UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the quarter ended June 30, 2000 Commission file number 000-30234
Millennium Plastics Corporation
(Exact name of registrant as specified in its charter)
Nevada 88-0422242
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5631 S. Pecos Rd
Las Vegas, Nevada 89120
(Address of principal executive offices) (Zip Code)
(702) 454-2121
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has 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.
Yes X No
As of June 30, 2000, there were 23,900,000 shares of common stock
outstanding.
<PAGE>
MILLENNIUM PLASTICS CORPORATION
FOR THE QUARTER ENDED
JUNE 30, 2000
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheet as of June 30, 2000 3
Statement of Shareholders' Equity
ending June 30, 2000 4
Income Statement
ending June 30, 2000 5
Statement of Cash Flows
ending June 30, 2000 6
Notes to Financial Statements
Ending June 30, 2000 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 11-12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults by the Company upon its
Senior Securities 12
Item 4. Submission of Matter to a Vote of
Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports of Form 8-K 12
SIGNATURES 13
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<TABLE>
MILLENNIUM PLASTICS CORPORATION
BALANCE SHEET
JUNE 30, 2000
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
June 30, March 31,
2000 2000
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash in bank $ 369,278 $ 585,854
--------------- ---------------
TOTAL CURRENT ASSETS 369,278 585,854
PROPERTY AND EQUIPMENT
Equipment 1,589 1,005
Less: Accumulated Depreciation 280 201
---------------- ---------------
NET PROPERTY AND EQUIPMENT 1,309 804
OTHER ASSETS
Patent 10,000,000 10,000,000
Less: Accumulated Amortization-Patent 333,334 166,667
------------------ ---------------
Patent-net of accumulated amortization 9,666,666 9,833,333
Use/Sales Tax Deposits 109 -
------------------ ---------------
TOTAL OTHER ASSETS 9,666,775 9,833,333
----------------- ----------------
TOTAL ASSETS $ 10,037,362 $ 10,419,991
================= ==============
</TABLE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITES
Accounts Payable $ 92,534 $ 154,138
Accrued Liabilities 3,677 7,672
-------------- ----------------
TOTAL CURRENT LIABILITIES 96,211 161,810
---------------- ---------------
LONG-TERM LIABILITIES
TOTAL LONG-TERM LIABILITIES - -
---------------- ---------------
TOTAL LIABILITIES 96,211 161,810
---------------- ---------------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value; 50,000,000
shares authorized; 23,900,000 shares
issued
and outstanding 23,900 23,900
Paid in Capital 10,736,599 10,736,599
Deficit accumulated during the
development stage (819,348) (502,318)
------------- --------------
TOTAL STOCKHOLDERS' EQUITY 9,941,151 10,258,181
-------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 10,037,362 $ 10,419,991
============= ===============
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
MILLENNIUM PLASTICS CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
ENDING JUNE 30, 2000
Deficit
Accumulated
Common Stock During The
Per Paid In Treasury Development
Share Shares Amount Capital Stock Stage
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C>
Inception 0.000 - - - - -
Shares issued 0.001 17,000,000 17,000
for marketing
Net loss for the -
years ended
March 31, 1987 - (17,000)
-----------------------------------------------------------
Balance March 17,000,000 17,000 (17,000)
31, 1987
Activity to - -
------------------------------------------------------------
March 31, 1998
Balance March 17,000,000 17,000 (17,000)
31, 1998
Activity to -
-------------------------------------------------------------
March 31, 1999
Balance March 17,000,000 17,000 (17,000)
31, 1999
Shares issued 0.050 100,000 100 4,900 405
for services
Shares issued 268
for acquisition
of Graduated 0.152 6,750,000 6,750 1,019,249
Plastics, inc.
