**SECURITIES AND        EXCHANGE COMMISSION        Washington, D.C. 20549**

**FORM        10-QSB**

*(Mark        One)*

þ     Quarterly        report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly        period ended **June 30, 2007**.

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

Commission file        number: **000-31390**

**PLANKTOS        CORP.****(formerly "Diatom Corporation")**

(Exact name of small        business issuer as specified in its charter)

| **NEVADA**                        (State or other jurisdiction of incorporation or organization) | **68-0423301**                        (IRS Employer Identification Number) |
|--------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|

**1151 Triton        Drive, Suite C, Foster City, California 94404**        (Address of Principal Executive        Office)          (Zip Code)

**(650)        638-1975**(Issuer’s telephone number)

Check 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            ̈

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2        of the Exchange Act).

        Yes     ̈                 No           þ

The number of outstanding shares of the        registrant’s common stock, $0.001 par value (the only class of voting stock), as of        August 20, 2007 was 83,673,873.

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**TABLE OF CONTENTS**

**           **Page**    **PART I.**     **ITEM 1.                    FINANCIAL STATEMENTS**  3   Unaudited Balance Sheets as of June 30,                            2007   4   Unaudited  Statements of Income                            for the three and six months ended June 30, 2007 and                            2006     5   Unaudited Statements of Cash Flows for the                            six months ended June 30, 2007 and 2006    6   Notes to the Unaudited Financial                            Statements  8                 **ITEM 2. MANAGEMENT'S DISCUSSION                            AND ANALYSIS**  17  **ITEM 3.                    CONTROLS AND PROCEDURES**  25 **PART II.**     **ITEM 1.                    LEGAL PROCEEDINGS**  26  **ITEM 2.                    UNREGISTERED SALES OF EQUITY SECURITIES**  26  **ITEM 3.                    DEFAULTS UPON SENIOR SECURITIES**  26  **ITEM 4.                    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**  27  **ITEM 5.                    OTHER INFORMATION**  27  **ITEM 6.                    EXHIBITS**  27  **SIGNATURES**  28 **INDEX TO                    EXHIBITS**  29 **
**            2        **

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**PART        I**

 

| **ITEM 1.** | **FINANCIAL STATEMENTS** |
|-------------|--------------------------|

 

As used        herein, the term “Company,” refers to Planktos Corp. (formerly “Diatom        Corporation”), a Nevada corporation and its predecessors, unless otherwise indicated.        In the opinion of management, the accompanying unaudited financial statements included in        this Form 10-QSB 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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| **PLANKTOS CORP**                                                         |                           |                                                                          |                                 |      |        |
|---------------------------------------------------------------------------|--------------------------------|-------------------------------------------------------------------------------|--------------------------------------|-----------|-------------|
| **(formerly Diatom Corporation)**                                         |                           |                                                                          |                                 |      |        |
| **(A Development Stage Company)**                                         |                           |                                                                          |                                 |      |        |
| **BALANCE SHEETS**                                                        |                           |                                                                          |                                 |      |        |
|                                                                      |                           |                                                                          |                                 |      |        | June 30, |   | December 31, |
|                                                                      |                           |                                                                          |                                 |      |        | 2007 |   | 2006 |
|                                                                      |                           |                                                                          |                                 |      |        | (unaudited) |   |   |
| **ASSETS**                                                                |                           |                                                                          |                                 |      |        |   |
|                                                                      | CURRENT ASSETS                 |                                                                          |                                 |      |        |   |
|                                                                      |                           | Cash                                                                          |                                 | $         | 14,469      | $ | 67,121 |
|                                                                      |                           | Advances receivable                                                           |                                 |      | 797,194     |   | 5,824 |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |
|                                                                      |                           |                                                                          | Total Current Assets                 |      |        | 811,663 |   | 72,945 |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |
|                                                                      | OTHER ASSETS                   |                                                                          |                                 |      |        |   |
|                                                                      |                           | Vessels and other fixed assets, net of                        depreciation    |                                 |      | 796,727     |   | - |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |
|                                                                      |                           |                                                                          | Total Other Assets                   |      |        | 796,727 |   | - |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |
|                                                                      | **TOTAL ASSETS**               |                                                                          | $                                    | 1,608,390 | $           | 72,945 |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |
| **LIABILITIES AND STOCKHOLDERS' EQUITY                        (DEFICIT)** |                           |                                                                          |                                 |      |
|                                                                      | CURRENT LIABILITIES            |                                                                          |                                 |      |        |   |
|                                                                      |                           | Accounts payable                                                              |                                 | $         | 9,018       | $ | 245 |
|                                                                      |                           | Loan payable – related party                                            |                                 |      | 110,510     |   | 174,511 |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |
|                                                                      |                           |                                                                          | Total Current Liabilities            |      |        | 119,528 |   | 174,756 |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |
|                                                                      | COMMITMENTS AND CONTINGENCIES  |                                                                          |                                 | -         |        | - |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |
|                                                                      | STOCKHOLDERS' EQUITY (DEFICIT) |                                                                          |                                 |      |        |   |
|                                                                      |                           | Common stock, authorized 100,000,000 shares                                   |                                 |      |        |   |   |
|                                                                      |                           | of $0.001 par value, issued and outstanding                        83,673,838 |                                 |      |        |   |
|                                                                      |                           | at June 30, 2007 and 77,438,838 at December 31,                        2006   |                                 | 83,674    |        | 77,439 |
|                                                                      |                           | Additional paid-in capital                                                    |                                 |      | 5,185,898   |   | 3,393,148 |
|                                                                      |                           | Deficit accumulated during development stage                                  |                                 |      | (3,780,710) |   | (3,572,398) |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |
|                                                                      |                           |                                                                          | Total Stockholders' Equity (Deficit) |      |        | 1,488,862 |   | (101,811) |
|                                                                      |                           |                                                                          |                                 |      |        |   |   |   |

 

 

|   | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        (DEFICIT)** | $ | 1,608,390 | $ | 72,945 |
|--------|---------------------------------------------------------------------------------|---|-----------|---|--------|

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

 

 

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| **PLANKTOS CORP**                 |                           |                         |   |                                             |   |                                           |    |                                |   |           |
|-----------------------------------|--------------------------------|------------------------------|--------|--------------------------------------------------|--------|------------------------------------------------|---------|-------------------------------------|--------|----------------|
| **(formerly Diatom Corporation)** |                           |                         |   |                                             |   |                                           |    |                                |   |           |
| **(A Development Stage Company)** |                           |                         |   |                                             |   |                                           |    |                                |   |           |
| **STATEMENTS OF OPERATIONS**      |                           |                         |   |                                             |   |                                           |    |                                |   | From Inception |
|                              |                           |                         |   |                                             |   |                                           |    | (December 10,                       |
|                              |                           |                         |   | For the Three Months Ended June 30,

