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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For Quarterly Period Ended June 30, 2007
 o
    
    TRANSITION REPORT UNDER TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
 Commission File Number: 0-26804
 PLANET TECHNOLOGIES, INC.
  CALIFORNIA
    
    33-0502606(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)96 Danbury Road, Ridgefield, Connecticut
    
    06877(Address of principal executive offices)
    
    (Zip Code)
 (Issuers telephone number, including area code)
  þ o
  o þ
  Class
    
    Outstanding at June 30, 2007Common Stock, no par value
    
    3,986,368




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##### 



Page No.PART I  Financial InformationItem 1 Financial StatementsCondensed Consolidated Balance Sheets June 30, 2007
(Unaudited) and December 31, 2006
    
    
    2Condensed Consolidated Statements of Operations (Unaudited)
Three and Six months ended June 30, 2007 and 2006
    
    
    3Condensed Consolidated Statement of Shareholders Equity
(Unaudited) Six months ended June 30, 2007
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited)
Six months ended June 30, 2007 and 2006
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6Item 2 Managements Discussion and Analysis or Plan of Operation
    
    
    10Item 3 Controls and Procedures
    
    
    14PART II  Other InformationItem 1 Legal Proceedings
    
    
    15Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    15Item 3 Defaults Upon Senior Securities
    
    
    15Item 4 Submission of Matters to a Vote of Security Holders
    
    
    15Item 5 Other Information
    
    
    15Item 6 Exhibits
    
    
    15SIGNATURESEXHIBIT 31.1EXHIBIT 32.1
  1




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PART 1  FINANCIAL INFORMATION
 
 Item 1  Financial Statements
 PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30, 2007
    
    
    December 31, 2006(unaudited)
    
    
    Note 1ASSETSCurrent assets:Cash
    
    $
    322,103
    
    
    $
    162,160Accounts receivable, less allowance for doubtful accounts of $34,189
    
    
    155,167
    
    
    
    196,095Inventory, net
    
    
    293,417
    
    
    
    486,809Other current assets
    
    
    87,650
    
    
    
    86,809Total current assets
    
    
    858,337
    
    
    
    931,873Equipment and improvements, net
    
    
    22,900
    
    
    
    27,349Intangibles, net
    
    
    1,053,248
    
    
    
    1,176,904Goodwill
    
    
    1,363,025
    
    
    
    1,363,025Totals
    
    $
    3,297,510
    
    
    $
    3,499,151LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of note payable to shareholder
    
    $
    250,000
    
    
    $
    Accounts payable and accrued expenses
    
    
    1,265,689
    
    
    
    1,247,685Accrued warrant liability
    
    
    40,900
    
    
    
    49,908Total current liabilities
    
    
    1,556,589
    
    
    
    1,297,593Note payable to shareholder, net of current portion
    
    
    250,000
    
    
    
    500,000Total liabilities
    
    
    1,806,589
    
    
    
    1,797,593Commitments
    
    
    
    
    
    
    Shareholders equity:Preferred stock, no par value, 4,250,000 shares authorized, no
shares issued or outstanding
    
    
    
    
    
    
    Series A convertible preferred stock, no par value, 750,000 shares
authorized, no shares issued or outstanding
    
    
    
    
    
    
    Common stock, no par value, 20,000,000 shares authorized, 3,986,368
shares issued and outstanding
    
    
    7,693,296
    
    
    
    7,693,296Additional paid-in capital
    
    
    580,308
    
    
    
    421,395Accumulated deficit
    
    
    (6,782,683
    )
    
    
    (6,413,133
    )Total shareholders equity
    
    
    1,490,921
    
    
    
    1,701,558Totals
    
    $
    3,297,510
    
    
    $
    3,499,151
  2




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Sales
    
    $
    1,730,990
    
    
    $
    1,992,255
    
    
    $
    3,807,133
    
    
    $
    4,310,084Cost of sales
    
    
    919,658
    
    
    
