Quarterly Report by a Small Business — Form 10-QSB Filing Table of Contents
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(Exact
name of small business issuer as specified in its charter)
WICKLUND
HOLDING COMPANY
(Former
name of small business issuer)
Wyoming
20-4263326
(State
or other jurisdiction of
(IRS
Employer identification No.)
incorporation
or organization)
3288
Eagle View Lane, #290
Lexington,
Kentucky 40509
(Address
of principal executive offices)
(859)
245-5252
(Issuer's
telephone number)
Securities
registered under Section 12(b) of the Exchange Act: None.
Securities
registered under Section 12(g) of the Exchange Act: Common Stock, $.001 par
value
Check
whether the issuer (1) filed all reports required to be filed by Section 13
or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the Small Business Issuer was required to file such reports), and (2)
has
been subject to such filing requirements for the past 90 days. Yes [ ] No
[x]
Indicate
by check mark whether the small business issuer is a shell Company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]
As
of
September 30, 2006, there were 7,370,499,148 common shares outstanding.
Notes
payable - related party, net of current portion
4,292,086
-
Total
liabilities
8,965,473
13,133,414
Stockholders’
deficit:
Preferred
stock; $1 par value; 6,000,000,000 shares authorized, 0 shares
issued and
outstanding as of September 30, 2006 and December 31, 2005
-
-
Common
stock; $0.001 par value; 13,500,000,000 shares authorized, 7,370,499,148
and 3,727,740,100 shares issued and outstanding as of September30, 2006
and December 31, 2005, respectively
7,370,499
3,727,740
Common
stock subscribed - not issued
7,529,660
4,160,539
Preferred
stock subscribed - not issued
360,000
360,000
Additional
paid - in capital
121,739,341
103,446,627
Accumulated
deficit
(137,808,574
)
(118,535,082
)
Total
stockholders’ deficit
(809,074
)
(6,840,176
)
Total
liabilities and stockholders’ deficit
$
8,156,399
$
6,293,238
The
accompanying notes are an integral part of these consolidated financial
statements.
The
condensed consolidated financial statements do not include footnotes and
certain
financial information normally presented annually under accounting principles
generally accepted in the United States and, therefore, should be read in
conjunction with the 2005 Annual Report of Plasticon International, Inc.
(Company or Plasticon). Accounting measurements at interim dates inherently
involve greater reliance on estimates than at year-end. The results of
operations for the interim period ended September 30, 2006 are not necessarily
indicative of results that can be expected for the fiscal year ending December31, 2006.
The
condensed financial statements included herein are unaudited; however, they
contain all adjustments (consisting of normal recurring accruals), which,
in the
opinion of the Company, are necessary to present fairly its financial position
at September 30, 2006 and December 31, 2005, and its results of operations
and
cash flows for the nine months ended September 30, 2006 and 2005, in conformity
with accounting principles generally accepted in the United States.
In
December 2005, the Company acquired all the stock of Pro Mold, Inc. (Pro
Mold),
an injection molding facility in the Midwest. In January 2006, the Company
acquired all the stock of SEMCO Manufacturing (SEMCO), a Nevada business
that
manufactures and sells concrete coating products and all the stock of a related
entity, Ultimate Surface, LLC. See Note 2 for description of
acquisitions.
2.
ACQUISITIONS
Pro
Mold Acquisition
The
December 2005, acquisition of Pro Mold was accounted for as a purchase business
combination under the provisions of the FASB’s SFAS No. 141, “Business
Combinations”.
The
aggregate purchase price of $3,866,852 (including $366,852 of professional
fees)
was allocated to the assets acquired and liabilities assumed based on the
respective fair values. The Company, with the help of an independent appraiser,
has assessed the fair value of the property and equipment. The Pro Mold accounts
receivable, inventory, accounts payable and accrued expenses and other assets
and long-term liabilities were estimates of management. Management is still
in
the process of finalizing the allocation of the purchase price, including
the
consideration of other intangible values. The Company has included Pro Mold
in
its operating results since January 1, 2006.
