure mean they can be used in a variety of ways - not
only as new electrical and electronic components, but also in products ranging
from piping to furniture, from lighting to sports equipment, from luggage to
gardening tools. Further, certain properties of the Infinymers can be adjusted
to suit customers' needs.
5
With
regard to our previously announced plans to open our first commercial plant in
the United States, on September 29, 2008, we announced that we entered into a
Letter of Intent with Creative Recycling Technologies, LLC, for the
establishment of a Joint Venture that will process mixed plastic E-Scrap in
Tampa, Florida. However, at this time, we are no longer pursuing that Joint
Venture.
Product
Distribution
The
distribution of our recycled plastic compounds is being undertaken by our own
employees and we anticipate that distribution will also occur in partnership
with other companies through joint ventures worldwide.
Our
products are sold with very specific specifications which are laid down in
consultation with customers and are tested as part of the sales process. As a
result, the sales process has a long lead time, from initial contact to the
ultimate signing of a contract. The following are the stages in our
sales process and the approximate time for each stage:
1. First
contact
2.
Determine method of preparation: 1 to 2 months
3.
Produce samples: 1 month
4.
Test product properties: 1 month
5. If
necessary, back to stage 2
6.
Draw up and sign contract
7. Production
and delivery: 1 to 2 months
Total lead time from first
contact to delivery: 4 to 6 months (or more if stage 5 is
necessary)
As
Infinymer™ is relatively new in the market, our strategy is to first address
potential customers who habitually use recycled material as a supplement in
their manufacturing process. These manufacturers will be more likely to
test the use of a new product and undertake limited production runs. The
objective is to build up a track record in this way in order to convince other
manufacturers who are accustomed to manufacturing only with virgin
pellets.
Competition
Our major
competitors consist of companies that purchase mixed plastic waste in order to
separate and regrind, which entails a different process from our blending
process. The separation process is complex and may result in a large loss of
material, which makes that process more costly than our blending process. Also
the separation process delivers an unfinished product, whereas the Plastinum
Compounds are end products usable within the polymer processing industry without
further modification. Therefore, we believe that our main competition will be
within the acquisition of waste materials.
Patents and
Trademarks
Our
BlendymerTM
technology is currently protected by U.S. Patent Number 6,107,400 and European
Patent Number 92907183.5-2307. The
patents are owned by Bami Intelligence S.A., our wholly-owned
Panamanian subsidiary. To date, we have not been involved in
any patent infringement or trade secret actions..
Research and
Development
We
incurred research and development expenses of $1,672,786 and $1,666,439 for the
fiscal years ended December 31, 2009 and 2008, respectively, on research and
development of the Plastinum technology.
6
We
anticipate expending approximately $500,000 towards research and development
activities during the next twelve months in connection with the continued
development of the Plastinum technology.
Number of
Employees
As
of April 13,
2010, we had
41 total employees, all of which were full-time employees, including Jacques
Mot, our Chief Executive Officer, Nils Berten, our Chief Operating Officer,
and, through our
Dutch subsidiaries, Rene Schutte, our Chief Technology Officer, and 37
other employees. We also use independent contractors to fulfill various
research and development and administrative
functions.
Environmental
Matters
We
believe that we are in compliance with all current federal, state and EU
environmental laws and currently have no costs associated with compliance with
environmental laws or regulations. However there can be no assurance that such
costs will not be incurred in future to the extent the Plastinum Process
technology is exploited.
Dependence On Key Customers;
Major Suppliers
One
customer accounted for 90% of our revenues for the year ended December 31, 2009
and that customer accounted for all of our accounts receivable at December
31, 2009.
There is no current supplier the loss of which would have a
material adverse effect on us.
Recent
Developments
Supply
Agreement in The Netherlands
On March
30, 2010, we entered into a Supply Agreement with Nedvang. Pursuant
to the Supply Agreement, Nedvang is to supply a mixed plastics packaging waste
stream to us at out plant in Emmen, The Netherlands. We expect that
this Supply Agreement will allow us to achive our sales targets for
2010.
Bank
Loan Agreement
On
October 30, 2009, Plastinum Polymer Technologies Corp. BV, an indirect,
majority-owned subsidiary of the Company, signed a bank loan agreement with
ABN-AMRO Bank for approximately $3,320,000 (2,250,000 Euros). Interest is
payable quarterly based on a variable rate (4.3% at December 31, 2009).
Repayment of principal will begin on January 1, 2011. Both NOM, our joint
venture partner in Plastinum Polymer Technologies Corp. BV (see “Investment in Dutch
Subsidiary” below), and PPT Holding B.V., a wholly-owned subsidiary of
the Company, gave ABN-AMRO Bank irrevocable guarantees of EUR 250,000 regarding
payment of principal and interest. The guarantee provided by PPT Holding
B.V. is via a bank guarantee from Societé General S.A., which in turn is secured
by a hold placed on EUR 250,000 deposited by the Company with Societé General
S.A. The assets and receivables of Plastinum Polymer Technologies BV are
pledged to ABN-AMRO Bank as collateral for the facility.
Private
Placements
On
January 27, 2009, we entered into a Note Purchase Agreement pursuant to which we
sold and issued a Convertible Promissory Note in the principal amount of
$1,000,000. On April 30, 2009, we sold and issued an additional
Convertible Promissory Note in the principal amount of $50,000. These
Convertible Promissory Notes accrue interest at a rate of 10% per annum and
mature on January 27, 2012. These Convertible Promissory Notes are
convertible into shares of common stock at an initial conversion price of $0.22
per share or an aggregate of 4,772,728 shares, subject to adjustment as
contained in the Notes.
On June
15, 2009, we entered into a Note Purchase Agreement pursuant to which we sold
and issued a Convertible Promissory Note in the principal amount of
$3,000,000. The Convertible Promissory Note is convertible into
shares of common stock at an initial conversion price of $0.28 per share or a
total of 10,714,286 shares, subject to adjustment as contained in the
Convertible Promissory Note.
On
September 25, 2009, we entered into a Note Purchase Agreement pursuant to which
we sold and issued a Convertible Promissory Note in the principal amount of
$2,000,000. The Convertible Promissory Note is convertible into
shares of common stock at an initial conversion price of $0.24 per share or a
total of 8,333,333 shares, subject to adjustment as contained in the Convertible
Promissory Note.
The
Convertible Promissory Notes issued on June 15, 2009 and September 25, 2009
accrue interest at a rate of 10% per annum and mature on June 15, 2012.
7
On
January 19, 2010, we entered into a Note Purchase Agreement pursuant to which we
sold and issued a Convertible Promissory Note in the principal amount of
$2,172,000 which accrues interest at a rate of 10% per annum, matures on January
19, 2013 and is convertible into shares of common stock at an initial conversion
price of $0.20 per share. In connection with the issuance of the
Convertible Promissory Note, we issued a Warrant to purchase 3,620,000 shares of
common stock at an exercise price of $0.20 per share and expiring on January 19,
2013.
Adjustment
of Preferred Stock Conversion Price
As a
result of the issuance of the Convertible Promissory Notes described immediately
above and pursuant to the terms of the Series B-1 Convertible Preferred Stock,
the conversion price of all outstanding shares of Series B-1 Convertible
Preferred Stock was reduced to $0.35 as of September 25, 2009 and further
reduced to $0.34 as of January 19, 2010.
Investment
in Dutch Subsidiary
On
February 16, 2009, pursuant to a Participation and Shareholders’ Agreement (the
“Participation Agreement”) among (i) Plastinum Polymer Technologies Corp. B.V.,
an indirect previously wholly-owned Dutch subsidiary of the Company (the “BV”),
(ii) PPT Holding B.V., our direct, wholly-owned Dutch subsidiary and owner of
our interest in the BV, (iii) Jacques Mot, our Chief Executive Officer and (iv)
N.V. NOM, Investerings- en ontwikkelingsmaatschappij voor
Noord-Nederland, a Dutch public limited company (“NOM”) with the State of the
Netherlands (Ministry of Economic Affairs) and the provinces of Groningen,
Friesland and Drenthe as its shareholders, NOM invested € 1,500,000 in the BV
and in return received preferential shares in the BV giving NOM a 49% share in
the profits of the BV.
Pursuant
to the terms of the Participation Agreement, (i) the preferential shares
received by NOM are entitled to cumulative annual 10% dividends, (ii) the
preferential shares received by NOM may be repurchased from NOM by the BV at any
time for 150% of the purchase price originally paid for the preferential shares
by NOM and (iii) if not repurchased by the BV by January 1, 2013, the
preferential shares received by NOM may be converted by NOM into 49% of the
ordinary shares of the BV.
The
Participation Agreement also provides for, among other things, (i) anti-dilution
protection for NOM, (ii) restrictions on transfer of shares in the BV, (iii)
provisions regarding the operation of the board of directors of the BV, (iv)
restrictions on dividend payments by the BV and (v) certain non-competition
provisions governing the BV and Mr. Mot.
Amendment
of Stock Options Issued to Certain Officers of the Company
On April
18, 2008, the Company entered into an Option Agreement with each of Jacques Mot,
the Company’s President and Chief Executive Officer, and Nils Berten, the
Company’s Chief Operating Officer, pursuant to which we granted each of them
options to purchase the Company’s common stock under its 2006 Long-Term
Incentive Plan (the “Options”). The exercise price for all of the granted
Options is $0.30 per share, a price that was designated by the Company as
reflective of the approximate average sales price of the Company’s common stock
as reported by the OTC Bulletin Board over the sixty day period prior to the
grant date and was not necessarily reflective of the last sale price per share
on the grant date itself.
Mr. Mot
was granted 14,400,000 Options and Mr. Berten was granted 6,000,000 Options. The
grant to Mr. Mot was subject to the approval of the holders of a majority of the
outstanding shares of the Company’s common stock (including the Series B
Preferred Stock voting on an “as converted” basis and excluding any shares held
by Mr. Mot who was not entitled to vote thereon). On July 1, 2008, at the Annual
Meeting of Stockholders of the Company, the stockholders of the Company approved
the Options grant to Mr. Mot.
The
Options expire on April 18, 2013 and, subject to the grantee thereof remaining
in the employ of the Company, vest as follows: (a) one-sixth of the Options
granted to each of Mr. Mot and Mr. Berten vest on each of the following dates
(the “Milestone Attainment Dates”) upon the attainment of each of the following
respective milestones (the “Milestones”): (i) on December 31, 2008, if at least
one fully operational factory in The Netherlands capable of processing 15,000
tons of eWaste per year at full capacity has been established by the Company,
(ii) on December 31, 2009 if at least one fully operational factory in the
United States has been established by the Company and (iii) on December 31, 2010
if at least four fully operational factories, including the ones contemplated by
the preceding clauses (i) and (ii), have been established by the Company; provided , however , that the
Milestones in clauses (i), (ii) and (iii) above may be adjusted by the
Compensation Committee of the Company’s Board of Directors at its discretion at
the beginning of the respective calendar year, and (b) on such date as the
market capitalization of the Company exceeds $300 million and provided that such
date occurs on or prior to 4/18/2011, then double the number of Options granted
to each of Mr. Mot and Mr. Berten that have already vested and those yet subject
to vesting on each Milestone Attainment Date that has not yet occurred will
become vested.
On
January 2, 2009, we entered into an Amendment to Stock Option Agreement with
each of Mr. Mot and Mr. Berten respect to the granted Options (together, the
“Amendments”). Each of the Amendments (i) acknowledged that one-third
of the Options granted were no longer eligible for vesting and expired and (ii)
modified the vesting conditions for the remaining Options with regards to the
establishment of factories so as to clarify that they may be established
anywhere in the world, including through a joint venture or
subsidiary.
On
December 31, 2009, 2,400,000 of the Options granted to Mr. Mot and 1,000,000 of
the Options granted to Mr. Berten vested.
8
ITEM
1A. RISK FACTORS
An investment in shares of our
common stock is very speculative and involves a very high degree of risk.
An investment in our company is suitable only for the persons who can afford the
loss of their entire investment. Accordingly, investors should carefully
consider the following risk factors, as well as other information set forth
herein, in making an investment decision with respect to our securities .
We have sought to identify
what we believe to be all material risks to our business, but we cannot predict
whether, or to what extent, any of such risks may be realized nor can we
guarantee that we have identified all possible risks that might
arise.
Risks Relating to Our
Business
Limited
Operating History as Stand-Alone Company
Our
operating history as an independent public company began on February 20, 2007
with the completion of the spin off by New Generation Holdings, Inc. (“NGH”) of
the approximately 94% of our shares of common stock which it
owned. We have since been putting in place the financial and
administrative structure necessary to operate as an independent public
company. Further, we did not generate any operating revenue prior to
2009 and generated minimal operating revenue during 2009. There can
be no assurance that we will generate additional operating revenue in the future
or that we will be able to completely put in place the financial and
administrative structure necessary to operate as an independent public company,
or that the development of such structure will not require a significant amount
of our management's time and other resources.
Our
Chief Executive Officer Owns a Significant Amount of Our Common
Stock
As of
February 2, 2010, Jacques Mot, our President and Chief Executive Officer and
Chairman of our Board of Directors held approximately 32.8% of our
outstanding shares of common stock, treating all currently outstanding shares of
preferred stock on an “as converted to common stock” basis. Our Chief
Executive Officer will continue to have significant control over our operations
and affairs.
Employees
As
of April 13,
2010, we
had 41 employees,
including Jacques
Mot, our Chief Executive Officer, Nils Berten, our Chief Operating Officer,
and, through our Dutch subsidiaries, Rene Schutte, our Chief
Technology Officer, and 37 other employees. As we grow, we will
need to attract an unknown number of qualified employees. This projected
increase in personnel is dependent upon our generating additional revenues and
obtaining additional financing. There is no guarantee that we will be successful
in raising the funds required or generating revenues sufficient to fund the
projected increase in the number of employees.
Potential
Fluctuations In Quarterly Operating Results
Our
quarterly operating results may fluctuate significantly in the future as a
result of a variety of factors, most of which are outside of our control,
including: the demand for products or services we may develop; seasonal trends
in purchasing; the amount and timing of capital expenditures and other costs
relating to the development of our products; price competition or pricing
changes in the industry; technical difficulties or system downtime; general
economic conditions, and economic conditions specific to the consumer plastics
recycling industry. Our quarterly results may also be significantly impacted by
the impact of the accounting treatment of acquisitions, financing transactions
or other matters. Particularly, at our early stage of development, such
accounting treatment can have a material impact on the results for any quarter.
Due to the foregoing factors, among others, it is likely that our operating
results will fall below our expectations or those of investors in some future
quarter.
Our
future performance and success are dependant upon the efforts and abilities of
our management. To a very significant degree, we are dependent upon the
continued services of Jacques Mot, our president and chief executive officer. We
do not maintain key man life insurance on Mr. Mot.
Lack
Of Independent Directors
We do not
have a majority of independent directors on our board of directors and we cannot
guarantee that our board of directors will have a majority of independent
directors in the future. In the absence of a majority of independent directors,
our executive officers, which are also principal stockholders and directors,
could establish policies and enter into transactions without independent review
and approval thereof. This could present the potential for a conflict of
interest between our stockholders and us generally and the controlling officers,
stockholders or directors.
Doubt
as to Ability to Continue as Going Concern
Our
independent certified public accountant has stated in their report included in
this filing that we have suffered recurring losses from operations
that raise substantial doubt about our ability to continue as a going
concern.
9
The
continuation of the Company as a going concern is dependent on our ability to
develop revenues and finance our business plan, including among other
possibilities, by obtaining financing from outside sources and/or entering into
strategic partnerships. From November 2007 through July 2008, we sold $6,165,000
of securities through private placements of preferred stock. In January 2009, we
issued a convertible promissory note for $1,000,000 through a private
placement. In April 2009, we issued a convertible promissory note for
$50,000 through a private placement. In June 2009 and September 2009
we issued additional convertible promissory notes for an aggregate of $5,000,000
through private placements. In January 2010, we issued an additional
convertible promissory note for $2,172,000 through a private
placement. In October 2009, Plastinum Polymer Technologies Corp. BV,
an indirect, majority-owned subsidiary of the Company, signed a bank loan
agreement with ABN-AMRO Bank for approximately $3,320,000 (2,250,000
Euros). However, we will need to generate additional funds in order
to continue to execute our business plan. We are currently in the process of
evaluating our financing needs and exploring all available financing options in
order to fully implement our business plan, including, among others, strategic
partnerships with other business entities and debt financing. Management is also
attempting to secure ongoing revenue relationships for our
products.
Should we
be unable to develop additional revenues or obtain necessary financing, we may
have to curtail our operations, which may have a material adverse effect on our
financial position and results of operations and our ability to continue as a
going concern.
Limitation
Of Liability And Indemnification Of Officers And Directors
Our
officers and directors are required to exercise good faith and high integrity in
our management affairs. Our certificate of incorporation provides, however, that
our officers and directors shall have no liability to our stockholders for
losses sustained or liabilities incurred which arise from any transaction in
their respective managerial capacities unless they violated their duty of
loyalty, did not act in good faith, engaged in intentional misconduct or
knowingly violated the law, approved an improper dividend or stock repurchase,
or derived an improper benefit from the transaction. Our certificate of
incorporation and bylaws also provide for the indemnification by us of the
officers and directors against any losses or liabilities they may incur as a
result of the manner in which they operate our business or conduct the internal
affairs, provided that in connection with these activities they act in good
faith and in a manner that they reasonably believe to be in, or not opposed to,
our best interests, and their conduct does not constitute gross negligence,
misconduct or breach of fiduciary obligations.
Potential
Inability to Achieve Acceptance of Our Products in the Marketplace
Our
success in generating significant sales of our products will depend in part on
our ability to achieve market acceptance of our products. The extent to which,
and rate at which, we achieve market acceptance and penetration of our current
and future products is a function of many variables including, but not limited
to:
|
·
|
price;
|
|
·
|
safety;
|
|
·
|
functionality;
|
|
·
|
reliability;
|
|
·
|
marketing and sales efforts;
and
|
|
·
|
general economic conditions
affecting purchasing
patterns.
|
We may
not be able to develop and introduce products in a timely manner or new products
may not gain market acceptance. We are in the early stages of commercialization
of our products. We believe that our future growth will depend in large part on
our ability to market these products in our target markets. In addition,
commercial applications of unique recycled plastics compounds has not been
undertaken prior to the introduction of our products and therefore the market is
new and evolving. The failure of our products to achieve market acceptance would
have a material adverse effect on our business, results of operations and
financial condition.