Shares
contributed by a
shareholder 8,000 (8,000)
Shares issued 1.213 9,692,000 8,000
for patent
Shares issued 0.250 50,000 50 12,450
for services
Net loss for the
year ended
March 31, 2000 (485,318)
------------------------------------------------------------
Balance March 23,900,000 23,900 10,736,599 (502,318)
31, 2000
Activity to June (317,030)
30, 2000
----------------------------------------------------------
Balance June 30,
2000 23,900,000 $23,900 $10,736,599 $(819,348)
==========================================================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
MILLENNIUM PLASTICS CORPORATION
INCOME STATEMENT
ENDING JUNE 30, 2000
Three months ended
June 30, 2000
<S> <C>
REVENUES
Revenues $
-
------------------
Total Revenues
-
EXPENSES
Amortization of Patent 166,667
Wages 29,509
Professional Fees 16,781
Travel 11,556
Administrative expenses 100,876
-------------------
Total Expenses 325,389
-------------------
Loss from Operations (325,389)
Interest Income 8,359
NET LOSS $ (317,030)
====================
Net loss per share of common stock-basic and diluted 0.0133
==================
Shares outstanding 23,900,000
====================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
MILLENNIUM PLASTICS CORPORATION
STATEMENT OF CASH FLOWS
ENDING JUNE 30, 2000
Three Months Year Ended
Ended
June 30, 2000 March 31, 2000
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (317,030) $ (485,318)
Adjustments to reconcile net income to
net cash
provided by operating activities:
Depreciation and Amortization 166,746 166,868
Issuance of stock for services - 17,500
Changes in assets and liabilities:
Deposits (109) -
Accounts payable (61,604) 74,808
Accrued liabilities (3,995) 7,672
---------------- -----------------
Cash used in operating activities (215,992) (218,470)
---------------- -----------------
Investing activities:
Purchase of equipment (584) (1,005)
---------------- -----------------
Cash used in investing activities (584) (1,005)
---------------- -----------------
Financing activities:
Payments on acquired patent - (220,670)
Stock issued for acquisition - 1,025,999
--------------- -----------------
Cash provided from financing activities - 805,329
Increase (decrease) in cash and cash (216,576) 585,854
equivalents
Cash and cash equivalents, beginning 585,854 -
-------------- -----------------
Cash and cash equivalents, ending $ 369,278 $ 585,854
--------------- -----------------
Interest paid - -
Income tax paid - -
============== =================
</TABLE>
<PAGE>
Note 1 - Summary of Significant Accounting Policies
Organization
Aurora Corporation (Aurora) was incorporated April 2, 1986. On July 15,
1999, Aurora was merged into Echo Services, Inc. (Echo). On November 23,
1999, Echo changed its name to Millennium Plastics Corporation (MPCO).
The Company owns patent rights to market, manufacture, and distribute
Solplax, a fully biodegradable plastic product.
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 financial statements and
notes. Actual results could differ from those estimates, but management does
not believe such differences will materially affect the Company's financial
position, results of operations, or cash flows.
Cash Equivalents
The Company's cash equivalents consist principally of any financial
instrument with maturities of generally three months or less.
Equipment
Equipment is carried at cost. Depreciation is on the straight-line
method, based on the useful life (5 years) of the asset.
Maintenance and repairs are charged to operations as incurred.
Accounting Method
The Company recognizes income and expense on the accrual method of
accounting.
Income Taxes
The Company accounts for its income taxes using Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, which
requires recognition of deferred tax liabilities and assets for expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the differences between the financial
statements and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
<PAGE>
Intangible Asset - Patent
The cost of the patent acquired is being amortized on the straight-line
method over fifteen years.
Estimated Fair Value of Financial Instruments
The information set forth below provides disclosure of the estimated
fair value of the Company's financial instruments presented in accordance
with the requirements of Statement of Financial Accounting Standards (SFAS)
No. 107. Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of March 31,
2000. Since the reported fair values of financial instruments are based upon
a variety of factors, they may not represent actual values that could have
been realized as of March 31, 2000 or that will be realized in the future.
The respective carrying value of certain on-balance sheet financial
instruments approximated their fair values. These financial instruments
include cash and accounts payable. Fair values were assumed to approximate
carrying values for these financial instruments since they are short-term in
nature and their carrying amounts approximated fair values or they are
receivable or payable on demand.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash. At various times
during the year, the Company has cash balances in excess of federally insured
limits. The Company maintains its cash, which consists primarily of demand
deposits, with high quality financial institutions, which the Company
believes limits risk.