Related
party funding in 2005 and 2006 (see Note 5)
2,866,852
Long-term
debt
875,000
Common
stock committed
125,000
Total
$
3,866,852
SEMCO
Acquisition
In
January 2006, the Company acquired all the stock of SEMCO, a Nevada business
that manufactures and sells concrete coating products, along with the stock
of a
related entity, Ultimate Surface, LLC. The purchase terms are $650,000 in
cash,
$2,000,000 in performance payments (50% of Net Profits as defined) plus
Plasticon restricted common stock worth $100,000. Additionally, the Company
will
pay a royalty payment (4% of Net Profits as defined) for twenty years beginning
after the $2,000,000 of performance payments are made. As the performance
and
royalty payments are made, the Company will increase goodwill to reflect
additional purchase price. The agreement includes a five year employment
agreement with a base salary and other benefits specified. As of September30,2006, the Company had recorded a long-term liability of $53,436 based on
the
terms and conditions agreed to.
The
January 2006 acquisition of SEMCO was accounted for as a purchase business
combination under the provisions of the FASB’s SFAS No. 141, “Business
Combinations”.
The
aggregate purchase price of $811,107 (including $61,107 of professional fees)
was allocated to the assets acquired and liabilities assumed based on the
respective fair values. The values below are fair value estimates made by
management. Management is still in the process of finalizing the allocation
of
the purchase price. The Company has included SEMCO in its operating results
since January 1, 2006.
The
following table summarizes the estimated fair values of assets acquired and
liabilities assumed at the date of acquisition.
The
unaudited pro forma information shown below assumes that the Pro Mold and
SEMCO
acquisitions occurred as of January 1, 2005. This pro forma financial statement
information is presented for informational purposes only and is not necessarily
indicative of the results of future operations that would have been achieved
had
the assets been acquired and liabilities been assumed at the beginning of
2005.
On
April30, 2005, the Company entered into an agreement for a revolving line of credit
worth $400,000, with an interest rate of 7% with Union Planters Bank to be
used
primarily for working capital. The line was paid off and expired in the second
quarter of 2006.
Note
payable to First National Bank of Barnesville, Barnesville,
Georgia
$
470,000
$
500,000
Note
payable to John P. Murphy (seller of Pro Mold, see Note 2), payable
over a
five year period in equal installments of $175,000 and shall bear
interest
at the rate of 5% per annum
875,000
875,000
Notes
payable to John P. Murphy (seller of Pro Mold, see Note 2)
436,558
-
Note
payable with All Points Capital
600,000
-
Notes
payable with Sam Sems (seller of SEMCO, see Note 2)
During
2000, the Company entered into a banking arrangement with the Bank of
Barnesville. On September 10, 2004, the Company provided 8,000,000 shares
of its
common stock to the Bank of Barnesville for use as a partial payment of the
Company’s debt to the Bank of Barnesville. For the periods ended September 30,2006 and December 31, 2005, the Company owed a balance of $470,000 and $500,000,
respectively, to the Bank of Barnesville. James N. Turek, Sr., the Company’s
president, transferred 7,000,000 shares of his personally held Plasticon
International, Inc. stock to the Bank of Barnesville in order to reduce the
debt
to $500,000 in 2005. The Company has agreed to pay $5,000 per month on this
note
with a revised due date of June 2013. The note bears interest at
11.5%.
During
early 2006, the Company obtained several term notes from Union Planters Bank.
The notes bear interest at rates between 5.0% and 8.0%. In July 2006, John
Murphy acquired the Union Planters notes, adjusting the interest rate to
7.5%
with a three year term. As of September 30, 2006, the Company owes $301,558
under these notes.
On
September 1, 2006, the Company, through its subsidiary, Pro Mold, entered
into a
$600,000 loan agreement with All Points Capital. The note is secured by certain
assets of Pro Mold. The interest rate is 9.76% and is due on September 6,2011.
Note
payable - LexReal, LLC, annual interest rate of 10%, due on December31,2010
$
2,551,036
$
-
Notes
payable - James Turek II, annual interest rate of 10%, due on December31,2010
127,050
130,000
Notes
payable - James Bonn, annual interest rate of 10%, due on December31,2010
170,000
170,000
Notes
payable - Brandon Turek, annual interest rate of 10%, due on December31,2010
150,000
-
Note
payable - Promotional Container, Inc. (PCI) due on December 31,2010
500,000
500,000
Note
payable - Jim Turek, Sr., annual interest rate of 10%, due on December31,2010
834,000
924,841
Total
4,292,086
1,724,841
Less:
current portion
-
(1,724,841
)
Long-term
portion
$
4,292,086
$
-
During
the course of normal business for the period ended March 31, 2006, LexReal,
LLC
(LexReal), a Kentucky limited liability company, paid for goods and services
for
the benefit of the Company in the amount of $2,057,340. LexReal is owned
by the
Company’s president and majority stockholder. During the period ended March 31,2006, $801,825 of debt was forgiven by LexReal. The Company removed the
obligation and increased paid-in capital to reflect this transaction.
