UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
        Washington, D.C. 20549
         
        FORM 10-Q



(Mark One)

þQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March
        31, 2008.



oTransition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to
        .



Commission file number: 000-28429



PLANKTOS CORP.

(Exact name of registrant as specified in its charter)



|Nevada(State or other jurisdiction of
                    incorporation or organization) | 68-0423301

                    (I.R.S. Employer

                    Identification No.)
|---------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------



145-925 West Georgia Street, Vancouver, British Columbia, Canada V6C 3L2

(Address of principal executive offices) (Zip Code)

(604) 669-4771

(Registrant’s telephone number, including area code)



N/A

(Former name, former address and former fiscal year, if changed since last report)



Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 þ No o.



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company as defined by Rule 12b-2 of the Exchange Act:

Large accelerated filer o Accelerated filer o Non-accelerated filer o
        Smaller reporting company þ



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes þ No o



At May 20, 2008, the number of shares outstanding of the registrant's common stock, $0.001 par value (the only class of voting stock), was 84,751,838.

1





TABLE OF CONTENTS



|                                |                                                                                                  |                                                                                                                                                             |    |    |   | 
|------------------------------- | ------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | -- | - | 
|                                |                                                                                                  |                                                                                                                                                             |    |   
|                                |                                                                                                  |                                                                                                                                                             |    |   
|PART I. - FINANCIAL INFORMATION |                                                                                                  |                                                                                                                                                             |    |   
|                                | ITEM 1.     FINANCIAL STATEMENTS                                                                 |                                                                                                                                                             |    | 3  |  
|                                |                                                                                                  | Consolidated Balance Sheets as of March 31, 2008 (unaudited) and December 31, 2007 (audited)                                                                |    |    | 4 | 
|                                |                                                                                                  | Unaudited Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2008 and March 31, 2007 and the period from inception |    |    | 5 | 
|                                |                                                                                                  | Unaudited Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2008 and March 31, 2007and the period from inception  |    |    | 6 | 
|                                |                                                                                                  | Notes to Unaudited Condensed Consolidated Financial Statements                                                                                              |    |    | 7 | 
|                                | ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                                                             |    | 12 |  
|                                | ITEM 3.    Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                                                                             |    | 17 |  
|                                | ITEM 4T.  Controls and Procedures                                                                |                                                                                                                                                             |    | 17 |  
|                                |                                                                                                  |                                                                                                                                                             |    |    |   | 
|                                |                                                                                                  |                                                                                                                                                             |    |    |   | 
|                                |                                                                                                  |                                                                                                                                                             |    |    |   | 
|PART II. - OTHER INFORMATION    |                                                                                                  |                                                                                                                                                             |    |   
|                                | ITEM 1.     Legal Proceedings                                                                    |                                                                                                                                                             |    | 17 |  
|                                | ITEM 1A.  Risk Factors                                                                           |                                                                                                                                                             |    | 17 |  
|                                | ITEM 2.     Unregistered Sales of Equity Securities and Use of Proceeds                          |                                                                                                                                                             |    | 20 |  
|                                | ITEM 3.     Defaults upon Senior Securities                                                      |                                                                                                                                                             |    | 20 |  
|                                | ITEM 4.     Submission of Matters to a Vote of Securities Holders                                |                                                                                                                                                             |    | 20 |  
|                                | ITEM 5.     Other Information                                                                    |                                                                                                                                                             |    | 20 |  
|                                | ITEM 6.     Exhibits                                                                             |                                                                                                                                                             |    | 20 |  
|                                | Signatures                                                                                       |                                                                                                                                                             |    | 21 |  
|Index to Exhibits               |                                                                                                  |                                                                                                                                                             | 22 |   

2





PART I – FINANCIAL INFORMATION



ITEM 1.     FINANCIAL STATEMENTS



As used herein, the terms “Company,” “we,” “our,” “us,” “it,”
        and “its” refer to Planktos Corp., a Nevada corporation, unless otherwise indicated. In the opinion of management, the accompanying unaudited financial statements included in this Form 10-Q
        reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.



