-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QlWrUgJ9hDRYvFRcCseYF8wp9fntpGaCiVMGhvl4FIU5ILgjrTIxbQHzCJtUWEgp w99mROyxwoX9FX50aazysg== 0000936392-99-000962.txt : 19990812 0000936392-99-000962.hdr.sgml : 19990812 ACCESSION NUMBER: 0000936392-99-000962 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLANET POLYMER TECHNOLOGIES INC CENTRAL INDEX KEY: 0000896861 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 330502606 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-26804 FILM NUMBER: 99684542 BUSINESS ADDRESS: STREET 1: 9985 BUSINESS PARK WAY STE A CITY: SAN DIEGO STATE: CA ZIP: 92131 BUSINESS PHONE: 6195495130 MAIL ADDRESS: STREET 1: 9985 BUSINESSPARK AVE STREET 2: STE A CITY: SAN DIEGO STATE: CA ZIP: 92131 FORMER COMPANY: FORMER CONFORMED NAME: PLANET POLYMER TECHNOLOGY INC DATE OF NAME CHANGE: 19950511 10QSB 1 FORM 10-QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For Quarterly Period Ended June 30, 1999 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Commission File Number: 0-26804 PLANET POLYMER TECHNOLOGIES, INC. ---------------------------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its character) CALIFORNIA 33-0502606 ---------------------------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) I.R.S. Employer Identification No. 9985 Businesspark Ave., Suite A, San Diego, California 92131 ---------------------------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (858) 549-5130 ---------------------------------------------------------------------------------------------------- (Issuer's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] YES [ ] NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class Outstanding at June 30, 1999 ----- ---------------------------- Common Stock, no par value 6,365,416 2 PLANET POLYMER TECHNOLOGIES, INC. FORM 10-QSB QUARTERLY REPORT QUARTER ENDED JUNE 30, 1999 INDEX
PAGE NO. PART I - FINANCIAL INFORMATION Item 1 Consolidated Balance Sheet (Unaudited) June 30, 1999 2 Consolidated Statements of Operations (Unaudited) Three Months Ended June 30, 1999 and 1998 3 Consolidated Statements of Operations (Unaudited) Six Months Ended June 30, 1999 and 1998 4 Consolidated Statement of Shareholders' Equity (Unaudited) Six Months Ended June 30, 1999 5 Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 1999 and 1998 6 Notes to Unaudited Consolidated Financial Statements 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION Item 1 Legal Proceedings 14 Item 2 Changes in Securities 14 Item 3 Defaults upon Senior Securities 14 Item 4 Submission of Matters to a Vote of Security Holders 14 Item 5 Other Information 14 Item 6 Exhibits and Reports on Form 8K 14 SIGNATURES 15
3 PLANET POLYMER TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET (UNAUDITED) ---------------
JUNE 30, 1999 ------------ ASSETS Current assets: Cash and cash equivalents $ 502,199 Accounts receivable, net of allowance for doubtful accounts of $10,000 429,880 Inventories, net 159,369 Prepaid expenses 31,350 Income tax receivable 30,168 ------------ Total current assets 1,152,966 Property and equipment, net of accumulated depreciation of $934,725 732,196 Goodwill, net of accumulated amortization of $112,044 528,018 Patents and trademarks, net of accumulated amortization of $115,753 338,497 Other assets 35,319 ------------ Total assets $ 2,786,996 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 28,351 Advances from related party 166,291 Accrued expenses 57,203 Current portion of capital lease obligations 12,531 ------------ Total current liabilities 264,376 Capital lease obligations, less current portion 24,701 Other liabilities 265,842 ------------ Total liabilities 554,919 ------------ Shareholders' equity: Preferred Stock, no par value 4,250,000 shares authorized No shares issued or outstanding -- Series A Convertible Preferred Stock, no par value 750,000 shares authorized 500,000 shares issued and outstanding Liquidation preference $1,000,000 804,435 Common Stock, no par value 20,000,000 shares authorized 6,365,416 shares issued and outstanding 11,896,143 Accumulated deficit (10,468,501) ------------ Total shareholders' equity 2,232,077 ------------ Total liabilities and shareholders' equity $ 2,786,996 ============
The accompanying notes are an integral part of the consolidated financial statements. 2 4 PLANET POLYMER TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ---------------