We
May Face Strong Competition in the Marketplace
Competitors
may succeed in developing alternative technologies and products that are easier
to use or less expensive than those which have been developed by us or that
would render our technology and products non-competitive. We operate in a highly
competitive and rapidly evolving field, and new developments are expected to
continue at a rapid pace. Many of these competitors have substantially greater
financial and technical resources and production and marketing capabilities than
we do.
We
Have a Limited Manufacturing Capacity
We are in
the process of setting up our first plants for the commercial production of our
recycled plastics compounds. Any disruptions in the manufacturing operations of
any single plant would materially reduce our ability to sell our products and
would have a material adverse effect on our financial results. Additionally, we
may not be able to continue to successfully operate our manufacturing operations
at acceptable costs, with acceptable yields, and retain adequately trained
personnel.
10
Both
Domestic and Foreign Government Regulations Can Have an Adverse Effect on Our
Business Operations
Our
products and operations are subject to governmental regulation in the United
States and foreign countries. Although we have no reason to believe that we will
not be able to comply with all applicable regulations regarding the manufacture
and sale of our products, regulations are always subject to change and depend
heavily on administrative interpretations and the country in which the products
are sold. Future changes in regulations or interpretations relating to matters
such as safe working conditions, manufacturing practices, environmental
controls, and disposal of hazardous or potentially hazardous substances may
adversely affect our business.
Management
of Potential Growth
Subject
to receipt of financing, we hope to experience rapid growth which, if achieved,
will place a significant strain on our managerial, operational, and financial
systems resources. To accommodate our current size and manage growth, we must
continue to implement and improve our financial strength and our operational
systems, and expand.
There is
no guarantee that we will be able to effectively manage the expansion of our
operations, or that our systems, procedures or controls will be adequate to
support our expanded operations, or that we will be able to obtain facilities to
support our growth. Our inability to effectively manage our future growth would
have a material adverse effect on us.
Disclosure Controls and
Procedures and
Potential Inability to Make
Required Public Filings
We currently have only
41 employees, including 38 through
our
Dutch
subsidiaries. Given our limited personnel and limited resources, we may
be unable to maintain effective controls to insure that we are able to make all
required public filings in a timely manner. If we do not make all public filings
in a timely manner, our shares of common stock may be delisted from the OTC
Bulletin Board. We could also be subject to regulatory action and/or lawsuits by
stockholders.
Foreign
Currency Risk
Our
financial results are quantified in U.S. dollars and a majority of our
obligations and expenditures with respect to our operations are incurred in
Euros, with the balance in U.S. dollars and Swiss franc. Our functional currency
has been the Euro. Although we do not believe we currently have any materially
significant market risks relating to our operations resulting from foreign
exchange rates, due to our limited operations, our lack of revenue and that the
Euro and Swiss franc are not highly inflational, if we enter into financing or
other business arrangements denominated in currency other than the U.S. dollars,
variations in the exchange rate may give rise to foreign exchange gains or
losses that may be significant.
Risks Relating to Our Common
Stock
During
the twelve months ended December 31, 2009, we registered for resale under the
Securities Act of 1933, as amended, 9,772,728 shares of our common stock. To the
extent that these shares have not yet been resold, their resale in the public
market could adversely affect the market price for our common stock and make it
more difficult for you to sell our shares at times and prices that you feel are
appropriate. Furthermore, we expect that, because a large number of shares were
registered, the selling stockholders will continue to offer those for a
significant period of time, the precise duration of which we cannot predict.
Accordingly, the adverse market and price pressures resulting from such sales
may continue for an extended period of time and continued negative pressure on
the market price of our common stock could have a material adverse effect on our
ability to raise additional equity capital.
Certificate
of Incorporation Grants the Board of Directors the Power to Designate and Issue
Additional Shares of Common and/or Preferred Stock.
Our
certificate of incorporation grants our Board of Directors authority to, without
any action by our stockholders, designate and issue, from our authorized
capital, shares in such classes or series (including classes or series of common
stock and/or preferred stock) as it deems appropriate and establish the rights,
preferences, and privileges of such shares, including dividends, liquidation and
voting rights. The rights of holders of classes or series of common stock or
preferred stock that may be issued could be superior to the rights of the common
stock offered hereby. Our board of directors’ ability to designate
and issue shares could impede or deter an unsolicited tender offer or takeover
proposal. Further, the issuance of additional shares having preferential rights
could adversely affect other rights appurtenant to the shares of common stock
offered hereby. Any such issuances will dilute the percentage of ownership
interest of our stockholders and may dilute our book value.
11
Lack of
Liquid Trading Market
for Common Stock
Although
our stock is quoted on the OTC Bulletin Board (the “OTCBB”) under the symbol
“PLNU”, our trading history is limited and the market for our common stock is
not liquid as there have been days when our stock did not trade even though it
is was quoted.
Limited
Market Due To Penny Stock
Our stock
differs from many stocks, in that it is considered a penny stock. The Securities
and Exchange Commission has adopted a number of rules to regulate penny stocks.
These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3,
15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of 1934, as
amended. Because our securities probably constitute penny stock within the
meaning of the rules, the rules would apply to our securities and us. The rules
may further affect the ability of owners of our stock to sell their securities
in any market that may develop for them. There may be a limited market for penny
stocks, due to the regulatory burdens on broker-dealers. The market among
dealers may not be active. Investors in penny stock often are unable to sell
stock back to the dealer that sold them the stock. The mark-ups or commissions
charged by the broker-dealers may be greater than any profit a seller may make.
Because of large dealer spreads, investors may be unable to sell the stock
immediately back to the dealer at the same price the dealer sold the stock to
the investor. In some cases, the stock may fall quickly in value. Investors may
be unable to reap any profit from any sale of the stock, if they can sell it at
all.
Stockholders
should be aware that, according to the Securities and Exchange Commission
Release No. 34-29093, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse. These patterns include: control of the market
for the security by one or a few broker-dealers that are often related to the
promoter or issuer; manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; “boiler room”
practices involving high pressure sales tactics and unrealistic price
projections by inexperienced sales persons; excessive and undisclosed bid-ask
differentials and markups by selling broker-dealers; and the wholesale dumping
of the same securities by promoters and broker-dealers after prices have been
manipulated to a desired level, along with the inevitable collapse of those
prices with consequent investor losses.
Furthermore,
the penny stock designation may adversely affect the development of any public
market for our shares of common stock or, if such a market develops, its
continuation. Broker-dealers are required to personally determine whether an
investment in penny stock is suitable for customers. Penny stocks are securities
(i) with a price of less than five dollars per share; (ii) that are not traded
on a "recognized" national exchange; (iii) whose prices are not quoted on the
NASDAQ automated quotation system (NASDAQ-listed stocks must still meet
requirement (i) above); and (iv) of an issuer with net tangible assets less than
$2,000,000 (if the issuer has been in continuous operation for at least three
years) or $5,000,000 (if in continuous operation for less than three years), or
with average annual revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Exchange Act, and Rule 15g-2 of the Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a
penny stock for the investor's account. Potential investors in our common stock
are urged to obtain and read such disclosure carefully before purchasing any
shares that are deemed to be penny stock. Rule 15g-9 of the Commission requires
broker-dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that
investor.
This
procedure requires the broker-dealer to (i) obtain from the investor information
concerning his financial situation, investment experience and investment
objectives; (ii) reasonably determine, based on that information, that
transactions in penny stocks are suitable for the investor and that the investor
has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for the Company's
stockholders to resell their shares to third parties or to otherwise dispose of
them.
The
Trading Price Of Our Common Stock May Decrease Due To Factors Beyond Our
Control
The
trading price of our common stock will be subject to significant fluctuations in
response to numerous factors, including:
|
·
|
Variations in anticipated or
actual results of
operations;
|
|
·
|
Announcements of new products or
technological innovations by us or our
competitors;
|
|
·
|
Changes in earnings estimates of
operational results by
analysts;
|
|
·
|
Results of product
demonstrations;
|
|
·
|
Inability of market makers to
combat short positions on the
stock;
|
|
·
|
Inability of the market to absorb
large blocks of stock sold into the
market;
|
|
·
|
Comments about us or our markets
posted on the
Internet.
|
Moreover,
the stock market from time to time has experienced extreme price and volume
fluctuations, which have particularly affected the market prices for emerging
growth companies and which often have been unrelated to the operating
performance of the companies. These broad market fluctuations may adversely
affect the market price of our common stock. If our stockholders sell
substantial amounts of their common stock in the public market, the price of our
common stock could fall. These sales also might make it more difficult for us to
sell equity or equity related securities in the future at a price we deem
appropriate.
12
We
Pay No Dividends
We have
never declared nor paid cash dividends on our capital stock. We currently intend
to retain any earnings for funding growth however these plans may change
depending upon capital raising requirements.
Sarbanes-Oxley
and Federal Securities Laws Reporting Requirements Can Be Expensive
As a
public reporting company, we are subject to the Sarbanes-Oxley Act of 2002, as
well as the information and reporting requirements of the Securities Exchange
Act of 1934, as amended, and other federal securities laws. The costs of
compliance with the Sarbanes-Oxley Act and of preparing and filing annual and
quarterly reports, proxy statements and other information with the SEC, and
furnishing audited reports to shareholders, are significant and may increase in
the future.
ITEM
2. PROPERTIES.
We lease
our plant in The Netherlands pursuant to a lease with an annual rental of
approximately $189,000. The lease terminates 12 months after notice of
termination is given by us or the landlord.
We lease
approximately 1,460 square feet of office space at Rue Ceard 6, Geneva,
Switzerland, pursuant to a lease with an annual rental of approximately $63,000.
The lease is scheduled to terminate on May 1, 2013.
We lease
approximately 2,200 square feet of office space in Naarden, The Netherlands,
pursuant to a lease with an annual rental of approximately $77,000. The lease is
scheduled to terminate on April 30, 2014.
We pay
approximately $300 per month for use of a conference room, on an as needed
basis, at 10100 Santa Monica Blvd, Los Angeles, CA.
ITEM
3. LEGAL PROCEEDINGS.
As of
December 31, 2009, we were not a party to any pending legal proceeding and our
property is not subject to any pending legal proceeding, and no such proceedings
are known to the Company to be threatened or contemplated against
it.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
13
ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
Market
Information
Our
common stock trades on the OTC Bulletin Board under the symbol “PLNU”. On April
8, 2010, the last sales price of our common stock as reported by the OTC
Bulletin Board was $0.19 per share.
The
following table sets forth for the periods indicated the high and low sales
prices of our common stock for the period from January 1, 2008 through December
31, 2009 as reported by the OTC Bulletin Board.
High
|
Low
|
|||||||
4th
Quarter 2009, ended 12/31/09
|
$
|
0.28
|
$
|
0.19
|
||||
3rd
Quarter 2009, ended 9/30/09
|
$
|
0.30
|
$
|
0.12
|
||||
2nd
Quarter 2009, ended 6/30/09
|
$
|
0.34
|
$
|
0.19
|
||||
1st
Quarter 2009, ended 3/31/09
|
$
|
0.27
|
$
|
0.16
|
||||
4th
Quarter 2008, ended 12/31/08
|
$
|
0.32
|
$
|
0.10
|
||||
3rd
Quarter 2008, ended 9/30/08
|
$
|
0.34
|
$
|
0.08
|
||||
2nd
Quarter 2008, ended 6/30/08
|
$
|
0.37
|
$
|
0.20
|
||||
1st
Quarter 2008, ended 3/31/08
|
$
|
0.37
|
$
|
0.20
|
Holders
The
number of record holders of our common stock as of December 31, 2009, was
approximately 143 based on information received from our transfer
agent. This amount excludes an indeterminate number of shareholders
whose shares are held in “street” or “nominee” name.
Dividend
Policy
We have
not paid any dividends since our inception and we do not anticipate or
contemplate paying dividends on our common stock in the foreseeable
future. It is our present intention to utilize all available funds
for the development of our business.
Securities Authorized for
Issuance Under Equity Compensation Plans
Equity Compensation Plan
Information as of December 31, 2009
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
|
|
Weighted-
average exercise
price of outstanding
options, warrants and
rights
(b)
|
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column
(a))
(c)
|
||
Equity
compensation plans approved by security holders
|
18,200,000
|
$
|
0.27
|
11,800,000
|
|||
Equity
compensation plans not approved by security holders
|
-
|
-
|
|||||
Total
|
18,200,000
|
$
|
0.27
|
11,800,000
|
Recent Sales of Unregistered
Securities
This item
is not applicable.
Issuer Purchases of Equity
Securities
There
were no repurchases of equity securities by us or any affiliated purchasers
during the fourth quarter of the year ended December 31, 2009.
14
ITEM 6. SELECTED FINANCIAL
DATA.
This item
is not applicable.
ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Statements
used in this Form 10-K, in filings by the Company with the Securities and
Exchange Commission (the "SEC"), in the Company's press releases or other public
or stockholder communications, or made orally with the approval of an authorized
executive officer of the Company that utilize the words or phrases "would be,"
"will allow," "intends to," "will likely result," "are expected to," "will
continue," "is anticipated," "estimate," "project," or similar expressions
speaking to anticipated actions, results or projections in the future speak only
as of the date made, are based on certain assumptions and expectations which may
or may not be valid or actually occur, and which involve various risks and
uncertainties. The Company cautions readers not to place undue
reliance on any such statements and that the Company's actual results for future
periods could differ materially from those anticipated or
projected.
Unless
otherwise required by applicable law, the Company does not undertake, and
specifically disclaims any obligation, to update any forward-looking statements
to reflect occurrences, developments, unanticipated events or circumstances
after the date of such statement.
The
following discussion should be read in conjunction with our consolidated
financial statements and related notes included as part of this
report.
Management's Plan of
Operation
The
following discussion and analysis provides information which our management
believes to be relevant to an assessment and understanding of our results of
operations and financial condition. This discussion should be read together with
our financial statements and the notes to financial statements, which are
included in this report.
Overview
At March
31, 2010, we were pursuing a business plan related to the Plastinum Process
described below. We own and develop a patented proprietary plastic blending
technology, whereby various kinds of immiscible plastics previously considered
non-compatible can be mixed mechanically into a new polymer compound. The
uniqueness of this blending technology stems from its potential cost-effective
applications in many fields of the plastic industry, from the recycling of mixed
post-consumer plastic scrap to the creation of new thermo plastic compounds
(InfinymerTM).
Through
March 31, 2009 we were considered to be in the development stage as defined by
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 915 “Development
Stage Entities”. We began production and sales of products during the
second quarter of 2009 and exited the development stage. As of the beginning of
2010, we have an operating capacity of 10,000 metric tons per year.
The
Plastinum Process
We own
and develop a patented and proprietary plastic blending technology
(BlendymerTM),
whereby various kinds of immiscible plastics previously considered
non-compatible can be mechanically mixed into a new polymer compound
(InfinymerTM). The
uniqueness of this blending technology stems from its potential cost-effective
applications in many fields of the plastic industry, from the recycling of mixed
post-consumer plastic waste to the creation of new thermo plastic compounds
(InfinymerTM). With
the BlendymerTM we are
able to alter the physical properties of the InfinymerTM to meet
the customers specifications.
Plastinum’s
mission is to commercialize the technology through application in the virgin
plastic markets (polymer alloys) and the plastic recycling sector (compounds
made from post-consumer mixed plastic waste).
Plastinum
believes its patented proprietary process, the Plastinum technology, is capable
of producing homogeneous, commercially usable polymer products from mixed virgin
plastic and/or mixed waste plastic.
During
October 2006 we opened a pilot plant in the EMMTEC Industry & Business Park,
Emmen, The Netherlands with a processing capacity of 1,500 metric tons annually.
This plant is our showcase for the recycling of different streams of total post
consumer mixed plastic waste, such as household waste). We have changed this
pilot plant in Emmen into our first commercial plant through an increase in the
workforce and commencement of production to fulfill our customer
orders. Production and delivery in the Netherlands of our INFINYMER TM
recycled plastic compounds began during the second quarter of
2009. Recent demand for INFINYMER TM has
risen and as of December 31, 2009 exceeded the capacity of our Emmen
plant. We have successfully increased the production
capacity of our plant in Emmen to 10,000 metric tons per year. Due to the
increasing demand of our Infinymer, we are furthering the expansion of our plant
in Emmen to 30,000 metric tons per year, which we anticipate completing by May
2011.
15
The
strategies for commercial implementation of the Plastinum technology range from
stand-alone plants, such as the plant in Emmen, to units integrated within an
existing plastic or waste processing facility. Plastinum anticipates achieving
this through joint venture contracts with large parties in the waste material or
the plastic processing industry, or through stand-alone plants with strategic
contracts. In a later stage we anticipate that independent parties will approach
us for licensing contracts, or machine leasing arrangements in order to enable
them to make use of the Plastinum technology.
We have
entered into multiple sales contracts and resulting orders have been, and
continue to be, delivered and invoiced to clients from The Netherlands. Test
materials have been shipped to parties in both the United States and Europe to
enable various potential customers to continue testing our materials. Our
Research and Development group is continuing to test alternative waste streams
being generated and collected worldwide.
We are
currently discussing various possibilities for the acquisition of source
materials with interested parties in the EU as well as in the U.S. and Asia. The
potential acquisition strategies would involve either profit sharing
(joint-venture) collaboration or the straight purchase of source
materials.
In the
EU, it is anticipated that source materials will be obtained from various
parties. We have reached an agreement with a Dutch company regarding
household waste from The Netherlands and we recently signed a second supply
agreement with Nedvang. Nedvang was founded by producers and importers
and appointed by the Dutch Government to coordinate and finance the
process of collection and processing of waste in the Netherlands.
Plan
of Operation
Our plan
of operation for the twelve month period following December 31, 2009 is
to:
¨
|
Increase the capacity
of our plant in Emmen to meet the rising demand for the
Infinymer
TM. This includes
enlarging our plant for the recycling of mixed plastic household waste
from a processing capacity of 10,000 MT annually to 30,000 MT
annually.
|
¨
|
Set up additional plants in the
EU and the USA for the recycling of mixed plastic household waste to a
processing capacity of 93,000 MT, planned for
2011.
|
¨
|
Open a commercial recycling plant
in the United States, planned for 2011 through a Joint Venture or
Licensing operation.
|
¨
|
Proceed with research and
development for virgin market applications and the development of new
virgin compounds.
|
We
currently have budgeted approximately $8,500,000 in cash expenditures for the
twelve month period following December 31, 2009, including (1) approximately
$3,000,000 to cover our projected general and administrative expense during this
period; (2) approximately $500,000 for research and development activities; (3)
approximately $3,500,000 for the necessary capital expenditure to
further expand our Netherlands plant; and (4) approximately $1,500,000 for
Working Capital needs at our Netherlands plant.