(unaudited) |   | For the Six Months Ended June 30,

(unaudited) |    | 1998) to June 30, 2007

(unaudited) |
|                              |                           |                         |   | 2007                                             |   | 2006                                           |    | 2007                                |   | 2006           |   |   |
| REVENUES                          |                           | $ -                          |   | $ -                                              |   | $ -                                            |    | $ -                                 |   | $ -            |
|                              |                           |                         |   |                                             |   |                                           |    |                                |   |           |   |   |
| OPERATING EXPENSES                |                           |                         |   |                                             |   |                                           |    |                                |   |           |
|                              | General and administrative     |                         | 39,181 |                                             | -      |                                           | 208,312 |                                | 12,815 |           | 3,527,851 |
|                              |                           | Total Operating Expenses     |   | 39,181                                           |   | -                                              |    | 208,312                             |   | 12,815         |   | 3,527,851 |
|                              |                           |                         |   |                                             |   |                                           |    |                                |   |           |   |   |
| LOSS FROM OPERATIONS              |                           | (39,181)                     |   | -                                                |   | (208,312)                                      |    | (12,815)                            |   | (3,527,851)    |
|                              |                           |                         |   |                                             |   |                                           |    |                                |   |           |   |   |
| OTHER INCOME (EXPENSE)            |                           |                         |   |                                             |   |                                           |    |                                |   |           |
|                              | Loss on sale of securities     |                         | -      |                                             | -      |                                           | -       |                                | -      |           | (12,108) |
|                              | Gain on settlement of debt     |                         | -      |                                             | -      |                                           | -       |                                | -      |           | 9,249 |
|                              | Write down of marketing rights |                         | -      |                                             | -      |                                           | -       |                                | -      |           | (250,000) |
|                              |                           | Total Other Income (Expense) |   | -                                                |   | -                                              |    | -                                   |   | -              |   | (252,859) |
|                              |                           |                         |   |                                             |   |                                           |    |                                |   |           |   |   |
| NET LOSS BEFORE INCOME TAX        |                           | (39,181)                     |   | -                                                |   | (208,312)                                      |    | (12,815)                            |   | (3,780,710)    |
| INCOME TAX EXPENSE                |                           | -                            |   | -                                                |   | -                                              |    | -                                   |   | -              |
| NET LOSS                          |                           | $ (39,181)                   |   | $ -                                              |   | $ (208,312)                                    |    | $ (12,815)                          |   | $ (3,780,710)  |
|                              |                           |                         |   |                                             |   |                                           |    |                                |   |           |   |   |
| NET LOSS PER SHARE                |                           | $ nil                        |   | $ nil                                            |   | $ nil                                          |    | $ nil                               |   |           |

 

| WEIGHTED AVERAGE NUMBER OF COMMON SHARES                        OUTSTANDING |  

83,273,838 |   |  

77,438,838 |   |  

82,947,588 |   |  

77,438,838 |   |  

                          |
|-----------------------------------------------------------------------------|--------------------|--------|--------------------|--------|--------------------|--------|--------------------|--------|----------------------------------------|

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

 

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| **PLANKTOS CORP**                             |                                            |                                      |      |                                           |     |                                |
|-----------------------------------------------|-------------------------------------------------|-------------------------------------------|-----------|------------------------------------------------|----------|-------------------------------------|
| **(formerly Diatom Corporation)**             |                                            |                                      |      |                                           |     |                                |
| **(A Development Stage Company)**             |                                            |                                      |      |                                           |     |                                |
| **STATEMENTS OF CASH FLOWS**                  |                                            |                                      |      |                                           |     | From Inception                      |
|                                          |                                            |                                      |      |                                           |     | (December 10,                       |
|                                          |                                            |                                      |      | For the Six Months Ended June 30,

(unaudited) |     | 1998) to June 30, 2007

(unaudited) |
|                                          |                                            |                                      |      | 2007                                           |     | 2006                                |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:         |                                            |                                      |      |                                           |     |
| Net loss                                      | $                                               | (208,312)                                 | $         | (12,815)                                       | $        | (3,780,710)                         |
| Adjustments to reconcile net loss to net cash |                                            |                                      |      |                                           |     |                                |
| (Used) in operating activities:               |                                            |                                      |      |                                           |     |                                |
|                                          | Depreciation                                    |                                      | 17,414    |                                           | -        |                                | 17,414 |
|                                          | Stock issued for services                       |                                      | 43,000    |                                           | -        |                                | 1,524,000 |
|                                          | Warrant expense                                 |                                      | -         |                                           | -        |                                | 500,347 |
|                                          | Loss on sale of securities                      |                                      | -         |                                           | -        |                                | 12,108 |
|                                          | Write down of marketing rights                  |                                      | -         |                                           | -        |                                | 250,000 |
|                                          | Gain on settlement of notes receivable          |                                      | -         |                                           | -        |                                | (9,249) |
|                                          | (Increase) decrease in advances receivable      |                                      | (791,370) |                                           | -        |                                | (797,194) |
|                                          | Increase (decrease) in accounts payable         |                                      | 8,773     |                                           | 424      |                                | 8,868 |
|                                          | Increase (decrease) in related accounts payable | -                                         |      | -                                              |     | 179,936                             |
|                                          |                                            | Net Cash (Used in) Operating Activities   | (930,495) |                                           | (12,391) |                                | (2,094,480) |
| CASH FLOWS FROM INVESTING ACTIVITIES:         |                                            |                                      |      |                                           |     |
|                                          | Proceeds from sale of securities                |                                      | -         |                                           | -        |                                | 492 |
|                                          | Purchase of marketing rights                    |                                      | -         |                                           | -        |                                | (250,000) |
|                                          | Purchase of vessel and other assets             |                                      | (814,141) |                                           | -        |                                | (814,141) |
|                                          | Payment on notes receivable                     |                                      | -         |                                           | -        |                                | (3,351) |
|                                          |                                            | Net Cash (Used in) Investing Activities   |      | (814,141)                                      |     | -                                   |   | (1,067,000) |
| CASH FLOWS FROM FINANCING ACTIVITIES:         |                                            |                                      |      |                                           |     |
|                                          | Capital contributions                           |                                      | -         |                                           | -        |                                | 1,500 |
|                                          | Issued common stock for cash                    |                                      | 1,755,985 |                                           | -        |                                | 2,123,785 |
|                                          | Loan payable                                    |                                      | (64,001)  |                                           | -        |                                | 10,969 |
|                                          | Proceeds from officer                           |                                      | -         |                                           | -        |                                | 201,839 |
|                                          | Proceeds from notes payable - related party     | -                                         |      | -                                              |     | 836,856                             |
|                                          | Proceeds from subscription receivable           |                                      | -         |                                           | -        |                                | 1,000 |
|                                          |                                            | Net Cash Provided by Financing Activities | 1,691,984 |                                           | -        |                                | 3,175,949 |
| NET INCREASE (DECREASE) IN CASH AND           |                                            |                                      |      |                                           |     |
| CASH EQUIVALENTS                              |                                            | (52,652)                                  |      | (12,391)                                       |     | 14,469                              |
| CASH AT BEGINNING OF PERIOD                   |                                            | 67,121                                    |      | 34,768                                         |     | -                                   |
| CASH AT END OF PERIOD                         |                                            | $ 14,469                                  |      | $ 22,377                                       |     | $ 14,469                            |
| SUPPLIMENTAL CASH FLOW INFORMATION            |                                            |                                      |      |                                           |     |
|                                          | CASH PAID FOR:                                  |                                      |      |                                           |     |                                |   |

 

 

|   |   | Interest     |   | $ - |   | $ - |   | $ - |
|--------|--------|--------------|--------|-----|--------|-----|--------|-----|
|   |   | Income taxes |   | $ - |   | $ - |   | $ - |

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

 

 

 

**6**

         

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**PLANKTOS        CORP.**

**(formerly Diatom Corporation)**

**(A        Development Stage Company)**

**STATEMENTS OF CASH FLOWS**

***(Continued)***

 

NON-CASH        FINANCING AND INVESTING TRANSACTIONS:

 

In        January 2000, a marketable security valued at $12,600 was received in exchange for a notes        receivable of $3,351. The market value of the securities at December 31, 2000 is        $415.

In April        2001, the Company issued 4,500 shares of its common stock for services valued at        $75,000.

In May        2001, the Company issued 75,000 shares of its common stock to an office of the Company for        services valued at $50,000.

In May        2001, the Company issued 10,500 shares of its common stock for services valued at        $175,000.

In July        2001, the Company issued 15,000 shares of its common stock for services valued at        $200,000.

In        December 2001, the Company issued 3,000,000 shares of its common stock to an office of the        Company for services valued at $20,000.

In        December 2001, debt in the amount of $41,685 was forgiven by officers of the        Company.

During        January 2002, the Company issued 750,000 shares of previously authorized but unissued        common stock for services rendered value at $125,000.

During        January 2002, the Company canceled 7,500 shares of common stock.

During        September 2002, the Company issued 600,000 shares of previously authorized but unissued        common stock for reduction of debt value at $80,000.