THREE MONTHS ENDED JUNE 30, -------------------------- 1999 1998 ----------- ----------- Sales $ 457,417 $ 462,378 Cost of sales 389,109 477,951 ----------- ----------- Gross profit 68,308 (15,573) ----------- ----------- Operating expenses: General and administrative 273,373 218,668 Marketing 61,958 69,088 Research and development, net 30,827 162,176 ----------- ----------- Total operating expenses 366,158 449,932 ----------- ----------- Loss from operations (297,850) (465,505) Other income, net 7,678 8,269 ----------- ----------- Loss before income taxes (290,172) (457,236) Income tax benefit (expense) (3,110) 1,653 ----------- ----------- Net loss $ (293,282) $ (455,583) =========== =========== Loss per share (basic and diluted) $ (0.05) $ (0.09) =========== =========== Shares used in per share computations 6,357,334 5,311,746 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 3 5 PLANET POLYMER TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ---------------
SIX MONTHS ENDED JUNE 30, -------------------------- 1999 1998 ----------- ----------- Sales $ 998,394 $ 1,052,184 Cost of sales 879,540 993,940 ----------- ----------- Gross profit 118,854 58,244 ----------- ----------- Operating expenses: General and administrative 517,461 441,914 Marketing 108,821 127,782 Research and development, net 81,789 274,541 ----------- ----------- Total operating expenses 708,071 844,237 ----------- ----------- Loss from operations (589,217) (785,993) Other income, net 3,010 19,167 ----------- ----------- Loss before income taxes (586,207) (766,826) Income tax expense (5,382) (1,915) ----------- ----------- Net loss $ (591,589) $ (768,741) =========== =========== Loss per share (basic and diluted) $ (0.09) $ (0.14) =========== =========== Shares used in per share computations 6,289,353 5,304,843 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 4 6 PLANET POLYMER TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) ---------------
SERIES A PREFERRED STOCK COMMON STOCK ------------------------ ------------------------ ACCUMULATED SHARES AMOUNT SHARES AMOUNT DEFICIT TOTAL ------- -------- --------- ----------- ------------ ----------- Balance at December 31, 1998 500,000 $804,435 5,341,062 $11,009,208 $ (9,846,912) $ 1,966,731 Issuance of Common Stock and related Warrants to Agway, net of issuance costs -- -- 1,000,000 845,060 -- 845,060 Issuance of Warrants to finder for cash -- -- -- 2,500 -- 2,500 Stock Options exercised for cash -- -- 5,000 9,375 -- 9,375 Issuance of Common Stock as a dividend on Convertible Preferred Stock on March 15, 1999 -- -- 9,677 15,000 (15,000) -- Issuance of Common Stock as a dividend on Convertible Preferred Stock on June 15, 1999 -- -- 9,677 15,000 (15,000) -- Net loss for the six months ended June 30, 1999 -- -- -- -- (591,589) (591,589) ------- -------- --------- ----------- ------------ ----------- Balance at June 30, 1999 500,000 $804,435 6,365,416 $11,896,143 $(10,468,501) $ 2,232,077 ======= ======== ========= =========== ============ ===========
The accompanying notes are an integral part of the consolidated financial statements. 5 7 PLANET POLYMER TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ---------------
SIX MONTHS ENDED JUNE 30, -------------------------- 1999 1998 ----------- ----------- Cash flows from operating activities: Net loss $ (591,589) $ (768,741) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 103,912 104,731 Compensation expense -- non-cash 2,443 8,241 Loss on disposal of assets 9,994 -- Deferred income taxes 4,582 -- Changes in assets and liabilities: Accounts receivable, net (136,966) 77,107 Inventories, net 140,867 81,774 Prepaid expenses and other assets 16,363 23,510 Accounts payable and accrued expenses (192,878) (19,967) Advances from related party 166,291 -- ----------- ----------- Net cash used by operating activities (476,981) (493,345) ----------- ----------- Cash flows from investing activities: Purchases of property and equipment (87,995) (34,063) Cost of patents and trademarks (33,998) (9,598) ----------- ----------- Net cash used by investing activities (121,993) (43,661) ----------- ----------- Cash flows from financing activities: Proceeds from issuance of Common Stock 1,000,000 -- Payment of equity issuance costs (73,952) -- Proceeds from issuance of warrants 2,500 -- Proceeds from stock options exercised 9,375 -- Principal payments on borrowings and capital lease obligations (100,747) (45,830) Proceeds from conversion of restricted cash to cash and cash equivalents 114,880 -- ----------- ----------- Net cash provided (used) by financing activities 952,056 (45,830) ----------- ----------- Net increase (decrease) in cash and cash equivalents 353,082 (582,836) Cash and cash equivalents at beginning of year 149,117 1,516,405 ----------- ----------- Cash and cash equivalents at end of year $ 502,199 $ 933,569 =========== =========== Supplemental disclosure of non-cash activity: Issuance of Common Stock dividends on Preferred Stock $ 30,000 $ 30,000 Stock options granted to a scientific advisor -- 8,241