The
actual start of the set up of a second plant in the EU and/or in the U.S. will
require us to start ordering with suppliers and making down payments to those
suppliers. These amounts are not included in above cash budget as both amounts
and timing are uncertain and conditional of reaching agreement with potential
joint-venture partners.
From
November 2007 through July 2008, we sold $6,165,000 of securities through a
private placement of securities. During 2009, we sold and issued convertible
promissory notes in the aggregate principal amount of $6,050,000. We also
generated sales revenues of approximately $556,000 during the year ended
December 31, 2009.
On
February 16, 2009, pursuant to a Participation and Shareholders’ Agreement (the
“Participation Agreement”) among (i) Plastinum Polymer Technologies Corp. B.V.,
our indirect previously wholly-owned Dutch subsidiary (the “BV”), (ii) PPT
Holding B.V., our direct, wholly-owned Dutch subsidiary and the owner of our
interest in the BV, (iii) Jacques Mot, our Chief Executive Officer and (iv) N.V.
NOM, Investerings- en ontwikkelingsmaatschappij voor Noord-Nederland,
a Dutch public limited company (“NOM”) with the State of the Netherlands
(Ministry of Economic Affairs) and the provinces of Groningen, Friesland and
Drenthe as its shareholders, NOM invested € 1,500,000 in the BV and in return
received preferential shares in the BV giving NOM a 49% share in the profits of
the BV. Pursuant to the terms of the Participation Agreement, (i) the
preferential shares received by NOM are entitled to cumulative annual 10%
dividends, (ii) the preferential shares received by NOM may be repurchased from
NOM by the BV at any time for 150% of the purchase price originally paid for the
preferential shares by NOM and (iii) if not repurchased by the BV by January 1,
2013, the preferential shares received by NOM may be converted by NOM into 49%
of the ordinary shares of the BV. The Participation Agreement also
provides for, among other things, (i) anti-dilution protection for NOM in the
event shares in the BV are sold at a lower valuation than that at which NOM made
its investment , (ii) restrictions on transfer of shares in the BV, (iii)
provisions regarding the operation of the board of directors of the BV, (iv)
restrictions on dividend payments by the BV until the dividends payable on
the preferential shares received by NOM are paid and (v) certain non-competition
provisions governing the BV and Jacques Mot. Further, in the event of a
conversion by NOM of its preferential shares in the BV, the following dividend
policy will be in effect at the BV: (i) when the solvency of the BV is below
30%, no dividends will be paid; (ii) when the solvency of the BV is between 30%
and 50%, 50% of the BV’s net income will be paid out as dividends; and (iii)
when the solvency of the BV is over 50%, 100% of the BV’s net income will be
paid out as dividends.
16
On
October 30, 2009, Plastinum Polymer Technologies Corp. BV, an indirect,
majority-owned subsidiary of the Company, signed a bank loan agreement with
ABN-AMRO Bank for approximately $3,320,000 (2,250,000 Euros). Interest is
payable quarterly based on a variable rate (currently 4.3%). Repayment of
principal will begin on January 1, 2011. Both NOM, our joint venture partner in
Plastinum Polymer Technologies Corp. BV, and PPT Holding B.V., a wholly-owned
subsidiary of the Company, gave ABN-AMRO Bank irrevocable guarantees of EUR
250,000 regarding payment of principal and interest. The guarantee
provided by PPT Holding B.V. is via a bank guarantee from Societé General S.A.,
which in turn is secured by a hold placed on EUR 250,000 deposited by the
Company with Societé General S.A. The assets and receivables of Plastinum
Polymer Technologies BV are pledged to ABN-AMRO Bank as collateral for the
facility.
We will
need to generate additional funds in order to execute our business plan, namely,
expansion through the set-up of additional recycling plants and expansion of our
existing recycling plant. We are currently in the process of evaluating our
financing needs and exploring all available financing options in order to fully
implement our business plan, including, among others, strategic partnerships
with other business entities and debt financing. Management is also attempting
to secure additional ongoing revenue relationships for our products. Should we
not be able to obtain suitable financing for our business plan, we may have to
substantially curtail our proposed expansion.
Our
anticipated costs and projected completion dates described above are estimates
based upon our current business plan, known resources and market dynamics. Our
actual costs or actual project completion dates could vary materially from those
projected. Our management team is continually re-evaluating our core
business plan as it relates to our monitoring products and identifying new
applications and markets for our technology. We may at any time decide to
terminate our ongoing development plans with respect to products and services if
they are deemed to be impracticable or not to be commercially
viable. Further changes to our current business plan could also
result, such as the acquisition of new products or services or the decision to
manufacture our own products, resulting in a change in our anticipated strategic
direction, investments, and expenditures.
Results of
Operations
Year
ended December 31, 2009 Compared to the Year ended December 31,
2008
Sales
and cost of sales
We began
commercial production and sales of our products during the second quarter of
2009. Sales for the year ended December 31, 2009 totaled $555,649, compared to
$25,084 in 2008. Cost of sales includes labor, raw materials, additives and
energy cost. During 2009 we generated a gross loss on sales of $1,428,633,
compared to a gross profit of $25,084 in 2008. This gross loss from current
sales resulted from the transition from a pilot and testing facility to actual
production plant. This is mainly due to lack of scale and start up problems with
raw material delivery and pre-treatment. This also induced us to use alternative
but more expensive raw materials.
Expenses
and operating losses
Operating
losses increased from $5,716,545 in 2008 to $8,415,934 in 2009. The increase of
$2,699,389 was the result of the increase in gross loss on sales of $1,453,717
as described above, an increase of $1,836,928 in general and administrative
expenses, from $4,218,442 in 2008 to $6,055,370 in 2009, an increase in research
and development expenses of $6,347, from $1,666,439 in 2008 to $1,672,786 in
2009, partially offset by and increase in earned subsidies of $597,603, from
$143,252 in 2008 to $740,855 in 2009. The primary components of our general and
administrative expenses for each of the years are compensation expense,
consulting and professional fees, rent and travel expenses. The increase in
general and administrative expenses from 2008 to 2009 results primarily from
increases in compensation expense of approximately $1,042,000 and in
professional fees, consulting fees and marketing and investor relations of
approximately $403,000. Aggregate research and development expenses were
consistent over both periods. Subsidy payments received are based on
expenditures for compensation, capital investments and other disbursements. Our
general and administrative and research and development expenses have increased
as we have raised capital, continued the development of the Plastinum technology
and position ourselves to become a revenue generating company.
During
2008 and 2007 we received approximately $3,869,000 and $3,566,000, respectively,
in proceeds from the sale of preferred stock and from the exercise of warrants.
During 2009 we received $6,050,000 from the sale of convertible promissory
notes. During February 2009 we received $1,929,600 from the sale of a non
controlling interest in a Dutch subsidiary. On October 30, 2009, Plastinum
Polymer Technologies Corp. BV signed a bank loan agreement with ABN-AMRO Bank
for approximately $3,320,000 (2,250,000 Euros). We have drawn down 2,000,000
Euros against the facility. The additional working capital has enabled us to
expand our operations, partially implement our business plan, improve our
products for market and proceed to develop additional products and processes.
This has resulted in the increases in expenses enumerated above. Specifically,
in the research area, we have been able to increase our research and development
personnel, engage research consultants and operate our pilot plant, changing
over to a commercial plant. In the administrative area, we have increased
personnel to build a corporate infrastructure and have incurred increased travel
and marketing expenses as we have raised capital and promoted our planned future
products. We have also increased our administrative equity based compensation
during the period.
17
Liquidity and Capital
Resources
As of
December 31, 2009 we had a working capital deficit of $3,200,124. For the year
ended December 31, 2009, net cash used by operating activities was $4,928,566,
resulting primarily from a loss of $6,734,575 and a loss attributable to the
noncontrolling interest of $2,070,882, plus an increase in value added taxes
receivable of $340,791, partially offset by a non-cash charge of $1,197,673 for
stock based compensation and an increase in accounts payable and accrued
expenses of $3,026,979.
During
2009 we expended $5,179,151 for the acquisition of equipment, with $407,248
expended during the 2008 period.
On
February 16, 2009, pursuant to a Participation and Shareholders’ Agreement (the
“Participation Agreement”) among (i) Plastinum Polymer Technologies Corp. B.V.,
an indirect previously wholly-owned Dutch subsidiary of the Company (the “BV”),
(ii) PPT Holding B.V., our direct, wholly-owned Dutch subsidiary and owner of
our interest in the BV, (iii) Jacques Mot, our Chief Executive Officer and (iv)
N.V. NOM, Investerings- en ontwikkelingsmaatschappij voor
Noord-Nederland, a Dutch public limited company (“NOM”) with the State of the
Netherlands (Ministry of Economic Affairs) and the provinces of Groningen,
Friesland and Drenthe as its shareholders, NOM invested € 1,500,000 ($1,929,600)
in the BV and in return received preferential shares in the BV giving NOM a 49%
share in the profits of the BV.
Pursuant
to the terms of the Participation Agreement, (i) the preferential shares
received by NOM are entitled to cumulative annual 10% dividends, (ii) the
preferential shares received by NOM may be repurchased from NOM by the BV at any
time for 150% of the purchase price originally paid for the preferential shares
by NOM and (iii) if not repurchased by the BV by January 1, 2013, the
preferential shares received by NOM may be converted by NOM into 49% of the
ordinary shares of the BV.
The
Participation Agreement also provides for, among other things, (i) anti-dilution
protection for NOM in the event shares in the BV are sold at a lower
valuation than that at which NOM made its investment , (ii) restrictions on
transfer of shares in the BV, (iii) provisions regarding the operation of the
board of directors of the BV, (iv) restrictions on dividend payments by the
BV until the dividends payable on the preferential shares received by NOM
are paid and (v) certain non-competition provisions governing the BV and Mr.
Mot. Further, in the event of a conversion by NOM of its preferential
shares in the BV, the following dividend policy will be in effect at the BV: (i)
when the solvency of the BV is below 30%, no dividends will be paid; (ii) when
the solvency of the BV is between 30% and 50%, 50% of the BV’s net income will
be paid out as dividends; and (iii) when the solvency of the BV is over 50%,
100% of the BV’s net income will be paid out as dividends.
The
investment by NOM is recorded as a non controlling interest in the financial
statements.
On
January 27, 2009, we entered into a Note Purchase Agreement with an investor
pursuant to which we sold and issued a convertible promissory note in the
principal amount of $1,000,000 (the “Note”). The Note accrues
interest at a rate of 10% per annum and matures on January 27,
2012. The Note is convertible into shares of common stock at an
initial conversion price of $0.22 per share or a total of 4,545,455 shares,
subject to adjustment as contained in the Note.
On April
30, 2009, we entered into a Note Purchase Agreement with an investor pursuant to
which we sold and issued a convertible promissory note in the principal amount
of $50,000 (the “Note”). The Note accrues interest at a rate of 10%
per annum and matures on January 27, 2012. The Note is convertible
into shares of common stock at an initial conversion price of $0.22 per share or
a total of 227,273 shares, subject to adjustment as contained in the
Note.
On June
15, 2009, we entered into a Note Purchase Agreement with an investor pursuant to
which we sold and issued a convertible promissory note in the principal amount
of $3,000,000 (the “Note”). The Note accrues interest at a rate of
10% per annum and matures on June 15, 2012. The Note is convertible
into shares of common stock at an initial conversion price of $0.28 per share or
a total of 10,714,286 shares, subject to adjustment as contained in the
Note.
On
September 25, 2009, we entered into a Note Purchase Agreement with an investor
pursuant to which we sold and issued a convertible promissory note in the
principal amount of $2,000,000 (the “Note”). The Note accrues
interest at a rate of 10% per annum and matures on June 15, 2012. The
Note is convertible into shares of common stock at an initial conversion price
of $0.24 per share or a total of 8,333,333 shares, subject to adjustment as
contained in the Note.
On
October 30, 2009, Plastinum Polymer Technologies Corp. BV, an indirect,
majority-owned subsidiary of the Company, signed a bank loan agreement with
ABN-AMRO Bank for approximately $3,320,000 (2,250,000 Euros). We have drawn down
2,000,000 Euros against the facility. Interest is payable quarterly based on a
variable rate (currently 4.3%). Repayment of principal will begin on January 1,
2011. Both NOM, our joint venture partner in Plastinum Polymer Technologies
Corp. BV, and PPT Holding B.V., a wholly-owned subsidiary of the Company, gave
ABN-AMRO Bank irrevocable guarantees of EUR 250,000 regarding payment of
principal and interest. The guarantee provided by PPT Holding B.V. is via
a bank guarantee from Societé General S.A., which in turn is secured by a hold
placed on EUR 250,000 deposited by the Company with Societé General S.A.
The assets and receivables of Plastinum Polymer Technologies BV are pledged to
ABN-AMRO Bank as collateral for the facility.
18
For the
year ended December 31, 2008, net cash used by operating activities was
$3,569,512, resulting primarily from a loss of $5,783,411 partially offset by a
non-cash charge of $881,538 for stock based compensation and an increase in
accounts payable and accrued expenses of $829,296 and an increase in unearned
subsidies of $524,572.
During
2008, we received $4,060,000 in proceeds from the sale of 40,600 shares of our
Series B-1 Redeemable Convertible Preferred Stock at a price of $100 per share.
Of this amount $1,400,000 was received in March and April and $2,660,000 was
received in July. We incurred costs of $191,359 related to the sale of the
preferred stock. The purchasers also received warrants, exercisable for a five
year period, to purchase an aggregate of 3,205,263 shares of our common stock at
an initial exercise price of $0.57 per share of common stock. During August of
2008 we paid $142,228 of accrued preferred dividends in cash.
During
2008, we repaid $466,949 of net working capital advances received from Mr.
Jacques Mot, our president and CEO, to fund operations.
In
addition to the need for substantial capital in order to implement our business
plan and expansion, we currently do not have sufficient capital resources to
meet projected cash flow deficits for ongoing operations and we will need
additional capital to continue our operations. We will endeavor to raise funds
through the sale of equity shares, debt financing and revenues from operations.
If we are unable to raise additional capital through debt or equity financings,
on terms acceptable to us, and are not successful in generating sufficient
liquidity from operations, then this lack of financing would have a material
adverse effect on our business, results of operations, liquidity and financial
condition.
There can
be no assurance that we will generate revenues from operations or obtain
sufficient capital on acceptable terms, if at all. Failure to obtain such
capital or generate such operating revenues would have a material adverse effect
on our financial position and results of operations and our ability to continue
as a going concern. Our operating and capital requirements during the next
fiscal year and thereafter will vary based on a number of factors, including the
level of sales and marketing activities for our plastic services and products.
There can be no assurance that additional private or public financings including
debt or equity financing, will be available as needed, or, if available, on
terms favorable to us. Furthermore, debt financing, if available, will require
payment of interest and may involve restrictive covenants that could impose
limitations on our operating flexibility. Our failure to successfully obtain
additional future funding may jeopardize our ability to continue our business
and operations. Any additional equity financing may be dilutive to stockholders
and such additional equity securities may have rights, preferences or privileges
that are senior to those of our existing common stock.
Our
registered independent certified public accountants have stated in their report,
dated April 14, 2010, that the Company's recurring losses raise substantial
doubt about the Company's ability to continue as a going concern.
Off Balance Sheet
Arrangements
We do not
have any off-balance sheet guarantees, interest rate swap transactions or
foreign currency contracts. We do not engage in trading activities involving
non-exchange traded contracts.
Inflation
We
believe that inflation has not had a material effect on our operations to
date.
Critical Accounting Policies
and Estimates
Our
Management’s Discussion and Analysis of Financial Condition and Results of
Operation is based upon our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles in the
United States of America. The preparation of these consolidated
financial statements requires us to make estimates and judgments that affect our
reported assets, liabilities, revenues, and expenses, and the disclosure of
contingent assets and liabilities. We base our estimates and judgments on
historical experience and on various other assumptions we believe to be
reasonable under the circumstances. Future events, however, may differ markedly
from our current expectations and assumptions. While there are a number of
significant accounting policies affecting our consolidated financial statements;
we believe the following critical accounting policies and pronouncements involve
the most complex, difficult and subjective estimates and judgments:
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and
accompanying disclosures. Although these estimates are based on management's
best knowledge of current events and actions the Company may undertake in the
future, actual results may differ from those estimates.
19
Stock
Based Compensation
We
account for our stock based compensation under ASC 718 “Compensation – Stock
Compensation” which was adopted in 2006, using the fair value based method.
Under this method, compensation cost is measured at the grant date based on the
value of the award and is recognized over the service period, which is usually
the vesting period. This guidance establishes standards for the
accounting for transactions in which an entity exchanges it equity instruments
for goods or services. It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value
of the entity’s equity instruments or that may be settled by the issuance of
those equity instruments.
Foreign
Currency Translation
The
Company translates the foreign currency financial statements of its foreign
subsidiaries in accordance with the requirements of ASC 830, "Foreign Currency
Matters." Assets and liabilities are translated at current exchange rates, and
related revenue and expenses are translated at average exchange rates in effect
during the period. Resulting translation adjustments are recorded as a separate
component in stockholders' equity. Foreign currency transaction gains and losses
are included in the statement of income.
Derivatives
In June
2008, the FASB issued new accounting guidance which requires entities to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock by assessing the instrument’s contingent exercise
provisions and settlement provisions. Instruments not indexed to their own stock
fail to meet the scope exception of ASC 815 and should be classified as a
liability and marked-to-market. The statement is effective for fiscal years
beginning after December 15, 2008 and is to be applied to outstanding
instruments upon adoption with the cumulative effect of the change in accounting
principle recognized as an adjustment to the opening balance of retained
earnings. The Company has assessed its outstanding equity-linked financial
instruments and has concluded that, effective January 1, 2009, the
conversion feature of our redeemable preferred stock will need to be recorded as
a derivative liability due to the fact that the conversion price is subject to
adjustment based on subsequent sales of securities. The cumulative effect of the
change in accounting principle on January 1, 2009 is an increase in our
derivative liability related to the fair value of the conversion feature of
$1,987,557, an increase in the unamortized discount related to our redeemable
preferred stock of $1,610,189, a decrease in additional paid-in capital of
$665,368 related to the amortization of discount from date of issue to January
1, 2009, and a $288,000 decrease in the deficit accumulated during development
stage to reflect the change in fair value of the derivative liability from date
of issue to January 1, 2009.
Going
Concern
We have
not generated significant revenue since the date of our inception and, at
present, we have insufficient capital on hand to fund our planned operations and
expansion through 2010.
The
foregoing matters raise substantial doubt about our ability to continue as a
going concern.
Recent
Accounting Pronouncements
For
information regarding other recent accounting pronouncements and their effect on
the Company, see “Recent Accounting Pronouncements” in Note A of the Notes to
Consolidated Financial Statements contained herein.
