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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-QSB (MARK ONE) þ
    
    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 For Quarterly Period Ended March 31, 2005 o
    
    TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 Commission File Number: 0-26804 PLANET
TECHNOLOGIES, INC. (Formerly Planet Polymer Technologies, Inc.)(Exact name of small business issuer as specified in its character)
 CALIFORNIA
    
    33-0502606(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 6835 Flanders Drive, Suite 100, San Diego, California
    
    92121(Address of principal executive offices)
    
    (Zip Code)
 (858) 457-4742(Issuers telephone number, including area code)
 Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act 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. þ YES
    
    o NO
 Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date: Class

    Outstanding at May 1, 2005Common Stock, no par value

    2,180,368




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INDEX  
 Page No.PART I  Financial StatementsItem 1
    
    Condensed Balance Sheet (Unaudited) March 31, 2005
    
    
    2Condensed Statements of Operations (Unaudited)Three Months Ended March 31, 2005 and 2004
    
    
    3Condensed Statement of Shareholders Deficiency (Unaudited) Three Months Ended March 31, 2005
    
    
    4Condensed Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2005 and 2004
    
    
    5Notes to Unaudited Condensed Financial Statements
    
    
    6Item 2
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3
    
    Controls and Procedures
    
    
    11PART II  Other InformationItem 1
    
    Legal Proceedings
    
    
    12Item 2
    
    Changes in Securities and Use of Proceeds Unregistered Sales of Securities and Use of Proceeds
    
    
    12Item 3
    
    Defaults upon Senior Securities
    
    
    12Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    12Item 5
    
    Other Information
    
    
    12Item 6
    
    Exhibits
    
    
    12SIGNATURES
    
    
    
    
    13EXHIBIT 31.1EXHIBIT 32.1
  1




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PART 1  FINANCIAL INFORMATION PLANET TECHNOLOGIES, INC.
 
 CONDENSED BALANCE SHEET (UNAUDITED)
 March 31, 2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    128,806Accounts receivable, less allowance for doubtful accounts of $5,500
    
    
    5,514Inventory
    
    
    19,798Other current assets
    
    
    34,822Total current assets
    
    
    188,940Property and equipment, net
    
    
    85,129Total
    
    $
    274,069LIABILITIES AND SHAREHOLDERS DEFICIENCYCurrent liabilities:Current portion of convertible notes payable to shareholder
    
    $
    136,332Advance from related party
    
    
    85,000Accounts payable
    
    
    71,898Accrued expenses
    
    
    361,024Interest payable
    
    
    1,749Total current liabilities
    
    
    656,003Convertible notes payable to shareholder, net of current potion
    
    
    83,495Total liabilities
    
    
    739,498Commitments and contingenciesShareholders deficiency: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,
2,180,368 shares issued and outstanding
    
    
    3,478,296Accumulated deficit
    
    
    (3,943,725
    )Total shareholders deficiency
    
    
    (465,429
    )Total
    
    $
    274,069
 See notes to unaudited condensed financial statements 2




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PLANET TECHNOLOGIES, INC. 
 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended
    
    
    Three months endedMarch 31,
    
    
    March 31,2005
    
    
    2004Net sales
    
    $
    221,526
    
    
    $
    381,262Cost of sales
    
    
    75,505
    
    
    
    146,015Gross profit
    
    
    146,021
    
    
    
    235,247Operating expenses:Selling
    
    
    161,194
    
    
    
    171,759General and administrative
    
    
    218,985
    
    
    
    248,471Totals
    
    
    380,179
    
    
    
    420,230Loss from operations
    
    
    (234,158
    )
    
    
    (184,983
    )Other income (expense):Other expense
    
    
    (1,949
    )
    
    
    (5,342
    )Interest expense
    
    
    (4,922
    )
    
    
    (51,786
    )Totals
    
    
    (6,871
    )
    
    
    (57,128
    )Net loss
    
    $
    (241,029
    )
    
    $
    (242,111
    )Net loss per share, basic and diluted
    
    $
    (0.11
    )
    
    $
    (0.15
    )Weighted average shares used in computing net loss per share basic
and diluted
    
    
    2,159,961
    
    
    
    1,655,803
 See notes to unaudited condensed financial statements 3




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PLANET TECHNOLOGIES, INC. 
 CONDENSED STATEMENT OF SHAREHOLDERS DEFICIENCY (UNAUDITED)
 Three Months Ended March 31, 2005
 Common Stock
    
    
    AccumulatedShares
    
    
    Amount
    
    