The accompanying notes are an integral part of the consolidated financial statements. 6 8 PLANET POLYMER TECHNOLOGIES, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying unaudited consolidated financial statements of Planet Polymer Technologies, Inc. ("Planet" or the "Company") have been prepared in accordance with the interim reporting requirements of Form 10-QSB, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 1999 are not necessarily indicative of results that may be expected for the year ending December 31, 1999. For additional information, refer to the Company's consolidated financial statements and notes thereto for the year ended December 31, 1998 contained in the Company's Form 10-KSB for the fiscal year ended December 31, 1998. Certain items shown in the consolidated financial statements for the six months ended June 30, 1998 and for the six months ended June 30, 1999 have been reclassified to conform to the current period presentation. 2. Line of Credit On March 10, 1999, the Company's wholly-owned subsidiary Deltco obtained a $100,000 line of credit with a financial institution under which Deltco may make borrowings for working capital and other general purposes throughout the term of the line of credit agreement which expires on March 10, 2000. Through June 30, 1999, no borrowings had been made against this line of credit. Borrowings under the line of credit are collateralized by substantially all of Deltco's assets. 3. Segment Information The segment information presented below reflects the Company's two reportable segments - (1) research and development of polymer technologies and materials in San Diego, California and (2) manufacturing and reprocessing of thermoplastic scrap resins by Deltco of Wisconsin, Inc. ("Deltco") in Ashland, Wisconsin. The technologies and products developed in California are currently in a research and development stage; and therefore, no revenues were reported under this segment during the three and six months ended June 30, 1999 and 1998. The Company evaluates the performance of its segments based on income or loss before depreciation and amortization. The table below presents information about reported segments for the three and six months ended June 30, 1999 and 1998. 7 9 PLANET POLYMER TECHNOLOGIES, INC. NOTES TO UNAUDITED FINANCIAL STATEMENTS - (CONTINUED)
Manufacturing Research and and Three months ended June 30, 1999 Development Reprocessing Total - --------------------------------- ----------- ----------- ----------- Revenues $ -- $ 457,417 $ 457,417 ----------- ----------- =========== (Loss) income before depreciation and amortization $ (295,703) $ 54,922 $ (240,781) ----------- ----------- Depreciation and amortization (52,501) ----------- Net loss $ (293,282) =========== Total assets at June 30, 1999 $ 1,821,465 $ 965,531 $ 2,786,996 ----------- ----------- =========== Three months ended June 30, 1998 - -------------------------------- Revenues $ -- $ 462,378 $ 462,378 ----------- ----------- =========== (Loss) income before depreciation and amortization $ (368,958) $ (34,072) $ (403,030) ----------- ----------- Depreciation and amortization (52,553) ----------- Net loss $ (455,583) =========== Total assets at June 30, 1998 $ 2,105,416 $ 1,367,574 $ 3,472,990 ----------- ----------- ===========
Manufacturing Research and and Six months ended June 30, 1999 Development Reprocessing Total - -------------------------------- ----------- ----------- ----------- Revenues $ -- $ 998,394 $ 998,394 ----------- ----------- =========== (Loss) income before depreciation and amortization $ (577,963) $ 90,286 $ (487,677) ----------- ----------- Depreciation and amortization (103,912) ----------- Net loss $ (591,589) =========== Six months ended June 30, 1998 - ------------------------------ Revenues $ -- $ 1,052,184 $ 1,052,184 ----------- ----------- =========== (Loss) income before depreciation and amortization $ (680,264) $ 16,254 $ (664,010) ----------- ----------- Depreciation and amortization (104,731) ----------- Net loss $ (768,741) ===========
