10/01/2007 251 Joint Stipulation , filed by Plasticon International, Inc. (RE: related document(s)186 Order Setting Hearing, 185 Order Setting Hearing, ). (Kennedy, Ellen) (Entered: 10/01/2007)
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Doc 251
In re:
PLASTICON INTERNATIONAL, INC.
Debtor.
Case No. 07-50934
Chapter 11
JOINT STIPULATIONS OF FACT
1. Plasticon International, Inc. (“Plasticon”), the Debtor, was formerly known as Wicklund Holding Company, but a name change to Plasticon International, Inc. was approved in the third quarter of 2004.
2. The shares of Plasticon are publicly traded through the “Pink Sheets” market under the symbol “PLNI” (now “PLNIQ”).
3. During the period of January 1, 2003 to May 16, 2007, when Plasticon filed a chapter 11 petition with this Court, James N. Turek Sr. (“Turek”) was the President, Chief Executive Officer, a Director, and stockholder of Plasticon.
4. As a publicly-traded corporation, Plasticon was required to file Annual Reports (Form 10-K) and Quarterly Reports (Form 10-Q) with the Securities and Exchange Commission.
5. Plasticon’s deadline for filing Form 10-K is 90 days after the end of the fiscal year. Its deadline to file Form 10-Q is 45 days after the end of the fiscal quarter.
6. Every Annual and Quarterly Report filed by Plasticon was filed late, as set forth below:
Form Period covered Due date When filed
10-K yr. ending 12/31/04 3/31/05 5/4/06
10-Q 1st Q 2005 5/15/05 7/27/06
10-Q 2d Q 2005 8/15/05 7/27/06
10-Q 3d Q 2005 11/15/05 7/31/06
10-K yr. ending 12/31/05 3/31/06 9/8/06
10-Q 1st Q 2006 5/15/06 1/24/07
10-Q 2d Q 2006 8/15/06 3/6/07
10-Q 3d Q 2006 11/15/06 3/15/07
7. Although due, Plasticon has not filed its Form 10-K for the year ending December 31, 2006 (due March 31, 2007), its Form 10-Q for the first quarter of 2007 (due March 15, 2007), and its Form 10-Q for the second quarter of 2007 (due August 15, 2007).
8. In its SEC filings, Plasticon states that it is 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.
9. Plasticon’s financial performance during the year ended December 31, 2003 was as follows:
(a) On December 31, 2003, Plasticon had total assets of $1,371,605 and total liabilities of $12,945,036;
(b) Plasticon had no sales resulting in revenue of $0;
(c) Plasticon incurred a net loss of $1,146,509; and
(d) Turek was awarded a salary of $325,000 and a bonus of $250,000.
10. Plasticon’s financial performance during the year ended December 31, 2004 was as follows:
(a) On December 31, 2004, Plasticon had total assets of $659,549 and total liabilities of $10,665,501;
(b) Plasticon had no sales resulting in revenue of $0;
(c) Plasticon incurred a net loss of $73,648,555;
(d) Turek was awarded a salary of $350,000 and a bonus of $350,000; and
(e) Turek converted $1,780,130 of debt into 758,833,001 shares of common stock of Plasticon with a par value of $1,708,130.
11. Plasticon’s financial performance during the year ended December 31, 2005 was as follows:
(b) Plasticon had sales of $65,565 and cost of goods sold of $94,227 resulting in a gross loss of $28,662;
(c) Plasticon incurred a net loss of $31,659,904;
(d) Turek was awarded a salary of $633,000 which he agreed to defer;
12. During 2005, Plasticon raised proceeds through commitments to issue 199,464,884 freetrading shares of Plasticon stock. Plasticon did not receive these proceeds; they were received by LexReal Co. LLC (“LexReal”). At the time LexReal received these proceeds, Turek was the sole member.
13. Plasticon’s financial performance during the nine-month period ending September 30, 2006 was as follows:
(a) On September 30, 2006, Plasticon had total assets of $8,156,399 and total liabilities of $8,965,473;
(b) Plasticon had sales of $4,761,839 and cost of goods sold of $3,703,192 resulting in a gross profit of $1,058,647;
(c) Plasticon incurred a net loss of $19,273,492; and
14. The number of shares of Plasticon common stock outstanding from 2003 to the third quarter of 2006 were as follows:
Date # shares outstanding # shares authorized
12/31/03 37,856,600 80,000,000
12/31/04 1,440,486,371 2,000,000,000
12/31/05 3,727,740,100 5,000,000,000
9/30/06 7,370,499,148 13,500,000,000
15. On June 17, 2005, Plasticon caused a press release to be issued entitled “Plasticon Announces Company is Profitable as of Second Quarter 2005.”