    Deficit
    
    

    TotalBeginning, January 1, 2005
    
    
    2,068,361
    
    
    $
    3,198,296
    
    
    $
    (3,702,696
    )
    
    $
    (504,400
    )Issuance of common stock for cash
    
    
    112,007
    
    
    
    280,000
    
    
    
    
    
    
    
    280,000Net loss
    
    
    
    
    
    
    
    
    
    
    (241,029
    )
    
    
    (241,029
    )Balance at March 31, 2005
    
    
    2,180,368
    
    
    $
    3,478,296
    
    
    $
    (3,943,725
    )
    
    $
    (465,429
    )
 See notes to unaudited condensed financial statements 4




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PLANET TECHNOLOGIES, INC. 
 CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Three months ended
    
    
    Three months endedMarch 31,
    
    
    March 31,2005
    
    
    2004Operating activities:Net loss
    
    $
    (241,029
    )
    
    $
    (242,111
    )Adjustments to reconcile net loss to net cashused in operating activities:Depreciation and amortization
    
    
    15,941
    
    
    
    23,308Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,438
    )
    
    
    1,990Inventory
    
    
    (786
    )
    
    
    42,493Other assets
    
    
    (12,720
    )
    
    
    (34,032
    )Interest payable
    
    
    (6,794
    )
    
    
    47,073Accounts payable
    
    
    (152,622
    )
    
    
    191,668Accrued expenses
    
    
    7,261
    
    
    
    (75,922
    )Net cash used in operating activities
    
    
    (393,187
    )
    
    
    (45,533
    )Investing activities  proceeds from sale of property and equipment
    
    
    
    
    
    
    1,505Financing activities:Advance from related party
    
    
    
    
    
    
    20,000Repayments of advances to related party
    
    
    (100,000
    )
    
    
    Principal payments on notes payable
    
    
    
    
    
    
    (90,778
    )Principal payments on notes payable to shareholder
    
    
    (32,930
    )Proceeds from issuance of investors notes payable
    
    
    
    
    
    
    25,000Proceeds from issuance of common stock in a private placement
    
    
    280,000
    
    
    
    Net cash provided by (used in) financing activities
    
    
    147,070
    
    
    
    (45,778
    )Net decrease in cash and cash equivalents
    
    
    (246,117
    )
    
    
    (89,806
    )Cash and
cash equivalents, beginning of period
    
    
    374,923
    
    
    
    128,005Cash and cash equivalents, end of period
    
    $
    128,806
    
    
    $
    38,199Supplementary disclosure of cash flow data:Interest paid
    
    $
    11,947
    
    
    $
    4,714
 See notes to unaudited condensed financial statements 5




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PLANET TECHNOLOGIES, INC. 
 NOTES TO UNAUDTED CONDENSED FINANCIAL STATEMENTS
  1.
    Basis of Presentation In managements opinion, the accompanying unaudited financial statements of Planet
Technologies, Inc. (Planet or the Company) have been prepared in accordance with
the interim reporting requirements of Form 10-QSB, pursuant to the rules and
regulations of the Securities and Exchange Commission. However, they do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In managements opinion, all adjustments (consisting of only normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 2005, are not necessarily
indicative of results that may be expected for the year ending December 31, 2005. For
additional information, refer to the Companys financial statements and notes thereto
for the year ended December 31, 2004, contained in the Companys most recent annual
report on Form 10-KSB for the fiscal year ended December 31, 2004.  2.
    Liquidity and Capital Resources The accompanying financial statements have been prepared assuming that the Company will
continue as a going concern. This basis of accounting contemplates the recovery of the
Companys assets and the satisfaction of its liabilities in the normal course of
business. Successful transition to profitable operations is dependent upon obtaining a
level of sales adequate to support the Companys cost structure. The Company has
suffered recurring losses resulting in an accumulated deficit of $3,943,725, a
shareholders deficiency of $465,429, and a working capital deficiency of $467,063 as
of March 31, 2005. Management intends to continue to finance operations primarily
through its potential ability to generate cash flows from equity offerings, including
restricted stock. However, there can be no assurance that the Company will be able to
obtain such financing or internally generate cash flows, which may impact the Companys
ability to continue as a going concern. The accompanying balance sheet does not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that may
result from the potential inability of the Company to continue as a going concern. On November 30, 2004, Planet acquired the business of Allergy Free, LLC (Allergy) for
approximately 1.65 million shares of Planet stock (after giving effect to a 50:1
reverse stock split), a convertible note of $274,300 bearing interest at 5.5% per annum
and due and payable within three years, and assumption of debt. As a result, Allergy
owned approximately 92.7% of the voting shares of Planet. Since the stockholders of
Allergy received the majority of the voting shares of Planet, the former managing
member of Allergy continued on as the president of the Company, and representatives of
Allergy hold three of the five seats on the Companys Board of Directors, the merger
was accounted for as a recapitalization of Allergy, whereby Allergy was the accounting
acquirer (legal acquiree) and Planet was the accounting acquiree (legal acquirer).
Since, at the closing, Planet was a non-operating shell corporation no longer meeting
the definition of a business as defined in EITF Consensus 98-3, Determining Whether a
Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business, the
transaction was equivalent to 6