    1,144,057
    
    
    
    2,119,666
    
    
    
    2,529,989Gross profit
    
    
    811,332
    
    
    
    848,198
    
    
    
    1,687,467
    
    
    
    1,780,095Operating expenses:Selling
    
    
    295,290
    
    
    
    261,669
    
    
    
    628,878
    
    
    
    630,722General and administrative
    
    
    670,293
    
    
    
    880,340
    
    
    
    1,435,574
    
    
    
    1,775,387Total operating expenses
    
    
    965,583
    
    
    
    1,142,009
    
    
    
    2,064,452
    
    
    
    2,406,109Loss from operations
    
    
    (154,251
    )
    
    
    (293,811
    )
    
    
    (376,985
    )
    
    
    (626,014
    )Other
income, net
    
    
    8,692
    
    
    
    79,341
    
    
    
    23,547
    
    
    
    77,341Interest expense, net
    
    
    (7,564
    )
    
    
    (2,485
    )
    
    
    (16,112
    )
    
    
    (3,989
    )Credit for change in derivative liability
    
    
    
    
    
    
    22,984
    
    
    
    
    
    
    
    21,096Net loss
    
    $
    (153,123
    )
    
    $
    (193,971
    )
    
    $
    (369,550
    )
    
    $
    (531,566
    )Net loss per share, basic and diluted
    
    $
    (0.04
    )
    
    $
    (0.05
    )
    
    $
    (0.09
    )
    
    $
    (0.13
    )Weighted average shares used in
computing net loss per share  basic and
diluted
    
    
    3,986,368
    
    
    
    3,986,368
    
    
    
    3,986,368
    
    
    
    3,986,368
  3




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (UNAUDITED)
Six Months Ended June 30, 2007
 Common Stock
    
    
    Additional
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Paid-in Capital
    
    
    Deficit
    
    
    TotalBalance at January 1, 2007
    
    
    3,986,368
    
    
    $
    7,693,296
    
    
    $
    421,395
    
    
    $
    (6,413,133
    )
    
    $
    1,701,558Stock options issued to
non-employee for services at
fair value of $1.60 per share
    
    
    
    
    
    
    
    
    
    
    16,042
    
    
    
    
    
    
    
    16,042Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    142,871
    
    
    
    
    
    
    
    142,871Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (369,550
    )
    
    
    (369,550
    )Balance at June 30, 2007
    
    
    3,986,368
    
    
    $
    7,693,296
    
    
    $
    580,308
    
    
    $
    (6,782,683
    )
    
    $
    1,490,921
  4




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Six Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006Operating activities:Net loss
    
    $
    (369,550
    )
    
    $
    (531,566
    )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    136,950
    
    
    
    159,308Non-cash credit for change in fair value of derivative liability
    
    
    
    
    
    
    (21,096
    )Non-cash change in fair value of warrant liability
    
    
    (9,008
    )
    
    
    (32,040
    )Non-cash charge for stock- based compensation
    
    
    142,871
    
    
    
    108,039Non-cash charge for change in fair value of options granted to consultant
    
    
    16,042
    
    
    
    7,670Changes in operating assets and liabilities:Accounts receivable
    
    
    40,928
    
    
    
    88,559Inventory
    
    
    193,392
    
    
    
    2,222Other current assets
    
    
    (841
    )
    
    
    46,193Accounts payable and accrued expenses
    
    
    18,004
    
    
    
    (254,199
    )Net cash provided by (used in) operating activities
    
    
    168,788
    
    
    
    (426,910
    )Investing activities:Purchases of property and equipment
    
    
    (8,845
    )
    
    
    Net cash used in investing activities
    
    
    (8,845
    )
    
    
    Financing activities:Proceeds from note payable
    
    
    
    
    
    
    250,000Payment of vendor promissory note
    
    
    
    
    
    
    (3,838
    )Principal payment on notes payable
    
    
    
    
    
    
    (70,055
    )Net cash provided by financing activities
    
    
    
