Mail Stop 6010
July 14, 2005
Scott L. Glenn
Chief Executive Officer and President
Planet Technologies, Inc.
6835 Flanders Drive, Suite 100
San Diego, California 92121
Re: Planet Technologies, Inc.
Amendment No. 1 to
Preliminary Schedule 14A
Filed June 30, 2005
File No. 0-26804
Form 10-KSB for the year ended December 31, 2004
File No. 0-26804
Dear Mr. Glenn:
We have reviewed your amended filing and have the following
comments. Where indicated, we think you should revise your
documents
in response to these comments. If you disagree, we will consider
your explanation as to why a comment is inapplicable or a revision
is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Schedule 14A/A-1
General
1. It does not appear that the Company`s response letter, dated
June
30, 2005, has been filed on the EDGAR database. Please file this
letter on EDGAR under the form type label "CORRESP" as soon as
possible or, if applicable, advise us that this filing has already
been made.
2. We note your inclusion of the "Key to SEC Comments" in the June
30
response letter, which cross-references our numbered comments to
the
relevant changed pages in the revised Proxy Statement. While this
key is extremely helpful, please consider including complete
written
responses to all of our comments in your next response letter.
Although not required, it is our experience that written responses
to
each of our comments explaining the company`s position and
describing
the extent of any revisions to the filing greatly facilitate the
review process and in many cases may obviate the need for further
comment.
3. We note your response to comment 4 of our prior letter dated
May
26, 2005 and the associated revisions to your proxy statement
disclosure. Please note, however, that Item 13(c) of Schedule 14A
relates only to information required by paragraph (a) of Item 13.
This includes financial information, management`s discussion and
analysis of financial condition, changes in and disagreements with
accountants and so on, but does not include agreements and plans
of
merger or portions of state statutes. Note, further, that Items
13(b)(1) and (2) of Schedule 14A specifically contemplate only the
incorporation by reference of information contained in previously
filed public documents. Also, Instruction D. to Schedule 14A
states,
"Information may be incorporated by reference only in the manner
and
to the extent specifically permitted in the items of this
schedule."
Accordingly, please delete your reference to Exhibits "C" and "D"
at
the bottom of page 47, as these may not be incorporated by
reference
into the Proxy Statement.
4. We note your response to comment 6 of our prior letter and the
associated revisions to your proxy statement disclosure.
Notwithstanding your revisions, however, there still appears to be
references to the Asset Purchase Agreement (page v) and the
purchase
of assets and liabilities of ACP (page 13). Therefore, we reissue
the comment. Please revise the proxy statement as necessary on
the
pages cited and elsewhere to the extent that there is any
confusion
concerning whether the transaction with ACP is a merger or an
asset
purchase agreement.
5. We note our prior Comment 7 and your response. Article 6.03
and
The disclosure you have added on page 19 of the proxy statement
indicate that you have agreed to register the issuance of common
stock in the merger to Mr. Dawson. However, it appears that the
registration statement of the sale of the common stock will not
occur
until after the shares are issued to Mr. Dawson at the effective
time. It does not appear to us that you can register the primary
issuance of the shares to Mr. Dawson after those shares have been
issued to him. Alternatively, it appears that you may be able to
register the resale of the shares issued to Mr. Dawson in the
merger,
after the effective time. Supplementally, please advise us as to
whether you plan to register the primary issuance of stock to Mr.
Dawson or the resale of stock by him, and provide corresponding
disclosure in the proxy statement.
Summary Term Sheet, pages iii-vi
6. We note your response to comment 10 of our prior letter and the
associated revisions to your proxy statement disclosure.
Notwithstanding your revisions, however, we reissue the comment in
its entirety. The summary of the Proposal 2 on revised page v and
the discussion of voting rights on page 1 now appear to avoid any
mention of the proxy holders` discretionary power to cumulate
votes,
but the body of the proxy statement nevertheless continues to
include
this statement on page 32. As we previously commented, this
disclosure on page 32 suggests that proxy holders may, at their
choosing, decide to cast the proxy granters` votes for directors
in
whatever proportion the proxy holders determine.
Please revise to make your disclosure on page 32 and elsewhere
consistent with the rest of the proxy statement by deleting this
reference to discretionary cumulative voting on the part of proxy
holders on page 32. In the alternative, please confirm
supplementally by written response, providing reasoning which
supports your apparent conclusion, that California corporate law
allows this grant of discretionary authority over cumulative
voting.