20
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
This item
is not applicable.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The
following financial statements are included herewith: the Company's audited
Financial Statements as of and for the fiscal years ended December 31, 2009 and
December 31, 2008.
21
PLASTINUM
POLYMER TECHNOLOGIES CORP.
INDEX TO
FINANCIAL STATEMENTS
For the Fiscal Years Ended December 31, 2009 and
2008
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
F-3
|
|
Consolidated
Statements of Operations and Comprehensive Loss for the Years
ended December 31, 2009 and 2008
|
F-4
|
|
Consolidated
Statements of Deficiency in Equity for the Years ended December 31, 2009
and 2008
|
F-5
|
|
Consolidated
Statements of Cash Flows for Years ended December 31, 2009 and
2008
|
F-6
|
|
Notes
to Consolidated Financial Statements
|
F-7
|
F-1
REPORT
OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
Board of
Directors
Plastinum
Polymer Technologies Corp.
Los
Angeles, California
We have
audited the accompanying balance sheets of Plastinum Polymer Technologies Corp.
as of December 31, 2009 and 2008, and the related statements of operations and
comprehensive loss, deficiency in equity, and cash flows for each of the
two years in the period ended December 31, 2009. These financial statements are
the responsibility of the company's management. Our responsibility is to express
an opinion on the financial statements based upon our audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatements. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Plastinum Polymer Technologies
Corp. at December 31, 2009 and 2008 and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 2009
in conformity with accounting principles generally accepted in the United States
of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note A, the Company has a
generated negative cash outflows from operating activities, experienced
recurring net operating losses, and is dependent on securing additional equity
and debt financing to support its business efforts. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to this matter are described in Note A. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ RBSM LLP
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RBSM
LLP
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||
New
York, New York
April
14, 2010
|
F-2
PLASTINUM
POLYMER TECHNOLOGIES CORP.
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31, 2009 AND 2008
2009
|
2008
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 800,442 | $ | 134,554 | ||||
Accounts
receivable
|
41,191 | 32,125 | ||||||
Inventory
|
50,942 | - | ||||||
Prepaid
expense
|
81,944 | 23,407 | ||||||
Value
added tax refunds receivable
|
414,482 | 63,213 | ||||||
Total
current assets
|
1,389,001 | 253,299 | ||||||
Equipment,
net
|
5,644,339 | 352,391 | ||||||
Security
deposit
|
41,777 | 16,031 | ||||||
Total
assets
|
$ | 7,075,117 | $ | 621,721 | ||||
Liabilities
and deficiency in equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 3,433,158 | $ | 485,366 | ||||
Accrued
salary
|
187,569 | 381,936 | ||||||
Accrued
interest
|
453,438 | 99,288 | ||||||
Convertible
notes payable, net of discount of $11,763
|
488,237 | - | ||||||
Due
to stockholder
|
26,723 | 25,890 | ||||||
Total
current liabilities
|
4,589,125 | 992,480 | ||||||
Unearned
subsidies received
|
533,317 | 524,572 | ||||||
Bank
guarantee payable
|
16,031 | 16,031 | ||||||
Loan
payable - bank
|
2,866,400 | - | ||||||
Convertible
notes payable, net of discount of $766,471 and $44,796
|
5,283,529 | 455,204 | ||||||
Derivative
liability
|
1,790,660 | - | ||||||
Total
liabilities
|
15,079,062 | 1,988,287 | ||||||
Redeemable
preferred stock, Series B; par value $.01 per share; 120,000 shares
authorized,
|
||||||||
61,650
shares issued and outstanding, net (Face value $6,165,000)
|
5,196,675 | 5,636,661 | ||||||
Deficiency
in equity:
|
||||||||
Preferred
stock, undesignated, par value $.01 per share; 9,880,000 shares
authorized,
|
||||||||
no
shares issued and outstanding
|
- | - | ||||||
Common
stock, par value $.01 per share; 250,000,000 shares
authorized,
|
||||||||
99,989,113
and 97,078,350 shares issued and outstanding, respectively
|
999,891 | 970,784 | ||||||
Additional
paid-in capital
|
10,078,509 | 9,965,027 | ||||||
Other
comprehensive income
|
(62,510 | ) | (126,046 | ) | ||||
Accumulated
deficit
|
(24,259,567 | ) | (17,812,992 | ) | ||||
Total
Plastinum Polymer Technologies Corp. stockholders' deficit
|
(13,243,677 | ) | (7,003,227 | ) | ||||
Noncontrolling
interest
|
43,057 | - | ||||||
Total
deficiency in equity
|
(13,200,620 | ) | (7,003,227 | ) | ||||
Total
liabilities and deficiency in equity
|
$ | 7,075,117 | $ | 621,721 |
See
accompanying notes to these consolidated financial
statements.
F-3
PLASTINUM
POLYMER TECHNOLOGIES CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
2009
|
2008
|
|||||||
Sales
|
$ | 555,649 | $ | 25,084 | ||||
Cost
of sales
|
1,984,282 | - | ||||||
Gross
loss / profit
|
(1,428,633 | ) | 25,084 | |||||
Operating
expenses:
|
||||||||
General
and administrative expenses
|
6,055,370 | 4,218,442 | ||||||
Research
and development
|
1,672,786 | 1,666,439 | ||||||
Subsidy
payments earned
|
(740,855 | ) | (143,252 | ) | ||||
Total
operating expenses
|
6,987,301 | 5,741,629 | ||||||
Loss
from operations
|
(8,415,934 | ) | (5,716,545 | ) | ||||
Interest
expense, net
|
(586,420 | ) | (66,866 | ) | ||||
Change
in fair value of derivative liability
|
196,897 | - | ||||||
Loss
before provision for income taxes
|
(8,805,457 | ) | (5,783,411 | ) | ||||
Provision
for income taxes
|
- | - | ||||||
Net
loss
|
(8,805,457 | ) | (5,783,411 | ) | ||||
Net
loss attributable to the noncontrolling interest
|
2,070,882 | - | ||||||
Net
loss attributable to Plastinum Polymer Technologies
|
||||||||
Corp.
before accretion of preferred dividends and discount
|
(6,734,575 | ) | (5,783,411 | ) | ||||
Accretion
of preferred dividends and discount
|
(1,780,137 | ) | (652,384 | ) | ||||
Accretion
of subsidiary preferred stock dividends
|
(184,339 | ) | - | |||||
Net
loss attributable to Plastinum Polymer Technologies
|
||||||||
Corp.
common shareholders
|
$ | (8,699,051 | ) | $ | (6,435,795 | ) | ||
Net
loss per common share, basic and diluted
|
$ | (0.09 | ) | $ | (0.07 | ) | ||
Weighted
average shares outstanding
|
98,856,870 | 97,014,786 | ||||||
Comprehensive
loss:
|
||||||||
Net
loss
|
$ | (6,734,575 | ) | $ | (5,783,411 | ) | ||
Foreign
currency translation gain (loss)
|
63,536 | (73,550 | ) | |||||
Comprehensive
loss
|
$ | (6,671,039 | ) | $ | (5,856,961 | ) |
See
accompanying notes to these consolidated financial statements.
F-4
PLASTINUM
POLYMER TECHNOLOGIES CORP.
CONSOLIDATED
STATEMENT OF DEFICIENCY IN EQUITY
Plastinum
Polymer Technologies Corp. Stockholders
|
||||||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||
Common
Stock
|
Paid-in
|
Accumulated
|
Comprehensive
|
Noncontrolling
|
Deficiency
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Income
|
Interest
|
in Equity
|
||||||||||||||||||||||
Balance,
January 1, 2008
|
96,953,722 | 969,537 | 9,465,997 | (12,029,581 | ) | (52,496 | ) | - | (1,646,543 | ) | ||||||||||||||||||
Shares
issued for services
|
85,918 | 860 | 14,130 | - | - | - | 14,990 | |||||||||||||||||||||
Cashless
exercise of warrants, March 30, 2008
|
38,710 | 387 | (387 | ) | - | - | - | - | ||||||||||||||||||||
Warrants
issued with redeemable convertible preferred stock
|
- | - | 263,452 | - | - | - | 263,452 | |||||||||||||||||||||
Beneficial
conversion feature of redeemable convertible preferred
stock
|
- | - | 2,281 | - | - | - | 2,281 | |||||||||||||||||||||
Stock
based compensation
|
- | - | 871,938 | - | - | - | 871,938 | |||||||||||||||||||||
Accretion
of preferred discount
|
- | - | (314,414 | ) | - | - | - | (314,414 | ) | |||||||||||||||||||
Accretion
of preferred dividends
|
- | - | (337,970 | ) | - | - | - | (337,970 | ) | |||||||||||||||||||
Currency
translation adjustment
|
- | - | - | - | (73,550 | ) | - | (73,550 | ) | |||||||||||||||||||
Net
loss
|
- | - | - | (5,783,411 | ) | - | - | (5,783,411 | ) | |||||||||||||||||||
Balance,
December 31, 2008
|
97,078,350 | 970,784 | 9,965,027 | (17,812,992 | ) | (126,046 | ) | - | (7,003,227 | ) | ||||||||||||||||||
Cumulative
effect of change in accounting principle
|
- | - | (665,369 | ) | 288,000 | - | - | (377,369 | ) | |||||||||||||||||||
Sale
of subsidiary shares to noncontrolling interest
|
- | - | - | - | - | 1,929,600 | 1,929,600 | |||||||||||||||||||||
Shares
issued as payment of accrued dividends
|
2,775,511 | 27,755 | 582,179 | - | - | - | 609,934 | |||||||||||||||||||||
Shares
issued for services
|
135,252 | 1,352 | 14,818 | - | - | - | 16,170 | |||||||||||||||||||||
Beneficial
conversion feature of convertible notes
|
- | - | 964,827 | - | - | - | 964,827 | |||||||||||||||||||||
Stock
based compensation
|
- | - | 1,181,503 | - | - | - | 1,181,503 | |||||||||||||||||||||
Accretion
of preferred discount
|
- | - | (1,286,938 | ) | - | - | - | (1,286,938 | ) | |||||||||||||||||||
Accretion
of preferred dividends
|
- | - | (493,199 | ) | - | - | - | (493,199 | ) | |||||||||||||||||||
Currency
translation adjustment
|
- | - | - | - | 63,536 | - | 63,536 | |||||||||||||||||||||
Accretion
of subsidiary preferred stock dividend
|
- | - | (184,339 | ) | - | - | 184,339 | - | ||||||||||||||||||||
Net
loss
|
- | - | - | (6,734,575 | ) | - | (2,070,882 | ) | (8,805,457 | ) | ||||||||||||||||||
Balance,
December 31, 2009
|
99,989,113 | $ | 999,891 | $ | 10,078,509 | $ | (24,259,567 | ) | $ | (62,510 | ) | $ | 43,057 | $ | (13,200,620 | ) |
See
accompanying notes to these consolidated financial statements.
F-5
PLASTINUM
POLYMER TECHNOLOGIES CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (6,734,575 | ) | $ | (5,783,411 | ) | ||
Adjustments
to reconcile net loss to net
|
||||||||
cash
used in operating activities:
|
||||||||
Stock
based compensation
|
1,197,673 | 881,538 | ||||||
Amortization
of debt discount
|
231,389 | 33,124 | ||||||
Loss
allocable to noncontrolling interest
|
(2,070,882 | ) | - | |||||
Change
in fair value of derivative liability
|
(196,897 | ) | - | |||||
Depreciation
and amortization
|
46,540 | 62,065 | ||||||
Decrease
(increase) in accounts receivable
|
5,590 | (32,125 | ) | |||||
(Increase)
decrease in value added tax refund receivable
|
(340,791 | ) | 14,851 | |||||
Increase
in prepaid expense
|
(88,700 | ) | (19,942 | ) | ||||
Increase
in inventory
|
(49,571 | ) | - | |||||
Increase
in deposits
|
(25,053 | ) | - | |||||
Increase
in advance receivable
|
- | (79,480 | ) | |||||
Increase
in accounts payable and accrued expenses
|
3,026,979 | 829,296 | ||||||
Increase
in unearned subsidies
|
69,732 | 524,572 | ||||||
Cash
used in operating activities
|
(4,928,566 | ) | (3,569,512 | ) | ||||
Cash
flows from financing activities
|
||||||||
Purchase
of equipment
|
(5,179,151 | ) | (407,248 | ) | ||||
Cash
used in investing activities
|
(5,179,151 | ) | (407,248 | ) | ||||
Cash
flows from financing activities
|
||||||||
Proceeds
from sale of redeemable preferred stock
|
- | 4,060,000 | ||||||
Cost
of sale of redeemable preferred stock
|
- | (191,359 | ) | |||||
Payment
of dividends on redeemable preferred stock
|
- | (142,228 | ) | |||||
Proceeds
from sale of subsidiary preferred stock
|
1,929,600 | |||||||
Proceeds
from sale of convertible notes
|
6,050,000 | - | ||||||
Proceeds
from bank loan
|
2,789,260 | - | ||||||
Advances
(repayments) from stockholder
|
833 | (466,549 | ) | |||||
Cash
provided by financing activities
|
10,769,693 | 3,259,864 | ||||||
Effect
of exchange rate changes on cash
|
3,912 | (73,550 | ) | |||||
Net
increase (decrease) in cash
|
665,888 | (790,446 | ) | |||||
Cash,
beginning of period
|
134,554 | 925,000 | ||||||
Cash,
end of period
|
$ | 800,442 | $ | 134,554 | ||||
Supplemental
disclosure of non-cash financing activities:
|
||||||||
Preferred
dividends paid with common stock
|
$ | 609,934 | $ | - | ||||
Accrued
liabilities settled in common stock
|
- | 5,390 | ||||||
Value
attributed to warrants issued with redeemable preferred
stock
|
- | 263,452 | ||||||
Beneficial
conversion feature of redeemable preferred stock
|
- | 2,281 | ||||||
Beneficial
conversion feature of convertible notes
|
964,827 | - | ||||||
Accretion
of discount on redeemable preferred stock
|
1,286,938 | 314,414 | ||||||
Accretion
of dividend on redeemable preferred stock
|
493,199 | 337,970 | ||||||
Prepaid
expense applied to acquisition of fixed assets
|
17,260 | - | ||||||
Security
deposit guarantee provided by bank
|
- | 16,031 |
See
accompanying notes to these consolidated financial statements.
F-6
PLASTINUM
POLYMER TECHNOLOGIES CORP.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE
A - SUMMARY OF ACCOUNTING POLICIES
A summary
of the significant accounting policies applied in the preparation of the
accompanying consolidated financial statements follows.
Business
Plastinum
Polymer Technologies Corp. (“we”, “us”, “our company“, “our”, “Plastinum” or the “Company”
) (formerly Plastinum Corp.) was formed under the laws of the State of Delaware
in 2000. We own and develop a patented and proprietary plastic blending
technology whereby various kinds of immiscible plastics can be mixed
mechanically into a new polymer compound. The technology is being marketed
worldwide. During the fourth quarter of 2008, we received a test order for our
Infinymer TM
product, which we shipped to a customer in Asia. We signed our first contract
for commercial delivery of products and began production and sales of products
to a customer in the Netherlands during the second quarter of 2009 and exited
the development stage. We were a development stage entity during the year ended
December 31, 2008.
Through
December 31, 2009, we have generated a relatively small amount of sales
revenues, have incurred significant expenses and have sustained losses.
Consequently, our operations are subject to all the risks inherent in the
establishment of a new business enterprise.
We
were a wholly owned subsidiary of New Generation Holdings, Inc. (“NGH”)
through May 24, 2006, and NGH owned approximately 94% of our common stock until
February 20, 2007, at which time NGH effected a pro rata distribution of our
common stock (commonly referred to as a “spin off”), pursuant to which each
stockholder of NGH received one share of our common stock for each share of NGH
owned by such stockholder.
The
consolidated financial statements include the accounts of Plastinum and its
subsidiaries. All significant intercompany transactions and balances have been
eliminated in the consolidated financial statements.
Going
Concern
The
financial statements have been prepared on a going concern basis and do not
reflect any adjustments related to the uncertainty surrounding our recurring
losses or accumulated deficit.
We have
had substantial net losses of $6,734,575 and $5,783,411 for the years ended
December 31, 2009 and 2008, respectively, and have generated minimal revenue
through December 31, 2009. These factors raise substantial doubt about our
ability to continue as a going concern.
We are
currently developing a proprietary technology designed to process and blend two
or more discrete plastic polymers. The technology is being marketed
worldwide.
The
continuation of the Company as a going concern is dependent on our ability to
develop revenues and finance our business plan, including among other
possibilities, by obtaining financing from outside sources and/or entering into
strategic partnerships. From November 2007 through July 2008, we sold $6,165,000
of securities through a private placement of securities. During 2009 we received
$6,050,000 from the sale of convertible promissory notes and in February 2009 we
received $1,929,600 from the sale of preferred shares in a Dutch subsidiary. On
October 30, 2009, Plastinum Polymer Technologies Corp. BV, an indirect,
majority-owned subsidiary of the Company, signed a bank loan agreement with
ABN-AMRO Bank for approximately $3,320,000 (2,250,000 Euros). During 2009 we
signed our first contracts for commercial delivery of products and began
production and sales of products to customers in the Netherlands. We will need
to generate additional funds, through increased revenue, additional debt or
equity financing, or a combination of revenue, equity or debt, in order to
execute our business plan, namely, expansion through the set-up of two
additional recycling plants, of which one will be in the E.U. and one will be in
the U.S., as well as further expanding our current plant in Emmen, The
Netherlands. We are currently in the process of evaluating our financing
needs and exploring all available financing options in order to fully implement
our business plan, including, among others, strategic partnerships with other
business entities and debt financing. Management is also attempting to secure
additional ongoing revenue relationships for our products.
Should we
be unable to develop additional revenues or obtain additional necessary
financing, we may have to curtail our operations, which may have a material
adverse effect on our financial position and results of operations and our
ability to continue as a going concern.
F-7
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and
accompanying disclosures. Although these estimates are based on management's
best knowledge of current events and actions the Company may undertake in the
future, actual results may differ from those estimates.
Revenue
Recognition
The
Company recognizes revenue in accordance with Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605 “Revenue
Recognition”. Revenue is recognized when persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered, the price is fixed
and determinable and collectibility is reasonably assured.
Product
Development Costs
Product
development costs include expenses incurred by the Company for research, design
and development of our proprietary technology and are charged to operations as
incurred.
Plastinum
incurred research and development expenses of $1,672,786 and $1,666,439 for the
years ended December 31, 2009 and 2008, respectively.
Major
Customers
One
customer accounted for 90% of our revenues for the year ended December 31, 2009
and that customer accounted for all of our accounts receivable at December
31, 2009.