3





|PLANKTOS CORP                                  |                                                      |                                                           |                                      |         |            
|---------------------------------------------- | ---------------------------------------------------- | --------------------------------------------------------- | ------------------------------------ | ------- | -----------
|(formerly Diatom Corporation)                  |                                                      |                                                           |                                      |         |            
|(A Development Stage Company)                  |                                                      |                                                           |                                      |         |            
|CONSOLIDATED BALANCE SHEETS                    |                                                      |                                                           |                                      |         |            
|                                               |                                                      |                                                           |                                      |         |            
|                                               |                                                      |                                                           |                                      |         |            
|                                               |                                                      |                                                           |                                      |         |            
|ASSETS                                         |                                                      |                                                           |                                      |         |            
|                                               | CURRENT ASSETS                                       |                                                           |                                      |         |            
|                                               |                                                      | Cash                                                      |                                      | $       | 152,032    
|                                               |                                                      | Advances receivable                                       |                                      |         | 200        
|                                               |                                                      |                                                           |                                      |         |            
|                                               |                                                      |                                                           | Total Current Assets                 |         |            
|                                               |                                                      |                                                           |                                      |         |            
|                                               | OTHER ASSETS                                         |                                                           |                                      |         |            
|                                               |                                                      | Vessels and other fixed assets, net of depreciation       |                                      |         | -          
|                                               |                                                      | Deposits                                                  |                                      |         | 4,720      
|                                               |                                                      |                                                           |                                      |         |            
|                                               |                                                      |                                                           | Total Other Assets                   |         |            
|                                               |                                                      |                                                           |                                      |         |            
|                                               | TOTAL ASSETS                                         |                                                           | $                                    | 156,952 | $          
|                                               |                                                      |                                                           |                                      |         |            
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |                                                      |                                                           |                                     
|                                               | CURRENT LIABILITIES                                  |                                                           |                                      |         |            
|                                               |                                                      | Accounts payable                                          |                                      | $       | 91,546     
|                                               |                                                      | Other accrued liabilities                                 |                                      |         | -          
|                                               |                                                      | Accrued interest payable – related parties                |                                      |         | 32,614     
|                                               |                                                      | Loan payable – related parties                            |                                      |         | 147,511    
|                                               |                                                      |                                                           |                                      |         |            
|                                               |                                                      |                                                           | Total Current Liabilities            |         |            
|                                               |                                                      |                                                           |                                      |         |            
|                                               | COMMITMENTS AND CONTINGENCIES                        |                                                           |                                      | -       |            
|                                               |                                                      |                                                           |                                      |         |            
|                                               | STOCKHOLDERS' EQUITY (DEFICIT)                       |                                                           |                                      |         |            
|                                               |                                                      | Common stock, authorized 250,000,000 shares of $0.001 par |                                      |         |            
|                                               |                                                      | value, issued and outstanding 84,751,838 at March 31,     |                                      |         |            
|                                               |                                                      | 2008 and 84,751,838 shares at December 31, 2007           |                                      | 84,752  |            
|                                               |                                                      | Additional paid-in capital                                |                                      |         | 3,671,624  
|                                               |                                                      | Deficit accumulated during development stage              |                                      |         | (3,871,095)
|                                               |                                                      |                                                           |                                      |         |            
|                                               |                                                      |                                                           | Total Stockholders' Equity (Deficit) |         |            
|                                               | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |                                                           |                                      |         |            
|                                               | $                                                    | 156,952                                                   | $                                    | 848,841



The accompanying condensed notes are an integral part of these financial statements.

4







|PLANKTOS CORP                                        |                             |                              |            |                                      |            |                                  
|---------------------------------------------------- | --------------------------- | ---------------------------- | ---------- | ------------------------------------ | ---------- | ---------------------------------
|(formerly Diatom Corporation)                        |                             |                              |            |                                      |            |                                  
|(A Development Stage Company)                        |                             |                              |            |                                      |            |                                  
|INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS        |                             |                              |            |                                     
|                                                     |                             |                              |            |                                      |            | From Inception (February 11, 2005
|                                                     |                             |                              |            | For the Three Months Ended March 31, |            | to March 31, 2008)               
|                                                     |                             |                             
|                                                     |                             |                              |            | 2008                                 |            | 2007                             
|                                                     |                             |                              |            | (Unaudited)                          |            | (Unaudited)                      
|REVENUES                                             | $                           | -                            | $          | -                                    | $          | -                                
|                                                     |                             |                              |            |                                      |            |                                  
|OPERATING EXPENSES                                   |                             |                              |            |                                      |            |                                  
|                                                     | Bad debt expense            |                              | -          |                                      | -          |                                  
|                                                     | General and administrative  |                              | 66,949     |                                      | 169,131    |                                  
|                                                     |                             | Total Operating Expenses     |            | 66,949                               |            | 169,131                          
|                                                     |                             |                              |            |                                      |            |                                  
|LOSS FROM OPERATIONS                                 |                             | (66,949)                     |            | (169,131)                            |            | (1,129,594)                      
|                                                     |                             |                              |            |                                      |            |                                  
|OTHER INCOME (EXPENSE)                               |                             |                              |            |                                      |            |                                  
|                                                     | Other income                |                              | 600        |                                      | -          |                                  
|                                                     | Other income- related party |                              | -          |                                      | -          |                                  
|                                                     | Interest income             |                              | 3          |                                      | -          |                                  
|                                                     | Interest expense            |                              | (7,000)    |                                      | -          |                                  
|                                                     |                             | Total Other Income (Expense) |            | (6,397)                              |            | -                                
|                                                     |                             |                              |            |                                      |            |                                  
|NET LOSS BEFORE INCOME TAX                           |                             | (73,346)                     |            | (169,131)                            |            | (1,134,065)                      
|INCOME TAX EXPENSE                                   |                             | -                            |            | -                                    |            | -                                
|                                                     |                             |                              |            |                                      |            |                                  
|NET LOSS FROM CONTINUING OPERATIONS                  |                             | (73,346)                     |            | (169,131)                            |            | (1,134,065)                      
|LOSS ON DISCONTINUED OPERATIONS                      |                             | (118,879)                    |            | -                                    |            | (2,737,030)                      
|                                                     |                             |                              |            |                                      |            |                                  
|NET LOSS                                             | $                           | (192,225)                    | $          | (169,131)                            | $          | (3,871,095)                      
|                                                     |                             |                              |            |                                      |            |                                  
|NET LOSS PER SHARE, CONTINUING OPERATIONS            | $                           | (0.00)                       | $          | (0.00)                               | $          | (0.03)                           
|                                                     |                             |                              |            |                                      |            |                                  
|NET LOSS PER SHARE, DISCONTINUED OPERATIONS          | $                           | (0.00)                       | $          | -                                    | $          | (0.06)                           
|                                                     |                             |                              |            |                                      |            |                                  
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 84,751,838                  |                              | 83,073,838 |                                      | 43,131,680



The accompanying condensed notes are an integral part of these financial statements.