8 10 PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PLANET POLYMER TECHNOLOGIES, INC. Except for the historical information contained herein, the discussion in this report contains forward-looking statements that involve certain risks and uncertainties. The Company's actual results could differ materially from those discussed in this report. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and in the Company's Form 10-KSB for the fiscal year ended December 31, 1998. OVERVIEW Since Planet Polymer Technologies, Inc. ("Planet" or the "Company") was founded in 1991, with exception of resources expended in connection with the purchase and ongoing operation of Deltco of Wisconsin, Inc. ("Deltco"), substantially all of the Company's resources have been devoted to the development and commercialization of its technologies and products. This has included the expenditure of funds to develop the Company's corporate infrastructure, support the Company's marketing efforts and establish a pilot production facility, in addition to research and development. In January 1996, Planet acquired Deltco, a manufacturer and reprocessor of plastic resins located in Ashland, Wisconsin. Planet maintains Deltco as a wholly-owned subsidiary. Prior to the acquisition of Deltco, essentially all revenue recognized was from customer-funded research and development activities, which included service and product sales for customer pilot trials. Planet has incurred operating losses since inception and had an accumulated deficit as of June 30, 1999 of approximately $10.5 million. Pending commercial deployment of and related volume orders for the Company's products, the Company expects to incur additional losses. In November 1998, the Company entered into a Stock Purchase Agreement with a subsidiary of Agway Inc. ("Agway") whereby Agway would purchase 1,000,000 shares of Planet's Common Stock for $1,000,000 and receive a warrant to purchase up to 2,000,000 shares of Common Stock at a price of $1.00 per share. The stock purchase transaction was completed in January 1999 with the Company's shareholders' approval. Contemporaneously with the execution of the Stock Purchase Agreement, Planet and Agway entered into an agreement relating to the funding by Agway of a feasibility study (the "Feasibility Agreement") of Planet's polymer technology for use in agricultural products (other than fertilizers and certain biological products) and food products and an exclusive worldwide license (the "License Agreement") to all current and future products that utilize Planet's polymer technology for agricultural and food related purposes (other than products already covered by existing agreements). Under the terms of the Feasibility Agreement, Planet will be reimbursed for certain qualifying research and development costs relating to such applications. Under the terms of the License Agreement, Agway has the exclusive right to grant licenses and sublicenses on the technology developed under the License Agreement to other parties. In return for the rights granted to Agway, Agway is required to pay royalties to the Company determined in accordance with the terms of the License Agreement. In addition, in February 1999, the Company received a commitment from Agway whereby Agway agreed to exercise its warrant to acquire up to 500,000 shares of the Company's Common Stock after July 1, 1999 at the Company's request, in the event that the Company's cash flows are less than currently projected and/or insufficient to fund its operating requirements. 