During        September 2002, the Company authorized a ten for one (10:1) reverse split of its common        stock.

In        October 2002, the Company issued 32,700,000 shares of common stock at $0.02 per share for        services revalued during the year at a total value of $436,000.

In        January 2003, the Company issued 30,000,000 shares of its common stock to an officer of the        Company for services valued at $400,000.

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.

 

In March        2007, the Company issued 50,000 shares of common stock to a director for services valued at        $43,000.

 

 

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**PLANKTOS        CORP.**

**(formally Diatom Corporation)**

**CONDENSED NOTES TO UNAUDITED FINANCIAL        STATEMENTS**

**JUNE 30, 2007**

 

**NOTE        1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION**

 

Diatom        Corporation (“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 again to        Diatom Corporation. The Company originally was organized to provide internet-based travel        services. The Company has not yet secured operations and is in the development stage        according to Financial Accounting Standards Board Statement No. 7.

 

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 defining        its business operation in order to generate significant revenues.

 

Pursuant to        a marketing agreement, the Company has acquired the marketing rights to an        “Iron-Fertilization” technology used for the sequestration of CO2.        The process is to remove carbon dioxide (CO2) from the atmosphere, and place it        into a stable storage medium in planktons in the ocean. The Company intends to assist with        the prove-out of the technology and then market the environmental CO2 reducer        credits to companies required to assist in environmental improvement

 

On March 8,        2007, the Company effected a 1:1.5 forward split of its common stock and amended its        articles of incorporation to reflect a name change from “Diatom Corporation” to        “Planktos Corp.”

 

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principlesfor interim financial information and with the instructions to Form 10-QSB and Regulation S-B as promulgated by the Securities andExchange Commission ("SEC"). Accordingly, these financial statements do not include all of the disclosures required by generallyaccepted accounting principles in the United States of America for complete financial statements. These unaudited financialsstatements should be read in conjunction with the audited financials statements for the year ended December 31, 2006. In the opinionof management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normalrecurring nature, necessary for a fair statement of results for the interim period presented. Operating results for the six monthperiod ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007.

 

 

**NOTE        2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES**

 

This        summary of significant accounting policies of Diatom Corporation 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 and short-term debt instruments with original maturities of three months or        less to be cash equivalents.

 

Derivative Instruments

The        Financial Accounting Standards Board issued Statement of Financial Accounting Standards No.        133, “Accounting for Derivative Instruments and Hedging Activities”        (hereinafter “SFAS No. 133”), as amended by SFAS No. 137, “Accounting for        Derivative Instruments and Hedging Activities – Deferral of the Effective Date of        FASB No. 133”, and SFAS No. 138, “Accounting for Certain Derivative Instruments        and Certain Hedging Activities”, and SFAS No. 149, “Amendment of Statement 133        on Derivative Instruments and Hedging Activities”. These statements establish        accounting and reporting standards for derivative instruments, including certain derivative        instruments embedded in other contracts, and for hedging activities. They require that an        entity recognize all derivatives as either assets or liabilities in the balance sheet and        measure those instruments at fair value.

 

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**PLANKTOS        CORP.**

**(formally Diatom Corporation)**

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**JUNE 30, 2007**

 

If certain        conditions are met, a derivative may be specifically designated as a hedge, the objective        of which is to match the timing of gain or loss recognition on the hedging derivative with        the recognition of (i) the changes in the fair value of the hedged asset or liability that        are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted        transaction. For a derivative not designated as a hedging instrument, the gain or loss is        recognized in income in the period of change.

 

At June 30,        2007 and 2006, the Company has not engaged in any transactions that would be considered        derivative instruments or hedging activities.

 

Earnings        Per Share

The Company        has adopted Statement of Financial Accounting Standards No. 128, which provides for        calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes        no dilution and is computed by dividing net income (loss) available to common shareholders        by the weighted average common shares outstanding for the period. Diluted earnings per        share reflect the potential dilution of securities that could share in the earnings of an        entity similar to fully diluted earnings per share. Basic and diluted loss per share was        the same, at the reporting dates, as there were no common stock equivalents        outstanding.

 

Fair        Value of Financial Instruments

The        Company's financial instruments as defined by Statement of Financial Accounting Standards        No. 107, "Disclosures about Fair Value of Financial Instruments," include cash, trade        accounts receivable, and accounts payable and accrued expenses. All instruments are        accounted for on a historical cost basis, which, due to the short maturity of these        financial instruments, approximates fair value at June 30, 2007 and December 31,        2006.

 

Going        Concern 

As shown in        the accompanying financial statements at June 30, 2007 and December 31, 2006, the Company        had negative working capital, no revenues and an accumulated deficit. The Company is        currently putting technology in place which will, if successful, mitigate these 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.

 

Management’s plans are to seek additional capital from new equity        securities offerings that will provide funds needed to increase liquidity, fund internal        growth and fully implement its business plan.

 

Long-lived Assets

In        accordance with Statement of Financial Accounting Standards No. 144, “Accounting for        the Impairment or Disposal of Long-Lived Assets”. This standard establishes a single        accounting model for long-lived assets to be disposed of by sale, including discontinued        operations, and requires that these long-lived assets be measured at the lower of carrying        amount or fair value less cost to sell, whether reported in continuing operations or        discontinued operations. Accordingly, the Company reviews the carrying amount of long-lived        assets for impairment where events or changes in circumstances indicate that the carrying        amount may not be recoverable. The determination of any impairment would include a        comparison of estimated future cash flows anticipated to be generated during the remaining        life of the assets to the net carrying value of the assets. For the year ended December 31,        2006, the Company impaired the entire $250,000 paid for the perpetual marketing rights and        intellectual property rights from Solar Energy Limited.

 

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**PLANKTOS        CORP.**

**(formally Diatom Corporation)**

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**JUNE 30, 2007**

 

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.

 

Vessels

Vessels and        other fixed assets, net are stated at cost less accumulated depreciation. Vessels and other        fixed assets are depreciated when the asset is ready for its intended use.

Depreciation is calculated, based on cost, less estimated residual value,        using the straight-line method, over the remaining economic life of each asset. The costs        of significant replacements, renewals and betterments are capitalized and depreciated over        the shorter of the assets remaining estimated useful life or the estimated life of the        renewal or betterment. Expenditures for routine maintenance and repairs are expensed as        incurred.

Following        are the estimated useful lives of vessels and other fixed assets:

| i.   | Vessels - on a straight line basis from date of acquisition                        over a period of 25 years. |
|----------------|--------------------------------------------------------------------------------------------------------------------|

| ii.   | Marine equipment on a straight line basis from date of                        acquisition over a period of five years. |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

 

Recent Accounting Pronouncements

In February        2007, the Financial Accounting Standards Board issued Statement of Financial Accounting        Standards No. 159, “The Fair Value Option for Financial Assets and Financial        Liabilities – Including an amendment of FASB Statement No. 115” (hereinafter        “SFAS No. 159”). This statement permits entities to choose to measure many        financial instruments and certain other items at fair value. The objective is to improve        financial reporting by providing entities with the opportunity to mitigate volatility in        reported earnings cause by measuring related assets and liabilities differently without        having to apply complex hedge accounting provisions. This Statement is expected to expand        the use of fair value measurement, which is consistent with the Board’s long-term        measurement objectives for accounting for financial instruments. This statement is        effective as of the beginning of an entity’s first fiscal year that begins after        November 15, 2007, although earlier adoption is permitted. Management has not determined        the effect that adopting this statement would have on the Company’s financial        condition for results of operations.

 

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.

 

Stock        Options and Warrants Granted to Employees and Nonemployees

On January        1, 2006, the Company 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 requires that such transactions be accounted        for using a fair-value-based method.

 

10

         

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**PLANKTOS        CORP.**

**(formally Diatom Corporation)**

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**JUNE 30, 2007**

 

The Company        uses 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.” The Company has 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.

 

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.

 

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.