Cash
Equivalents
For
purposes of the statements of cash flows, we consider all highly liquid debt
instruments purchased with a maturity date of three months or less to be cash
equivalents. We maintain our cash in bank deposit accounts which, at times, may
exceed insured limits. We have not experienced any losses in our
accounts.
Comprehensive
Income
We
utilize ASC Topic 220, “Comprehensive Income” which establishes standards for
the reporting and displaying of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and distributions to
owners. Among other disclosures, ASC 220 requires that all items that are
required to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. Comprehensive income includes
gains and losses on foreign currency translation adjustments and is included as
a component of stockholders' equity.
Foreign
Currency Translation
The
Company translates the foreign currency financial statements of its foreign
subsidiaries in accordance with the requirements of ASC Topic 830, “Foreign
Currency Matters”. Assets and liabilities are translated at current exchange
rates, and related revenue and expenses are translated at average exchange rates
in effect during the period. Resulting translation adjustments are recorded as a
separate component in stockholders' equity. Foreign currency transaction gains
and losses are included in the statement of income.
Concentrations
of Credit Risk
Financial
instruments and related items, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash and cash equivalents.
The Company places its cash and temporary cash investments with credit quality
institutions. At times, such investments may be in excess of applicable
government mandated insurance limits.
F-8
Loss
Per Share
We
utilize ASC Topic 260, “Earnings Per Share” for calculating the basic and
diluted loss per share. We compute basic loss per share by dividing net loss and
net loss attributable to common shareholders by the weighted average number of
common shares outstanding. Diluted loss per share is computed similar to basic
loss per share. Common equivalent shares are excluded from the computation of
net loss per share if their effect is anti-dilutive. There were 69,134,830
common share equivalents at December 31, 2009 and 46,557,673 at December 31,
2008. For the years ended December 31, 2009 and 2008, these potential
shares were excluded from the shares used to calculate diluted earnings per
share as their inclusion would reduce net loss per share.
Stock-Based
Compensation
We
account for our stock based compensation under ASC 718 “Compensation – Stock
Compensation” using the fair value based method. Under this method, compensation
cost is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting
period. This guidance establishes standards for the accounting for
transactions in which an entity exchanges it equity instruments for goods or
services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the
entity’s equity instruments or that may be settled by the issuance of those
equity instruments.
We use
the fair value method for equity instruments granted to non-employees (if any)
and will use the Black-Scholes model for measuring the fair value of options, if
issued. The stock based fair value compensation is determined as of the date of
the grant or the date at which the performance of the services is completed
(measurement date) and is recognized over the vesting periods.
Property
and Equipment
We record
our equipment at historical cost. We expense maintenance and repairs as
incurred. Depreciation is provided for by the straight-line method over three to
ten years, the estimated useful lives of the property and
equipment.
Fair
value of financial instruments
In April
2009, we adopted accounting guidance which requires disclosures about fair value
of financial instruments in interim financial statements as well as in annual
financial statements.
Our
short-term financial instruments, including cash accounts receivable, inventory,
prepaid expenses and other assets, accounts payable and other liabilities,
consist primarily of instruments without extended maturities, the fair value of
which, based on management’s estimates, reasonably approximate their book value.
The fair value of long term convertible notes is based on management estimates
and reasonably approximates their book value after comparison to obligations
with similar interest rates and maturities. The fair value of the Company’s
redeemable preferred stock is estimated to be its liquidation value, which
includes accumulated and unpaid dividends. The fair value of the Company’s
derivative instruments is determined using option pricing models.
Fair
value measurements
Effective
November 1, 2008, we adopted new accounting guidance pursuant to ASC 820
which established a framework for measuring fair value and expands disclosure
about fair value measurements. The Company did not elect fair value accounting
for any assets and liabilities allowed by previous guidance. Effective
January 1, 2009, the Company adopted the provisions accounting guidance
that relate to non-financial assets and liabilities that are not required or
permitted to be recognized or disclosed at fair value on a recurring basis.
Effective April 1, 2009, the Company adopted new accounting guidance which
provides additional guidance for estimating fair value in accordance with ASC
820, when the volume and level of activity for the asset or liability have
significantly decreased. The adoptions of the provisions of ASC 820 did not have
a material impact on our financial position or results of
operations.
ASC 820
defines fair value as the amount that would be received for an asset or paid to
transfer a liability (i.e., an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market
participants on the measurement date. ASC 820 also establishes a fair value
hierarchy that requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. ASC 820
describes the following three levels of inputs that may be used:
Level 1:
Quoted prices (unadjusted) in active markets that are accessible at the
measurement date for identical assets and liabilities. The fair value hierarchy
gives the highest priority to Level 1 inputs.
Level 2:
Observable prices that are based on inputs not quoted on active markets but
corroborated by market data.
Level 3:
Unobservable inputs when there is little or no market data available, thereby
requiring an entity to develop its own assumptions. The fair value hierarchy
gives the lowest priority to Level 3 inputs.
F-9
The table
below summarizes the fair values of our financial liabilities that are measured
on a recurring basis at fair value as of December 31, 2009:
Fair
Value at
|
Fair
Value Measurement Using
|
|||||||||||||||
December
31,
2009
|
Level
1
|
Level
2
|
Level
3
|
|||||||||||||
Embedded
derivatives
|
1,790,660 | 1,790,660 | ||||||||||||||
$ | 1,790,660 | $ | $ | — | $ | 1,790,660 |
The
following is a description of the valuation methodologies used for these
items:
Embedded derivatives — these
instruments consist of the embedded conversion feature of our preferred stock.
These instruments were valued using pricing models which incorporate the
Company’s stock price, volatility, U.S. risk free rate, dividend rate and
estimated life.
Change
in Accounting Principle
In June
2008, the FASB issued new accounting guidance which requires entities to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock by assessing the instrument’s contingent exercise
provisions and settlement provisions. Instruments not indexed to their own stock
fail to meet the scope exception of ASC 815 and should be classified as a
liability and marked-to-market. The statement is effective for fiscal years
beginning after December 15, 2008 and is to be applied to outstanding
instruments upon adoption with the cumulative effect of the change in accounting
principle recognized as an adjustment to the opening balance of retained
earnings. The Company has assessed its outstanding equity-linked financial
instruments and has concluded that, effective January 1, 2009, the
conversion feature of our redeemable preferred stock will need to be recorded as
a derivative liability due to the fact that the conversion price is subject to
adjustment based on subsequent sales of securities. The cumulative effect of the
change in accounting principle on January 1, 2009 is an increase in our
derivative liability related to the fair value of the conversion feature of
$1,987,557, an increase in the unamortized discount related to our redeemable
preferred stock of $1,610,189, a decrease in additional paid-in capital of
$665,368 related to the amortization of discount from date of issue to January
1, 2009, and a $288,000 decrease in the deficit accumulated during development
stage to reflect the change in fair value of the derivative liability from date
of issue to January 1, 2009.
Advances
Receivable – Former Parent
Advances
receivable – former parent represent amounts advanced on behalf of NGH,
primarily for the payment of professional fees incurred by NGH and certain NGH
accounts payable. These advances had no stated maturity date and bore no
interest. Our president and chief executive officer, Jacques Mot, is the
principal stockholder of NGH and Mr. Mot has repaid the advances, aggregating
$271,522, during the fourth quarter of 2008 through a reduction of accrued
compensation due to him.
Income
taxes
The Company utilizes ASC 740 “Income
Taxes” which requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred income taxes
are recognized for the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting amounts at
each year-end based on enacted tax laws and statutory tax rates applicable to
the periods in which the differences are expected to affect taxable
income.
Recent
Accounting Pronouncements
Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting
Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards
Codification (the “Codification”) as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with U.S.
GAAP. Rules and interpretive releases of the SEC under authority of federal
securities laws are also sources of authoritative U.S. GAAP for SEC registrants.
All guidance contained in the Codification carries an equal level of authority.
The Codification superseded all existing non-SEC accounting and reporting
standards. All other non-grandfathered, non-SEC accounting literature not
included in the Codification is non-authoritative. The FASB will not issue new
standards in the form of Statements, FASB Staff Positions or Emerging Issues
Task Force Abstracts. Instead, it will issue Accounting Standards Updates
(“ASUs”). The FASB will not consider ASUs as authoritative in their own right.
ASUs will serve only to update the Codification, provide background information
about the guidance and provide the bases for conclusions on the change(s) in the
Codification. References made to FASB guidance throughout this document have
been updated for the Codification.
F-10
In
December 2007 the FASB issued new accounting guidance which establishes
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
non-controlling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. This guidance changes the way the consolidated income
statement is presented. It requires consolidated net income to be reported at
amounts that include the amounts attributable to both the parent and the
non-controlling interest. It also requires disclosure, on the face of the
consolidated statement of income, of the amounts of consolidated net income
attributable to the parent and to the non-controlling interest. This guidance
establishes disclosure requirements in the consolidated financial statements,
which will enable users to clearly distinguish between the interests of the
parent’s owners and the interests of the non-controlling owners of a subsidiary.
The guidance is effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008; earlier adoption is
prohibited. The adoption of this guidance did not have a material impact on our
consolidated financial position, results of operations or cash
flows.
In March
2008, the FASB issued new accounting guidance which requires enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This guidance is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008; earlier adoption is encouraged. The adoption of this guidance
did not have a material impact on the Company’s consolidated financial position,
results of operations or cash flows.
Effective
January 1, 2009, the Company adopted new accounting guidance which requires
that all unvested share-based payment awards that contain non-forfeitable rights
to dividends should be included in the basic Earnings Per Share (EPS)
calculation. The adoption of this guidance did not affect the
Company’s consolidated financial position or results of operations.
In April
2009, the FASB issued new accounting guidance to be utilized in determining
whether impairments in debt securities are other than temporary, and which
modifies the presentation and disclosures surrounding such instruments. This
guidance is effective for interim periods ending after June 15, 2009, but early
adoption is permitted for interim periods ending after March 15, 2009. The
adoption of this guidance during the second quarter of 2009 had no impact on the
Company’s consolidated financial position or results of operations.
In April
2009, the FASB issued new accounting which provides additional guidance in
determining whether the market for a financial asset is not active and a
transaction is not distressed for fair value measurement purposes. The guidance
is effective for interim periods ending after June 15, 2009, but early adoption
is permitted for interim periods ending after March 15, 2009. The adoption of
this guidance during the second quarter of 2009 had no impact on the Company’s
consolidated financial position or results of operations.
In April
2009, the FASB issued new accounting guidance which requires disclosures about
fair value of financial instruments in interim financial statements as well as
in annual financial statements. This guidance is effective for interim periods
ending after June 15, 2009, but early adoption is permitted for interim periods
ending after March 15, 2009. The adoption of this guidance during the second
quarter of 2009 had no impact on the Company’s consolidated financial position,
results of operations, or cash flows.
In May
2009, the FASB issued new accounting guidance which establishes general
standards of accounting for and disclosures of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. The guidance will be effective for interim and annual financial
periods ending after June 15, 2009. The Company adopted the guidance during
the three months ended June 30, 2009. The adoption of this guidance had no
impact on the Company’s consolidated financial position, results of operations,
or cash flows.
In June
2009, the FASB issued new accounting guidance which will require more
information about the transfer of financial assets where companies have
continuing exposure to the risks related to transferred financial assets. This
guidance is effective at the start of a company’s first fiscal year beginning
after November 15, 2009, or January 1, 2010 for companies reporting earnings on
a calendar-year basis. We do not expect that the adoption of this guidance will
have a material impact on the Company’s consolidated financial position, results
of operations, or cash flows.
In June
2009, the FASB issued new accounting guidance which will change how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. Under this
guidance, determining whether a company is required to consolidate an entity
will be based on, among other things, an entity's purpose and design and a
company's ability to direct the activities of the entity that most significantly
impact the entity's economic performance. This guidance is effective at the
start of a company’s first fiscal year beginning after November 15, 2009, or
January 1, 2010 for companies reporting earnings on a calendar-year basis. We do
not expect that the adoption of this guidance will have a material impact on the
Company’s consolidated financial position, results of operations, or cash
flows.
Other
recent accounting pronouncements issued by the FASB and the SEC did not have, or
are not believed by management to have, a material impact on the Company's
present or future consolidated financial statements.
F-11
NOTE
B - CAPITAL STOCK AND STOCKHOLDER’S EQUITY
We are
authorized to issue 250,000,000 shares of common stock with a par value of $.01
per share and 10,000,000 shares of preferred stock with a par value of $.01 per
share.
During
the year ended December 31, 2009, we issued 2,775,511 shares of common stock as
payment of $609,934 of accrued preferred dividends.
During
the year ended December 31, 2009, we issued 135,252 shares of common stock,
valued at $16,170 as payment for services.
During
the year ended December 31, 2008, 200,000 common stock warrants were exercised
on a cashless basis into 38,710 shares of common stock.
During
the year ended December 31, 2008, we issued 85,918 shares of common stock for
services valued at $14,990. Of this amount, $5,390 was included in accrued
expenses at December 31, 2007.
On April
18, 2008, we granted an aggregate of 8,400,000 options to purchase our common
stock to two employees under our 2006 Long-Term Incentive Plan and pursuant to
option agreements entered into with each of them (the “options”). The exercise
price for all of the granted options is $0.30 per share, a price that was
designated by the Company as reflective of the approximate average sales price
of our common stock as reported by the OTC Bulletin Board over the sixty day
period prior to the grant date and was not necessarily reflective of the last
sale price per share on the grant date itself. The options expire on April 18,
2013 and, as originally granted, subject to the grantee thereof remaining in our
employ, vest as follows: (a) one-sixth of the Options granted to each of the
employees vest on each of the following dates (the “ Milestone Attainment Dates ”)
upon the attainment of each of the following respective milestones (the “ Milestones ”): (i) on
December 31, 2008, if at least one fully operational factory in The Netherlands
capable of processing 15,000 tons of eWaste per year at full capacity has been
established, (ii) on December 31, 2009 if at least one fully operational factory
in the United States has been established and (iii) on December 31, 2010 if at
least four fully operational factories, including the ones contemplated by the
preceding clauses (i) and (ii), have been established; provided , however , that the
Milestones in clauses (i), (ii) and (iii) above may be adjusted by the
compensation committee of our Board of Directors at its discretion at the
beginning of the respective calendar year, and (b) on such date as our market
capitalization exceeds $300 million and provided that such date occurs on or
prior to April 18, 2011, then double the number of Options granted to each of
the employees that have already vested and those yet subject to vesting on each
Milestone Date that has not yet occurred will become vested. The December 31,
2008 Milestone was not attained and therefore 2,800,000 options terminated on
that date. On January 2, 2009, the remaining Milestones were adjusted by the
compensation committee of our Board of Directors to clarify that the
establishment of factories may be anywhere in the world, including through a
joint venture or subsidiary. On the Milestone Attainment Date of
December 31, 2009, 1,400,000 of the options vested.
The
options have been valued at $1,732,773 on the grant date using the Black-Scholes
model. The assumptions used in the Black-Scholes model are as follows: (1)
dividend yield of 0%; (2) expected volatility of 106%, (3) risk-free interest
rate of 1.7% - 2.6%, (4) expected life of 1-3 years, and (5) estimated fair
value of Plastinum common stock of $0.34 per share. The compensation expense is
being recorded over the vesting periods, based on the number of options expected
to vest.
On April
18, 2008, we entered into an option agreement with Jacques Mot,
our president and chief executive officer, pursuant to which we granted Mr.
Mot 14,400,000 options to purchase our common stock under our 2006
Long-Term Incentive Plan. These options have identical terms to the options
described above, including with respect to the adjustments to the Milestones
made by the compensation committee of our Board of Directors on January 2,
2009. The grant to Mr. Mot was subject to the approval of the
holders of a majority of the outstanding shares of our common stock (including
the Series B Preferred Stock voting on an “as converted” basis and excluding any
shares held by Mr. Mot who was not entitled to vote thereon). Such approval was
received at our stockholder meeting on July 1, 2008. Therefore the grant date of
these options is July 1, 2008 and they have been recorded in the financial
statements starting in the third quarter of 2008. The options have been valued
at $1,833,030 on the grant date using the Black-Scholes model. The assumptions
used in the Black-Scholes model are as follows: (1) dividend yield of 0%; (2)
expected volatility of 129%, (3) risk-free interest rate of 2.1% - 3%, (4)
expected life of .5-2.75 years, and (5) estimated fair value of Plastinum common
stock of $0.22 per share. The compensation expense is being recorded over the
vesting periods, based on number of options expected to
vest. The December 31, 2008 Milestone was not attained and
therefore 4,800,000 options granted to Mr. Mot terminated on that
date. On the Milestone Attainment Date of December 31, 2009,
2,400,000 of the options granted to Mr. Mot vested.
In
anticipation of the spinoff transaction described in Note A, NGH amended its
existing common stock purchase warrants to permit, or issued common stock
purchase warrants that permitted, at the holder's election, the exercise of
the warrants to purchase shares of our common stock or NGH common
stock. The Plastinum shares issuable upon exercise of warrants will be issued in
the same amounts and for the same exercise price as the warrants for shares of
NGH. The total number of NGH warrants exercisable into Plastinum common stock is
1,985,584 and 5,866,884 at December 31, 2009 and 2008, respectively, with an
exercise price of $0.35 per share.
F-12
NOTE
C - REDEEMABLE PREFERRED STOCK AND WARRANT UNIT OFFERING
We have
designated 120,000 shares of preferred stock as Series B Convertible Preferred
Stock, which may be issued in one or more sub-series, and have authorized the
issuance of 80,000 shares of a sub-series designated as Series B-1 Convertible
Preferred Stock. The Series B-1 Preferred Stock is convertible into shares of
our Common Stock at an initial conversion price of $0.38 per share, subject to
adjustment for customary anti-dilution provisions. The conversion price was
adjusted to $0.35 per share during the year ended December 31, 2009 as a result
of the sale of the convertible notes described in Note G. Plastinum may, on or
after November 1, 2010 and upon at least 30 days notice, redeem the Series B-1
Preferred Stock in full at the purchase price plus any accrued but unpaid
dividends, subject to the holder’s conversion rights. Conversely, in the event
of a change of control (as defined in the purchase agreement with respect to the
Series B-1 Preferred Stock), or at the holder’s option at any time on or after
November 1, 2010 and upon 45 days notice from a holder to Plastinum, we are
required to redeem the Series B-1 Preferred Stock for the purchase price plus
any accrued but unpaid dividends. The Series B-1 Preferred Stock accrues
dividends at an annual rate of the Wall Street Journal Prime Rate then in
effect, but not less than 8% or greater than 10% per annum, payable quarterly,
either in cash or, at our election, shares of our common stock.