Net Loss Per Common Share
The Company computes loss per share in accordance with SFAS No. 128,
Earnings Per Share. This standard requires dual presentation of basic and
diluted earnings per share on the face of the income statement for all
entities with complex capital structures and requires a reconciliation of the
numerator and denominator of the diluted earnings per share computation. Net
loss per common share (basic and diluted) is based on the net loss divided by
the weighted average number of common shares outstanding during the year.
The Company's potentially issuable shares of common stock pursuant to an
outstanding payable (see Note 5) that will be paid in stock are excluded from
the Company's diluted computation, as their effect would be anti-dilutive.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 requires companies to recognize all derivatives contracts as either
assets or liabilities in the balance sheet and to measure them at fair value.
If certain conditions are met, a derivative may be specifically designated as
a hedge, the objective of which is to match the timing of the gain or loss
recognition on the hedging derivative with the recognition of (i) the changes
in the fair value of the hedged asset or liability that are attributable to
the hedged risk or (ii) the earnings effect of the hedged forecasted
transaction. For a derivative not designated as a hedging instrument, the
gain or loss is recognized in income in the period of change. On June 30,
1999, the FASB issued SFAS No. 137, Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133. SFAS No. 133 as amended by SFAS No. 137 is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. Historically, the
Company has not entered into derivatives contracts to hedge existing risks or
for speculative purposes. Accordingly, the Company does not expect adoption
of the new standard to affect its financial statements.
Note 2 - Development Stage Company
The Company is a development stage company. It is concentrating
substantially all of its efforts in raising capital and establishing business
operations in order to generate significant revenues.
Note 3 - Acquisition
On November 23, 1999, MPCO acquired Graduated Plastics, Inc. (GPI) in a
business combination accounted for as a purchase. GPI was a developmental
stage company with no business operations. The total cost of acquisition was
$1,025,999 which represented the fair market value of assets acquired. MPCO
issued 6,750,000 shares of stock for the outstanding stock of GPI and the
majority shareholder of MPCO contributed as paid in capital 8,000,000 shares
of MPCO. The difference between the par value of MPCO stock and the assets
acquired was recorded as paid in capital for MPCO. GPI was dissolved after
the merger.
If the acquisition would have occurred on April 1, 1997 there would be
no activity in fiscal year ending March 31, 1998, and 1999. Fiscal year
ending March 31, 2000 would have a loss of $486,819 and loss per share basic
and diluted would be $.02.
Note 4 - Intangible Asset - Patent
On September 30, 1999, Graduated Plastics, Inc. entered into a mandatory
agreement with SCAC Holdings, Corp. assigning a United States patent in
consideration for a fee equal to 5% of the net receipts received by the
assignee.
On December 1, 1999 MPCO added an addendum to the patent assignment and
royalty agreement whereas SCAC Holdings, Corp. received 8,000,000 shares of
MPCO stock and a $300,000 payable for consideration for the termination of
the 5% royalty.
The assigned value to the transaction of $10,00,000 ($8,000 stock,
$9,692,000 paid in capital, and $300,000 payable) was determined by
management after discounts by determining the estimated fair market value of
the publicly traded market and the value that would be received if the shares
were sold.
At March 31, 2000, approximately $79,000 remained unpaid in the payable
to SCAC Holdings Corp.
Note 5 - Stock Transactions
Stock was issued for consulting services for an assigned value of $5,000
for 100,000 shares. Stock was issued for legal services for an assigned
value of $12,500 for 50,000 shares.
Pursuant to an agreement in December 1999, MPCO will place in escrow
120,000 shares of stock to be issued to a Company performing investment
relations. The agreement called for the immediate vesting of 36,000 shares
and 7,000 shares each month for 12 month to be issued based on the
performance of services. At March 31, 2000 no shares were issued, although
57,000 shares were earned. The shares were issued subsequent to year-end. A
payable was recorded for the earned shares. The services were assigned a
value equal to $1.25 per share. If the shares would have been issued prior
to March 31, 2000, the loss per share would remain at $.02 per basic and
diluted outstanding share.
<PAGE>
Note 6 - Income Taxes
The Company accounts for income taxes under the provision of Statement
of Financial Accounting Standards (SFAS) No. 109, Accounting for Income
Taxes. SFAS No. 109 is an asset and liability approach for computing
deferred income taxes.