5









|PLANKTOS CORP                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                          |                                                     |           |                                      |           |                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | --------- | ------------------------------------ | --------- | ---------------------------------
|(formerly Diatom Corporation)                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                          |                                                     |           |                                      |           |                                  
|(A Development Stage Company)                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                          |                                                     |           |                                      |           |                                  
|INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                                                                                                                                                                                                                                                                                                                               |                                                          |                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          |                                                     |           |                                      |           | From Inception (February 11, 2005
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          |                                                     |           | For the Three Months Ended March 31, |           | to March 31, 2008)               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          |                                                     |           | 2008                                 |           | 2007                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          |                                                     |           | (Unaudited)                          |           | (Unaudited)                      
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                          |                                                     |           |                                      |          
|Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $                                                        | (73,346)                                            | $         | (169,131)                            | $         | (1,134,065)                      
|Adjustments to reconcile net loss to net cash                                                                                                                                                                                                                                                                                                                                                                                                               |                                                          |                                                     |           |                                      |           |                                  
|(Used) in operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                          |                                                     |           |                                      |           |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Depreciation                                             |                                                     | -         |                                      | 8,707     |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Expenses paid through contribution of paid in capital    |                                                     | -         |                                      | -         |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | (Increase) decrease in deposits                          |                                                     | -         |                                      | -         |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | (Increase) decrease in prepaid expense& misc. receivable | -                                                   |           | -                                    |           | -                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Increase (decrease) in accounts payable                  |                                                     | (96,422)  |                                      | 3,627     |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Increase (decrease) in other liabilities                 |                                                     | (3,242)   |                                      | 43,000    |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Increase (decrease) in accrued interest payable          |                                                     | -         |                                      | -         |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Net Cash (Used in) Continuing Operating Activities       |                                                     | (173,010) |                                      | (113,797) |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Net Cash (Used in) Discontinued Operating Activities     | (331,318)                                           |           | -                                    |           | (2,949,469)                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          | Net Cash Provided by (Used in) Operating Activities | (504,328) |                                      | (113,797) |                                  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                          |                                                     |           |                                      |          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Purchase of vessel and other fixed asset                 |                                                     | -         |                                      | (814,141) |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Sale of vessel                                           |                                                     | 1,000,000 |                                      |           |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Acquisition of business                                  |                                                     | -         |                                      | -         |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          | Net Cash Provided by (Used in) Investing Activities | 1,000,000 |                                      | (814,141) |                                  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                          |                                                     |           |                                      |          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Issued common stock for cash                             |                                                     | -         |                                      | 1,656,000 |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Affiliate receivable                                     |                                                     | (200)     |                                      | (479,999) |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Affiliate payable                                        |                                                     | -         |                                      | -         |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Proceeds from payable - related party                    | -                                                   |           | 98,000                               |           | 1,589,750                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Loan principal repayments                                |                                                     | (400,000) |                                      | (175,000) |                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          | Net Cash Provided by (Used in) Financing Activities | (400,200) |                                      | 1,099,001 |                                  
|NET INCREASE (DECREASE) IN CASH AND                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                          |                                                     |           |                                      |          
|CASH EQUIVALENTS                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          | 95,472                                              |           | 171,063                              |           | 152,032                          
|CASH AT BEGINNING OF PERIOD                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                          | 56,560                                              |           | 67,121                               |           | -                                
|CASH AT END OF PERIOD                                                                                                                                                                                                                                                                                                                                                                                                                                       | $                                                        | 152,032                                             | $         | 238,184                              | $         | 152,032                          
|SUPPLIMENTAL CASH FLOW INFORMATION CASH PAID FOR:                                                                                                                                                                                                                                                                                                                                                                                                           |                                                          |                                                     |           |                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          | Interest                                            | $         | -                                    | $         | -                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          | Income taxes                                        | $         | -                                    | $         | -                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                          |                                                     |           |                                      |           |                                  
|NON-CASH FINANCING AND INVESTING TRANSACTIONS:

                    During 2005, the Company issued 78,711,311 shares of common stock to satisfy debt of $997,010.

                    During 2006, the Company converted $99,541 of accounts payable - related party to loan payable - related party.

                    During 2007, the Company issued 50,000 shares of common stock for services provided by one of our directors valued at $46,000.



The accompanying condensed notes are an integral part of these financial statements.

6







PLANKTOS CORP.
            (formerly Diatom Corporation)
            (A Development Stage Company) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS March 31, 2008


NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION



Planktos Corp. (the “Company”) was incorporated as “eWorld Travel Corp” on December 10, 1998 under the laws of the state of Nevada. On September 23, 2002, the Company changed its name to “GYK Ventures, Inc.” and on July 8, 2005, the Company changed its name to “Diatom Corporation”. The Company
        was originally organized to provide internet-based travel services.



The Company was engaged in the carbon offset business through efforts to prove out an “iron-fertilization” technology.



During December of 2007, the “iron-fertilization” prove-out program of Planktos, Inc. - our subsidiary (“Planktos”), was suspended and efforts are underway to wind down its operations. The Company has since terminated all employees, liquidated substantially all of its assets and, at March 31, 2008, was in the process of
        closing its Foster City, California office. As of March 31, 2008 this prove out program was suspended and $2,737,030 has been recognized as a loss in discontinued operations.