Additionally, the Company negotiated the remaining balance of $1,786,841
with
LexReal as a note payable, bearing no interest, with a due date of December31,2010.
During
the second and third quarters of 2006, LexReal made additional loans to the
Company totaling approximately $715,000. The loans bear interest at 10% per
annum and are due on December 31, 2010.
During
the years ended 2001 and 2002, James Turek II, the Company’s operating officer
and the son of the Company’s president, advanced funds to the Company in the
amount of $130,000. The promissory notes provided by the Company to the
operating officer included an interest rate of 10% per annum. Additionally,
the
holder of the promissory note has the right to convert the notes into the
Company’s common stock at the Company’s stated par value as well as to receive
for every three shares converted from this note, a fourth to be issued by
the
Company for consideration of the note. During the period ended March 31,2006,
the Company successfully negotiated the extension of the note with a due
date of
December 31, 2010. As of September 30, 2006 and December 31, 2005, the balance
owed to the Company’s operation executive was $130,000. As of September 30, 2006
and December 31, 2005, the Company owes James Turek II $65,420 and $59,000,
respectively, for accrued interest on past notes.
During
the years ended 2001 through 2003, James Bonn, the Company’s secretary, advanced
funds to the Company in the amount of $120,000. During
the year ended 2004, the Company’s secretary advanced additional funds to the
Company in the amount of $50,000. The promissory notes provided by the Company
to the secretary included an interest rate of 10% per annum. Additionally,
the
holder of the promissory notes has the right to convert the notes into the
Company’s common stock at the Company’s stated par value as well as to receive
for every three shares converted from the note, a fourth to be issued by
the
Company for consideration of the note. During the period ended March 31,2006,
the Company successfully negotiated the extension of the note with a due
date of
December 31, 2010. As of both September 30, 2006 and December 31, 2005, the
balance owed to the Company’s secretary was $170,000. As of September 30, 2006
and December 31, 2005, the Company owes James Bonn, $71,742 and $59,000,
respectively, for accrued interest on past notes.
During
the normal course of business, PCI paid for goods and services for the benefit
of the Company. During the first quarter 2006, $82,630 of debt was forgiven
by
PCI. The Company removed the obligation and increased paid-in capital to
reflect
this transaction. As of September 30, 2006 and December 31, 2005, the balances
owed to PCI (exclusive of the $500,000 note payable which the Company had
reflected as of December 31, 2005) were $0 and $167,832, respectively. As
of
September 30, 2006, the Company has a due from PCI of $40,000 as a result
of the
Company making payments to a vendor on behalf of PCI.
In
January 2005, the Company obtained certain assets (molds, sales contract,
customer base, and patents) from a related party, Promotional Container,
Inc.
(PCI). PCI is owned by James N. Turek, Sr., the Company’s president and majority
stockholder. Consideration to PCI consisted of a promise to exchange 100,000,000
shares of preferred stock (recorded as $360,000 of preferred stock subscribed
in
the accompanying balance sheet) in the Company by May 2007 and a promise
to pay
$500,000 (non-interest bearing) by May 2006. Due to common control, paid-in
capital was reduced by $860,000 to record the transaction. As of September30,2006 and December 31, 2005, the Company owed a balance of $500,000 to
Promotional Containers, Inc. as a result of the acquisition. During the period
ended March 31, 2006, the Company successfully negotiated the extension of
the
note with a due date of December 31, 2010.
On
January 3, 2006, Jim Turek, Sr., the Company’s president and majority
stockholder, forgave approximately $5,980,000 of obligations consisting of
notes
payable, accrued interest, and accrued salaries and bonuses. The Company
removed
the obligations and increased paid-in capital to reflect the
transaction.
In
the
second and third quarters of 2006, Jim Turek, Sr., the Company’s president and
majority stockholder, made additional loans to the Company totaling
approximately $330,000. The loans bear interest at 10% per annum and are
due on
December 31, 2010.
