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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
 (MARK ONE)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For Quarterly Period Ended September 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)(800) 255-3749(Issuers telephone number, including area code)
 þ o
 o þ
  Class
    
    Outstanding at September 30, 2007Common Stock, no par value
    
    3,986,368




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##### 



Page No.PART I  Financial InformationItem 1
    
    Financial Statements
    
    
    2Condensed Consolidated Balance Sheets September 30, 2007 (Unaudited) and December 31, 2006
    
    
    2Condensed Consolidated Statements of Operations (Unaudited) Three and Nine months ended September 30, 2007 and 2006
    
    
    3Condensed Consolidated Statement of Shareholders' Equity (Unaudited) Nine months ended September 30, 2007
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited) Nine months ended September 30, 2007 and 2006
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6Item 2
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    11Item 3A(T)
    
    Controls and Procedures
    
    
    15PART II  Other InformationItem 1
    
    Legal Proceedings
    
    
    16Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 3
    
    Defaults Upon Senior Securities
    
    
    16Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    16Item 5
    
    Other Information
    
    
    17Item 6
    
    Exhibits
    
    
    17SIGNATURESEXHIBIT 10.30EXHIBIT 31.1EXHIBIT 32.1
  1




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##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 Item 1  Financial Statements
 PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30, 2007
    
    
    December 31, 2006(unaudited)
    
    
    Note 1ASSETSCurrent assets:Cash
    
    $
    248,566
    
    
    $
    162,160Accounts receivable, less allowance for doubtful accounts of $34,189
    
    
    142,022
    
    
    
    196,095Inventory, net
    
    
    282,187
    
    
    
    486,809Other current assets
    
    
    84,090
    
    
    
    86,809Total current assets
    
    
    756,865
    
    
    
    931,873Equipment and improvements, net
    
    
    20,742
    
    
    
    27,349Intangibles, net
    
    
    993,754
    
    
    
    1,176,904Deferred acquisition costs
    
    
    93,265
    
    
    
    Goodwill
    
    
    1,363,025
    
    
    
    1,363,025Totals
    
    $
    3,227,651
    
    
    $
    3,499,151LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    
    1,389,458
    
    
    
    1,247,685Accrued warrant liability
    
    
    66,701
    
    
    
    49,908Total current liabilities
    
    
    1,456,159
    
    
    
    1,297,593Note payable to shareholder, net of current portion
    
    
    500,000
    
    
    
    500,000Total liabilities
    
    
    1,956,159
    
    
    
    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
    
    
    678,215
    
    
    
    421,395Accumulated deficit
    
    
    (7,100,019
    )
    
    
    (6,413,133
    )Total shareholders equity
    
    
    1,271,492
    
    
    
    1,701,558Totals
    
    $
    3,227,651
    
    
    $
    3,499,151
  2




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 Three months ended September 30,
    
    
    Nine months ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Sales
    
    $
    1,646,849
    
    
    $
    1,872,047
    
    
    $
    5,453,982
    
    
    $
    6,182,130Cost of sales
    
    
    949,127
    
    
    
    1,142,160
    
    
    
    3,068,794
    
    
    
    3,672,148Gross profit
    
    
    697,722
    
    
    
    729,887
    
    
    
    2,385,188
    
    
    
    2,509,982Operating expenses:Selling
    
    
    302,716
    
    
    
    327,523
    
    
    
    931,593
    
    
    
    958,244General and administrative
    
    
    764,613
    
    
    
    830,019
    
    
    
    2,200,187
    
    
    
    2,605,406Total operating expenses
    
    
    1,067,329
    
    
    
    1,157,542
    
    
    
    3,131,780
    
    
    
    3,563,650Loss from operations
    
    
    (369,607
    )
    
    
    (427,655
    )
    
    
    (746,592
    )
    
    
    (1,053,668
    )Other income
    
    
    62,286
    
    
    
    59,974
    
    
    
    85,833
    
    
    
    137,314Interest expense, net
    
    
    (10,015
    )
    
    
    (7,196
    )
    
    
    (26,127
    )
    
    
    (11,186
    )Credit
(Charge) for change in derivative liability
    
    
    
    
    
    
    (20,328
    )
    
    
    
    
    
    
    768Net loss
    
    $
    (317,336
    )
    
    $
    (395,205
    )
    
    $
    (686,886
    )
    
    $
    (926,772
    )Net loss per share, basic and diluted
    
    $
    (0.08
    )
    
    $
    (0.10
    )
    
    $
    (0.17
    )
    
    $
    (0.23
    )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)
Nine Months Ended September 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
$2.23 per share
    
    
    
    
    
    
    
    
    
    
    32,475
    
    
    
    
    
    
    
    32,475Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    224,345
    
    
    
    
    
    
    
    224,345Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (686,886
    )
    
    
    (686,886
    )Balance at September 30, 2007
    
    
    3,986,368
    
    
    $
    7,693,296
    
    
    $
    678,215
    
    
    $
    (7,100,019
    )
    
    $
    1,271,492
  4




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Nine MonthsEnded
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006Operating activities:Net loss
    
    $
    (686,886
    )
    
    $
    (926,772
    )Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    198,602
    
    
    
    228,432Gain on disposition of leased property
    
    
    
    
    
    
    (2,102
    )Credit for change in fair value of derivative liability
    
    
    
    
    
    
    (768
    )Change in fair value of warrant liability
    
    
    16,793
    
    
    
    (5,504
    )Charge for stock- based compensation
    
    
    224,345
    
    
    