    
    
    
    176,107Net increase (decrease) in cash
    
    
    159,943
    
    
    
    (250,803
    )Cash, beginning of period
    
    
    162,160
    
    
    
    436,844Cash, end of period
    
    $
    322,103
    
    
    $
    186,041Supplementary disclosure of cash flow data:Cash paid for interest
    
    $
    
    
    
    $
    2,531
  5




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
   2. Going Concern
  3. Accounting Policies
 Revenue Recognition
  Warranty Reserve
  6




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Inventory
  June 30,
    
    
    December 31,2007
    
    
    2006Raw materials
    
    $
    122,783
    
    
    $
    182,846Finished goods
    
    
    223,004
    
    
    
    361,219Totals
    
    
    345,787
    
    
    
    544,065Less reserve for obsolescence
    
    
    52,370
    
    
    
    57,256Totals
    
    $
    293,417
    
    
    $
    486,809
 Income Taxes
    Loss Per Share
   Reclassifications
  7




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 4. Stock-Based Compensation
     8




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 4. Stock-Based Compensation (concluded)
  Weighted
    
    
    Weighted AverageAvg
    
    
    Remaining
    
    
    AggregateUnderlying
    
    
    Exercise
    
    
    Contractual Life
    
    
    IntrinsicShares
    
    
    Price
    
    
    (years)
    
    
    ValueOutstanding, beginning of period
    
    
    569,613
    
    
    $
    2.86
    
    
    
    8.51
    
    
    $
    Granted
    
    
    100,000
    
    
    
    1.31
    
    
    
    9.83
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited/expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, end of period
    
    
    669,613
    
    
    $
    2.63
    
    
    
    8.29
    
    
    $
    75,600Exercisable, end of period
    
    
    292,994
    
    
    $
    3.22
    
    
    
    8.01
    
    
    $
    
  Volatility
    
    
    391
    %Dividend yield
    
    
    Risk free interest rate
    
    
    4.92
    %Vesting period
    
    4 yearsExpected life
    
    10 years
  5. Notes payable to shareholder
    9




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PART 1  FINANCIAL INFORMATION
 
 Item 2  Managements Discussion and Analysis or Plan of Operation
 Planet Technologies, Inc. and Subsidiary
 Except for the historical information contained herein, the discussion in this report contains
forward-looking statements that involve certain risks and uncertainties. The Companys actual
results could differ materially from those discussed in this report. Factors that could cause or
contribute to such differences include, but are not limited to those discussed below and in the
Companys Form 10-KSB for the fiscal year ended December 31, 2006.
       Three months ended June 30, 2007 compared to three months ended June 30, 2006
   10




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PART 1  FINANCIAL INFORMATION
Item 2  Managements Discussion and Analysis or Plan of Operation
 Planet Technologies, Inc. and Subsidiary
    Six months ended June 30, 2007 compared to six months ended June 30, 2006
     11




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PART 1  FINANCIAL INFORMATION
Item 2  Managements Discussion and Analysis or Plan of Operation
 Planet Technologies, Inc. and Subsidiary
 Off Balance Sheet Arrangements
      Recent Accounting Pronouncements
    12




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PART 1  FINANCIAL INFORMATION
Item 2  Managements Discussion and Analysis or Plan of Operation
 Planet Technologies, Inc. and Subsidiary
    13




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PART 1  FINANCIAL INFORMATION
 
 Item 3  Controls and Procedures
 Planet Technologies, Inc. and Subsidiary
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  14




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PART II  OTHER INFORMATION
 Planet Technologies, Inc. and Subsidiary
 
   
   
   
   
   
     15




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Planet Technologies, Inc.
 
   Date: August 13, 2007
    Planet Technologies, Inc./s/ Edward J. SteubeEdward J. SteubeChief Executive Officer/s/ Francesca DiNotaFrancesca DiNotaChief Financial Officer and
Chief Accounting Officer