On
January 3, 2006, James Turek II, the son of the Company’s president, forgave
certain liabilities, which included compensation and interest owed to him,
of
approximately $344,000. On January 3, 2006, James Bonn, the Company’s secretary,
forgave certain liabilities which included interest owed to him, amounting
to
approximately $344,000. Both agreements to forgive such liabilities were
subsequently revoked and the Company has reinstated the amounts due
Additionally, the Company successfully negotiated an extension of the notes
with
the parties with a due date of December 31, 2010.
During
second quarter 2006, $225,000 of subscribed common shares were issued related
to
the acquisitions of Pro Mold and SEMCO. Subscriptions totaling $7,129,299
are
due to the conversion of related party debt to subscribed common stock. In
August 2006, the Company entered into an agreement with a vendor to convert
$400,361 of payables due to subscribed common stock.
The
following is a summary of the subscribed preferred share activity for the
period
ended September 30, 2006:
As
of
September 30, 2006, the Company has commitments to provide preferred stock
to
PCI and LexReal. The class B preferred stock ($1 par value) committed to
LexReal
is convertible up to 7,300,000,000 shares of common stock.
During
the period ended September 30, 2006, the Company issued 3,642,759,048 shares
of
common stock. Of those shares 3,603,771,000 were issued to the majority
shareholder. The shares issued represent
compensation of $14,846,168 based on the fair value of the stock upon the
date
of issuance. As part of the Pro Mold and SEMCO transactions (see Note 2),
22,321,382 and 16,666,666 shares, respectively, were issued pursuant to the
purchase agreements.
On
April4, 2006, the Company increased authorized shares of common stock to
13,500,000,000 shares. Also on that date the authorized shares of preferred
stock increased to 6,000,000,000 shares.
9.
SUBSEQUENT
EVENTS
During
the fourth quarter 2006, the Company identified $720,000 in term debt that
was
incurred in 2005. Proceeds from the borrowings were deposited with LexReal.
The
loans were booked and offset against amounts owed to LexReal, with no increase
in debt. The loans have been called, requiring the Company to provide
270,296,888 of common shares in satisfaction of the notes. On October 29,2006,
the shares were issued at a cost of $162,178. The Company is in the process
of
determining the impact on 2005 financial statements and will make the necessary
entries in completing the accounting for 2006.
In
December 2006, the Company identified that a former subsidiary of the Company’s
predecessor, Wickland Holdings, owed $342,681 to the Internal
Revenue Service (IRS). The IRS is holding the Company’s majority shareholder and
president liable for this obligation. The president’s indemnification holds the
president harmless. The Company will book the liability and expense in the
fourth quarter 2006.
During
December 2006, the former owner of Pro Mold filed a lawsuit against the Company
for alleged contract violations. The suit ended when the attorneys for John
Murphy withdrew due to a conflict of interest. Management has since resolved
the
issues and no further actions are anticipated.
In
January 2007, the Company was presented an offer from PCI and LexReal, the
holders of $7,129,299 in subscribed common stock, to convert those subscribed
shares at $.00011 per share at their discretion. The corporate attorney for
this
purpose issued an opinion letter supporting the transaction.
On
March9, 2007, the Company announced the signing of a letter of intent to acquire
100%
of AV-CB Developments. AV-CB Developments is a joint venture by Avest Limited
Partnership and Christian Brothers Construction located in the Boise, Idaho
area. Plasticon expects to add $80,000,000 in sales volume from the acquisition,
with a possible $7,000,000 in 2007.
F-16
ITEM
2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
The
discussion contained in this Form 10-QSB under the Securities Exchange Act
of
1934, as amended, (the "Exchange Act") contains forward-looking statements
that
involve risks and uncertainties. The issuer's actual results could differ
significantly from those discussed herein. These include statements about our
expectations, beliefs, intentions or strategies for the future, which we
indicate by words or phrases such as "anticipate,""expect,""intend,""plan,""will,""we believe,""the Company believes,""management believes" and similar
language, including those set forth in the discussion under "Description of
Business," including the "Risk Factors" described in that section, and
"Management's Discussion and Analysis or Plan of Operation" as well as those
discussed elsewhere in this Form 10-QSB. We base our forward-looking statements
on information currently available to us, and we assume no obligation to update
them. As used in this Form 10-QSB, unless the context requires otherwise, “we”
or “us” or the “Company” means Plasticon International, Inc., and its
subsidiaries.