    222,981Charge for change in fair value of options granted to
consultant
    
    
    32,475
    
    
    
    15,594Changes in operating assets and liabilities:Accounts receivable
    
    
    54,073
    
    
    
    134,163Inventory
    
    
    204,622
    
    
    
    1,862Other current assets
    
    
    2,719
    
    
    
    (11,072
    )Accounts payable and accrued expenses
    
    
    141,773
    
    
    
    (305,889
    )Net cash provided by (used in) operating activities
    
    
    188,516
    
    
    
    (649,075
    )Investing activities:Deferred acquisition costs
    
    
    (93,265
    )
    
    
    Purchases of property and equipment
    
    
    (8,845
    )
    
    
    Cash used in investing activities
    
    
    (102,110
    )
    
    
    Financing activities:Proceeds from note payable
    
    
    
    
    
    
    500,000Payment of vendor promissory note
    
    
    
    
    
    
    (4,813
    )Principal payment on notes payable
    
    
    
    
    
    
    (88,082
    )Net cash provided by financing activities
    
    
    
    
    
    
    407,105Net increase (decrease) in cash
    
    
    86,406
    
    
    
    (241,970
    )Cash, beginning of period
    
    
    162,160
    
    
    
    436,844Cash, end of period
    
    $
    248,566
    
    
    $
    194,874Supplementary disclosure of cash flow data:Cash paid for interest
    
    $
    
    
    
    $
    2,829Supplementary disclosure of non financing activities:Termination
of capital lease obligation
    
    
    
    
    
    $
    13,427
  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
  September 30,
    
    
    December 31,2007
    
    
    2006Raw materials
    
    $
    128,441
    
    
    $
    182,846Finished goods
    
    
    203,041
    
    
    
    361,219Totals
    
    
    331,482
    
    
    
    544,065Reserve for obsolescence
    
    
    (49,295
    )
    
    
    (57,256
    )Totals
    
    $
    282,187
    
    
    $
    486,809
 Income Taxes
    Loss Per Share
   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
    
    
    124,000
    
    
    
    1.06
    
    
    
    7.72
    
    
    
    294,862Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited/expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, end of period
    
    
    693,613
    
    
    $
    2.53
    
    
    
    7.76
    
    
    $
    294,862Exercisable, end of period
    
    
    321,278
    
    
    $
    3.19
    
    
    
    7.86
    
    
    $
    
  Volatility
    
    
    319-391
    %Dividend yield
    
    
    Risk free interest rate
    
    
    4.83-4.92
    %Vesting period
    
    4 yearsExpected life
    
    10 years
  5. Notes payable to shareholder
  9




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PLANET TECHNOLOGIES, INC. AND SUBSIDIARY
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 6. Subsequent Events
    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
 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 Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006.
    ®
   Three months ended September 30, 2007 compared to three months ended September 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
    Nine months ended September 30, 2007 compared to nine months ended September 30, 2006
     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
     Recent Accounting Pronouncements
    13




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PART 1  FINANCIAL INFORMATION
Item 2  Managements Discussion and Analysis or Plan of Operation
 Planet Technologies, Inc. and Subsidiary
   14




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PART 1  FINANCIAL INFORMATION
 
 Item 3 A(T)  Controls and Procedures
 Planet Technologies, Inc. and Subsidiary
 Evaluation of Disclosure Controls and Procedures -
  Changes in Internal Control Over Financial Reporting
  15




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PART II  OTHER INFORMATION
 Planet Technologies, Inc. and Subsidiary
 
   
   
   
    Percent of
    
    Result ofFor
    
    Withheld
    
    Outstanding Voted
    
    Shares Voteda. Scott L. Glenn
    
    
    2,458,319
    
    
    
    2
    
    
    
    76.82
    %
    
    
    80.28
    %b. Eric B.
Freedus
    
    
    2,459,369
    
    
    
    2
    
    
    
    76.82
    %
    
    
    80.31
    %c. H.M. Busby
    
    
    2,459,119
    
    
    
    2
    
    
    
    76.82
    %
    
    
    80.30
    %d. Michael
Trinkle
    
    
    2,459,319
    
    
    
    2
    
    
    
    76.82
    %
    
    
    80.31
    %e. Ellen Preston
    
    
    2,459,369
    
    
    
    2
    
    
    
    76.82
    %
    
    
    80.31
    %f. Michael Walsh
    
    
    2,459,369
    
    
    
    2
    
    
    
    76.82
    %
    
    
    80.31
    %g. Edward Steube
    
    
    2,443,541
    
    
    
    2
    
    
    
    76.82
    %
    
    
    79.79
    %
   Percent of
    
    Percent ofOutstanding
    
    Voting inFor
    
    Against
    
    Abstain
    
    Voted
    
    Favor2,376,676
    
    
    600,201
    
    
    
    15,782
    
    
    
    75.07
    %
    
    
    79.42
    %
   Percent ofOutstanding
    
    Percent of VotingFor
    
    Against
    
    Abstain
    
    Voted
    
    in Favor3,060,730
    
    
    350
    
    
    
    1,224
    
    
    
    76.82
    %
    
    
    99.5
    %
 16




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PART II  OTHER INFORMATION
 Planet Technologies, Inc. and Subsidiary
 
   
      17




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Planet Technologies, Inc.
 
   Date: November 14, 2007
    Planet Technologies, Inc./s/ Edward J. SteubeEdward J. SteubeChief Executive Officer/s/ Francesca DiNotaFrancesca DiNotaChief Financial Officer and
Chief Accounting Officer