The accompanying unaudited interim financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q of Regulation S-K. They may not include all information and footnotes required by United States generally accepted
        accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2007 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. The interim unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the
        opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal and recurring adjustments have been made. Operating results for the three months ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.



NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES



This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally
        accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.



Accounting Method

The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of March 31, 2008 $39,734 exceeded federally insured limits.



7





PLANKTOS CORP.
            (formerly Diatom Corporation)
            (A Development Stage Company) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS March 31, 2008


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES - continued



Concentrations

The Company maintains its cash accounts in commercial banks. During the year, the Company may maintain balances in excess of the federally insured amounts in the accounts that are maintained in the United States.



Fair Value Measurements

Effective January 1, 2008, the Company adopted Financial Accounting Standards Board (FASB) SFAS No.157, Fair Value Measurements (SFAS 157). The provisions of SFAS 157 are applicable to all of the Company’s assets and liabilities that are measured and recorded at fair value.
        SFAS 157 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. SFAS 157 establishes a fair value hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy defined by SFAS 157 are described below.

Level 1:     Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.



Level 2:     Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.





The Company does not have any assets or liabilities measured at fair value on a recurring basis at March 31, 2008. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, 2008.



Going Concern

As shown in the accompanying financial statements, the Company had a negative working capital of $119,439 and an accumulated deficit of $3,871,095 incurred through March 31, 2008. The Company is currently evaluating its “iron-fertilization” program and is currently seeking out a new business opportunity that might, if successful, mitigate those
        factors which raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
         
        The Company plans on continuing to reduce expenses, and in the event that a new revenue producing business is acquired, believes that it will eventually be able to reverse the present deficit.

8





PLANKTOS CORP.
            (formerly Diatom Corporation)
            (A Development Stage Company) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS March 31, 2008




NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES - continued



Going Concern - continued

An estimated $100,000 is believed necessary to continue operations until such time as a new business opportunity is acquired. In the event that we acquire a new business opportunity, the timing and amount of capital requirements will depend on a number of factors, including the demand for products or services, the availability of opportunities for expansion
        through affiliations and other business relationships. Management intends to seek additional capital from new equity securities offerings that will provide the funds needed to increase liquidity, fund internal growth and fully implement its business plan.



Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All significant intercompany balances and transactions have been eliminated.



Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes.” Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between
        the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by SFAS No. 109 to allow recognition of such an asset.



Recent Accounting Pronouncements

In March 2008, the FASB issued SFAS No. 161 which amends and expands the disclosure requirements of SFAS 133 to provide an enhanced understanding of an entity’s use of derivative instruments, how they are accounted for under SFAS 133 and their effect on the entity’s financial position, financial performance and cash
        flows. The provisions of SFAS 161 are effective for the period beginning after November 15, 2008. The Company is currently reviewing the effect, if any, that the adoption of this statement will have on our financial statements.



Reclassification

Certain amounts from prior periods have been reclassified to conform to the current period presentation. This reclassification has resulted in no changes to the Company’s accumulated deficit or net losses presented.



Use of Estimates

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of
        the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.



Development Stage



The Company is a development stage company as defined in Financial Accounting Standards Board Statement No. 7. It is concentrating substantially all of its efforts in raising capital and re-defining its business operation in order to generate revenues.



9





PLANKTOS CORP.
            (formerly Diatom Corporation)
            (A Development Stage Company) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS March 31, 2008


NOTE 3 – VESSEL AND OTHER FIXED ASSETS



Vessel and other fixed assets consist of the following at March 31, 2008 and December 31, 2007:

| |                                  |                |  |                  
| | -------------------------------- | -------------- |  | -----------------
| |                                  | March 31, 2008 |  | December 31, 2007
| |                                  |                |  |                  
| | Research Vessel “Weatherbird II” | $ -            |  | $ 800,000        
| | Marine Equipment                 | -              |  | 23,306           
| |                                  | -              |  | 823,306          
| | Accumulated Depreciation         | -              |  | (35,745)         
| | Net Vessel & Equipment           | $ -            |  | $ 787,561        



On February 28, 2008, the Company completed the sale of the Weatherbird II for cash proceeds of $1,000,000. As a result, the Company recorded a gain of $212,439 in discontinued operations.



NOTE 4 – RELATED PARTY TRANSACTIONS



As of March 31, 2008, the Company owes $147,511 in loans and $32,614 in accrued interest payable to related parties.



NOTE 5 – CAPITAL STOCK



Common Stock

There were no equity, stock option or stock warrant transactions for the three months ended March 31, 2008.



NOTE 6 – COMMITMENTS AND OBLIGATIONS

On February 21, 2008 Planktos executed an agreement to sell its sixty percent (60%) interest in Klimafa to Dr. David Gazdag in exchange for two hundred and fifty thousand dollars ($250,000) in the form of a
        convertible debenture with a repayment term being the earlier of ten years or Klimafa’s generation of cash flow, bearing four percent (4%) per annum, convertible into sequestered tones of carbon dioxide credits. As of March 31, 2008, this agreement has yet to be finalized.