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Allergy issuing stock for the net liabilities of Planet, accompanied by a
recapitalization. The accounting was identical to that resulting from a reverse
acquisition, except that there were no adjustments to the historic carrying values of
the assets and liabilities. Accordingly, the accompanying statements of operations and
cash flows are the historical financial statements of Allergy Free. Immediately prior to the closing of the acquisition, Planet Polymer distributed to a
trustee for the benefit of Planet Polymer shareholders of record as of September 30,
2004, the right to receive all royalties payable to Planet pursuant to those certain
sale and licensing agreements between Planet and Agway, Inc., related to Planets Fresh
Seal® and Optigen® technology and that certain purchase, sale and license agreement
between Planet and Ryer Enterprises, LLC, relating to Planets AQUAMIM® technology. Prior to acquiring Allergy, Planet Polymer was an advanced materials company that
developed and licensed unique polymer materials. All operations related to Planet
Polymer have been discontinued. On March 7, 2005, Planet entered into a definitive agreement to acquire Allergy Control
Products, Inc. (ACP). The merger transaction will be structured pursuant to an
Agreement and Plan of Merger agreed upon by both parties, and is subject to approval by
each partys respective shareholders and other contingencies. Pursuant to the terms of
the merger transaction the shareholder of ACP will be issued 600,000 shares of Planet
common stock. In addition, ACP debt to its shareholder in the approximate amount of
$1,500,000 will be paid in full by Planet, using anticipated proceeds from private
placement offerings. Investors are encouraged to review our report on Form 8-K filed with the Securities and
Exchange Commission on March 10, 2005, which discusses more thoroughly the terms of the
proposed merger and which is available through EDGAR at
www.sec.gov, and when
available, the Companys Proxy Statement which will also be available through EDGAR.  3.
    Earnings (Loss) Per Share Net loss per share is computed using the weighted average number of shares of common
stock outstanding and is presented for basic and diluted loss per share. Basic loss
per share is computed by dividing net loss by the weighted average number of common
shares outstanding for the period. Diluted loss per share is computed by dividing net
by the weighted average number of common shares outstanding during the period
increased to include, if dilutive, the number of additional common shares what would
have been outstanding if the potential common shares had been issued. The Company has excluded all convertible notes payable and outstanding stock options
and warrants from the calculation of diluted loss per share because all such
securities are considered anti-dilutive. Accordingly, diluted loss per share equals
basic loss per share. The total number of potential common shares excluded from the
calculation of diluted loss per share for the three months ended March 31, 2005 and
2004 was 391,208 and 26,332, respectively. 7