The
charge to additional paid-in capital for amortization of discount and costs for
the years ended December 31, 2009 and 2008 was $1,286,938 and $314,414,
respectively. The amortization has been charged to additional paid-in capital
since there is a deficit in retained earnings.
For the
years ended December 31, 2009 and 2008, we have accrued dividends in the amount
of $493,199 and $337,970, respectively. The accrued dividends have been charged
to additional paid-in capital (since there is a deficit in retained earnings)
and the net unpaid accrued dividends been added to the carrying value of the
preferred stock. During 2009, we issued 2,775,511 shares of common stock as
payment of $609,934 of accrued preferred dividends. Accrued and unpaid
dividends included in the carrying value of the preferred stock at December 31,
2009 and 2008 total $103,539 and $220,274, respectively.
NOTE
D - RELATED PARTY TRANSACTIONS
On
December 3, 2007, our Compensation Committee and the Board of Directors
authorized and ratified payment of a base salary of $60,000 per month effective
November 1, 2007 to Jacques Mot as compensation for services being provided by
him to the Corporation in his capacity as President and Chief Executive Officer
of the Corporation. Mr. Mot will be permitted to receive his compensation in the
form of shares of the Registrant’s common stock, at Mr. Mot’s sole election and
at any time prior to the payment thereof, at a price per share equal to $0.39
(the average closing bid price of the Registrant’s common stock on the
Over-the-Counter Bulletin Board during October 2007). For the year ended
December 31, 2009, Mr. Mot voluntarily reduced his salary by $420,000 to
$300,000 for the year.
As of
December 31, 2009 and 2008, advances payable to Mr. Mot aggregated $26,723 and
$25,890, respectively. These advances are for working capital purposes. The
advances are non interest bearing.
Mr. Mot
has also purchased $200,000 of our convertible notes, which are convertible into
400,000 shares of our common stock and also received warrants to purchase
400,000 shares of our common stock with an exercise price of $0.50 per
share.
Mr. Mot
is the principal stockholder of NGH, our former parent, and Mr. Mot has repaid
the advances made to NGH described in Note A, aggregating $271,522, during the
fourth quarter of 2008 through a reduction of accrued compensation due to
him.
NOTE
E - INVENTORY
Inventory
at December 31, 2009 consists of the following:
2009
|
||||
Raw
materials
|
$ | 38,395 | ||
Finished
goods
|
12,547 | |||
$ | 50,942 |
NOTE
F - PROPERTY AND EQUIPMENT
Property
and equipment at December 31, 2009 and 2008 is summarized as
follows:
2009
|
2008
|
|||||||
Furniture,
Office Equipment, Website and Improvements
|
$ | 154,714 | $ | 97,327 | ||||
Equipment
|
5,597,929 | 317,442 | ||||||
5,752,643 | 414,769 | |||||||
Accumulated
depreciation
|
108,304 | 62,378 | ||||||
$ | 5,644,339 | $ | 352,391 |
Depreciation
expense recorded in the statement of operations for the years ended December 31,
2009 and 2008 is $46,540 and $62,065, respectively. For the years ended December
31, 2009 and 2009 $6,323 and $46,847, respectively, of depreciation expense is
included in research and development expense.
F-13
During
the third quarter of 2009 we revised our estimate of the useful lives of our
property and equipment. The adjustments related to these revisions are included
in the year ended December 31, 2009.
During
the year ended December 31, 2009, the Company capitalized equipment totaling
$5,280,487. Capitalized equipment costs are depreciated on a
straight-line basis over the estimated economic lives, beginning when the
equipment is placed into service. As of December 31,
2009, the Company had equipment that was not placed in service
totaling $5,215,270.
NOTE G
- CONVERTIBLE NOTES PAYABLE
On
January 27, 2009, we entered into a Note Purchase Agreement with an investor
pursuant to which we sold and issued a convertible promissory note in the
principal amount of $1,000,000 (the “Note”). The Note accrues
interest at a rate of 10% per annum and matures on January 27,
2012. The Note is convertible into shares of common stock at an
initial conversion price of $0.22 per share or a total of 4,545,455 shares,
subject to adjustment as contained in the Note. Since the conversion price
was less than the fair value of our common stock on the date of issue we have
recorded a beneficial conversion feature in the amount of $227,273 as a
discount. This discount will be amortized over the life of the Note. During 2009 amortization
as interest expense amounted to $70,154.
On April
30, 2009 we entered into a Note Purchase Agreement with an investor pursuant to
which we sold and issued a convertible promissory note in the principal amount
of $50,000 (the “Note”). The Note accrues interest at a rate of 10%
per annum and matures on January 12, 2012. The Note is convertible
into shares of common stock at an initial conversion price of $0.22 per share or
a total of 227,273 shares, subject to adjustment as contained in the
Note. Since the conversion price was less than the fair value of our common
stock on the date of issue we have recorded a beneficial conversion feature in
the amount of $11,364 as a discount. This discount will be amortized over the
life of the Note. During 2009 amortization as interest expense amounted to
$2,677.
On June
15, 2009, we entered into a Note Purchase Agreement with an investor pursuant to
which we sold and issued a convertible promissory note in the principal amount
of $3,000,000 (the “Note”). The Note accrues interest at a rate of
10% per annum and matures on June 15, 2012. The Note is convertible
into shares of common stock at an initial conversion price of $0.28 per share or
a total of 10,714,286 shares, subject to adjustment as contained in the
Note. Since the conversion price was less than the fair value of our common
stock on the date of issue we have recorded a beneficial conversion feature in
the amount of $642,857 as a discount. This discount will be amortized over the
life of the Note. During 2009 amortization as interest expense amounted to
$117,310.
On
September 25, 2009, we entered into a Note Purchase Agreement with an investor
pursuant to which we sold and issued a convertible promissory note in the
principal amount of $2,000,000 (the “Note”). The Note accrues
interest at a rate of 10% per annum and matures on June 15, 2012. The
Note is convertible into shares of common stock at an initial conversion price
of $0.24 per share or a total of 8,333,333 shares, subject to adjustment as
contained in the Note. Since the conversion price was less than the fair
value of our common stock on the date of issue we have recorded a beneficial
conversion feature in the amount of $83,333 as a discount. This discount will be
amortized over the life of the Note. During 2009 amortization as interest
expense amounted to $8,216.
On July
10, 2006, we entered into a Convertible Loan Agreement with Mr. Mot and a third
party pursuant to which we borrowed an aggregate of $500,000. The loans bear
interest at 8% per year and are convertible into an aggregate of 1,000,000
shares of our common stock. If not converted earlier, the notes mature on May
31, 2010. In addition, the lenders received warrants to purchase an aggregate of
1,000,000 shares of our common stock at an exercise price of $0.50 per share. In
accordance with EITF 00-27, a portion of the proceeds was allocated to the
warrants based on their relative fair value, which totaled $126,700 using
the Black-Scholes option pricing model. The remaining balance was allocated to
the convertible notes. The assumptions used in the Black-Scholes model are as
follows: (1) dividend yield of 0%; (2) expected volatility of 136%, (3)
risk-free interest rate of 4.9%, (4) expected life of 2 years and (5) estimated
fair value of Plastinum common stock of $0.29 per share. The expected term of
the warrants represents the estimated period of time until exercise and is based
on historical experience of similar awards and giving consideration to the
contractual terms. The debt discount is being amortized over the term of the
notes. During 2009 and 2008, amortization as interest expense amounted to
$33,033 and $33,124, respectively. We have determined that there was no
beneficial conversion feature attributable to the convertible notes. Payment of
principal not converted to common stock and accrued interest is due on the
maturity date of May 31, 2010.
NOTE H
– NOTE PAYABLE - BANK
On
October 30, 2009, Plastinum Polymer Technologies Corp. BV, an indirect,
majority-owned subsidiary of the Company, signed a bank loan agreement with
ABN-AMRO Bank for approximately $3,320,000 (2,250,000 Euros). We have drawn down
2,000,000 Euros against the facility. Interest is payable quarterly based on a
variable rate (4.3% at December 31, 2009). Repayment of principal will begin on
January 1, 2011. Both NOM, our joint venture partner in Plastinum Polymer
Technologies Corp. BV, and PPT Holding B.V., a wholly-owned subsidiary of the
Company, gave ABN-AMRO Bank irrevocable guarantees of EUR 250,000 regarding
payment of principal and interest. The guarantee provided by PPT Holding
B.V. is via a bank guarantee from Societé General S.A., which in turn is secured
by a hold placed on EUR 250,000 deposited by the Company with Societé General
S.A. The assets and receivables of Plastinum Polymer Technologies BV are
pledged to ABN-AMRO Bank as collateral for the facility.
F-14
NOTE I
– DERIVATIVE LIABILITY
In June
2008, the FASB issued new accounting guidance which requires entities to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock by assessing the instrument’s contingent exercise
provisions and settlement provisions. Instruments not indexed to their own stock
fail to meet the scope exception of ASC 815 and should be classified as a
liability and marked-to-market. The statement is effective for fiscal years
beginning after December 15, 2008 and is to be applied to outstanding
instruments upon adoption with the cumulative effect of the change in accounting
principle recognized as an adjustment to the opening balance of retained
earnings. The Company has assessed its outstanding equity-linked financial
instruments and has concluded that, effective January 1, 2009, the
conversion feature of our redeemable preferred stock will need to be recorded as
a derivative liability due to the fact that the conversion price is subject to
adjustment based on subsequent sales of securities. The cumulative effect of the
change in accounting principle on January 1, 2009 includes an increase in
our derivative liability related to the fair value of the conversion feature of
$1,987,557. Fair value at January 1, 2009 was determined using the Black-Scholes
method based on the following assumptions: (1) risk free
interest rate of 0.875%; (2) dividend yield of 0%; (3) volatility
factor of the expected market price of our common stock of 131%;
(4) an expected life of the warrants of 1.5 years and
(5) estimated fair value of Plastinum common stock of $0.25 per
share.
At
December 31, 2009 we recalculated the fair value of the conversion feature
subject to derivative accounting and have determined that the fair value at
December 31, 2009 is $1,790,660. The fair value of the conversion features was
determined using the Black-Scholes method based on the following
assumptions: (1) risk free interest rate of 0.6%;
(2) dividend yield of 0%; (3) volatility factor of the expected market
price of our common stock of 132%; (4) an expected life of the
conversion feature of 1 year and (5) estimated fair value of Plastinum
common stock of $0.25 per share.
We have
recorded a gain of $196,897 during the year ended December 31, 2009 related to
the change in fair value during that period.
NOTE J
– NONCONTROLLING INTEREST
On
February 16, 2009, pursuant to a Participation and Shareholders’ Agreement (the
“Participation Agreement”) among (i) Plastinum Polymer Technologies Corp. B.V.,
an indirect previously wholly-owned Dutch subsidiary of the Company (the “BV”),
(ii) PPT Holding B.V., our direct, wholly-owned Dutch subsidiary and owner of
our interest in the BV, (iii) Jacques Mot, our Chief Executive Officer and (iv)
N.V. NOM, Investerings- en ontwikkelingsmaatschappij voor
Noord-Nederland, a Dutch public limited company (“NOM”) with the State of the
Netherlands (Ministry of Economic Affairs) and the provinces of Groningen,
Friesland and Drenthe as its shareholders, NOM invested € 1,500,000 ($1,929,600)
in the BV and in return received preferential shares in the BV giving NOM a 49%
share in the profits of the BV.
Pursuant
to the terms of the Participation Agreement, (i) the preferential shares
received by NOM are entitled to cumulative annual 10% dividends, (ii) the
preferential shares received by NOM may be repurchased from NOM by the BV at any
time for 150% of the purchase price originally paid for the preferential shares
by NOM and (iii) if not repurchased by the BV by January 1, 2013, the
preferential shares received by NOM may be converted by NOM into 49% of the
ordinary shares of the BV.
The
Participation Agreement also provides for, among other things, (i) anti-dilution
protection for NOM in the event shares in the BV are sold at a lower valuation
than that at which NOM made its investment , (ii) restrictions on transfer of
shares in the BV, (iii) provisions regarding the operation of the board of
directors of the BV, (iv) restrictions on dividend payments by the BV until the
dividends payable on the preferential shares received by NOM are paid and (v)
certain non-competition provisions governing the BV and Mr. Mot. Further,
in the event of a conversion by NOM of its preferential shares in the BV, the
following dividend policy will be in effect at the BV: (i) when the solvency of
the BV is below 30%, no dividends will be paid; (ii) when the solvency of the BV
is between 30% and 50%, 50% of the BV’s net income will be paid out as
dividends; and (iii) when the solvency of the BV is over 50%, 100% of the BV’s
net income will be paid out as dividends.
The
investment by NOM is recorded as a noncontrolling interest in the financial
statements.
For the
year ended December 31, 2009, we have recorded $184,339 of dividends related to
the preferred stock. The dividends have not been paid. These dividends have been
credited to the noncontrolling interest with a corresponding charge to
additional paid-in capital since there is a deficit in retained
earnings.
NOTE
K - UNEARNED SUBSIDIES RECEIVED
Unearned
subsidies received represent payments received from the Netherlands government
to subsidize industrial operations (including equipment acquisitions) in
specific geographical locations. The subsidy agreements contain specific
performance criteria that must be met before they are earned. When earned, the
liability account will be reduced. During 2009 and 2008, we received $810,587
and $667,824, respectively, in subsidy payments of which $533,317 and $524,572
at December 31, 2009 and 2008, respectively, have not been
earned.
NOTE
L - INCOME TAXES
The
Company utilizes ASC 740 “Income Taxes” which requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred income taxes are recognized for the tax consequences in
future years of differences between the tax bases of assets and liabilities and
their financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income.
F-15
Net
operating losses for tax purposes of approximately $1,030,000
at December 31, 2009 are available for carryover. The net operating losses will
expire in 2029. We have provided a 100% valuation allowance for the deferred tax
benefit resulting from the net operating loss carryover due to our limited
operating history. In addressing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences are deductible. The
valuation allowance increased by $120,000
and $124,000 during the years ended December 31, 2009 and 2008, respectively. A
reconciliation of the statutory Federal income tax rate and the effective income
tax rate for the years ended December 31, 2009 and 2008 follows.
Significant
components of deferred tax assets and liabilities are as follows:
2009
|
2008
|
|||||||
Deferred
tax assets:
|
$ | $ | ||||||
Net
operating loss carryforward
|
$ | 350,000 | 230,000 | |||||
Valuation
allowance
|
(350,000 | ) | (230,000 | ) | ||||
Net
deferred tax assets
|
$ | - | $ | - | ||||
Statutory
federal income tax rate
|
-34 | % | -34 | % | ||||
State
income taxes, net of federal taxes
|
-0 | % | -0 | % | ||||
Valuation
allowance
|
34 | % | 34 | % | ||||
Effective
income tax rate
|
0 | % | 0 | % |
NOTE
M - WARRANTS AND STOCK OPTIONS
Employee
Stock Options
Transactions
involving our stock options issued to employees are summarized as
follows:
2009
|
2008
|
|||||||||||||||
Number
|
Weighted
Average
Exercise Price
|
Number
|
Weighted
Average
Exercise Price
|
|||||||||||||
Outstanding
at beginning of the period
|
18,200,000 | $ | 0.27 | 3,000,000 | $ | 0.10 | ||||||||||
Granted
during the period
|
— | — | 22,800,000 | 0.30 | ||||||||||||
Exercised
during the period
|
— | — | — | — | ||||||||||||
Terminated
during the period
|
— | — | (7,600,000 | ) | 0.30 | |||||||||||
Outstanding
at end of the period
|
18,200,000 | $ | 0.27 | 18,200,000 | $ | 0.27 | ||||||||||
Exercisable
at end of the period
|
6,800,000 | $ | 0.21 | 2,000,000 | $ | 0.10 |
During
2009 and 2008, we recognized $1,181,503 and $871,938, respectively, in
compensation cost related to stock options. Compensation cost related to
nonvested options of $864,003 at December 31, 2009 will be recognized over the
next 1.25 years.
At
December 31, 2009, the aggregate intrinsic value of options vested and expected
to vest was $450,000. Aggregate intrinsic value represents the difference
between the Company’s closing stock price on the last trading day of the fiscal
period, which was $0.25 as of December 31, 2009, and the exercise price,
multiplied by the number of options outstanding. The intrinsic value of options
exercisable at December 31, 2009 was $450,000.
F-16
Warrants
Transactions
involving our warrant issuances are summarized as follows:
|
2009
|
2008
|
||||||||||||||
|
Number
|
Weighted
Average
Exercise Price
|
Number
|
Weighted
Average
Exercise Price
|
||||||||||||
Outstanding at beginning of
the period
|
11,133,989 | $ | 0.45 | 21,793,176 | $ | 0.37 | ||||||||||
Granted
during the period
|
— | — | 3,205,263 | 0.57 | ||||||||||||
Exercised
during the period
|
— | — | (200,000 | ) | 0.25 | |||||||||||
Terminated
during the period
|
(3,881,300 | ) | 0.35 | (13,664,450 | ) | 0.35 | ||||||||||
Outstanding
at end of the period
|
7,252,689 | $ | 0.51 | 11,133,989 | $ | 0.45 | ||||||||||
Exercisable
at end of the period
|
7,252,689 | $ | 0.51 | 9,033,989 | $ | 0.42 |
The
number and weighted average exercise prices of our options and warrants
outstanding as of December 31, 2009 is as follows:
Range of Exercise Prices
|
Remaining
Number
Outstanding
|
Weighted Average
Contractual Life
(Years)
|
Weighted Average
Exercise Price
|
|||||||||
$0.10
|
3,000,000 | 1.5 | $ | 0.10 | ||||||||
$0.30
- $0.35
|
17,185,584 | 3.2 | $ | 0.31 | ||||||||
$0.50
- $0.57
|
5,267,105 | 3.2 | $ | 0.56 |
NOTE
N - COMMITMENTS
We lease
our plant in The Netherlands pursuant to a lease with an annual rental of
approximately $189,000. The lease
terminates 12 months after notice of termination is given by us or
the landlord.
We lease
approximately 1,460 square feet of office space in Geneva, Switzerland, pursuant
to a lease with an annual rental of approximately $63,000. The lease is
scheduled to
terminate on May 1, 2013.
We lease
approximately 2,200 square feet of office space in Naarden, The Netherlands,
pursuant to a lease with an annual rental of approximately $77,000. The lease is
scheduled to terminate on April 30, 2014.
We pay
approximately $300 per month for use of a conference room, on an as needed
basis, at 10100 Santa Monica Blvd, Los Angeles, CA.