NOTE 7 – DISCONTINUED OPERATIONS



In December 2007, the Company suspended its Iron-Fertilization Prove-Out operations and initiated negotiations for the sale of the related assets (See Note 1).  Accordingly, this business component has been presented as discontinued operations within the consolidated financial statements in accordance with SFAS No. 144, “ Accounting
        for the Impairment or Disposal of Long-Lived Assets” and EITF 03-13. As discussed in Note 1, the Company was engaged in research related to creation and sales of “Kyoto Protocol” certified emission reduction credits.



The loss from disposal of discontinued operations for the year ended December 31, 2007 and cumulatively for the three months ended March 31, 2008 were $2,575,491 and $2,737,030, respectively.

10





PLANKTOS CORP.
            (formerly Diatom Corporation)
            (A Development Stage Company) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS March 31, 2008


NOTE 8 – SUBSEQUENT EVENTS



On February 22, 2008 the Company and Planktos entered into a Settlement and Release Agreement with Russ George, Solar Energy Limited - our parent company (“Solar”), and Nelson Skalbania for the purposes of separating the services and know-how of Russ George, from each of the Company and Planktos. The agreement provided that Russ
        George resign his positions as the Company’s chief executive officer, chief financial officer and principal accounting officer, resign from the Company’s board of directors and return to Solar for cancellation 3,500,000 shares of Solar that were issued to him for his ownership interest in Planktos (and his interest in D2Fusion, Inc., a wholly owned subsidiary of Solar) in exchange for his right to the exclusive use of the name “Planktos” and the non-exclusive use
        of the proprietary know-how associated with “iron-fertilization”. On April 11, 2008, Solar’s 3,500,000 shares were returned to treasury and cancelled.



On April 30, the company closed its Foster City, California office.

11







Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS



This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain
        forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms.
        Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following
        discussion should be read in conjunction with our financial statements and notes thereto included in this report. Our fiscal year end is December 31. All information presented herein is based on the three month period ended March 31, 2008.



Discussion and Analysis



During December of 2007 the Company discontinued its “iron-fertilization” prove-out
        program and commenced efforts to wind-down its business. We continued these efforts through the three month period ended March 31, 2008, terminating all of our employees and divesting substantially all of our assets, including the sale of our research vessel
        on February 28, 2008. Subsequent to the current period, on April 30, 2008, we closed our Foster City, California office.



The Company, through our wholly owned subsidiary, Planktos, Inc. (“Planktos”), had been focused on reviving marine as well as land based ecosystem health and biodiversity with the intention of slowing global climate change.
        We had launched a two year “iron-fertilization” pilot project to restore hundreds of millions of tons of missing plankton plant life in the open seas to sequester tens of millions of tons of CO2, thereby generating
        what we believe would be the largest volume of low-cost greenhouse gas offsets or “carbon credits” available to commercial, governmental and green consumer clients.
         Following the decision to wind-down our business the Company and Planktos entered into a Settlement and Release Agreement dated February 22, 2008 with Solar Energy Limited (our parent company, “Solar”), Russ George, and Nelson
        Skalbania for the purposes of separating the services and know-how of Russ George, from each of the Company and Planktos. The agreement provided that Mr. George resign his executive officer and directorship positions with the Company and return to Solar for cancellation 3,500,000 shares of Solar that were issued to him for his ownership interest in Planktos. The agreement provides Mr. George with
        the exclusive right to use the name “Planktos” and the non-exclusive right to use proprietary know-how associated with “iron-fertilization.”



KlimaFa S.A. (“KlimaFa”), Planktos’ former
        Hungarian subsidiary, intends to plant thousands of hectares of new, permanently protected, native forests in the national parks system of the European Union to produce low cost “carbon credits.” On February
        21, 2008 Planktos executed an agreement to sell its 60 % interest in KlimaFa to Dr. David Gazdag in exchange for $250,000 in the form of a convertible debenture with a repayment term being the earlier of ten years or Klimafa’s generation of cash flow, bearing four percent per annum, convertible into sequestered tons of
        “carbon credits.” As of March 31, 2008, this agreement had yet to be finalized.



The Company’s plan of operation over the next twelve months will require a minimum of
        $100,000 to (i) reconsider its objectives with respect to carbon sequestration in
        general, and “iron fertilization” in particular; or (ii) identify a suitable business opportunity for development through merger or acquisition. Should, the
        Company decide to remain involved with carbon sequestration or alternatively decide to develop a business opportunity through merger or acquisition, our funding requirements will change.The Company has been funded since inception from public or private debt or equity placements or by major shareholders in the form of loans. Substantially all of the capital raised to date has been allocated in some manner to a prove-out of Planktos’ “iron fertilization” program.

12







Results of Operations



During the three month period ended March 31, 2008, the Company was focused on
        (i) winding down its intended carbon sequestration business, (ii) disposing of essentially all of its assets including the
        research vessel, (iii) finalizing an agreement to separate from the services offered
        by Russ George, (iv) reaching an agreement to sell KlimaFa, and (v) satisfying continuous public disclosure requirements.



The Company has not generated any revenues since inception. Since we have suspended operations and have no current ability to
        generate revenue, we expect to continue to incur losses for the foreseeable future.



Net Losses

For the period from inception until March 31, 2008, the Company incurred a net loss of $3,871,095. Net losses for the three month period ended
        March 31, 2008 were $192,225 as compared to $169,131 for the three month period ended March 31, 2007.
        The Company’s net losses in the current period are primarily attributable to general and administrative expenses of $66,949 and losses from discontinued operations of $118,879. General and administrative expenses include accounting
        expenses, professional fees, consulting fees, and costs associated with the preparation of disclosure documentation while losses from discontinued operations are the result of the suspension of efforts dedicated to the sequestration of CO2.