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4.
    Income Taxes As the ultimate realization of the potential benefits of the companys net operating
loss carryforwards is considered unlikely by management, the Company has offset the
deferred tax assets attributable to those potential benefits through valuation
allowances and, accordingly, the Company did not recognize any benefit for income
taxes in the accompanying condensed statements of operations of offset its pre-tax
losses.  5.
    Stock-Based Compensation As explained in Note 2 in the Form 10-KSB, the Statement of Financial Accounting
Standards No. 123 (SFAS 123), Accounting for Stock-Based Compensation, provides
for the use of a fair value based method of accounting for stock-based compensation.
However, SFAS 123 allows an entity to continue to measure compensation cost for stock
options granted to employees using the intrinsic value method of accounting prescribed
by Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued
to Employees, which only requires charges to compensation expense for the excess, if
any, of the fair value of the underlying stock at the date a stock option is granted
(or at an appropriate subsequent measurement date) over the amount the employee must
pay to acquire the stock. The Company has elected to account for employee stock
options using the intrinsic value method under APB 25. By making that election, it is
required by SFAS 123 and Statement of Financial Accounting Standards No. 148,
Accounting for Stock-Based Compensation  Transition and Disclosure to provide pro
forma disclosures of net loss as if a fair value based method of accounting had been
applied. In January 2005, an individual became a member of the Companys board of directors and
was granted an option to purchase 500 shares of common stock at an exercise price of
$3.00 per share. The options vest one year from the date of grant and expire on
January 18, 2015. The estimated fair value of the options on the date of grant was
$1,499. In January 2005, the members of the board of directors were granted options to
purchase 40,000 shares of common stock at an exercise price of $3.00 per share. Two
Company officers were also granted options to purchase 30,000 shares of common stock
each at an exercise price of $3.00 per share. All of these options vest 25% one year
from date of grant, and 1/36th each month thereafter, and expire on January
25, 2015. The estimated fair value of these options on the date of grant was
$299,845. In January 2005, the Companys chairman of the board of directors was granted an
option to purchase 25,000 shares of common stock at an exercise price of $3.50 per
share. The options vest 25% one year from date of grant and 1/36th each
month thereafter, and expire on January 25, 2015. The estimated fair value of these
options on the date of grant was $74,958. Had compensation cost for the Companys stock-based compensation plans been determined
based on the fair value method at the grant dates for awards under the Companys
plans, the Companys net loss and net loss per share for the three months ended March
31, 2005 and 2004 would have been increased to the pro forma amounts indicated below. 8




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2005
    
    
    2004Loss per Share 
    
    
    
    
    
    
    Loss per Share Net Loss
    
    
    Basic and Diluted
    
    
    Net Loss
    
    
    Basic and DilutedAs reported
    
    $
    (241,029
    )
    
    $
    (0.11
    )
    
    $
    (242,111
    )
    
    $
    (0.15
    )Stock based compensation
expense assuming a fair
value based method had
been used for all
awards
    
    
    (46,000
    )
    
    
    (0.02
    )
    
    
    Pro forma
    
    $
    (287,029
    )
    
    $
    (0.13
    )
    
    $
    (242,111
    )
    
    $
    (0.15
    )
 In accordance with the provisions of SFAS 123, all other issuances of common stock,
warrants, stock options or other equity instruments to non-employees as the
consideration for goods or services received by the Company are accounted for based
on the fair value of the equity instruments issued (unless the fair value of the
consideration received can be more reliably measured). Generally, the fair value of
any options, warrants or similar equity investments will be estimated based on the
Black-Scholes option-pricing model. 9




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PART 1  FINANCIAL INFORMATION 
 Item 2  Managements Discussion and Analysis of Financial
 Condition and Results of Operations
 Planet Technologies, Inc. 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, 2004. OVERVIEW Planet Technologies, Inc. (Planet or the Company) formerly known as Planet Polymer
Technologies, Inc. (Planet Polymer) was incorporated in August, 1991, in the State of California,
and, since November 30, 2004, is engaged in the business of designing, manufacturing, selling and
distributing common products for use by allergy sensitive persons, including, without limitation,
air filters, bedding, room air cleaners, and related allergen avoidance products. The business
strategy is primarily based upon promotion of products directly to the consumer by telemarketing to
the Companys database of customers who have purchased the Allergy Free Electrostatic Filter. Planet has an accumulated deficit as of March 31, 2005, of $3,943,725. RESULT OF OPERATIONS The
net loss for the three months ended March 31, 2005, was $241,029 compared to a net loss of
$242,111 for the three-month period ended March 31, 2004. The
Companys net sales decreased by
$159,736, from $381,262 for the three months ended March 31, 2004, to $221,526 for the same period
in 2005. This decrease was due to several factors. First, in 2004, for a portion of the quarter,
there were two active telemarketing sales locations, while in 2005, there is only one. Also, the
Company continues to experience the effects of the Do Not Call legislation (DNC), which went into
effect during the fourth quarter of 2003. Due to DNC requirements, the Company is unable to
contact increasing numbers of its customers via outbound telemarketing. Cost
of sales decreased to $75,505 for the three months ended March 31, 2005, from $146,015
for the same period in 2004, as of a result of the decrease in net
sales. Overall gross margin, as a
percentage of net sales, increased positively period over period from 61.7% for the three months ended
March 31, 2004 to 65.9% for the three months ended March 31, 2005. This positive increase in gross
margin is due primarily to the Companys change in manufacturing strategy in the second quarter of
2004, when the manufacture of the Companys permanent filter was contracted out to a manufacturer
near the Company headquarters in San Diego, California. Total
operating expenses decreased by $40,051 to $380,179 for the three
months ended March 31, 2005. This decrease was due mainly to
$37,760 in moving expenses which were incurred in the first
quarter of 2004, when the Companys Houston, Texas operations
were moved to its San Diego location. 10