 

**NOTE        3 - VESSEL AND OTHER FIXED ASSETS**

 

Vessel        and other fixed assets consist of the following at June 30, 2007 and December 31,        2006:

 

|   | June 30, | December 31, |
|--------|----------|--------------|

|   | 2007 | 2006 |
|--------|------|------|

 

|   | Research Vessel “Weatherbird II” | $ | 800,000 | $ | - |
|--------|----------------------------------------------|---|---------|---|---|

|   | Marine Equipment | 14,141 | - |
|--------|------------------|--------|---|

|   | 814,141 | - |
|--------|---------|---|

|   | Accumulated Depreciation | 17,414 | - |
|--------|--------------------------|--------|---|

|   | Net Vessel & Equipment | $ | 796,727 | $ | - |
|--------|----------------------------|---|---------|---|---|

 

 

**NOTE        4 – RELATED PARTY TRANSACTIONS**

 

During        2005, the Company incurred payables to a shareholder for unsecured, non-interest bearing        advances in the amount of $99,541. In December 2006, this debt was assigned to related        party.

 

On March        13, 2007, the Company issued 50,000 common shares to a director for services valued at        $43,000.

 

During        2005, the Company received loan advances of $74,970 from a third party. These loans bear no        interest and are unsecured. During December 2006, this related party purchased the debt of        $99,541, as described above.

 

During the        six months ended June 30, 2007, the Company received an additional $98,000 from this        related party. The Company additionally paid back $162,000 during the six months ended June        30, 2007. As of June 30, 2007 the Company owes this related party $110,510.

 

11

         

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**PLANKTOS        CORP.**

**(formally Diatom Corporation)**

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**JUNE 30, 2007**

 

**NOTE        5– CAPITAL STOCK**

 

Common Stock 

The Company        is authorized to issue 100,000,000 shares of common stock. All shares have equal voting        rights, are non-assessable and have one vote per share. Voting rights are not cumulative        and, therefore, the holders of more than 50% of the common stock could, if they choose to        do so, elect all of the directors of the Company.

 

In its        initial capitalization on December 10, 1998, the Company issued 300 shares of common stock        for a total of $20,000 cash.

 

In June        2005, the Company issued 78,711,311 shares of its common stock to a related party for        settlement of debt valued at $997,010.

 

During        August 2005, officers of the Company canceled 70,500,000 shares of common stock. Also in        2005, the Company issued 1,500,000 shares of its common stock to a related party for cash        of $250,000 and issued 600,000 shares of common stock to a non-related party for cash of        $80,000.

 

During        2006, there were no issuances of common stock.

 

In January        2007 the Company completed a private placement for 4,327,500 units at $0.27 per unit for        cash proceeds of $1,154,000. Each unit consists of one common share and one share purchase        warrant exercisable into one common share at $0.27 for a period of two years.

 

In February        2007 the Company completed a private placement for 1,257,500 units at $0.40 per unit for        cash proceeds of $502,000. Each unit consists of one common share and one share purchase        warrant exercisable into one common share at $0.50 for a period of two years.

 

On March 8,        2007, the Company effected a 1:1.5 forward split of its common stock. All references in the        financial statements to shares, share prices, per share amounts and stock plans have been        adjusted retroactively for the 1:1.5 forward stock split.

 

On March        13, 2007, the Company issued 50,000 common shares for services valued at        $43,000.

 

On June 26,        2007, the Company issued 600,000 common shares on the exercise of 600,000 purchase warrants        at $0.1667 share for cash proceeds of $100,000.

 

 

 

 

 

 

 

12

         

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**PLANKTOS        CORP.**

**(formally Diatom Corporation)**

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**JUNE 30, 2007**

 

Warrants

A summary        of the Company’s warrants at June 30, 2007 and December 31, 2006 and the changes for        2007 are as follows:

 

 

|                                         |   |                   |   | Weighted                       |   | Weighted                      |
|----------------------------------------------|--------|------------------------|--------|--------------------------------|--------|-------------------------------|
|                                         |   |                   |   | Average                        |   | Average                       |
|                                         |   | Warrants               |   | Exercise                       |   | Remaining                     |
|                                         |   | Outstanding            |   | Price                          |   | Life                          |
|                                         |   |                   |   |                           |   |                          |
| Balance, December 31, 2006                   |   | 600,000                |   | $     0.16 |   | -                             |
| Issued                                       |   | 5,525,000              |   | 0.32                           |   |      1.55 |
| Exercised / Cancelled / Expired              |   |    (600,000) |   | 0.16                           |   |                          |
|                                         |   |                   |   |                           |   |                          |
| Balance                        June 30, 2007 |   | 5,525,000              |   | $ 0.32                         |   | 1.55 years                    |

 

 

**NOTE        6 – MARKETING RIGHTS AND COMMITMENTS**

 

On August        17, 2005, the Company entered an agreement with Planktos to buy perpetual marketing rights        and intellectual property rights from Solar Energy, LTD, in exchange for developmental        funding and a royalty agreement. The purchase price was $250,000 cash, on closing, plus        additional funding commitments.

 

Pursuant to        the marketing agreement, the Company committed to provide 25% of the cost of the prove-out        phase of the development. This commitment is estimated to be $322,500.

 

The        $250,000 already paid by the Company is part of this commitment, leaving $72,500 remaining        to fund the prove-out. Solar Energy and its subsidiary, Planktos, Inc., are contractually        delegated to fund the remaining 75% of the prove-out phase estimated at        $967,750.

 

In        accordance with Statement of Financial Accounting Standards No. 144, “Accounting for        the Impairment or Disposal of Long-Lived Assets” the Company impaired, at December        31, 2006, the entire $250,000 paid for the perpetual marketing rights and intellectual        property rights from Solar Energy Ltd.

 

On January        12, 2007, the Company entered into a securities exchange agreement and plan of exchange        with Solar Energy, Ltd. to acquire 100% ownership of Planktos, Inc. (a subsidiary of Solar)        in exchange for an aggregate of 45,000,000 shares of common stock of Planktos Corp., and        the fulfillment of certain conditions on or before closing. The conditions include: (a)        making available working capital of no less than $1,000,000 to Planktos on or before the        acquisition is completed, (b) cancellation of 45,000,000 shares of issued and outstanding        common share capital on or before the acquisition is completed, and (c) obtaining        shareholder approval of the transaction. The transaction obtained shareholder approval on        May 31, 2007.

 

 

 

 

13

         

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**PLANKTOS        CORP.**

**(formally Diatom Corporation)**

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**JUNE 30, 2007**

 

**NOTE        7 – CONCENTRATIONS**

 

Bank        Accounts

The        Company maintains its cash accounts in a single commercial bank. 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.

 

**NOTE        8 - SUBSEQUENT EVENTS**

 

On July 30,        2007, the Company filed an amendment with the Secretary of State of the State of Nevada to        increase the number of its authorized common shares to 250,000,000 par value        $0.001.

 

On August        9, 2007, the Company acquired Planktos, Inc. as a wholly owned subsidiary, pursuant to the        closing of a securities exchange agreement and plan of exchange. The agreement, entered        into on January 12, 2007 with Solar Energy Limited and the Company, provided for the        acquisition of 100% ownership of Planktos, Inc. in exchange for an aggregate of 45,000,000        shares (post forward split, dated March 8, 2007) of our common stock and the fulfillment of        certain conditions on or before closing, including the retirement of $1,180,000 of        Planktos, Inc. payables to Solar Energy Limited. The agreement was closed pursuant to the        written consent of approximately 57% of the Company’s shareholders as of May 31,        2007.