9 11 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) PLANET POLYMER TECHNOLOGIES, INC. OVERVIEW, CONTINUED On June 23, 1999, the Company entered into an Amending Agreement (the "Amending Agreement") with Agrium, Inc. ("Agrium") to amend that certain Technology Development and License Agreement dated as of January 30, 1995. The Amending Agreement provides that if the Company enters into an arrangement or agreement with Agway with respect to the development of certain technologies, then the Company will grant Agrium, among other items, an option to acquire a license and a right to produce, market and distribute such technologies on the same terms and conditions as those offered to Agway. RESULTS OF OPERATIONS Revenue The Company's revenues, which were all related to Deltco, decreased from approximately $462,000 for the three months ended June 30, 1998 to approximately $457,000 for the three months ended June 30, 1999 and from approximately $1,052,000 for the six months ended June 30, 1998 to approximately $998,000 for the six months ended June 30, 1999. These decreases were primarily attributable to the net effect of a decline in the sales price of Deltco's recycled polypropylene offset in part by an increase in sales volume. Cost of Sales Cost of sales decreased from approximately $478,000 for the three months ended June 30, 1998 to approximately $389,000 for the three months ended June 30, 1999 and from approximately $994,000 for the six months ended June 30, 1998 to approximately $880,000 for the six months ended June 30, 1999. These decreases were primarily attributable to a reduction in the purchase price of raw materials due to price fluctuations in the polypropylene market. General and Administrative Expenses General and administrative expenses increased from approximately $219,000 for the three months ended June 30, 1998 to approximately $273,000 for the three months ended June 30, 1999 and from approximately $442,000 for the six months ended June 30, 1998 to approximately $517,000 for the six months ended June 30, 1999. These increases were primarily attributable to increased costs of outside services and legal fees. Marketing Expenses Marketing expenses decreased from approximately $69,000 for the three months ended June 30, 1998 to approximately $62,000 for the three months ended June 30, 1999 and from approximately $128,000 for the six months ended June 30, 1998 to approximately $109,000 for the six months ended June 30, 1999. These decreases were primarily attributable to the reduction in sales and marketing personnel. 10 12 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED) PLANET POLYMER TECHNOLOGIES, INC. RESULTS OF OPERATIONS, CONTINUED Research and Development Expenses, Net The Company's net research and development expenses decreased from approximately $162,000 for the three months ended June 30, 1998 to approximately $31,000 for the three months ended June 30, 1999 and from approximately $275,000 for the six months ended June 30, 1998 to approximately $82,000 for the six months ended June 30, 1999. These decreases were primarily due to the Feasibility Agreement entered into with Agway. Planet has allocated research and development resources to projects that are reimbursable by Agway and other customers. Offsetting research and development revenue increased from approximately $7,000 for the three months ended June 30, 1998 to approximately $147,000 for the three months ended June 30, 1999 and from approximately $43,000 for the six months ended June 30, 1998 to approximately $310,000 for the six months ended June 30, 1999. Approximately $111,000 of the research and development revenue for the three months ended June 30, 1999 and approximately $251,000 of the research and development revenue for the six months ended June 30, 1999 relates to research and development costs reimbursable from Agway. 11 13 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED) PLANET POLYMER TECHNOLOGIES, INC. LIQUIDITY AND CAPITAL RESOURCES In January 1999, with the Company's shareholders' approval, the Company issued 1,000,000 shares of Common Stock to Agway and received proceeds of $845,000, net of issuance costs totaling approximately $155,000 (approximately $81,000 of which was paid during the three months ended December 31, 1998). In addition, from January 1999 to June 1999, the Company recorded research and development revenue of approximately $251,000 from Agway under the Feasibility Agreement. The Company anticipates that additional research and development expenditures in the agrotechnology area may be reimbursable by Agway under the Feasibility Agreement during the remainder of 1999. In February 1999, the Company received a commitment from Agway whereby Agway agreed to exercise its warrant to acquire up to 500,000 shares of the Company's Common Stock after July 1, 1999 at the Company's request, in the event that the Company's cash flows are less than currently projected and/or insufficient to fund its operating requirements. The Company