Capital Expenditures

During the year ended December 31, 2007, the Company expended $800,000 on its former research vessel which was sold during the current three month period for $1,000,000 and $23,306 on marine equipment. Otherwise,
        we have expended no significant amounts on capital expenditures for the period from inception to March 31, 2008.



Income Tax Expense (Benefit)



The Company has a prospective income tax benefit resulting from a net operating loss carryforward and start up costs that may offset any future operating profit.



Impact of Inflation



The Company believes that inflation has had a negligible effect on operations over the past three years.



Liquidity and Capital Resources

The Company is in the development stage and, since inception, has experienced significant changes in liquidity, capital resources and stockholders’ equity. We have been funded since inception from public or private debt or equity placements or by major shareholders in the form of loans.



Cash flow used in operating activities was $3,887,247 for the period from inception to March 31, 2008. Cash flow used in operating activities for the
        three month period ended March 31, 2008 was $504,328 as compared to $113,797 for the three month period ended March 31, 2007. The increase in cash
        flow used in operating activities in the current period was due primarily to cash used in discontinued operations.

13





Cash flow provided by investing activities was $249,394 for the period from inception to March 31, 2008. Cash
        flow provided by investing activities for the three month period ended March 31, 2008 was $1,000,000 as compared to $814,141 used in
        investing activities for the three month period ended March 31, 2007. Cash flow provided by investing activities in the current period is attributed to the
        sale of our research vessel.

Cash flow provided by financing activities was $3,789,885 for the period from inception to March 31, 2008. Cash flow
        used in financing activities for the three month period ended March 31, 2008 was $400,200 as compared to $1,099,001 provided by financing activities
        for the three month period ended March 31, 2007. Cash flow used in financing activities in the current period can be primarily attributed to loan
        repayments.

The Company had a working capital deficit of $119,439 as of March 31, 2008, down from $714,775 as of December 31, 2007. As of March 31, 2008 our total assets were
        $156,952 and our total current assets were $152,232, consisting almost entirely of cash. As of March 31, 2008 our current liabilities
        were $271,671, consisting of a loan payable to a related party, with interest, and accounts payable. Net stockholders' deficit in the Company was $114,719 as of March 31, 2008 as compared to a net stockholders’ equity of $77,506
        at December 31, 2007.



The Company’s current assets are insufficient to conduct our plan of operation over the next twelve months and we will have to seek debt or equity financing to fund operations. The Company has no current commitments or arrangements with respect to, or immediate sources of funding.
        Further, no assurances can be given that funding is available or available to the Company on acceptable terms. The Company’s shareholders would be the most likely source of new funding in the form of loans or equity placements though none have made any commitment for future investment and we have no agreement formal or otherwise. The Company’s inability to obtain funding has had a material adverse
        affect on our plan of operation and will continue to diminish our efforts.

The Company does not expect to pay cash dividends in the foreseeable future.
         The Company had no lines of credit or other bank financing arrangements as of March 31, 2008.
         The Company has no defined benefit plan or contractual commitment with any of its officers or directors.



The Company sold its research vessel for $1,000,000 during the three month period ended March 31, 2008 and otherwise has no plans for the purchase or sale of any
        plant or equipment.



The Company currently has no employees and has no plans to hire any employees in the near future.



Off Balance Sheet Arrangements



As of March 31, 2008, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to
        stockholders.



14





Going Concern



The Company’s auditors have expressed an opinion as to our ability to continue as a going concern as a result of an accumulated deficit of $3,678,870 as of December 31, 2007. Our accumulated deficit increased to $3,871,095 as of March 31, 2008. Our ability to
        continue as a going concern is subject to the ability of the Company to obtain the necessary funding from outside sources. Management’s plan to address the Company’s ability to continue as a going concern, includes (i) obtaining funding from private placement sources; (ii) obtaining additional funding from the sale of the Company’s securities; (iii) establishing revenues from a suitable business opportunity that has not yet been identified; (iv) obtaining loans and
        grants from various financial institutions where possible. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful.



Forward Looking Statements and Factors That May Affect Future Results and Financial Condition



The statements contained in the section titled “Results of Operations” and “Description of Business”, with the exception of historical facts, are forward looking
        statements. A safe-harbor provision may not be applicable to the forward looking statements made in this current report Forward looking statements reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning:

| | · | our anticipated financial performance and business plan;
| | - | --------------------------------------------------------

| | · | the sufficiency of existing capital resources;
| | - | ----------------------------------------------

| | · | our ability to raise additional capital to fund cash requirements for future operations;
| | - | ----------------------------------------------------------------------------------------

| | · | uncertainties related to the Company’s future business prospects;
| | - | -----------------------------------------------------------------

| | · | the ability of the Company to generate revenues to fund future operations;
| | - | --------------------------------------------------------------------------

| | · | the volatility of the stock market and; and
| | - | -------------------------------------------

| | · | general economic conditions.
| | - | ----------------------------



We wish to caution readers that our operating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated, including the factors set forth in the section entitled “Risk Factors”
        included elsewhere in this report. We also wish to advise readers not to place any undue reliance on the forward looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than is required by law.