In        satisfaction for the purchase price, the Company assumed all outstanding liabilities of        Planktos, Inc. The fair market value of the assets acquired and the liabilities assumed        were as follows:

 

|   | Prepaid expenses and deposits | $ | 5,000 |
|--------|-------------------------------|---|-------|

|   | ___________ |
|--------|-------------|

|   | Total assets acquired | 5,000 |
|--------|-----------------------|-------|

 

|   | Accounts payable | 16,000 |
|--------|------------------|--------|

|   | Other current liabilities | 23,000 |
|--------|---------------------------|--------|

 

|   | Total liabilities acquired | 39,000 |
|--------|----------------------------|--------|

 

 

|   | Net liabilities acquired in excess of assets | $ | (34,000) |
|--------|----------------------------------------------|---|----------|

 

 

 

 

 

 

 

 

 

14

         

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**PLANKTOS        CORP.**

**(formally Diatom Corporation)**

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**JUNE 30, 2007**

 

 

| **PLANKTOS CORP**                                                          |                           |                         |                           |     |
|----------------------------------------------------------------------------|--------------------------------|------------------------------|--------------------------------|----------|
| **JUNE 30, 2007**                                                          |                           |                         |                           |     |   |   |   |
| **CONSOLIDATED STATEMENT OF OPERATIONS -                        PROFORMA** |                           |                         |                           |     |
|                                                                       |                           |                         |                           |     |   |   |   |   |   |
|                                                                       |                           |                         |                           |     |   |   |   |   | **PROFORMA** |
|                                                                       |                           |                         | **Planktos Corp.**             |     | **Planktos Inc.** |   | **Eliminations** |   | **CONSOLIDATED** |
|                                                                       |                           |                         |                           |     |   |   |   |   |   |
|                                                                       |                           |                         | **For the Three Months Ended** |
|                                                                       |                           |                         |                           |     |   |   |   |   |   |
|                                                                       |                           |                         | June 30,                       |     | June 30, |   | June 30, |   | June 30, |
|                                                                       |                           |                         | 2007                           |     | 2007 |   | 2007 |   | 2007 |
|                                                                       |                           |                         | (Unaudited)                    |     | (Unaudited) |   | (Unaudited) |   | (Unaudited) |
|                                                                       |                           |                         |                           |     |   |   |   |   |   |
| REVENUES                                                                   | $ -                            |                         | $ -                            |     |   |   | $ - |
|                                                                       |                           |                         |                           |     |   |   |   |   |   |
| OPERATING EXPENSES                                                         |                           |                         |                           |     |   |   |   |
|                                                                       | General and administrative     | 39,181                       |                           | 356,158  |   |   |   | 395,339 |
|                                                                       | Marketing and selling          | -                            |                           | -        |   |   |   | - |
|                                                                       | Research and development       |                         |                           | 75,000   |   |   |   | 75,000 |
|                                                                       | Vessel operating costs         | -                            |                           | 311,418  |   |   |   | 311,418 |
|                                                                       |                           | Total Operating Expenses     | 39,181                         |     | 742,576 |   | - |   | 781,757 |
| LOSS FROM OPERATIONS                                                       | (39,181)                       |                         | (742,576)                      |     | - |   | (781,757) |
|                                                                       |                           |                         |                           |     |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                                     |                           |                         |                           |     |   |   |   |
|                                                                       | Other income                   | -                            |                           | 9,352    |   |   |   | 9,352 |
|                                                                       | Interest income                | -                            |                           | 6        |   |   |   | 6 |
|                                                                       | Charitable contribution        | -                            |                           | (27,500) |   |   |   | (27,500) |
|                                                                       | Interest expense               | -                            |                           | -        |   |   |   | - |
|                                                                       | Write down of marketing rights | -                            |                           | -        |   |   |   | - |
|                                                                       |                           | Total Other Income (Expense) | -                              |     | (18,142) |   | - |   | (18,142) |
| NET LOSS BEFORE INCOME TAX                                                 | (39,181)                       |                         | (760,718)                      |     | - |   | (799,899) |
|                                                                       |                           |                         |                           |     |   |   |   |   |   |
| INCOME TAX EXPENSE                                                         | -                              |                         | -                              |     | - |   | - |
|                                                                       |                           |                         |                           |     |   |   |   |   |   |
| NET LOSS                                                                   | $ (39,181)                     |                         | $ (760,718)                    |     | $ - |   | $ (799,899) |

 

 

 

15

         

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**PLANKTOS        CORP.**

**(formally Diatom Corporation)**

**CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**JUNE 30, 2007**

 

 

 

| **PLANKTOS CORP**                                                          |                           |                         |                         |     |
|----------------------------------------------------------------------------|--------------------------------|------------------------------|------------------------------|----------|
| **JUNE 30, 2007**                                                          |                           |                         |                         |     |   |   |   |
| **CONSOLIDATED STATEMENT OF OPERATIONS -                        PROFORMA** |                           |                         |                         |     |
|                                                                       |                           |                         |                         |     |   |   |   |   |   |
|                                                                       |                           |                         |                         |     |   |   |   |   | **PROFORMA** |
|                                                                       |                           |                         | **Planktos Corp.**           |     | **Planktos Inc.** |   | **Eliminations** |   | **CONSOLIDATED** |
|                                                                       |                           |                         |                         |     |   |   |   |   |   |
|                                                                       |                           |                         | **For the Six Months Ended** |
|                                                                       |                           |                         |                         |     |   |   |   |   |   |
|                                                                       |                           |                         | June 30,                     |     | June 30, |   | June 30, |   | June 30, |
|                                                                       |                           |                         | 2007                         |     | 2007 |   | 2007 |   | 2007 |
|                                                                       |                           |                         | (Unaudited)                  |     | (Unaudited) |   | (Unaudited) |   | (Unaudited) |
|                                                                       |                           |                         |                         |     |   |   |   |   |   |
| REVENUES                                                                   | $ -                            |                         | $ -                          |     | $ - |   | $ - |
|                                                                       |                           |                         |                         |     |   |   |   |   |   |
| OPERATING EXPENSES                                                         |                           |                         |                         |     |   |   |   |
|                                                                       | General and administrative     | 208,312                      |                         | 652,729  |   |   |   | 861,041 |
|                                                                       | Marketing and selling          | -                            |                         | -        |   |   |   | - |
|                                                                       | Research and development       | -                            |                         | 125,000  |   |   |   | 125,000 |
|                                                                       | Vessel operating costs         | -                            |                         | 517,767  |   |   |   | 517,767 |
|                                                                       |                           | Total Operating Expenses     | 208,312                      |     | 1,295,496 |   | - |   | 1,503,808 |
| LOSS FROM OPERATIONS                                                       | (208,312)                      |                         | (1,295,496)                  |     | - |   | (1,503,808) |
|                                                                       |                           |                         |                         |     |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                                     |                           |                         |                         |     |   |   |   |
|                                                                       | Other income                   | -                            |                         | 9,652    |   |   |   | 9,652 |
|                                                                       | Interest income                | -                            |                         | 6        |   |   |   | 6 |
|                                                                       | Charitable contribution        | -                            |                         | (27,500) |   |   |   | (27,500) |
|                                                                       | Interest expense               | -                            |                         | -        |   |   |   | - |
|                                                                       | Write down of marketing rights | -                            |                         | -        |   |   |   | - |
|                                                                       |                           | Total Other Income (Expense) | -                            |     | (17,842) |   | - |   | (17,842) |
| NET LOSS BEFORE INCOME TAX                                                 | (208,312)                      |                         | (1,313,338)                  |     | - |   | (1,521,650) |
|                                                                       |                           |                         |                         |     |   |   |   |   |   |
| INCOME TAX EXPENSE                                                         | -                              |                         | -                            |     | - |   | - |
|                                                                       |                           |                         |                         |     |   |   |   |   |   |
| NET LOSS                                                                   | $ (208,312)                    |                         | $ (1,313,338)                |     | $ - |   | $ (1,521,650) |

         

 

16

         

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**ITEM 2. MANAGEMENT'S DISCUSSION AND        ANALYSIS**

 

The        following discussion and analysis of our financial condition and results of operation        should be read in conjunction with the financial statements and accompanying notes and the        other financial information appearing elsewhere in this report. The Company’s fiscal        year end is December 31.