Rent
expense for 2009 and 2008 was $334,026 and $179,165, respectively.
Future minimum lease payments are as follows
2010
|
$ | 329,000 | ||
2011
|
140,000 | |||
2012
|
140,000 | |||
2013
|
98,000 | |||
2014
|
26,000 | |||
$ | 733,000 |
NOTE
O – SUBSEQUENT EVENTS
During
February 2010, we issued 573,138 shares of common stock as payment of $124,313
of preferred stock dividends for the quarterly dividend payment date of January
15, 2010.
On
January 19, 2010, we entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with Richard von Tscharner pursuant to which we sold and issued a
Convertible Promissory Note in the principal amount of $2,172,000 (the “Note”)
and (ii) a Warrant to purchase 3,620,000 shares of the Company’s Common Stock
(the “Warrant”). The Note accrues interest at a rate of 10% per year and matures
on January 19, 2013. The Note is convertible into shares of our
common stock at an initial conversion price of $0.20 per share or a total of
10,860,000 shares, subject to adjustment as contained in the Note. The Warrant
expires on January 19, 2013. The initial exercise price of the
Warrant is $0.20 per share, subject to adjustment as contained in the
Warrant.
As a
result of the issuance of the Note described above and pursuant to the terms of
our Series B-1 Convertible Preferred Stock, the conversion price of all
outstanding shares of Series B-1 Convertible Preferred Stock has been further
reduced to $0.34 per share.
F-17
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
This item
is not applicable.
ITEM
9A. CONTROLS AND PROCEDURES
This item
is not applicable.
ITEM
9A(T). CONTROLS AND PROCEDURES
Evaluation of Disclosure
Controls and Procedures
We
maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) that are designed to be effective in providing reasonable assurance that
information required to be disclosed in our reports under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission (the “ SEC”),
and that such information is accumulated and communicated to our management to
allow timely decisions regarding required disclosure.
The
Company’s management, under the supervision and with the participation of the
Company's Chief Executive Officer and Chief Financial (and principal accounting)
Officer, carried out an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31,
2009. Based upon that evaluation and the identification of the
material weakness in the Company’s internal control over financial reporting as
described below under “Management’s Report on Internal Control over Financial
Reporting,” the Chief Executive Officer and Chief Financial Officer concluded
that the Company’s disclosure controls and procedures were ineffective as of the
end of the period covered by this report.
Evaluation of and Report on
Internal Control over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting of the Company. Management, with the
participation of our principal executive officer and principal financial
officer, has evaluated the effectiveness of our internal control over financial
reporting as of December 31, 2009 based on the criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, because of
the Company’s limited resources and limited number of employees, management
concluded that, as of December 31, 2009, our internal control over financial
reporting is not effective in providing reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. generally accepted accounting
principles.
To
mitigate the current limited resources and limited employees, we rely heavily on
direct management oversight of transactions, along with the use of legal and
accounting professionals. As we grow, we expect to increase our number of
employees, which will enable us to implement adequate segregation of duties
within the internal control framework.
This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the company's registered
public accounting firm pursuant to temporary rules of the SEC that permit the
company to provide only management's report in this annual report.
Limitations
on Effectiveness of Controls and Procedures
Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include, but are not limited to, the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.
22
Changes in Internal Control
over Financial Reporting
There was
no change in our internal controls over financial reporting identified in
connection with the requisite evaluation that occurred during our last fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
ITEM
9B. OTHER INFORMATION
This item
is not applicable.
23
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Management
Our
directors, executive officers, significant employees, as well as their ages and
the positions they held, as of December 31, 2009, are set forth
below. Our directors hold office until our next annual meeting of
stockholders and until their successors in office are elected and
qualified. All of our officers serve at the discretion of our Board
of Directors. There are no family relationships among our executive
officers and directors.
Name
|
|
Age
|
|
Position and Offices with the Company
|
Jacques
Mot
|
53
|
Chairman
of the Board of Directors, President and CEO
|
||
Marcel
Rokegem
|
61
|
Director
|
||
Pierre
Kladny
|
47
|
Director
|
||
Robert
Scherne
|
53
|
Chief
Financial Officer
|
||
Nils
Berten
|
41
|
Chief
Operating Officer
|
Jacques Mot
served as the Chairman of the Board, President and CEO for New Generation
Holdings, Inc. (“NGH”) and Plastinum from April of 1999 to January 24, 2000 and
again from February 2002 until the present. Mr. Mot was also a Director of
Argenta & Magnum Management Company Ltd. — Gibraltar, a company that
was engaged in providing financial advisory services. From 1987 to 1992, Mr. Mot
was the General Manager and Director of Iesa Investissements S.A., a portfolio
management and investment company, where he handled portfolio and investment
management on a confidential basis. Mr. Mot attended the University of Lausanne,
Switzerland studying economics from 1976-1979. Mr. Mot’s day-to-day strategic leadership
provides our Board of Directors with extensive knowledge of the
Company’s operations and the unique perspective of a major
stockholder of the Company.
Marcel
Rokegem has served as a Director of NGH and Plastinum since 1999. As of
1991 he acted as an independent investment consultant. From 1987 to 1991 he was
co-founding partner and director of Euro Suisse Securities, a member of the
London Stock Exchange. From 1982 to 1987 he was co-founding partner and director
of Jesup and Lamont International, an affiliate of Jesup and Lamont Securities
Co., a member of the New York Stock Exchange and one of the oldest Wall Street
firms. Prior to that Mr. Rokegem was partner in charge of the international
department of Biard, Hombergen, Pringiers and Co., a member of the Brussels
Stock Exchange. He started his career with Kredietbank in Brussels where he was
responsible for international equity trading and sales. He attended the Antwerp
Jesuit University where he studied AES (Applied Economic Science). He is a
diploma holder from I.S.M.A. and is an officially recognized insurance
consultant. Mr. Rokegem provides our Board of Directors with analytical
expertise and financial experience.
Pierre
Kladny has served as a Director of the Company since July 1, 2008.
Since 2006, Mr. Kladny has served as Managing Partner of ValleyRoad Capital SA,
a private equity and investment banking boutique in Geneva, Switzerland, of
which he was also a founder. Before that, Mr. Kladny was an entrepreneur for 18
years. He joined Lombard Odier Darier Hentsch & CIE (a large Swiss private
bank, “LODH”) in 2002 as Senior Vice President conducting mergers and
restructurings for the LODH Immunology Biotech Fund, the Minicap Technology Fund
and the Renaissance Tech Funds and served on their boards as a member or
observer. He also headed the Performance Measurement department at LODH and
created the Private Equity Advisory Services department at LODH with CHF800
million under advisory mandate and/or custody. Prior to that, he founded and
managed four companies in the technology and consumer goods spaces and as an
angel and regular investor he worked with numerous start-ups. Mr. Kladny is
registered as a qualified fund manager with the Jersey Financial Services
Commission and the equivalent commission in the British Virgin Islands. Mr.
Kladny holds a Masters in Science degree from the Swiss Federal Institute of
Technology in Lausanne and a Postgraduate degree in industrial accounting from
the Swiss French Center for Managerial Studies. Mr.
Kladny provides our
Board of
Directors
with strategic
expertise and financial experience.
Robert Scherne has provided
his services as the Interim Chief Financial Officer of NGH and Plastinum since
February 2006 on a leased basis through Robert C. Scherne, CPA, PC, a company
that specializes in providing financial management personnel to businesses on a
temporary basis. Mr. Scherne has been the principal of Robert C. Scherne,
CPA, PC, since March 2003. Mr. Scherne served as an officer and Secretary
of Forme Capital, Inc. from September 2007 to March 2008, CFO, Secretary and
Treasurer of Dentalserve.com from December 2006 until December 2007, and as CFO
of UniPro Financial Services, Inc., from September 2005 until November
2006. Prior to 2003, Mr. Scherne was employed as an accountant by
Merdinger, Fruchter Rosen and Company from December 1993 to
December 2002; by Louis Sturz & Co. and its successor firm Grossman,
Russo & Shapiro from July 1986 until November 2002; and by L.H.
Frishkoff &Co. and its successor firm A. Uzzo & Co. from July 1978
to June 1986. Mr. Scherne holds a Bachelors of Business Administration
degree in Accounting from Pace University (New York City), and is an active
member of the American Institute of Certified Public Accountants and the New
York State Society of Certified Public Accountants.
Nils Berten began his service
as Chief Operating Officer of Plastinum on January 7, 2008. Prior to that,
he was employed by Slokker Sales BV beginning in 2005 where he was responsible
for setting up a financial services company for Coldwell Banker Realtors
Netherlands and overseeing international real estate investments. From 2004, Mr.
Berten has also been the owner of Funhaler, a company that developed a new
product for the young consumer. From 2003, he has also been the co-owner of
Klaus Vastgoed, a real estate investment company. Prior to that, from 1999 to
2003, he was a franchisee of Financieel Compleet.
24
Compliance with Section
16(a) of the Securities Exchange Act
Section
16(a) of the Securities Exchange Act of 1934 requires our officers and
directors, and persons who own more than 10 percent of a registered class of our
equity securities, to file reports of ownership and changes in ownership with
the SEC. To the Company’s knowledge, no director, officer or
beneficial owner of more than ten percent of any class of equity securities of
the Company failed to file on a timely basis reports required by Section 16(a)
of the Exchange Act during the fiscal year ended December 31,
2009.
Code of
Ethics
We have
not adopted a Code of Ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions because of the small number of persons
involved in the management of the Company.
Audit
Committee
We do not
presently have a separately-designated standing Audit Committee. The
entire Board of Directors acts as the Audit Committee.
Audit Committee Financial
Expert
We do not
presently have a qualified financial expert serving on our Board of Directors as
we do not have adequate financial resources at this time to hire such an
expert.
25
ITEM
11. EXECUTIVE COMPENSATION
The
following table sets forth the cash and non-cash compensation for each of our
last two fiscal years awarded to, earned by or paid to (i) each individual
serving as our chief executive officer during the fiscal year ended December 31,
2009, (ii) the most highly compensated individuals (up to two) other than the
chief executive officer that served as an executive officer at the conclusion of
the fiscal year ended December 31, 2009 and who received total compensation in
excess of $100,000 during such fiscal year and (iii) the most highly compensated
individuals (up to two) that did not serve as an executive officer at the
conclusion of the fiscal year ended December 31, 2009 but who received total
compensation in excess of $100,000 during such fiscal
year (collectively, the “named executive officers”):
SUMMARY
COMPENSATION TABLE
Name &
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Jacques
Mot,
|
2009
|
300,000 |
(1)
|
|
- | - | - | - | - | - | 300,000 | |||||||||||||||||||||||
Chief
Executive Officer
|
2008
|
720,000 | - | - | 1,833,030 |
(2)
|
- | - | - | 2,553,030 | ||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Nils
Berten,
|
2009
|
282,287 | - | - | - | - | - | - | 282,287 | |||||||||||||||||||||||||
Chief
Operating Officer
|
2008
|
243,395 | - | - | 1,237,695 |
(3)
|
- | - | - | 1,481,090 |
(1)
|
Mr. Mot’s employment agreement
provides for an annual salary of $720,000. For 2009, Mr. Mot
voluntarily forewent $420,000 of
compensation.
|
(2)
|
On April 18, 2008, Mr. Mot was
granted 14,400,000 Options to purchase our Common Stock under
our 2006 Long-Term Incentive Plan at an exercise price of $0.30 per
share. The grant was subject to stockholder approval which was
received on July 1, 2008. The Options expire on April 18,
2013. Subject to Mr. Mot remaining in our employ, one-sixth of
the Options vest on each of the following dates if the following
respective milestones (as subsequently adjusted by our compensation
committee in accordance with the terms of the grant) have been attained by
such dates: (i) on December 31, 2008, if at least one fully operational
factory in The Netherlands capable of processing 15,000 tons of eWaste per
year at full capacity has been established, (ii) on December 31, 2009 if
at least one fully operational factory anywhere in the world has been
established and (iii) on December 31, 2010 if at least four fully
operational factories have been established anywhere in the
world. (The milestones may be adjusted by the compensation
committee of our Board of Directors at its discretion at the beginning of
the respective calendar year). Further, on such date as our
market capitalization exceeds $300 million, if that date occurs on or
prior to April 18, 2011, then double the number of Options granted to Mr.
Mot that have already vested and those yet subject to vesting on each
milestone date that has not yet occurred will become
vested. The fair value of the option grant on the grant date
(such date being the date of stockholder approval) was determined using
the Black Scholes option pricing model assuming an estimated life of .5 -
2.75 years, no expected dividend payments, a volatility of 129%, and a
risk-free interest rate of 2.1% - 3%. The December 31, 2008
milestone was not attained and therefore 4,800,000 options terminated on
that date. On the December 31, 2009 milestone date, 2,400,000
options vested.
|
(3)
|
On April 18, 2008, Mr. Berten was
granted 6,000,000 Options to purchase our Common Stock under our
2006 Long-Term Incentive Plan at an exercise price of $0.30 per
share. The Options expire on April 18, 2013. Subject
to Mr. Berten remaining in our employ, one-sixth of the Options vest on
each of the following dates if the following respective milestones (as
subsequently adjusted by our compensation committee in accordance with the
terms of the grant) have been attained by such dates: (i) on December 31,
2008, if at least one fully operational factory in The Netherlands capable
of processing 15,000 tons of eWaste per year at full capacity has been
established, (ii) on December 31, 2009 if at least one fully operational
factory anywhere in the world has been established and (iii) on December
31, 2010 if at least four fully operational factories have been
established anywhere in the world. (The milestones may be
adjusted by the compensation committee of our Board of Directors at its
discretion at the beginning of the respective calendar
year). Further, on such date as our market capitalization
exceeds $300 million, if that date occurs on or prior to April 18, 2011,
then double the number of Options granted to Mr. Berten that have already
vested and those yet subject to vesting on each milestone date that has
not yet occurred will become vested. The fair value of the
option grant on the grant date was determined using the Black Scholes
option pricing model assuming an estimated life of 1 - 3 years, no
expected dividend payments, a volatility of 106%, and a risk-free interest
rate of 1.7% - 2.6%.The December 31, 2008 milestone was not attained and
therefore 2,000,000 options terminated on that date. On the
December 31, 2009 milestone date, 1,000,000 options
vested.
|
26
Executive Employment
Agreements
On
December 3, 2007, the Compensation Committee and the Board of Directors of the
Company authorized and ratified payment of a base salary of $60,000 per month to
Mr. Mot effective November 1, 2007 as compensation for services being provided
by him to the Corporation in his capacity as President and Chief Executive
Officer of the Corporation. Mr. Mot is be permitted to receive his compensation
in the form of shares of the Company’s common stock, at Mr. Mot’s sole election
and at any time prior to the payment thereof, at a price per share equal to
$0.39 (the average closing bid price of the Company’s common stock on the
Over-the-Counter Bulletin Board during October 2007). For 2009, Mr.
Mot voluntarily forewent $420,000 of compensation.
Robert
Scherne is retained as our interim Chief Financial Officer on a consulting basis
pursuant to an engagement letter with Robert Scherne, CPA, P.C. dated February
10, 2006. Pursuant to the terms of the engagement letter, Mr. Scherne
is paid at an hourly rate of $150 per hour, $90 of which is payable in cash and
$60 of which is payable in restricted shares of our common stock. The amount of
common stock due to Mr. Scherne is determined on a monthly basis by dividing $60
per billed hour by 50% of the average trading price of our common stock for
the prior ninety days. Mr. Scherne's engagement may be terminated by
either party upon notice to the other party.
On
January 3, 2008, Plastinum entered into an Employment Agreement with Mr. Nils
Berten pursuant to which Mr. Berten was appointed the Chief Operating Officer of
the Company effective January 7, 2008. Pursuant to the Employment Agreement, Mr.
Berten will receive an initial base salary of €115,200 per year. The base salary
will rise to €163,200 after six months upon the satisfaction of certain
conditions. Mr. Berten will also be entitled to a bonus payment of between 25%
and 75% of his base salary, dependant on the attainment of performance targets,
and will be entitled to receive payments during the term of his employ towards
retirement savings as well as other standard benefits. The Employment Agreement
may be terminated at any time by either party by providing notice to the other
party. However, if Plastinum terminates the Employment Agreement without
Cause (as defined in the Employment Agreement), Mr. Berten will be entitled to
continue to receive his base salary for a three month period.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
The
following table sets forth information with respect to equity awards outstanding
at the conclusion of the fiscal year ended December 31, 2009 for each of the
named executive officers:
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
|
Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)
|
||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||
Jacques
Mot
|
3,000,000 | - | - | 0.10 |
7/10/2011
|
- | - | - | - | ||||||||||||||||||||||||
Jacques
Mot
|
2,400,000 | 7,200,000 | 7,200,000 | 0.30 |
4/18/2013
|
- | - | - | - | ||||||||||||||||||||||||
Nils
Berten
|
1,000,000 | 3,000,000 | 3,000,000 | 0.30 |
4/18/2013
|
- | - | - | - |
DIRECTOR
COMPENSATION
The
following table sets forth the compensation of the non-executive directors of
the Company for the fiscal year ended December 31, 2009:
Name
|
Fees Earned
or Paid in
Cash ($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan
Compensation ($)
|
Nonqualified
Deferred
Compensation
Earnings ($)
|
All Other
Compensation ($)
|
Total ($)
|
|||||||||||||||||||||
Marcel
Rokegem
|
50,207 | - | - | - | - | - | 50,207 | |||||||||||||||||||||
Pierre
Kladny
|
- | - | - | - | - | - | - |
We do not
currently have standard compensation arrangements for members of our Board of
Directors for service on our Board of Directors.
The
$50,207 in fees paid to Marcel Rokegem for the 2009 fiscal year was paid on the
basis of a monthly retainer payment of 3,000 Euros (in lieu of payments per
meeting attended) as compensation for services he rendered to us as an
independent member of our Board of Directors, including attendance at
Compensation Committee and Board of Directors meetings.
Directors
are eligible to receive options under our existing long-term stock option
incentive plan.
27
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
Common
Stock
The
following table sets forth, certain information, as of March 31, 2010,
regarding beneficial ownership of our common stock by (i) each stockholder known
by us to be the beneficial owner of more than five percent (5%) of the
outstanding shares of our common stock, (ii) each of our directors, (iii) each
of the named executive officers and (iv) all of our current executive officers
and directors as a group. At the close of business on March 31,
2010, (i) there were 100,562,251 shares of our common stock issued and
outstanding and (ii) 61,650 shares of our Series B-1 Convertible Preferred Stock
issued and outstanding convertible into 18,132,353 shares of our common
stock. Unless otherwise noted, we believe that all persons named in
the table have sole voting power and investment power with respect to all shares
beneficially owned by them and the information as to persons who are not
officers or directors of the Company is based upon the latest information made
available to the Company. Shares of common stock subject to warrants
or other instruments currently exercisable or convertible or exercisable or
convertible within 60 days of the date hereof are deemed outstanding for
computing the number of shares beneficially owned and the percentage of
outstanding shares of the class held by a person holding such warrants or other
instruments, but are not deemed outstanding for computing the percentage of any
other person.