used approximately $477,000 for operations for the six months ended June 30, 1999. Such funds were used primarily for research and development activities, marketing efforts and administrative support. The Company used approximately $122,000 for investing activities for the six months ended June 30, 1999. Such funds were used for the purchase of equipment and for the preparation and filing of patents. Net cash provided by financing activities of approximately $952,000 for the six months ended June 30, 1999 resulted from the issuance of Common Stock and warrants for aggregate proceeds of approximately $929,000, net of issuance costs paid during the six months ended June 30, 1999 of approximately $74,000, proceeds from the exercise of a stock option of approximately $9,000 and proceeds from the conversion of restricted cash to cash and cash equivalents of approximately $115,000, offset by approximately $101,000 used for the repayment of debt and capital lease obligations. The Company believes that its existing sources of liquidity and anticipated revenues, including revenues generated from Deltco, anticipated cost reimbursements from Agway, Deltco's line of credit and Agway's commitment to exercise its warrants to acquire up to 500,000 shares of Common Stock after July 1, 1999, will satisfy the Company's projected working capital and other cash requirements through at least the next twelve months. There can be no assurance, however, that future revenue decreases or changes in the Company's plans or other events affecting the Company's operating expenses will not result in the expenditure of the Company's resources. The Company expects that it will need to raise substantial additional funds to continue its current and planned operations. The Company intends to seek additional funding from existing and potential customers or through public or private equity or debt financing. There can be no assurance that additional financing will be available on acceptable terms, or at all. The Company's ability to raise additional capital may be dependent upon the stock being quoted on the Nasdaq SmallCap Market. There can be no assurance that the Company will be able to satisfy the criteria for continued quotation on the Nasdaq SmallCap Market. For example, one of the criteria for continued quotation is that the Company will maintain net tangible assets of $2 million. As of June 30, 1999, the Company's net tangible assets were approximately $1.7 million. Failure to meet the maintenance criteria in the future may result in the Company's Common Stock not being eligible for quotation. In such event, an investor may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of the Company's Common Stock. 12 14 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED) PLANET POLYMER TECHNOLOGIES, INC. YEAR 2000 The Company recognizes the need to ensure that its operations will not be impacted by the year 2000 issue that results from computer applications being written along two digits rather than four to define the application year. As a result of the year 2000 issue, computer applications may recognize a date using "00" as the year 1900 rather than the year 2000, resulting in system failures or miscalculations causing disruption of operations. The Company has reviewed its material computer applications for year 2000 compliance and is working with vendors and suppliers to make its computer applications year 2000 compliant. Thus, the Company has developed a plan to modify its information technology in recognition of the year 2000 issue. The plan calls for updating existing software and hardware to newer versions that incorporate corrections to eliminate the problem. The Company used approximately $36,000 for the six months ended June 30, 1999 to update the accounting system and network and used approximately $17,000 for the six months ended June 30, 1999 to update its computers in order to be year 2000 compliant. The Company believes that these amounts represent substantially all of its estimated remediation costs and that future costs will not be significant. The Company does not expect the year 2000 issue and the plan to resolve it to have a significant impact on its operations. However, if such plans cannot be completed on a timely basis, the year 2000 issue could have a material adverse impact on the Company's business, financial condition and results of operations. Because of the many uncertainties associated with year 2000 compliance issues, and because the Company's assessment is necessarily based on information from third party vendors and suppliers, there can be no assurance as to whether such assessment is correct or as to the materiality or effect if such assessment is not correct. For example, to the extent that customers would be unable to order products or pay invoices or suppliers would be unable to manufacture or deliver product, the Company's operations would be affected. The Company is currently evaluating its potential contingency plan options relating to these uncertainties. 