 

**General**

 

The Company        was incorporated as eWorld Travel Corp on December 10, 1998 to provide internet-based        travel services. The Company changed it name to GYK Ventures, Inc. on September 23, 2002,        and to Diatom Corporation on July 8, 2005. Subsequent to the year ended December 31, 2006,        we changed our name to Planktos Corp.

 

**Description of Business**

 

On August        17, 2005, the Company entered into an Iron-Fertilization Prove-Out and Purchase Agreement        with Planktos, Inc. (“Planktos”) and its parent company, Solar Energy Limited        (“Solar”) to provide developmental funding for Planktos’        “iron-fertilization” prove out program of its carbon dioxide        (“CO2”) sequestration process. The process is designed to capture CO2 from the        earth’s marine environment using a proprietary “iron fertilization”        process to generate commercial quantities of verifiable carbon credits to meet global        demands for CO2 reduction made part of international agreements such as the Kyoto Protocol.        We agreed to provide up to 25% of the program’s cost in exchange for exclusive        marketing and intellectual property rights to Planktos the marine based sequestration        process. We advanced $250,000 pursuant to this agreement and anticipate that Planktos will        initiate the “iron-fertilization” prove out program this year.

 

On January        12, 2007, we entered into a Securities Exchange Agreement and Plan of Exchange with Solar        to acquire 100% ownership of Planktos, in exchange for an aggregate of 45,000,000 shares of        our common stock, and the fulfillment of certain conditions on or before closing. The        conditions include that we (a) make available working capital of no less than $1,000,000 to        Planktos on or before the acquisition is completed, (b) cancel 45,000,000 shares of our        issued and outstanding common share capital on or before the acquisition is completed, and        (c) obtain shareholder approval of the transaction. Shareholder approval of the acquisition        was obtained on May 31, 2007.

 

On August        9, 2007, the Company concluded the terms of the Securities Exchange Agreement and Plan of        Exchange dated January 12, 2007 pursuant to which we acquired Planktos as a wholly owned        subsidiary from it former parent Solar in exchange for 45,000,000 shares or 53.78% of our        outstanding common stock.

 

***Planktos, Inc.***

 

Planktos is        a Foster City, California based business focused on reviving marine as well as land based        ecosystem health and biodiversity with the intention to slow global climate change.        Planktos has launched a two year pilot project series to restore hundreds of millions of        tons of missing plankton plant life in the open seas that will sequester tens of millions        of tons of CO2 in the deep ocean for centuries or more. On land, Planktos’ Hungarian        affiliate KlimaFa (translated as “Climate Forest”) intends to plant thousands        of hectares of new, permanently protected, native forests or “climate parks” in        the national parks system of the European Union and elsewhere.

 

 

17

         

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Both ocean        plankton and forest ecorestoration projects remove huge quantities of global warming CO2        from the atmosphere. Long term CO2 reductions can now be banked and traded like a commodity        in international carbon markets. Consequently, Planktos’ business model will not only        restore the planet’s most vital biological systems but will generate the largest        volume of lowest cost greenhouse gas offsets or “carbon credits” available to        commercial, governmental and green consumer clients.

 

Rarely in        history has a globally recognized environmental crises and a remedial technology emerged        with such auspicious synchronicity. Planktos is pioneering natural science intensive marine        and terrestrial ecorestoration regimes that affordably offer unprecedented gains for the        climate, the biosphere and the company’s commercial objectives. Simply, restoring        ocean plankton plant life to 1980’s levels of health will remove 3-4 billion tons of        global warming CO2 and generate tens of billions of dollars in tradable carbon credit        value.

 

Years        before global warming began claiming headlines around the world, Planktos researchers were        building on a decade of ocean international science investigations with micronutrient        revival of lifeless regions of the sea. Although this restoration science was once proposed        as a potent technique to revive the collapsing marine food chain, it was neither funded nor        developed as an effective technology. The advent of the Kyoto Protocol, the enormous carbon        sequestration potential of this work, and the developing global trade in carbon credits,        has become the focus of the Planktos business model.

 

The Kyoto        Protocol enables companies and governments to offset regulated greenhouse emission        restrictions by investing in CO2 reduction programs in exchange for Carbon Emission        Reduction (“CER”) credits.European        nations began tradingCER credits as of January 2005. CER        credits are traded much like commodities with an average value of between $6 and $16 per        CER (which represents one ton of CO2 or equivalent) dependent on whether the carbon credit        is certified or not and depending on the date and origin of the carbon credit. The Kyoto        Protocol became law effective February 16, 2005, the result of which should be a rapidly        expanding multi-billion-dollar market for CER credits.

 

Planktos has cultivated working partnerships with        government labs and ocean science institutions to assist with measurement and verification        procedures and to optimize project designs. Bankable, tradable investment grade CER credits        for corporate buyers and fund managers will be verified and certified with satellite &        aerial mapping, underwater analysis methods, and bloom measuring sensors on Planktos’        proprietary autonomous ocean rovers.

 

Russ        George, the president of Planktos, has been involved with ocean restoration and CO2        sequestration since 1997 and was responsible for establishing the Planktos Foundation.        Planktos’ management team is supported by an Advisory Group headed by Dr. Noel Brown        (formerly the United Nations Environmental Program director) and Dr. Scott Chubb (US Naval        Research Laboratory).

 

***Forests of the Ocean***

 

Plankton in        our oceans is well documented in its utilization of photosynthesis to absorb CO2.        Planktos’ near-term commercial objective is to produce CER credits at a cost of less        than $1 per ton utilizing proprietary technology designed to stimulate plankton growth in        the world's oceans as a means by which to sequester(isolate from the atmosphere)CO2.

 

 

 

18

         

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Specifically, Planktos expects to implement its program of sequestration by        "iron fertilization" of the ocean, restoring this micronutrient that isvital for ocean plant growth and photosynthesis which        is now scarce in marine waters. The iron is similar to that nature has delivered to sustain        the oceans throughout history, but that has been on the decline for thirty years owing to        changes in land use. The fertilization process is intended to trigger vast plankton blooms        which will absorb the carbon in CO2, 30-40% of which sinks deep enough to be verified as        sequestered

 

Planktos’ initial calculations have determined that the introduction        of one ton of iron results in the biological fixation of up to 100,000 tons of CO2.        Moreover, this process has three additional benefits that help to restore ecosystems of the        open ocean:

 

|   | § | Support and restore diminished fish populations (additional                        plankton means more food) |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | § | Adds to global O2 levels (more plankton results in more                        oxygen as some 60% of the earth’s O2 is produced by                        plankton) |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | Preserves coral reefs by reducing the acidity of the                        oceans. |
|--------|--------|-------------------------------------------------------------------------------------|

 

Planktos is        committed to the implementation of the iron-fertilization prove out program during        2007

 

The process        of stimulating plankton growth and the overall mission of Planktos can be viewed on its        website:*www.planktosinc.com*.

 

***Forests of the Land***

 

A tree is        composed of about 50% carbon which is produced by removing CO2 from the air through        photosynthesis. KlimaFa is dedicated to afforestation and reforestation projects in Europe        and the Americas. Studies are now underway to develop an ecologically sound indigenous        species mix and planting model of flora to maximize wildlife habitat and biodiversity in        the respective regions. KlimaFa is currently involved in several government-assisted carbon        forest projects in Hungary that intend to restore native mixed growth forests in national        parks and then afforest vast tracts of retired agricultural lands.

 

The Kyoto        Protocol recognizes a variety of mechanisms to reduce atmospheric CO2 and other greenhouse        gases, and has approved carbon sequestration from new forests. The development of forests        ultimately produces valuable carbon credits. KlimaFa estimates that carbon credits produced        in this manner will cost approximately $4.00 per ton. KlimaFa’s target is to plant up        to 100,000 hectares over the next 24 months.