Plasticon
International, Inc. (“Plasticon”, “we”, “us”, “our” or, “the Company”), was
incorporated in Delaware in 1981 and re-domiciled in Wyoming on January 22,2004. We are engaged in the business of designing, producing, and distributing
high-quality concrete accessories (rebar supports), informational and
directional signage, and plastic lumber, which are all produced from recycled
and recyclable plastics.
We
have
been in the oil and recycled plastics business since 1981. The Company's line
of
plastic concrete accessories has been approved or accepted in all 50 states
and
several foreign countries including Poland, Israel, Canada, Mexico, and Egypt.
In addition, its transportation signage has received DOT approval or acceptance
in all 50 states. Specifically, the Company offers for resale:
-
Rebar
supports
-
Propriety surface Coating Line
-
Information and Directional signage (i.e.; highway and state signs, etc.)
-
Impermeable concrete-like products made from recycled glass.
A
unique
feature of all our products is that they are of the highest quality, yet do
not
require virgin raw material. Using recycled materials significantly reduces
the
cost of manufacturing; thus, we are considered a "green” company. Our use of
environmental waste as raw material in the production of new and innovative
products will continue to reduce waste since the new products are recyclable.
Our
primary products are concrete accessories. Over the course of 10 years in
business, the Company has focused on the development of necessary molds and
has
obtained approval from each of the fifty states, all U.S. territories, and
the
Federal DOT for use of these concrete products.
3
RESULTS
OF OPERATIONS
Revenue
for the three months ended September 30, 2006 was $1,194,948, an increase of
$1,193,227 from revenue totaling $1,721 for the three months ended September30,2005. The increase in revenue is attributed to the acquisition and operations
of
Semco Distribution, Inc., Ultimate Surfaces, LLC, and Pro Mold,
Inc.
Cost
of
revenue for the three months ended September 30, 2006 was $802,062 as opposed
to
$507,321 for the quarter ended September 30, 2005. The gross profit for the
three months ended September 30, 2006 was $392,886, as opposed to a loss of
$505,600 for the quarter ended September 30, 2005, which is an improvement
of
$898,486 for the quarter and $1,843,895 for the nine months ending September30,2006.
For
the
quarter ended September 30, 2005, selling, general and administrative expenses
were $11,673,292 of which, $6,548,040 was compensation for shares. Selling,
general and administrative expenses for the three months ended September 30,2006 were $2,349,990 of which, $1,067,168 was compensation for shares The
decrease in these expenses is primarily attributed to a decrease in legal and
accounting professional fees as well as a significant decrease in stock
compensation. Loss from operations for the three months ended September 30,2006
was $1,957,104 as opposed to $12,178,892 for the same quarter ended 2005. The
decrease in loss from operations from September 30, 2005 to September 30, 2006
is attributed to the decline in compensation for shares and the decline in
the
acquisition related professional services.
Interest
expense for the period ended September 30, 2006 was $97,517, an increase of
$79,243 from the period ended September 30, 2005. The increase in interest
expense is due to the acquisition funding and increased borrowing from related
parties.
Total
liabilities and stockholders’ deficit for the quarter ended September 30, 2006
was $8,156,399. The Company’s working capital deficit improved by approximately
$9.7 million from $10.9 million at September 30, 2005 to $1.2 million at
September 30, 2006 primarily due to debt restructuring. This trend is expected
to continue.
CAPITAL
RESOURCES AND LIQUIDITY
For
the
three month period ended September 30, 2006, the Company sustained a net loss
of
$2,062,370, or $.0003 per share (basic and diluted) on revenue of $1,194,948
as
opposed to a loss of $12,197,166 or $.006 per share (basic and diluted) on
revenue of $1,721 for the quarter ended September 30, 2005. The increase is
based upon numerous related party transactions as set forth in the Company’s
financial statements and the fact that the Company had minimal operating
revenues in the first quarter of 2005, yet still had administrative
expenses.
4
RELATED
PARTY TRANSACTIONS
During
the course of normal business for the period ended March 31, 2006, LexReal,
LLC
(LexReal), a Kentucky limited liability company, paid for goods and services
for
the benefit of the Company in the amount of $2,057,340. LexReal is owned by
the
Company’s president and majority stockholder. During the period ended March 31,2006, $801,825 of debt was forgiven by LexReal. The Company removed the
obligation and increased paid-in capital to reflect this transaction.