13 15 PART II - OTHER INFORMATION PLANET POLYMER TECHNOLOGIES, INC. Item 1 - Legal Proceedings: In November 1998, the Company initiated litigation against Brian To, a former director, officer and consultant of the Company, Tarrenz Inc. and Tarrenz Management Consultants, Inc., entities owned by Brian To ("Tarrenz"), in the Superior Court of the State of California for the County of San Diego. The complaint alleges breach of contract, breach of fiduciary duty and other tort claims arising from services the defendants performed for or on behalf of the Company. The Company is seeking recovery of compensation, stock, stock options and expense reimbursements. In response to the Complaint, the defendants filed a Motion to Compel Arbitration. The Court issued an order compelling the case to arbitration on Friday, March 12, 1999. The arbitration will be conducted in San Diego pursuant to the rules of the American Arbitration Association. On April 26, 1999, the defendants answered and denied the allegations of the complaint and filed a cross-complaint against the Company alleging breach of contract, misrepresentation, slander, intentional infliction of emotional distress and fraud. It is too early to determine the impact, if any, of this proceeding on the Company, its financial condition or the results of the Company's operations. Item 2 - Changes in Securities: None Item 3 - Defaults upon Senior Securities: None Item 4 - Submission of Matters to a Vote of Security Holders: None Item 5 - Other Information: None Item 6 - Exhibits and Reports on Form 8-K: (a) Exhibits:
Exhibit Number Description -------------- ----------- 10.1 Amended Technology Development and License Agreement, dated June 23, 1999, between Agrium Inc. (formerly known as Cominco Fertilizers Ltd.) and Planet Polymer Technologies, Inc. 11.1 Statement of Computation of Common and Common Equivalent Shares 27.1 Financial Data Schedule
(b) Reports on Form 8-K: None 14 16 PLANET POLYMER TECHNOLOGIES, INC. SIGNATURES In accordance with the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: August 11, 1999 Planet Polymer Technologies, Inc. /s/ Robert J. Petcavich --------------------------------------- Robert J. Petcavich President, Chief Executive Officer and Director (On behalf of Registrant and as Registrant's Principal Financial and Accounting Officer) 15 EX-10.1 2 EXHIBIT 10.1 1 EXHIBIT 10.1 AMENDING AGREEMENT -------------------- THIS AGREEMENT made effective as of the 23rd day of June, 1999, BETWEEN: AGRIUM INC., a corporation with an office in the City of Calgary in the Province of Alberta (formerly known as Cominco Fertilizers Ltd.) (hereinafter called "Agrium") -and- PLANET POLYMER TECHNOLOGIES, INC., a corporation with an office in the City of San Diego, State of California, United States of America (hereinafter called "Planet") WHEREAS a Technology Development and License Agreement was entered into between Agrium and Planet dated as of January 30, 1995 (the "Agreement"); AND WHEREAS the parties consider it appropriate to amend the Agreement by changing certain provisions of the Agreement; NOW THEREFORE in consideration of the foregoing and the mutual covenants and promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the parties hereto agree as follows: 1. Paragraph 8.1 of the Agreement shall be amended so as to read as follows: During the term of this Agreement Planet shall not conduct any development work of the same nature or type as the Work, for any third party, except for Agway Consumer Products, Inc. or Agway Inc. ("Agway"), on any subject if the intended use falls within, or could reasonably be expected to fall within, Agrium's Field of Business formerly Cominco's Field of Business, as defined herein. If Planet enters into any arrangements or agreements with Agway for a license