 

The science        and news surrounding eco-restoration can be viewed on KilmaFa’s website:*www.klimafa.com*

 

**Plan        of Operation**

 

During the        six months ended June 30, 2007, the Company was involved in monitoring Solar’s        efforts to implement the sea trials contemplated in the Iron-Fertilization Prove-Out and        Purchase Agreement to confirm the effectiveness of the Planktos CO2 sequestration process,        conducting a private placement of common stock with warrants attached and purchasing the        research vehicle Weatherbird II. We have now closed the acquisition of Planktos and are        intent on the development of its business plan.

 

 

 

 

19

         

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***Planktos, Inc.***

 

Planktos is        currently working with US and European marine research teams to plan and launch significant        ocean iron fertilization projects during 2007. Initial efforts will be modest in scope and        research-intensive, but are still designed to verifiably sequester carbon between hundreds        of thousands and millions of tonnage per voyage.

 

Planktos        expects to launch in 2007 the first of a series of up to 6 commercial scale ocean plankton        blooms over 24 months designed to verifiably sequester a total of between 24 and 30 million        tons of CO2. Post 2008 follow on projects include new ships, and larger blooms with a        target of 250 million tons of verified CO2 sequestration by 2010.

 

Planktos,        through its affiliate Klimifa, intends to initiate the planting of thousands of hectares of        new, permanently protected, native forests or “climate parks” in Europe this        year.

 

Planktos is        approaching this work with an array of qualifications:

 

|   | **•** | Years of experience in the basic science of the                        field; |
|--------|------------|-------------------------------------------------------------------------------|

|   | **•** | Collaborative arrangements and working relationships with                        internationally recognized marine science project partners required for                        certification; |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Sustainable resource maximization plan designs; |
|--------|------------|-------------------------------------------------|

|   | **•** | Expertise in resource value computation and certification                        procedures; |
|--------|------------|----------------------------------------------------------------------------------------------|

|   | **•** | Market access for resource monetization and trade;                        and |
|--------|------------|-------------------------------------------------------------------------------|

|   | **•** | Experience in structuring all preceding factors into viable                        binding business plans. |
|--------|------------|------------------------------------------------------------------------------------------------------------|

         

Our plan of        operation for Planktos will require $1,500,000 in funding over the next 12 months. We are        confident that the funds required to complete the “iron fertilization” prove        out phase of the Planktos business model will be made available from additional debt or        equity financings tied our common stock.

 

**Results of Operations**

 

The Company        has been funded since inception from public or private debt or equity placements or by        major shareholders in the form of loans. Virtually all of the capital raised to date has        been allocated for general and administrative costs, financial obligations tied to the        Iron-Fertilization Prove-Out and Purchase Agreement, the Securities Exchange Agreement and        Plan of Exchange and the purchase of the research vessel Weatherbird II.

 

**Net        Losses**

 

For the        period from inception until June 30, 2007, the Company incurred a net loss of $3,780,710.        Net losses for the three month period ended June 30, 2007 were $39,181 as compared to $0        for the three months ended June 30, 2006. Net losses for the six month period ended June        30, 2007 were $208,312 as compared to $12,815 for the six months ended June 30, 2006. The        Company’s net losses are attributable to general and administrative expenses. General        and administrative expenses include financing costs, accounting costs, consulting fees,        leases, employment costs, professional fees and costs associated with the preparation of        disclosure documentation. We did not generate any revenues during this period.

 

The Company        expects to continue to incur losses through the year ended 2007

 

         

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**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.

 

**Capital        Expenditures**

 

The Company        expended no significant amounts on capital expenditures for the period from inception to        December 31, 2006.

 

**Liquidity and Capital Resources**

 

As of June        30, 2007, the Company had current assets totaling $811,663 and a working capital surplus of        $692,135. These assets consist of cash on hand of $14,469 and advances receivable of        $797,194. Net stockholders' equity in the Company was $1,488,862 at June 30, 2007. The        Company is in the development stage and, since inception, has experienced significant        changes in liquidity, capital resources and shareholders’ equity.

 

Cash flow        used in operating activities was $2,094,480 for the period from inception to June 30, 2007.        Cash flow used in operating activities for the six month period ended June 30, 2007 was        $930,495 as compared to $12,391 for the six months ended June 30, 2006. The increase in        cash flow used in operating activities in the current six month period was due primarily to        an increase in net losses and an increase in advances receivable.

 

Cash flow        provided by financing activities was $3,175,949 for the period from inception to June 30,        2007. Cash flow provided by financing activities for the six month period ended June 30,        2007 was $1,691,984 as compared to $0 for the six months ended June 30, 2006. Cash flow        provided by financing activities in the current six month period can be attributed to the        sale of common stock on a private placement basis.

 

Cash flows        used for investing activities was $1,067,000 for the period from inception to June 30,        2007. Cash flow used for investing activities for the six month period ended June 30, 2007        was $814,141 as compared to $0 for the six months ended June 30, 2006. Cash flow used for        investing activities can be attributed to the purchase of the research vehicle Weatherbird        II in the current six month period.

 

The        Company’s current assets are insufficient to conduct its plan of operation over the        next twelve (12) months and it 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 will be        available or available to the Company on acceptable terms. In addition, any equity        financing would result in dilution to the Company shareholders and any debt financing could        involve restrictive covenants with respect to future capital raising activities or other        financial or operational matters.

 

The        Company’s shareholders will 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 adequate        funds will adversely affect our operations and the ability to implement is plan of        operation.

 

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The Company        has no current plans for the purchase or sale of any plant or equipment except those        operational purchases required to equip the Weatherbird II for anticipated sea        voyages.

 

The Company        has no current plans to make any changes in the number of employees.

 

**Off        Balance Sheet Arrangements**

 

As of June        30, 2007, the Company has 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.

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

 

The        statements contained in the section titled*Management’s Plan        of Operations*, with the exception of historical facts, are        forward looking statements within the meaning of Section 27A of the Securities Act. A        safe-harbor provision may not be applicable to the forward looking statements made in this        prospectus because of certain exclusions under Section 27A (b). 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; |
|--------|------------|-----------------------------------------|

|   | **•** | general economic conditions. |
|--------|------------|------------------------------|

         

We wish to        caution readers that the Company’s 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.

 

**Critical Accounting Policies**

 

In the        notes to the audited consolidated financial statements for the year ended December 31, 2006        included in the Company’s Form 10-KSB, we discuss those accounting policies that are        considered to be significant in determining the results of operations and our financial        position. The Company believes that the accounting principles utilized by us conform to        accounting principles generally accepted in the United States of America.

 

 

 

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The        preparation of financial statements requires management to make significant estimates and        judgments that affect the reported amounts of assets, liabilities, revenues and expenses.        By their nature, these judgments are subject to an inherent degree of uncertainty. On an        on-going basis, the Company evaluates our estimates, including those related to bad debts,        inventories, intangible assets, warranty obligations, product liability, revenue, and        income taxes. We base our estimates on historical experience and other facts and        circumstances that are believed to be reasonable, and the results form the basis for making        judgments about the carrying value of assets and liabilities. The actual results may differ        from these estimates under different assumptions or conditions.

**Stock-Based Compensation**

On January        1, 2006, we 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.

 

 

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**Risks        Related to Our Business**

 

Our future        operating results are highly uncertain. Before deciding to invest in us or to maintain or        increase your investment, you should carefully consider the risks described below, in        addition to the other information contained in this quarterly report. If any of these risks        actually occur, our business, financial condition or results of operations could be        seriously harmed. In that event, the market price for our common stock could decline and        you may lose all or part of your investment.

 

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

 

Since our        inception in 1998, our operations have resulted in a continuation of losses and an        accumulated deficit which reached $3,572,398 at December 31, 2006 that had increased to        $3,780,710 at June 30, 2007 During fiscal 2006, we recorded a net loss of $169,131 The        Company has never realized revenue from operations. Our only expectation of future        profitability is dependent upon the successful implementation of the company’s        business model. Therefore, we may never be able to achieve profitability.