15





Stock-Based Compensation

We have adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based
        Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. In January 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which provides supplemental
        implementation guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and instead generally requires that such transactions be accounted for using a fair-value-based method. We use the Black-Scholes-Merton (“BSM”) option-pricing model to determine the fair-value of stock-based awards
        under SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS No. 123, Accounting for Stock-Based Compensation. We have elected the modified prospective transition method as permitted by SFAS No. 123R and accordingly prior periods have not been restated to reflect the impact of SFAS No. 123R. The modified prospective transition method requires that stock-based compensation expense be recorded for all new and unvested stock options, restricted stock, restricted
        stock units, and employee stock purchase plan shares that are ultimately expected to vest as the requisite service is rendered beginning on January 1, 2006, the first day of our fiscal year 2006. Stock-based compensation expense for awards granted prior to January 1, 2006 is based on the grant date fair-value as determined under the pro forma provisions of SFAS No. 123.



Prior to the adoption of SFAS No 123R, we measured compensation expense for our employee stock-based compensation plans using the intrinsic value method prescribed by APB Opinion No. 25. We applied the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for
        Stock-Based Compensation – Transition and Disclosure, as if the fair-value-based method had been applied in measuring compensation expense. Under APB Opinion No. 25, when the exercise price of the Company’s employee stock options was equal to the market price of the underlying stock on the date of the grant, no compensation expense was recognized.



We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force (“EITF”) in Issue No. 96-18. Costs are measured at the estimated
        fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.



Recent Accounting Pronouncements



In March 2008, the FASB issued SFAS No. 161 which amends and expands the disclosure requirements of SFAS 133 to provide an enhanced understanding of an entity’s use of derivative instruments, how they are accounted for under SFAS 133 and their effect on the
        entity’s financial position, financial performance and cash flows. The provisions of SFAS 161 are effective for the period beginning after November 15, 2008. The Company is currently reviewing the effect, if any, that the adoption of this statement will have on our financial statements.



16





ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Not required.



ITEM 4T.CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to ensure that information
        required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.



Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be
        disclosed, within the time periods specified in the Commission’s rules and forms.

Changes in Internal Control over Financial Reporting



There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended March 31, 2008, that materially affected, or are reasonably likely to materially affect,
        the Company’s internal control over financial reporting.



PART II – OTHER INFORMATION



ITEM 1.     LEGAL PROCEEDINGS

Legal proceedings were initiated by Mary Ruth Ladd against the Company and certain individuals affiliated to the Company on October 3, 2007 in the Superior Court of the State of California, County of San Francisco in connection with allegations of discrimination and retaliation against a whistle blower, wrongful termination,
        fraud, breach of contract, wrongful business acts and intentionally causing injury in the workplace. The claim seeks $58,280 in lost wages in addition to certain employee benefits and punitive damages. The Company has retained counsel to respond to these allegations and denies any liability for these alleged causes of action.



ITEM 1A.RISK FACTORS

The Company’s operations and securities are subject to a number of risks. Below we have identified and discussed the material risks that we are likely to face. Should any of the following risks occur, they will adversely affect our operations, business, financial condition and/or operating results as well as the future trading price and/or
        the value of our securities.



17





We have essentially suspended all operations and our ability to continue is in doubt.

During December of 2007 the Company suspended its “iron-fertilization” prove out efforts and commenced efforts to wind down its
        business including the sale of assets and termination of employees. The Company’s limited financial resources and absence of ongoing business operations place its ongoing operation in doubt.



We have a history of significant operating losses and such losses may continue in the future.



Since the beginning or our development stage, our operations have resulted in a continuation of losses and an accumulated deficit of $3,871,095 at December 31, 2007. The Company has never realized revenue from operations.
        We will continue to incur operating losses as we maintain our search for a suitable business opportunity and satisfy our ongoing disclosure requirements with the Commission. Such continuing losses could result in a decrease in share value.



The Company’s limited financial resources cast severe doubt on our ability to develop a profitable business opportunity.



The Company’s future operation is dependent upon its ability to develop a profitable business opportunity. However, the prospect of developing such an opportunity is doubtful due to the Company’s limited
        financial resources. Since we are a “shell” company, our ability to improve this financial condition through debt or equity offerings is limited. Such limitation may act as a deterrent in future negotiations with prospective business opportunities. Should we be unable to develop a profitable business opportunity the Company will,
        in all likelihood, be forced to cease operations.



The Company will require additional capital funding.

The Company will require additional funds, either through equity offerings or debt placements to develop our operations. Such additional capital may result in dilution to our current shareholders. Our ability to meet short-term and long-term financial commitments depends on future cash. There can be no assurance that future income will generate sufficient funds to enable us to meet our financial commitments.



Corporate control lies in the hands of one shareholder.



Solar Energy Limited owns and controls voting power over approximately 54% of the Company’s issued and outstanding stock. The concentration of such a large percentage of the Company’s stock in the hands of one shareholder may
        have a disproportionate effect on the voting power of minority shareholders’ upon any and all matters presented to the Company’s shareholders.



The market for our stock is limited and our stock price may be volatile.

The market for our common stock has been limited due to low trading volume and the small number of brokerage firms acting as market makers. Because of the limitations of our market and volatility of the market price of our stock, investors may face difficulties in selling shares at attractive prices when they want to. The average daily trading volume for our stock has varied significantly from week to week and from month to month, and the trading volume often varies widely from day to
        day.



18





The Company does not pay cash dividends.



