Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2010, 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 objective is to raise capital to pursue a merger, acquisition, or business combination with an operating entity. The company has no specific business plan or purpose other than this potential combination and has generated no revenue since its inception on January 24, 2006.
Key Financial Metrics
| Metric | Q1 2010 (Unaudited) | Q1 2009 (Unaudited) | Cumulative (Inception to Mar 31, 2010) |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(3,888) | $(7,204) | $(83,669) |
| Cash and Cash Equivalents | $2,404 | $7,399 | $2,404 |
| Total Assets | $2,404 | $7,399 | $2,404 |
| Total Liabilities | $55,145 | $55,412 | $55,145 |
| Stockholders' Deficit | $(52,741) | $(48,853) | $(52,741) |
| Net Cash Used in Operating Activities | $(4,155) | $(7,683) | $(77,524) |
Debt and Liquidity: As of March 31, 2010, the company held $2,404 in cash against total current liabilities of $55,145, resulting in a working capital deficiency of $52,741. Liabilities consist primarily of a $49,000 note payable to a related party, $5,545 in accrued interest to a related party, and $600 in accounts payable.
Material Changes Versus Prior Period
- Net Loss Reduction: The net loss for the three months ended March 31, 2010, was $3,888, a decrease of approximately 46% compared to the $7,204 loss in the same period in 2009. This reduction is attributed to lower general and administrative expenses ($3,020 in 2010 vs. $6,829 in 2009).
- Cash Position: Cash and cash equivalents decreased by $4,155 during the quarter, dropping from $6,559 at December 31, 2009, to $2,404 at March 31, 2010.
- Liabilities: Total current liabilities remained relatively stable, decreasing slightly from $55,412 to $55,145, driven by a reduction in accounts payable offset by an increase in accrued interest.
Outlook, Risks, and Management Commentary
Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern. The company has not generated revenue, has an accumulated deficit of $83,669, and relies on future capital raises to fund operations and consummate a business combination.
Future Plans: The company intends to issue additional shares of common stock to raise funds. Management plans to continue efforts to locate suitable acquisition candidates over the next 12 months. Costs anticipated include filing fees and expenses related to investigating and consummating an acquisition.
Risks:
- Dependence on Related Parties: The company is dependent on related parties (including management and Broadband Capital Management, LLC) for loans and continued funding. If funding is unavailable, the company may not be able to implement its plan of operations.
- Acquisition Risk: Any target business selected may be financially unstable or in early stages of development. There is no assurance that a business combination will be achieved.
- Liquidity Risk: The company cannot provide assurance that it can satisfy cash requirements for the next twelve months without additional financing.
Unusual Items: The company has no off-balance sheet arrangements. All debt is related-party in nature, with interest rates ranging from 4% to 8.25% per annum.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $2,404 cash balance against the $55,145 in current liabilities and ongoing operating costs.
- Related Party Debt: Confirm the terms and repayment triggers of the $49,000 note payable and accrued interest owed to related parties (Broadband Capital Management, LLC and individual directors).
- Capital Raise Status: Investigate the status of any planned equity issuances required to fund the search for a business combination.
- Shell Company Status: Acknowledge the high risk associated with investing in a "blank check" company with no operating history or revenue.
- Management Concentration: Note that the same individuals serve as management for both the registrant and the related-party lender (Broadband Capital Management, LLC).