As of March 31, 2000 the Company had a net operating loss carry forward
for Federal income tax reporting purposes amounting to approximately $318,000
which expire in to 2015.
The components of the deferred tax asset as of March 31, 2000 was as
follows:
2000
Benefit of net operating loss carry forwards. $ 108,000
Less valuation allowance. 108,000
Net deferred tax assets. $ --
As of March 31, 2000 sufficient uncertainty exists regarding the
reliability of these operating loss carry forwards and, accordingly, a
valuation allowance has been established.
Note 7 - Contingency
The company has an agreement to issue 63,000 shares of stock (7,000
shares a month for April through December 2000) to a company that will
provide professional services.
Note 8 - Related Party Transactions
The Company uses the management and office services of a company owned
by an officer. Amounts paid for the services for the year ended March 31,
2000 was $29,200, which approximated the fair market value of those services.
Note 9 - Subsequent Events
On April 30, 2000 MPCO entered into an agreement with SCAC Holdings
Corp. (SCAC) to acquire all of the outstanding stock of Solplax Limited, a
wholly owned subsidiary of SCAC. MPCO will receive back the 8,000,000
restricted shares they issued to SCAC in December 1999 and will issue
12,000,000 unrestricted shares to SCAC. It is anticipated the merger will be
consummated in the second quarter of fiscal year 2001.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis should be read in conjunction with
the Company's financial statements and the notes thereto contained elsewhere
in this filing.
Overview
Millennium Plastics Corporation ("Millennium" or the "Company") was
incorporated in the State of Nevada. Millennium, through its merger with
Graduated Plastics Corporation, acquired the United States patent rights to
new and innovative polymer and coating technology invented in 1995 by Solplax
Ltd. of Ireland. International patent attorneys in Europe and the United
States have confirmed that the patent is comprehensive and durable, having
been written by the developers of the technology and a scientific team with
specialization in PVA polymers. Independent evaluations carried out in
London, and Trinity College of Dublin have also endorsed these conclusions.
The plastics which have been developed have the unique and very
marketable characteristic of dissolving in water and leaving only non-toxic
water and atmospheric gases. Public perception and governmental pressures for
plastics which are environmentally friendly are projected to propel the
commercial demand for this product.
Results of Operations for the three months ended June 30, 2000
Total operating expenses from continuing operations were $325,389 for
the three months ended June 30, 2000. Increase operating expenses in the
current period are a result of professional fees, administrative expenses and
other expenses related to product research, development and marketing.
Forward-Looking Statements and Associated Risks
This Quarterly Report on Form 10-QSB contains forward-looking statements
made pursuant to the safe harbor provisions of the Securities Litigation
Reform Act of 1995. These forward looking statements are based largely on
the Company's expectations and are subject to a number of risks and
uncertainties, many of which are beyond the Company's control, including, but
not limited to, economic, competitive and other factors affecting the
Company's operations, markets, products and services, expansion strategies
and other factors discussed elsewhere in this report and the documents filed
by the Company with the Securities and Exchange Commission. Actual results
could differ materially from these forward-looking statements. In light of
these risks and uncertainties, there can be no assurance that the forward-
looking information contained in this report will in fact prove accurate.
The Company does not undertake any obligation to revise these forward-looking
statements to reflect future events or circumstances.
<PAGE>
Liquidity and Capital Reserves
As of June 30, 2000 (Unaudited)
As of June 30, 2000, the Company's assets were $10,037,362 and its
liabilities were $96,211 resulting in an excess of assets of $9,941,151. Cash
was $369,278 at June 30, 2000.
The Company has continued to fund its deficit cash flow from private
placements of the Company's common stock. It is anticipated that loans and
the sale of the Company's stock will continue until such time as the Company
generates sufficient revenues from its operations to cover operating
expenses.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None.
Item 3. Defaults by the Company upon its Senior Securities.
None.
Item 4. Submission of Matter to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports of Form 8-K.
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MILLENNIUM PLASTICS CORPORATION
(Registrant)
By:/s/ Paul Branagan
Paul Branagan
President
Date: August 14, 2000