 

*Planktos        will not likely be profitable in the next twelve months and may never be        profitable.*

 

Planktos is        in the process of implementing its iron-fertilization prove-out program and is not expected        to be profitable within the next twelve months. While the prove out program can        hypothetically produce profits, we cannot be assured that iron-fertilization will live up        to our expectations or that revenue will ever be produced as a result of our attempts to        sequester carbon credits.

 

*We will        need additional financing to fund Planktos.*

 

We will        need additional capital to fund Planktos to completion of its iron-fertilization prove-out        program. In our efforts to raise capital or obtain additional financing, we may be        obligated to issue additional shares of common stock or warrants or other rights to acquire        common stock on terms that will result in dilution to existing shareholders or place        restrictions on operations. If adequate funds are not available our ability to fund        Planktos will be significantly limited.

 

*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.

 

*We may        incur significant expenses as a result of being quoted on the Over the Counter Bulletin        Board, which may negatively impact our financial performance.*

 

We may        incur significant legal, accounting and other expenses as a result of being listed on the        Over the Counter Bulletin Board. 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 as discussed in the        following risk factor, 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.

 

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*Our        internal controls over financial reporting may not be considered effective, 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, beginning with our annual report for the        year ending December 31, 2008, we may be required to furnish a report by our management on        our internal controls over financial reporting. Such report will 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 assert that our internal controls are        effective as of December 31, 2008, investors could lose confidence in the accuracy and        completeness of our financial reports, which in turn could cause our stock price to        decline.

 

**Going        Concern**

Due to the        uncertainty of our ability to meet our current operating expenses and the capital expenses        noted above, in their report on the annual financial statements for the year ended December        31, 2006, our independent auditors included an explanatory paragraph regarding concerns        about our ability to continue as a going concern. Our financial statements contain        additional note disclosures describing the circumstances that lead to this disclosure by        our independent auditors.

The        Company’s ability to continue as a going concern is subject to our ability to realize        a profit and /or obtain funding from outside sources. Management’s plan to address        our ability to continue as a going concern, include: (a) obtaining funding from private        placement sources; (b) obtaining additional funding from the sale of the Company’s        securities; and (c) obtaining loans and grants from various financial institutions, where        possible. Although management believes that we will be able to obtain the necessary funding        to allow us to remain a going concern through the methods discussed above, there can be no        assurances that such methods will prove successful.

 

**ITEM 3. CONTROLS AND PROCEDURES**

 

The        Company’s president acts both as our chief executive officer and chief financial        officer and is responsible for establishing and maintaining disclosure controls and        procedures for the Company.

 

(a)        Evaluation of Disclosure Controls and Procedures

 

Under the        supervision and with the participation of our management, including our principal executive        officer and principal financial officer, we evaluated the effectiveness of the design and        operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and        15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”), as of        June 30, 2007 Based on this evaluation, our principal executive officer and our principal        financial officer concluded that, as of the end of the period covered by this report, our        disclosure controls and procedures were effective and adequately designed to ensure that        the information required to be disclosed by us in the reports we submit under the Exchange        Act is recorded, processed, summarized and reported within the time periods specified in        the applicable rules and forms and that such information was accumulated and communicated        to our chief executive officer and chief financial officer, in a manner that allowed for        timely decisions regarding required disclosure.

 

 

 

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(b) Changes        in Internal Controls

 

During the        period ended June 30, 2007, there has been no change in internal control over financial        reporting that has materially affected, or is reasonably likely to materially affect our        internal control over financial reporting.

 

**PART        II**

 

| **ITEM 1.** | **LEGAL PROCEEDINGS** |
|-------------|-----------------------|

 

None.

 

| **ITEM 2.** | **UNREGISTERED SALES OF EQUITY SECURITIES** |
|-------------|---------------------------------------------|

 

On June 26,        2007, the Company authorized the issuance of 600,000 shares of common stock on the exercise        of 600,000 purchase warrants attached valued at $0.1667 per share to Anitha Vasireddi, for        cash consideration of $100,000 pursuant to the exemptions from registration provided by        Regulation S and Section 4(2) of the Securities Act of 1933, as amended.

 

The Company        complied with Section 4(2) based on the following factors: (1) the issuance was an isolated        private transaction that did not involve a public offering; (2) there was one offeree who        was issued the stock for cash consideration on the exercise of warrants; (3) the offeree        stated an intention not to resell the stock; (4) there were no subsequent or        contemporaneous public offerings of the stock; (5) the stock was not broken down into        smaller denominations; and (6) the negotiations that lead to the issuance of the stock took        place directly between the offeree and the Company.

 

Regulation        S provides generally that any offer or sale that occurs outside of the United States is        exempt from the registration requirements of the Securities Act, provided that certain        conditions are met. Regulation S has two safe harbors. One safe harbor applies to offers        and sales by issuers, securities professionals involved in the distribution process        pursuant to contract, their respective affiliates, and persons acting on behalf of any of        the foregoing (the “issuer safe harbor”), and the other applies to resales by        persons other than the issuer, securities professionals involved in the distribution        process pursuant to contract, their respective affiliates (except certain officers and        directors), and persons acting on behalf of any of the forgoing (the “resale safe        harbor”). An offer, sale or resale of securities that satisfied all conditions of the        applicable safe harbor is deemed to be outside the United States as required by Regulation        S. The distribution compliance period for shares sold in reliance on Regulation S is one        year.

 

The Company        complied with the requirements of Regulation S by having made no directed offering efforts        in the United States, by offering only to an offeree who were outside the United States at        the time the stock was issued, and ensuring that the offeree to whom the stock was issued        was a non-U.S. offeree with an address in a foreign country. 

 

| **ITEM 3.** | **DEFAULTS UPON SENIOR SECURITIES** |
|-------------|-------------------------------------|

 

None.

 

 

 

 

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| **ITEM 4.** | **SUBMISSION OF MATTERS TO A VOTE OF                        SECURITY HOLDERS** |
|-------------|--------------------------------------------------------------------------------|

 

On May 31,        2007, the holders of a majority of the outstanding shares of our common stock entitled to        vote executed a written consent in accordance with the provisions set forth in*Title 7, Article 78, Section 390*of the Nevada        Revised Statutes and*Article II, Section 10*of the Corporation's bylaws to approve the agreement to acquire Planktos and        an increase in the number of our authorized common shares to 250,000,000. As of the record        date, we had 83,073,873 shares of common stock issued and outstanding that was entitled to        vote, with each share of common stock entitled to one vote. The holders of 47,392,238        shares of our outstanding common shares, representing approximately 57% of the votes        entitled to be cast, approved both the acquisition of Planktos and the increase in the        number of authorized common shares.

 

| **ITEM 5.** | **OTHER INFORMATION** |
|-------------|-----------------------|

 

None.

 

| **ITEM 6.** | **EXHIBITS** |
|-------------|--------------|

         

Exhibits        required to be attached by Item 601 of Regulation SB are listed in the Index to Exhibits on        page 29 of this Form 10-QSB and are incorporated herein by this reference.

         

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**SIGNATURES**

 

In        accordance with the requirements of the Exchange Act, the registrant caused this report to        be signed on its behalf by the undersigned, hereunto duly authorized, this 20th        day of August 2007.

 

 

**PLANKTOS        CORP.**

 

 

| /s/ Russ George |
|-----------------|

| Russ George |
|-------------|

Chief        Executive Officer, Chief Financial Officer and Principal Accounting Officer

 

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**EXHIBITS**

 

| ***Exhibit*** | ***Page*** |
|---------------|------------|

| ***No.*** | ***No.*** | ***Description*** |
|-----------|-----------|-------------------|

 

| 3(i)(a) | * | Articles of Incorporation (incorporated by reference to the                        Corporation’s | Form |
|---------|---|--------------------------------------------------------------------------------------------------------|------|

10-SB filed with the Commission on January 31, 2000)

         

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

         

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

         

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

         

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

         

| 3(ii) * |         By-laws                        (incorporated herein by reference to the Corporation’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 Corporation’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 Corporation’s Form 8-K filed with the                         Commission on January 19, 2007) |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

| 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. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|