Name of Beneficial Owner
|
Number of
Shares
Beneficially
Owned
|
Percent of
Class
|
||||||
Jacques
Mot (1)
|
45,972,076 | 43.1 | % | |||||
Marcel
Rokegem
|
50,000 | * | % | |||||
Robert
Scherne
|
317,093 | * | % | |||||
Nils
Berten (2)
|
1,400,000 | 1.4 | % | |||||
Pierre
Kladny
|
24,000 | * | % | |||||
Lombard
Odier Darier Hentsch & CIE (3)
Rue
de La Coraterie 11
1204
Geneva, Switzerland
|
7,300,000 | 7.3 | % | |||||
Richard
von Tscharner (4)
Rue
de La Coraterie 11
1204
Geneva, Switzerland
|
49,998,960 | 35.7 | % | |||||
Schroder
& Co Banque SA (5)
Rue
d'Italie 8
1204
Geneva, Switzerland
|
16,485,822 | 14.3 | % | |||||
All
executive officers and directors as a group (5 persons)
|
47,763,169 | 44.3 | % |
* less
than 1%
(1)
|
Consists of (i) 38,772,076 issued
and outstanding shares of common stock, (ii) 400,000 shares issuable upon
conversion of a $200,000 convertible loan made by Mr. Mot on July 10,
2006, (iii) immediately exercisable warrants to purchase an additional
400,000 shares of common stock at an exercise price of $0.50 per share,
and (iv) 5,400,000 shares issuable upon exercise of immediately
exercisable options. Does not include unvested options issued to Mr.
Mot to purchase 7,200,000 shares of common
stock.
|
(2)
|
Consists of (i) 400,000 issued
and outstanding shares of common stock and (ii) 1,000,000 shares issuable
upon exercise of immediately exercisable options. Does not
include unvested options issued to Mr. Berten to purchase 3,000,000 shares
of common stock.
|
(3)
|
Mr. Richard von Tscharner has
shared voting control over the shares held by Lombard Odier Darier Hentsch
& CIE.
|
(4)
|
Richard
von Tscharner is an affiliate of Lombard Odier Darier Hentsch & CIE
(“LODH”) and has shared voting control over shares held by
LODH. Beneficial ownership consists of (i) 208,239 issued
and outstanding shares of common stock held by Mr. von Tscharner, (ii)
7,300,000 issued and outstanding shares of common stock held by LODH,
(iii) 1,117,647 shares issuable upon conversion of Series B-1 Convertible
Preferred Stock owned by Mr. von Tscharner, (iv) 3,920,000 shares issuable
upon exercise of immediately exercisable warrants held by Mr. von
Tscharner and (v) 34,453,074 shares issuable upon conversion of
Convertible Promissory Notes held by Mr. von
Tscharner.
|
(5)
|
Consists of (i) 2,085,513 issued
and outstanding shares of common stock, (ii) 11,352,941 shares issuable
upon conversion of outstanding shares of Series B-1 Convertible Preferred
Stock and (iii) immediately exercisable warrants to purchase an additional
3,047,368 shares of common stock at an exercise price of $0.57 per
share.
|
28
Series B-1 Convertible
Preferred Stock
The
following table sets forth, certain information, as of March 31, 2010,
regarding beneficial ownership of our Series B-1 Convertible Preferred Stock by
(i) each stockholder known by us to be the beneficial owner of more than five
percent (5%) of the outstanding shares of our Series B-1 Convertible Preferred
Stock, (ii) each of our directors, (iii) each of the named executive officers
and (iv) all of our current executive officers and directors as a
group. At the close of business on February 2, 2010, (i) there
were 61,650 shares of our Series B-1 Convertible Preferred Stock issued and
outstanding convertible into 18,132,353 shares of our common
stock. Unless otherwise noted, we believe that all persons named in
the table have sole voting power and investment power with respect to all shares
beneficially owned by them and the information as to persons who are not
officers or directors of the Company is based upon the latest information made
available to the Company.
Name of Beneficial
Owner
|
Number of
Shares
Beneficially
Owned
|
Percent of
Class
|
||||||
Jacques
Mot
|
0 | * | % | |||||
Marcel
Rokegem
|
0 | * | % | |||||
Robert
Scherne
|
0 | * | % | |||||
Nils
Berten
|
0 | * | % | |||||
Pierre
Kladny
|
0 | * | % | |||||
Bernard
Droux
Rue
de La Coraterie 11
1204
Geneva, Switzerland
|
5,000 | 8.1 | % | |||||
Richard
von Tscharner
Rue
de La Coraterie 11
1204
Geneva, Switzerland
|
3,800 | 6.2 | % | |||||
Schroder
& Co Banque SA
Rue
d'Italie 8
1204
Geneva, Switzerland
|
38,600 | 62.6 | % | |||||
All
executive officers and directors as a group (5 persons)
|
0 | * | % |
* less
than 1%
29
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
The
Company has received advances from Mr. Jacques Mot, our President and Chief
Executive Officer, for working capital purposes. As of December 31, 2009,
the outstanding amount of such advances was $26,723.
The advances are non-interest bearing.
On
January 27, 2009, we entered into a Note Purchase Agreement with Richard von
Tscharner pursuant to which we sold and issued a Convertible Promissory Note in
the principal amount of $1,000,000. The Convertible Promissory Notes
accrues interest at a rate of 10% per annum, matures on January 27, 2012 and is
convertible into shares of common stock at an initial conversion price of $0.22
per share or an aggregate of 4,545,455 shares, subject to adjustment as
contained in the Note.
On June
15, 2009, we entered into a Note Purchase Agreement with Richard von Tscharner
pursuant to which we sold and issued a Convertible Promissory Note in the
principal amount of $3,000,000. The Convertible Promissory Note is
convertible into shares of common stock at an initial conversion price of $0.28
per share or a total of 10,714,286 shares, subject to adjustment as contained in
the Convertible Promissory Note.
On
September 25, 2009, we entered into a Note Purchase Agreement with Richard von
Tscharner pursuant to which we sold and issued a Convertible Promissory Note in
the principal amount of $2,000,000. The Convertible Promissory Note
is convertible into shares of common stock at an initial conversion price of
$0.24 per share or a total of 8,333,333 shares, subject to adjustment as
contained in the Convertible Promissory Note.
The
Convertible Promissory Notes issued on June 15, 2009 and September 25, 2009
accrue interest at a rate of 10% per annum and mature on June 15, 2012.
On
January 19, 2010, we entered into a Note Purchase Agreement with Richard von
Tscharner pursuant to which we sold and issued a Convertible Promissory Note in
the principal amount of $2,172,000 which accrues interest at a rate of 10% per
annum, matures on January 19, 2013 and is convertible into shares of common
stock at an initial conversion price of $0.20 per share. In
connection with the issuance of the Convertible Promissory Note, we also issued
to Richard von Tscharner a Warrant to purchase 3,620,000 shares of common stock
at an exercise price of $0.20 per share and expiring on January 19,
2013.
There
have been no transactions, or series of similar transactions, during 2009, or
any currently proposed transaction, or series of similar transactions, to which
the Company was or is to be a party, in which the amount involved exceeded or is
expected to exceed $120,000 and in which any director of our company, any
executive officer of our company, any shareholder owning of record or
beneficially 5% or more of our common stock, or any member of the immediate
family of any of the foregoing persons, had, or will have, a direct or indirect
material interest except as otherwise disclosed in this report (a “Related
Person Transaction”).
The
Company’s policy with regards to Related Person Transactions requires that where
a transaction has been identified as a Related Person Transaction, the
independent members of the Board of Directors of the Company must approve or
ratify it. Management must present to such independent members of the Board of
Directors a description of, among other things, the material facts, the
interests, direct and indirect, of the related persons, the benefits to the
Company of the transaction and whether any alternative transactions were
available. To identify Related Person Transactions, the Company relies on
information supplied by its executive officers and Directors. In considering
Related Person Transactions, the independent members of the Board of Directors
take into account the relevant available facts and circumstances including, but
not limited to (a) the risks, costs and benefits to the Company,
(b) the impact on a Director’s independence in the event the related person
is a director, immediate family member of a Director or an entity with which a
Director is affiliated, (c) the terms of the transaction, (d) the
availability of other sources for comparable services or products and
(e) the terms available to or from, as the case may be, unrelated third
parties or to or from employees generally. In the event a Director has an
interest in the proposed transaction, the Director must recuse himself or
herself from the deliberations and approval. In determining whether to approve,
ratify or reject a Related Person Transaction, the independent members of the
Board of Directors look at, in light of known circumstances, whether the
transaction is in, or is not inconsistent with, the best interests of the
Company and its stockholders, as determined by them in the good faith exercise
of their discretion.
The Board
of Directors has determined that Mr. Rokegem is “independent” and that each
of Mr. Mot and Mr. Kladny is not “independent” as defined in NASDAQ
Marketplace Rule 4200.
30
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit
Fees, Audit Related Fees, Tax Fees and All Other Fees
The
following is a summary of the fees billed to Plastinum Polymer Technologies
Corp. by RBSM LLP for professional services rendered for the fiscal years ended
December 31, 2008 and 2007:
Fee Category
|
Fiscal 2009
Fees
|
Fiscal 2008
Fees
|
||||||
Audit
Fees
|
$ | 57,711 | $ | 40,875 | ||||
Audit-Related
Fees
|
7,500 | 13,099 | ||||||
Tax
Fees
|
4,500 | 4,500 | ||||||
All
Other Fees
|
— | — | ||||||
Total
Fees
|
$ | 69,711 | $ | 58,474 |
AUDIT
FEES. Consists of fees billed for professional services rendered for the audit
of Plastinum Polymer Technologies Corp.'s consolidated financial statements and
review of the interim consolidated financial statements included in quarterly
reports and services that are normally provided by RBSM LLP in connection with
statutory and regulatory filings or engagements.
AUDIT-RELATED
FEES. Consists of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of Plastinum
Polymer Technologies Corp.'s consolidated financial statements and are not
reported under "Audit Fees." There were no Audit-Related services provided in
fiscal 2008 or 2007.
TAX FEES.
Consists of fees billed for professional services for tax compliance, tax advice
and tax planning. There were tax services provided in the fiscal year 2009 and
2008.
ALL OTHER
FEES. Consists of fees for products and services other than the services
reported above. There were no management consulting services provided in fiscal
2009 or 2008.
Audit
Committee Pre-Approval Policies and Procedures
The
Company currently does not have a separately-designated standing Audit
Committee, and accordingly, the Company's Board of Directors' policy is to
pre-approve all audit and permissible non-audit services provided by the
independent auditors. These services may include audit services, audit-related
services, tax services and other services. Pre-approval is generally provided
for up to one year and any pre-approval is detailed as to the particular service
or category of services and is generally subject to a specific budget. The
independent auditors and management are required to periodically report to the
Company's Board of Directors regarding the extent of services provided by the
independent auditors in accordance with this pre-approval, and the fees for the
services performed to date. The Board of Directors may also pre-approve
particular services on a case-by-case basis.
31
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)
|
Documents filed as part of this
report.
|
(1)
|
Financial Statements. The
following financial statements are included in Part II, Item 8
of this Annual Report on Form
10-K:
|
Report of
RBSM LLP on Consolidated Financial Statements as of and for the periods ended
December 31, 2009 and December 31, 2008
Consolidated
Balance Sheets as of December 31, 2009 and 2008
Consolidated
Statements of Operations
And Comprehensive Loss for the Years ended December 31, 2009 and
2008
Consolidated
Statements of Deficiency in Equity for the Years ended December 31, 2009 and
2008
Consolidated
Statements of Cash Flows for Years ended December 31, 2009 and 2008
Notes to
Consolidated Financial Statements
(2)
|
Financial Statement
Schedules.
|
Additional
Schedules are omitted as the required information is inapplicable or the
information is presented in the financial statements or related
notes.
(3)
|
Exhibits required to be filed by
Item 601 of Regulation
S-K.
|
See
Exhibit Index located immediately following this Item 15.
The
exhibits filed herewith are attached hereto (except as noted) and those
indicated on the Exhibit Index which are not filed herewith were previously
filed with the Securities and Exchange Commission as indicated.
EXHIBIT
INDEX
Exhibit No.
|
Description
|
|
3.1
|
Amended
and Restated Certificate of Incorporation, incorporated by reference to
the Company’s Form SB-2 filed on April 10, 2007.
|
|
3.2
|
By-laws,
incorporated by reference to the Company’s Form 10-SB filed on July 12,
2006.
|
|
3.3
|
Certificate
of Designation of Series B-1 Convertible Preferred Stock, incorporated by
reference to the Company’s Form 8-K filed on November 8,
2007.
|
|
3.4
|
Certificate
of Amendment of Certificate of Designation of Series B-1 Preferred Stock,
incorporated by reference to the Company’s Form 8-K filed on March 31,
2008.
|
|
4.1
|
Specimen
Certificate for Common Stock, incorporated by reference to the Company’s
Form 10-KSB filed on March 6, 2007.
|
|
4.2
|
Form
of Warrant to Purchase Common Stock issued to purchasers of Series B-1
Convertible Preferred Stock during November 2007, incorporated by
reference to the Company’s Form 8-K filed on November 8,
2007.
|
|
4.3
|
Form
of Warrant to Purchase Common Stock issued to issued to Richard von
Tscharner on January 19, 2010, incorporated by reference to the Company’s
Form 8-K filed on January 22, 2010.
|
|
10.1
|
Form
of Warrant and Joinder Agreement, incorporated by reference to the
Company’s Form 10-SB filed on July 12, 2006.
|
|
10.2
|
Form
of Warrant to Purchase Common Stock issued to certain consultants on March
7, 2007, incorporated by reference to the Company’s Form SB-2 filed on
April 10, 2007.
|
|
10.3
|
Plastinum
Polymer Technologies Corp. 2006 Long Term Incentive Plan, incorporated by
reference to the Company’s Form 10-SB filed on July 12,
2006.
|
32
10.4
|
Convertible
Loan Agreement between Plastinum Polymer Technologies Corp., Mr. Mot and
Mr. Bottinelli dated July 10, 2006, incorporated by reference to the
Company’s Form 10-SB filed on July 12, 2006.
|
|
10.5
|
Engagement
letter among New Generation Holdings, Inc., the Company and Robert
Scherne, CPA, P.C. dated February 10, 2006, incorporated by reference to
the Company’s Amendment No. 1 to Form S-1 filed on December 5,
2008.
|
|
10.6
|
Advisory
Agreement between New Generation Holdings, Inc., Plastinum and Valley Road
Capital dated July 10, 2006 which has been assigned to Plastinum,
incorporated by reference to Amendment No. 1 to the Company’s Form 10-SB
filed on September 13, 2006.
|
|
10.7
|
Form
of Securities Purchase Agreement entered into during November 2007 among
the Company and the purchasers of the Company’s Series B-1 Convertible
Preferred Stock, incorporated by reference to the Company’s Form 8-K filed
on November 8, 2007.
|
|
10.8
|
Form
of Registration Rights Agreement entered into during November 2007 among
the Company and the purchasers of the Company’s Series B-1 Convertible
Preferred Stock, incorporated by reference to the Company’s Form 8-K filed
on November 8, 2007.
|
|
10.9
|
Employment
Agreement between the Company and Nils Berten, effective January 7, 2008,
incorporated by reference to the Company’s Form 8-K filed on January 8,
2008.
|
|
10.10
|
Stock
Option Grant Agreement between the Company and Jacques Mot, dated April
18, 2008, incorporated by reference to the Company’s Form 10-Q filed on
May 15, 2008.
|
|
|
||
10.11
|
Stock
Option Grant Agreement between the Company and Nils Berten, dated April
18, 2008, incorporated by reference to the Company’s Form 10-Q filed on
May 15, 2008.
|
|
10.12
|
Amendment
to Stock Option Grant Agreement between the Company and Jacques Mot, dated
January 2, 2009, incorporated by reference to the Company’s Form 8-K filed
on January 7, 2009.
|
|
10.13
|
Amendment
to Stock Option Grant Agreement between the Company and Nils Berten, dated
January 2, 2009, incorporated by reference to the Company’s Form 8-K filed
on January 7, 2009.
|
|
10.14
|
Note
Purchase Agreement and Convertible Promissory Note between the Company and
Richard von Tscharner, dated January 27, 2009, incorporated by reference
to the Company’s Form 8-K filed on January 29, 2009.
|
|
10.15
|
Note
Purchase Agreement and Convertible Promissory Note between the Company and
Richard von Tscharner, dated June 15, 2009, incorporated by reference to
the Company’s Form 8-K filed on June 17, 2009.
|
|
10.16
|
Note
Purchase Agreement and Convertible Promissory Note between the Company and
Richard von Tscharner, dated September 25, 2009, incorporated by reference
to the Company’s Form 8-K filed on September 29, 2009.
|
|
10.17
|
Securities
Purchase Agreement and Convertible Promissory Note between the Company and
Richard von Tscharner, dated January 19, 2010, incorporated by reference
to the Company’s Form 8-K filed on January 22, 2010.
|
|
21.1
|
Subsidiaries
of the Company, filed herewith.
|
|
31.1
|
Certificate
pursuant to section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
|
31.2
|
Certificate
pursuant to section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
|
32.1
|
Certificate
pursuant to section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
|
32.2
|
Certificate
pursuant to section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
33
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
on April 15, 2010 by the undersigned, thereunto duly authorized.
PLASTINUM
POLYMER TECHNOLOGIES
CORP.
|
||
(Registrant)
|
||
By:
|
/s/
Jacques Mot
|
|
Jacques
Mot
|
||
(Chief
Presiding Officer)
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below on April 15, 2010 by the following persons on behalf of the
registrant and in the capacities indicated:
By:
|
/s/
Jacques Mot
|
|
Jacques
Mot
|
||
Director
and CEO
|
||
(Principal
Executive Officer)
|
||
By:
|
/s/
Robert Scherne
|
|
Robert
Scherne
|
||
Interim
Chief Financial Officer
|
||
(Principal
Financial and Accounting Officer)
|
||
By:
|
/s/
Marcel Rokegem
|
|
Marcel
Rokegem
|
||
Director
|
||
By:
|
||
Pierre
Kladny
|
||
Director
|
34