The Company does not pay cash dividends. We have not paid any cash dividends since inception and have no intention of paying any cash dividends in the foreseeable future. Any future dividends would be at the discretion of our board of directors and would depend on, among other things, future earnings, our operating and financial condition, our
        capital requirements, and general business conditions. Therefore, shareholders should not expect any type of cash flow from their investment.

We incur significant expenses as a result of being registered under the Securities Exchange Act of 1934, as amended, which may negatively
        impact our financial performance.We incur significant legal, accounting and other expenses as a result of being registered under the Securities Exchange Act of 1934, as amended. The Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission, has required changes in corporate governance practices of public companies. We expect that compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, may
        substantially increase our expenses, including our legal and accounting costs, and make some activities more time-consuming and costly. As a result, there may be a substantial increase in legal, accounting and certain other expenses in the future, which would negatively impact our financial performance and could have a material adverse effect on our results of operations and financial condition.



Our internal controls over financial reporting may not be considered effective in the future, which could result in a loss of investor confidence in our financial reports and in turn have an adverse effect on our stock price.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our management on our internal controls over financial reporting. Such report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end of the year, including a statement as to whether or not our internal controls over financial reporting are effective. This assessment must include disclosure of any material
        weaknesses in our internal controls over financial reporting identified by management. If we are unable to continue to assert that our internal controls are effective, our investors could lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline.



The Company’s shareholders may face significant restrictions on their stock.



The Company’s stock differs from many stocks in that it is a “penny stock.” The Commission has adopted a number of rules to regulate “penny stocks” including, but not limited to, those rules from the Securities Act as follows:



3a51-1     which defines penny stock as, generally speaking, those securities which are not listed on either NASDAQ or a national securities exchange and are priced under $5, excluding securities of issuers that have net tangible assets greater than $2 million if they have been in operation at least
        three years, greater than $5 million if in operation less than three years, or average revenue of at least $6 million for the last three years;

15g-1     which outlines transactions by broker/dealers which are exempt from 15g-2 through 15g-6 as those whose commissions from traders are lower than 5% total commissions;

15g-2      which details that brokers must disclose risks of penny stock on Schedule 15G;

15g-3      which details that broker/dealers must disclose quotes and other information relating to the penny stock market;

15g-4      which explains that compensation of broker/dealers must be disclosed;

19







15g-5      which explains that compensation of persons associated in connection with penny stock sales must be disclosed;

15g-6      which outlines that broker/dealers must send out monthly account statements; and

15g-9     which defines sales practice requirements.



Since the Company’s securities constitute a “penny stock” within the meaning of the rules, the rules would apply to us and our securities. Because these rules provide regulatory burdens upon broker-dealers, they may affect the ability of shareholders to sell their securities in any market that may develop; the rules themselves may limit the
        market for penny stocks. Additionally, the market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may
        fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all.



Shareholders should be aware that, according to Commission Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered from patterns of fraud and abuse. These patterns include:

| | · | control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
| | - | -----------------------------------------------------------------------------------------------------------------------

| | · | manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
| | - | -------------------------------------------------------------------------------------------------------------------

| | · | “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
| | - | -------------------------------------------------------------------------------------------------------------------------------

| | · | excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
| | - | ------------------------------------------------------------------------------------------

| | · | the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.



ITEM 3.     DEFAULTS ON SENIOR SECURITIES



None.

ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



ITEM 5.     OTHER INFORMATION

None.



ITEM 6.     EXHIBITS



Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 22 of this Form 10-Q, and are incorporated herein by this
        reference.

20





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.



Planktos Corp.



/s/ Robert FisherDate: May 20, 2008

Robert Fisher

Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer

21





INDEX TO EXHIBITS



Exhibit         Description



3(i)(a)*         Articles of Incorporation (incorporated by reference to the Company’s Form 10-SB filed with the Commission on January 31, 2000)



3(i)(b)*         Amendment of the Company’s Articles of Incorporation (incorporated by reference to the
        Company’s Form 8-K filed with the Commission on September 24, 2002)



3(i)(c)*         Amendment of the Company’s Articles of Incorporation (incorporated by reference to the Company’s Form 8-K filed with the Commission on August 10, 2007)



3(i)(d)*         Amendment of the Company’s Articles of Incorporation (incorporated by reference to the Company’s Form 8-K filed with the Commission on August 10, 2007)



3(i)(e)*         Amendment of the Company’s Articles of Incorporation (incorporated by reference to the Company’s Form 8-K filed with the Commission on August 10, 2007)



3(ii)*             By-laws (incorporated herein by reference to the Company’s Form 10-SB filed with the Commission on January 31, 2000)



10(i)*            Iron-Fertilization Prove-Out and Purchase Agreement with Solar, dated August 17, 2005 (incorporated by reference to the Company’s Form 10-QSB/A filed with the Commission on September 7, 2005)



10(ii)*           Securities Exchange Agreement and Plan of Exchange with Solar, dated January 12, 2007 (incorporated by reference to the Company’s Form 8-K filed with the Commission on January 19, 2007)



10(iii)*          Settlement and Release Agreement between the Company, Planktos, Russ George, Solar, and Nelson Skalbania dated February 22, 2008 (incorporated by reference to the Company’s Form 8-K filed with the
        Commission on March 31, 2008)



14*              Code of Ethics adopted April 1, 2008(incorporated herein by reference to Form 10-K dated April 29, 2008).



31                Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32                Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



*      Incorporated by reference to previous filings of the Company.



22