If you opt for this alternative, please make clear in your
disclosure
on page 32 and elsewhere as appropriate (including the proxy card)
that shareholders are conferring this right upon the proxy holders
and explain that, unless instructed otherwise, proxy holders may
allocate their cumulated votes for the director nominees in
whatever
proportion they choose, name the proxy holders as part of this
disclosure and state their intentions as to voting such proxies.
7. We note your response to comment 12 of our prior letter and the
associated revisions to your proxy statement disclosure. However,
there appears to be a discrepancy between the number of options
granted to officers and directors under the 2000 Stock Option Plan
as
described on page v (i.e., options for 125,000 shares, exclusive
of
the options for 100,000 shares granted to Edward Steube) and the
number of options granted under the 2000 Plan as described in the
table on page 43 (i.e., options for 226,043 shares, exclusive of
the
options for 100,000 shares granted to Mr. Steube). Please revise
this discrepancy or provide us with an explanation.
Introduction, pages 1-2
Voting Rights and Outstanding Shares, page 1
8. We note your response to comment 14 of our prior letter and the
associated revisions to your proxy statement disclosure. As was
the
case with the previous version of the proxy statement, you
disclose
in the Introduction that "abstentions will be counted towards the
tabulation of votes cast on proposals presented to the
shareholders
and will have the same effect as negative votes." It appears that
you have revised your disclosure on pages iii and 2 to the effect
that the vote required for approval of Proposals 3 and 4 is the
affirmative vote of a majority of the shares represented and
voting,
either present in person or represented by proxy. Likewise, on
page
46, you state that abstentions and broker non-votes will not be
counted for purposes of determining whether or not Proposal 4 has
been approved. It appears that the vote required for approval of
Proposals 3 and 4 is the affirmative vote of a majority of the
shares
represented and voting, rather than the affirmative vote of a
majority of the shares represented. If this is indeed the correct
standard for approval of Proposals 3 and 4, it seems to us that
abstentions would have no effect on approval, rather than the same
effect as negative votes. As to each proposal, throughout the
proxy
statement, please revise to make consistent the language
concerning
the effect of abstentions and broker non-votes. See Item 21(b) of
Schedule 14A.
Risk Factors, pages 5-12
General
9. Please revise this section so that your risk factor headings
are
all in the same font and style of the headings that appear on
pages 8
through 12. The headings that appear on pages 5 through 8 in the
first half of this section appear in all capital letters, which is
inconsistent with the remainder of your Risk Factors section.
Risk Factors Associated with the Merger, pages 5-8
10. We note your response to comment 61 of our prior letter and
the
associated revisions to your proxy statement disclosure.
Notwithstanding your changes, we reissue the comment in part. Our
prior comment 61 requested that you also disclose whether any
third
party has indicated its intention to terminate its agreement with
either company or to defer or delay a decision affecting its
agreement with either company in response to the contemplated
transactions. Also, if the merger will trigger any change of
control
or similar provisions in contracts of either company which could
have
a material effect on the combined company, you should discuss them
in
your Risk Factors section and quantify the effect(s) to the extent
possible.
"The Company and ACP may waive one or more of the conditions to
the
Merger . . .," pages 6-7
11. We note your response to comment 65 of our prior letter and
the
associated revisions to your proxy statement disclosure.
Notwithstanding your changes, we reissue the comment in part.
Please
clarify the nature of the risk to shareholders if the parties
waive
one or more of the conditions to the merger, and the board decides
not to resolicit shareholder approval.
Risk Factors of the Merged Company, pages 8-12
"We may require additional capital n the future . . .," page 9
12. We note your response to comment 50 of our prior letter and
the
associated revisions to your proxy statement disclosure on page 13
in
the section entitled "Reasons for the Merger." However, our
comment
asked that you expand the risk factor to quantify the working
capital
deficit. Please make this change.
13. In addition, our prior comment 50 requested that you revise
the
disclosure to state that the combined company will require
additional
capital in the future and describe generally how the company met
its
capital needs in the past. Please make these changes as well.
"Any inability to adequately retain or protect our employees . .
..,"
page 10
14. Please delete the risk factor on page 12 entitled "The
departure
of key personnel . . .," as this appears redundant with the risk
factor that you have already included on page 10.
