Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2011, for Plastron Acquisition Corp. II. The registrant is a Delaware corporation classified as a "shell company" and a "blank check" company in the development stage. Its primary business objective is to raise capital to pursue a merger, acquisition, or business combination with an operating entity. The company has generated no revenue since its inception on January 24, 2006, and currently has no active operations other than organizational efforts and seeking acquisition targets.
Key Financial Metrics
| Metric | Q1 2011 (Three Months) | Q1 2010 (Three Months) | Cumulative (Inception to Mar 31, 2011) |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(12,131) | $(3,888) | $(122,353) |
| Loss Per Share (Basic) | $(0.01) | $(0.00) | N/A |
| Cash and Cash Equivalents | $521 | $2,404 (End of Q1 2010) | $521 |
| Total Assets | $746 | N/A | N/A |
| Total Liabilities | $98,171 | N/A | N/A |
| Stockholders' Deficit | $(97,425) | N/A | N/A |
| Working Capital | $(97,425) | N/A | N/A |
Debt and Liquidity: As of March 31, 2011, the company held only $521 in cash. Total current liabilities were $98,171, consisting primarily of related party advances ($41,177), a related party note payable ($47,000), and accrued interest ($9,994). The company has a significant working capital deficiency.
Material Changes Versus Prior Period
- Increased Net Loss: The net loss for the three months ended March 31, 2011, was $12,131, a significant increase from the $3,888 loss in the same period in 2010. This increase is attributed to higher general and administrative expenses ($10,677 vs. $3,020) and increased interest expense ($1,454 vs. $868).
- Liability Growth: Total current liabilities increased from $84,406 at December 31, 2010, to $98,171 at March 31, 2011. This was driven by an increase in related party advances of $14,795 during the quarter.
- Asset Reduction: Total assets decreased from $5,112 to $746, primarily due to the reduction of prepaid expenses and cash burn from operations.
- Treasury Stock: The company repurchased 400,000 shares of common stock from director Clifford Chapman for $6,000, recorded as treasury stock.
Outlook, Risks, and Management Commentary
Going Concern: Management explicitly states that the company's financial condition raises substantial doubt about its ability to continue as a going concern. The company has an accumulated deficit of $122,353 and relies entirely on related party funding or future equity financing to meet obligations.
Future Plans: The company intends to continue searching for a suitable acquisition target. Management plans to fund operations through the issuance of additional common stock, related party advances, or a reverse merger transaction. There is no assurance that additional funding will be available.
Risks:
- Liquidity Risk: With only $521 in cash and liabilities exceeding $98,000, the company cannot satisfy cash requirements for the next 12 months without external financing.
- Related Party Dependence: All debt and recent funding advances are from related parties (Broadband Capital Management, LLC and individual directors), creating significant concentration risk.
- Business Uncertainty: As a shell company with no operations, the business model relies entirely on a future merger, which is not guaranteed.
Subsequent Events: Following the quarter end, on April 28, 2011, the company repurchased an additional 61,586 shares from Charles Allen for $928. On April 25, 2011, director Clifford Chapman resigned.
Investor Verification Checklist
- Cash Runway: Verify the current cash balance (reported as $521) and confirm if any new funding has been secured to cover the $98,171 in liabilities.
- Related Party Debt: Review the terms of the $47,000 note payable and $41,177 in advances to Broadband Capital Management, LLC, noting they are due on demand or upon a business combination.
- Share Count: Confirm the outstanding share count (1,661,856 as of March 31, 2011) and account for subsequent repurchases (400,000 shares in March; 61,586 shares in April).
- Merger Progress: Investigate if the company has identified a specific target for a reverse merger or business combination, as this is the only path to revenue generation.
- Management Changes: Note the resignation of director Clifford Chapman and assess the impact on the company's governance and access to related party capital.