Additionally, the Company negotiated the remaining balance of $1,786,841 with
LexReal as a note payable, bearing no interest, with a due date of December31,2010.
During
the second and third quarters of 2006, LexReal made additional loans to the
Company totaling approximately $715,000. The loans bear interest at 10% per
annum and are due on December 31, 2010.
James
Turek II, the Company’s operating officer and the son of the Company’s
president, advanced funds to the Company in the amount of $130,000 during the
years ended 2001 and 2002. The promissory notes provided by the Company to
the
operating officer included an interest rate of 10% per annum. Additionally,
the
holder of the promissory note has the right to convert the notes into the
Company’s common stock at the Company’s stated par value as well as to receive
for every three shares converted from this note, a fourth to be issued by the
Company for consideration of the note. During the period ended March 31, 2006,
the Company successfully negotiated the extension of the note with a due date
of
December 31, 2010. As of September 30, 2006 and December 31, 2005, the balance
owed to the Company’s operation executive was $130,000. As of September 30, 2006
and December 31, 2005, the Company owes James Turek II $65,420 and $59,000,
respectively, for accrued interest on past notes.
During
the years ended 2001 through 2003, James Bonn, the Company’s secretary, advanced
funds to the Company in the amount of $120,000. During the year ended 2004,
the
Company’s secretary advanced additional funds to the Company in the amount of
$50,000. The promissory notes provided by the Company to the secretary included
an interest rate of 10% per annum. Additionally, the holder of the promissory
notes has the right to convert the notes into the Company’s common stock at the
Company’s stated par value as well as to receive for every three shares
converted from the note, a fourth to be issued by the Company for consideration
of the note. During the period ended March 31, 2006, the Company successfully
negotiated the extension of the note with a due date of December 31, 2010.
As of
both September 30, 2006 and December 31, 2005, the balance owed to the Company’s
secretary was $170,000. As of September 30, 2006 and December 31, 2005, the
Company owes James Bonn, $71,742 and $59,000, respectively, for accrued interest
on past notes.
During
the normal course of business, PCI paid for goods and services for the benefit
of the Company. During the first quarter 2006, $82,630 of debt was forgiven
by
PCI. The Company removed the obligation and increased paid-in capital to reflect
this transaction. As of June 30, 2006 and December 31, 2005, the balances owed
to PCI (exclusive of the $500,000 note payable which the Company had reflected
as of December 31, 2005) were $0 and $167,832, respectively. As of September30,2006, the Company has a due from PCI of $40,000 as a result of the Company
making payments to a vendor on behalf of PCI.
5
In
January 2005, the Company obtained certain assets (molds, sales contract,
customer base, and patents) from a related party, Promotional Container, Inc.
(PCI). PCI is owned by James N. Turek, Sr., the Company’s president and majority
stockholder. Consideration to PCI consisted of a promise to exchange 100,000,000
shares of preferred stock (recorded as $360,000 of preferred stock subscribed
in
the accompanying balance sheet) in the Company by May 2007 and a promise to
pay
$500,000 (non-interest bearing) by May 2006. Due to common control, paid-in
capital was reduced by $860,000 to record the transaction. As of September30,2006 and December 31, 2005, the Company owed a balance of $500,000 to
Promotional Containers, Inc. as a result of the acquisition. During the period
ended March 31, 2006, the Company successfully negotiated the extension of
the
note with a due date of December 31, 2010.
On
January 3, 2006, Jim Turek, Sr., the Company’s president and majority
stockholder, forgave approximately $5,980,000 of obligations consisting of
notes
payable, accrued interest, and accrued salaries and bonuses. The Company removed
the obligations and increased paid-in capital to reflect the
transaction.
In
the
second and third quarters of 2006, Jim Turek, Sr., the Company’s president and
majority stockholder, made additional loans to the Company totaling
approximately $330,000. The loans bear interest at 10% per annum and are due
on
December 31, 2010.
On
January 3, 2006, James Turek II, the son of the Company’s president, forgave
certain liabilities, which included compensation and interest owed to him,
of
approximately $344,000. On January 3, 2006, James Bonn, the Company’s secretary,
forgave certain liabilities which included interest owed to him, amounting
to
approximately $344,000. Both agreements to forgive such liabilities were
subsequently revoked and the Company has reinstated the amounts due.