"Future sales of our common stock . . .," pages 11-12
15. We note your response to comment 86 of our prior letter and
the
associated revisions to your proxy statement disclosure. Please
clarify, in the sentence that begins "Certain officers and
directors
of the Company hold options" at the top of page 12, that the
shares
underlying these options are in addition to the 1,955,397 shares
of
common stock outstanding at December 31, 2004.
Proposal 1 - The Merger, pages 13-32
16. We note your response to comment 20 of our prior letter. In
addition to the materials already provided, please include copies
of
the Schedules to the Agreement and Plan of Merger with your next
response letter.
17. We note your response to comment 23 of our prior letter and
the
associated revisions to your proxy statement disclosure.
Notwithstanding your revisions, we reissue the comment in part.
Your
disclosure, in its current form on page 13, does not clearly
indicate
the amount of debt Mr. Dawson will forgive in exchange for the
$1.5
million payment in connection with the merger. Please revise to
disclose the amount of money ACP owes to Mr. Dawson. The wording,
"represents payment in full," is not necessarily indicative of
this
amount, as it merely reflects the fact that Mr. Dawson has agreed
to
accept the consideration as payment in full for the obligations
owed
to him by ACP. In addition, we note that any changes that make in
response to this comment will likely also impact your disclosure
on
page 16 in the last bullet point under the title "Completion of
the
Merger," as it relates to the same subject matter.
Reasons for the Merger, pages 13-14
18. We note your response to comment 24 of our prior letter and
the
associated revisions to your proxy statement disclosure.
Nevertheless, it appears that very little of this section has
changed
in response to our comment. Therefore, we reissue the comment in
its
entirety.
Background and Negotiations Related to the Merger, pages 14-15
19. We note your response to comment 27 of our prior letter.
However, we were unable to locate the supplementary non-public
information to which you refer. Accordingly, we reissue the
comment
in full.
Dissenters` Rights, page 17
20. We note your response to comment 15 of our prior letter and
the
associated revisions to your proxy statement disclosure. In
addition
to these changes, please include instructions describing what must
be
stated in a dissenting shareholder`s demand for purchase. Refer
to
paragraph (c) of Section 1301 of the California Corporations Code.
Please be advised that you may not incorporate the contents by
reference to the Sections 1300 through 1312 of the California
Corporations Code. Rather, you are required to disclose in the
body
of the Proxy Statement all of the key provisions of these sections
sufficient to enable a dissenting shareholder to exercise its
right
to demand payment of its shares from the Company. This discussion
should include mention of the timing and deadlines applicable to
each
step in the process.
The Agreement and Plan of Merger, pages 17-19
21. We note your response to comment 33 of our prior letter and
the
associated revisions to your proxy statement disclosure.
Notwithstanding your revisions, we reissue the comment in part.
Your
statement that this section is a "summary of the [sic] some of the
material terms of the Agreement and Plan of Merger" is not
appropriate. Instead, your disclosure should include all of the
material terms of the Agreement and Plan of Merger. Please revise
accordingly.
Planet Technologies Statements of Operations, page B-32
22. We noted your response to our comment 82 and we reissue our
comment. Please confirm that the fair value and not nominal value
of
the President/CEO and Chairman of the Board has been used in
determining compensation expense in the financial statements.
* * *
As appropriate, please amend your filings in response to
these
comments. You may wish to provide us with marked copies of
amendments to expedite our review. Please furnish a cover letter
with your amendments that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please file your cover
letter
on EDGAR under the form type label CORRESP. Please understand
that
we may have additional comments after reviewing your amendments
and
responses to our comments.
You may contact Sasha Parikh at (202) 551-3627 or Mary Mast
at
(202) 551-3613 if you have questions regarding comments on the
financial statements and related matters. Please contact Daniel
Greenspan, Attorney-Advisor, at (202) 551-3623, Michael Reedich,
Special Counsel, at (202) 551-3612, or me at (202) 551-3710 with
any
other questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: Reggie F. Borkum, Esq.
Bob Blanchard, Esq.
Blanchard, Krasner & French
800 Silverado Street, Second Floor
La Jolla, CA 92037
??
??
??
??
Scott L. Glenn
Planet Technologies, Inc.
July 14, 2005
Page 1