under any of the Planet Technology, the New Technology or with respect to new compositions of matter, new chemical complexes, improved chemical complexes, association compounds, blends, mixtures or compositions of coating materials, polymer materials or new products or new processes relating thereto ("Other New Technology") and which could reasonably be expected to fall within Agrium's Field of Business or any agreements or arrangements with Agway for the right to 2 -2- produce, market or distribute Fertilizer Products, which term, for purposes of this paragraph 8, shall be as defined in paragraph 1.1 (but deleting reference to "produced, distributed or marketed by Cominco from time to time"), or Biological Products, which term, for purposes of this paragraph 8, shall be as defined in paragraph 1.2 (but deleting reference to "produced, distributed or marketed by Cominco from time to time"); under or with respect to the Planet Technology, the New Technology or the Other New Technology (the said Fertilizer Products and Biological Products being collectively called the "New Products") and if (i) the intended place of use is within the Territory and (ii) the intended use falls within, or could reasonably be expected to fall within Agrium's Field of Business, or (iii) if pursuant to such agreements or arrangements, the intended use falls within, or could reasonably be expected as falling within Agrium's Field of Business, Planet shall provide Agrium with an option, to be exercised by Agrium within ninety (90) days from receipt of written notice, to acquire a license and the right to produce, market and distribute the New Products, on substantially the same terms and conditions as those contained in this Agreement, including but not limited to those terms and conditions set out in paragraphs 6.1, 6.2 and 6.3. Subject to the foregoing exception, during the term of this Agreement, Planet shall not enter into any arrangement or agreements with any third party for a license under any of the Planet Technology, the New Technology or the Other New Technology if the intended place of use is within the Territory and the intended use falls within, or could reasonably be expected to fall within, Agrium's Field of Business, without first offering such arrangement to Agrium and at terms no less favorable to Agrium than those offered to a third party. 2. All other provisions of the Agreement not amended by this Amending Agreement shall be unchanged and remain in full force and effect. IN WITNESS WHEREOF the parties hereto have executed this Amending Agreement as of the date first above written. Agrium Inc. Per: /s/ Dennis Kalma ---------------------------- Planet Polymer Technologies, Inc. Per: /s/ Robert J. Petcavich ---------------------------- EX-11.1 3 EXHIBIT 11.1 1 PLANET POLYMER TECHNOLOGIES, INC. EXHIBIT 11.1 STATEMENT OF COMPUTATION OF COMMON AND COMMON EQUIVALENT SHARES AS OF JUNE 30, 1999
Three months ended June 30, Six months ended June 30, --------------------------- ------------------------- 1999 1998 1999 1998 --------- --------- --------- --------- Shares outstanding at beginning of period 5,300,144 5,300,144 5,300,144 5,300,144 10,169 shares issued on March 15, 1998 10,169 10,169 10,169 3,978 8,695 shares issued on June 15, 1998 8,695 1,433 8,695 721 13,483 shares issued on September 15, 1998 13,483 -- 13,483 -- 8,571 shares issued on December 15, 1998 8,571 -- 8,571 -- --------- --------- --------- --------- Weighted average number of shares 5,341,062 5,311,746 5,341,062 5,304,843 ========= ========= 1,000,000 shares issued on January 11, 1999 1,000,000 939,227 9,677 shares issued on March 15, 1999 9,677 5,721 5,000 shares issued on March 30, 1999 5,000 2,541 9,677 shares issued on June 15, 1999 1,595 802 --------- --------- Weighted average number of shares 6,357,334 6,289,353 ========== =========
EX-27.1 4 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED JUNE 30, 1999 BALANCE SHEET AND STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS AS FILED IN THE COMPANY'S FORM 10-QSB FOR THE SIX MONTHS ENDED JUNE 30, 1999. 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 502,199 0 439,880 (10,000) 159,369 1,152,966 1,666,921 (934,725) 2,786,996 264,376 0 0 0 11,896,143 (10,468,501) 2,786,996 998,394 998,394 879,540 879,540 708,071 0 3,056 (586,207) (5,382) (591,589) 0 0 0 (591,589) (0.09) (0.09)
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