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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.
(Exact name of registrant as specified in its charter)

Delaware
 
20-4255141
(State or other jurisdiction of incorporation)
 
(IRS employer identification no.)

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
 
Name of each exchange on which registered
None
 
None

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

   
   
Page
 
PART I
   
Item 1. 
Business
 
 3
Item 1A. 
Risk Factors
 
9
Item 2. 
Properties
 
13
Item 3. 
Legal Proceedings
 
13
Item 4.
Submission of Matters to a Vote of Security Holders
 
13
 
PART II
   
Item 5. 
Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
14
Item 6. 
Selected Financial Data
 
15
Item 7. 
Management's Discussion and Analysis of Financial Condition and Results of Operation
 
15
Item 7A. 
Quantitative and Qualitative Disclosures About Market Risk
 
21
Item 8.
Financial Statements and Supplementary Data
 
21
Item 9. 
Changes In and Disagreements With Accountants on Accounting And Financial Disclosure
 
22
Item 9A.
Controls And Procedures
 
22
Item 9A(T).
Controls And Procedures
 
22
Item 9B.
Other Information
 
23
 
PART III
   
Item 10. 
Directors, Executive Officers and Corporate Governance
 
24
Item 11. 
Executive Compensation
 
26
Item 12. 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
28
Item 13. 
Certain Relationships and Related Transactions, Director Independence
 
30
Item 14. 
Principal Accounting Fees and Services
 
31
 
PART IV
   
Item 15. 
Exhibits, Financial Statement Schedules
 
32
Signatures
   
34
 
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).
 
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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:
 
·
polypropylene
 
·
polyethylene
 
·
LLDPE
 
·
LDPE
 
·
MDPE
 
·
HDPE
 
·
polystyrene
 
·
PET
 
·
PS-ABS
 
·
ABS-PC
 
·
and variations of these.
 
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.
 
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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:
 
·
Large quantities of raw materials, in particular fossil fuel, are required for producing plastics.
 
·
8% of oil produced annually throughout the world is consumed by plastics manufacturing.
 
·
Manufacturing plastics also demands other resources such as land and water, and brings with it waste and emissions.
 
·
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.

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.
 
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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.  
 
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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.
 
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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 
 
 
     RBSM LLP
 
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. Mots day-to-day strategic leadership provides our Board of Directors with extensive knowledge of the Companys 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.
 
 
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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.
 
 
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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.

 
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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
 
 
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