Additionally, the Company successfully negotiated an extension of the notes
with
the parties with a due date of December 31, 2010.
The
Company does not have any off-balance sheet arrangements that are likely to
have
a current or future effect on the Company’s financial condition, revenues or
expenses, results of operations or capital resources.
6
ITEM
3. CONTROLS
AND PROCEDURES
Within
90
days prior to the date of filing this report, we carried out an evaluation,
under the supervision and with the participation of our management, including
the Chief Executive Officer and the Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective in causing material information to be recorded, processed, summarized,
and reported by our management on a timely basis and to ensure that the quality
and timeliness of our public disclosures complies with SEC disclosure
obligations. There were no significant changes in our internal controls or
in
other factors that could significantly affect these internal controls after
the
date of our most recent evaluation.
PROPERTIES
We
currently lease 3,775 square feet of office space at 3288 Eagle View Lane,
#290,
Lexington, Kentucky40509. The terms of our lease are from January 1, 2006
through December 31, 2010, with a monthly lease payment of $5,662.
PART
11
ITEM
1.
LEGAL
PROCEEDINGS
See
Subsequent events
ITEM
2.
CHANGES
IN SECURITIES
During
the nine months ended September 30, 2006, the Company issued 3,642,759,048
shares of common stock. Of those shares, 3,603,771,000 were issued to the
majority shareholder. The shares issued represent compensation of $14,846,168
based on the fair value of the stock upon the date of issuance. As part of
the
Pro Mold and SEMCO transactions, 22,321,382 and 16,666,666 of shares,
respectively, were issued pursuant to the purchase agreements.
On
April4, 2006, the Company increased authorized shares of common stock to
13,500,000,000 shares. Also on that date the authorized shares of preferred
stock increased to 6,000,000,000 shares.
ITEM
3. DEFAULTS
UPON SENIOR SECURITIES
During
the quarter ended September 30, 2006, there were no defaults upon senior
securities.
ITEM
4.
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
During
the quarter ended September 30, 2006, there were no submissions of matters
to a
vote of security holders.
7
ITEM
5.
EXHIBITS
AND REPORTS ON FORM 8-K
During
the quarter ended September 30, 2006, there were no reports on form
8-K.
During
the fourth quarter 2006, the Company identified $720,000 in term debt that
was
incurred in 2005. The funds from the borrowings were deposited with LexReal.
The
loans have been called, requiring the Company to provide 270,296,888 of common
shares to terminate the notes. On October 29, 2006, the shares were issued
at a
cost of $162,178. The referenced loans were booked by the Company with an offset
to the amounts owed to LexReal, with no increase in the Company’s debt. We are
in the process of investigating the impact on prior year’s financial statements
and will make the necessary entries when completing the 2006 year-end
accounting.
In
December 2006, the Company identified that a former subsidiary of the Company’s
predecessor, Wickland Holdings, owed $342,681 to the Internal Revenue Service
(IRS). The IRS is holding the Company’s majority shareholder and president
liable for this obligation. The president’s indemnification holds the president
harmless. The Company will book the liability and expense in the fourth quarter
2006.
The
previous owner of Pro Mold filed, John Murphy, a lawsuit against the Company
In
December 2006 for alleged contract violations. The suit ended when the attorneys
for John Murphy withdrew due to a conflict of interest. Management has since
resolved the issues and no further actions are anticipated.
In
January 2007, the Company was presented an offer from PCI and LexReal, the
holders of $7,129,299 in subscribed common stock to convert those subscribed
shares at $.00011 per share. The corporate attorney for the Company issued
an
opinion letter supporting the transaction.
On
March9, 2007, the Company announced the signing of a letter of intent to acquire
100%
of AV-CB Developments. AV-CB Developments is a joint venture by Avest Limited
Partnership and Christian Brothers Construction located in the Boise, Idaho
area. We expect this will add significantly to our total revenues.
8
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the Small Business
Issuer caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized this 14th
day of
March, 2007.
PLASTICON
INTERNATIONAL, INC.
/s/
James N. Turek
James
N.
Turek, President
9
Dates Referenced Herein and Documents Incorporated by Reference