16. Plasticon’s Second Quarter 2005 Report, filed in July of 2006, reported that Plasticon had suffered a net loss of $3,018,067.00.
17. On September 12, 2005, William Howe, a Senior Consultant for Plasticon, caused a press release to be issued entitled “Plasticon Receives Patent Confirmation for PAC Chair III– Plasticon’s Patents Now Valued at $20 Million.” This press release stated that Plasticon “has recently received confirmation of the company’s patent for the PAC Chair III product.”
18. In its Schedules, Plasticon asserted that it owned the following four patents with an “unknown” value:
(a) U.S. Patent No. 4,942,714–Slab Bolster;
(b) Canadian Patent No. 1,317,474–Slab Bolster;
19. As of the petition date, the record owner of U.S. Patent Nos. 4,942,714 and D324,643 is Promotional Containers, Inc. (“PCI”).
20. As of the petition date, the record owners of patent D500, 243 are James N. Turek II and Brandon D. Turek.
21. Turek believes that patent D500,243 is the most valuable patent.
22. The Canadian Intellectual Property Office lists “International Plastics, Inc.” (“IPI”) as the owner of Canadian Patent 1,317,474. The patent on this invention has lapsed.
23. In its 2005 Annual Report, Plasticon reported to the Securities and Exchange Commission that in January of 2005 it purchased, inter alia, “patents” from PCI.
24. Plasticon filed its Statement of Financial Affairs (“SOFA”) on June 6, 2007. Question 23 of the SOFA asks a debtor to, inter alia, list all withdrawals or distributions credited or given to an insider, including compensation in any form, bonuses, loans, stock redemptions, options exercised and any other perquisite during one year immediately preceding the commencement of this case. In response, Plasticon indicated “None.”
25. After filing for bankruptcy protection, Plasticon made three payments on pre-petition debt to the Internal Revenue Service totaling $12,750. Turek is personally liable to the Internal Revenue Service for this obligation.
26. After filing for bankruptcy protection, Plasticon borrowed funds from LexReal without Court approval. The notes documenting these loans provide for an “upfront fee” to be paid to LexReal of Plasticon common stock valued at 100% of the loan amount, and a default interest rate of 20% daily.
27. On July 31, 2007, Plasticon’s primary bank account had a negative balance of $18,712.28.
28. On May 14, 2002, Turek filed for chapter 11 relief in the U.S. Bankruptcy Court for the Northern District of Florida. Case No. 02-20411-LMK. After entry of a Final Decree, his case was closed on September 13, 2006.
29. William D. Bishop (“Bishop”) of Arcadia Consulting Services has been contacted and has agreed to serve the Debtor as CRO as set forth in the Application to Employ a Chief Restructuring Officer previously filed herein.
Dated: October 1, 2007
RICHARD F. CLIPPARD
United States Trustee for Region 8
By Counsel
By: /s/ John L. Daugherty
John L. Daugherty
Assistant U.S. Trustee
00 E. Vine St., Suite 500
Lexington, Kentucky 40507
(859) 233-2822
FOWLER MEASLE & BELL PLLC
By: /s/ Ellen Arvin Kennedy
Ellen Arvin Kennedy
Taft A. McKinstry
Timothy A. West
300 West Vine Street, Suite 600
Lexington, Kentucky 40507-1660
(859) 252-6700
(859) 255-3735 Facsimile
Attorneys for Debtor Pro Mold, Inc. and Debtor
Plasticon International, Inc.
STONE, LEYTON & GERSHMAN
A Professional Corporation
By: /s/ Howard S. Smotkin
E. Rebecca Case, EDMO #2800
Howard S. Smotkin, EDMO #4407
7733 Forsyth Boulevard, Suite 500
St. Louis, Missouri 63105
(314) 721-7011
(314) 721-8660 Facsimile
erc@stoneleyton.com
hss@stoneleyton.com
Attorneys for the Murphy Entities |