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PART 1  FINANCIAL INFORMATION Item 2  Managements Discussion and Analysis of Financial
 Condition and Results of Operations
 Planet Technologies, Inc. Other
expenses decreased $50,257, from $57,128 for the three months ended March 31, 2004, to
$6,871 for the same period in 2005. Of this decrease, $46,864 is due to a reduction of interest
expense related to former shareholder debt. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $128,806 at March 31, 2005. Although the Company used cash
totaling $393,187 for its operations during the quarter, the Company also repaid $100,000 of
advances from a related party and paid principal payments totaling $32,930 on notes payable.
During the quarter, shares were sold to investors through a private placement offering that was
originally initiated during the fourth quarter of 2004. Proceeds related to restricted stock
totaled $280,000 for the quarter. The Company intends to continue its Private Placement Offering
for another 60 days or more in an effort to provide more working capital and for acquisition
opportunities. Inventory
levels remained relatively unchanged during the quarter, and the
Company paid down routine accounts payable and accrued expenses. The Company does not believe that its existing sources of liquidity and anticipated revenue
will be adequate to satisfy the Companys projected working capital and other cash requirements
through December 2005 to continue operations as a public reporting company without raising
additional capital. On March 7, 2005, Planet entered into a definitive agreement to acquire Allergy Control
Products, Inc. (ACP). The merger transaction will be structured pursuant to an Agreement and Plan
of Merger agreed upon by both parties, and is subject to approval by each partys respective
shareholders and other contingencies. Pursuant to the terms of the merger transaction the
shareholder of ACP will be issued 600,000 shares of Planet common stock. In addition, ACP debt to
its shareholder in the approximate amount of $1,500,000 will be paid in full by Planet. For us to
complete this transaction, we will need to raise significant additional capital through our Private
Placement Offering. Investors are encouraged to review our report on Form 8-K filed with the Securities and
Exchange Commission on March 10, 2005, which discusses more thoroughly the terms of the proposed
merger and which is available through EDGAR at www.sec.gov, and when available, the Companys Proxy
Statement which will also be available through EDGAR. 
 ITEM 3. CONTROLS AND PROCEDURES The Companys management, with the participation of the Companys Chief Executive Officer and
the Companys the Chief Financial Officer, has evaluated the effectiveness of the Companys
disclosure controls and procedures as of March 31, 2005. Based on this evaluation, the Companys
Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures are effective for gathering, analyzing and disclosing the information the
Company is 11




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PART 1  FINANCIAL INFORMATION Item 2  Managements Discussion and Analysis of Financial
 Condition and Results of Operations
 Planet Technologies, Inc. required to disclose in the reports it files under the Securities and Exchange Act of 1934,
within the time periods specified in the Securities and Exchange Commissions rules and forms. During the three months ended March 31, 2005, there were no significant changes in the Companys
internal control over financial reporting that materially affected, or is reasonably likely to
materially affect, the Companys internal control over financial reporting. 
 PART II  OTHER INFORMATION 
 Item 1  Legal Proceedings: None 
 Item 2  Changes in Securities: None 
 Item 3  Defaults upon Senior Securities: None 
 Item 4  Submission of Matters to a Vote of Security Holders: None 
 Item 5  Other Information: None 
 Item 6  Exhibits (a) Exhibits Exhibit 31.1 Certification of Principal Executive Officer and Financial Officer
pursuant to Section 302 of the Sarbanes Oxley Act of 2002. Exhibit 32.1 Certification of Principal Executive Officer and Financial Officer
pursuant to Section 906 of the Sarbanes Oxley Act of 2002. 12




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PART 1  FINANCIAL INFORMATION Item 2  Managements Discussion and Analysis of Financial
 Condition and Results of Operations
 Planet Technologies, Inc. 
 SIGNATURES In accordance with the requirements of Exchange Act, the Registrant has duly caused this report on
Form 10-QSB to be signed on its behalf by the undersigned, thereunto duly authorized. Date:
May 13, 2005
    
    Planet Technologies, Inc.
 /s/ Scott L. GlennScott L. GlennChief Executive Officer/s/ Leslie WhiteLeslie WhiteChief Financial Officer andChief Accounting Officer
 13