UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to ________________
Commission file number 000-28279
PLANETGOOD TECHNOLOGIES, INC. (d/b/a BrowseSafe.com)
(Exact name of small business issuer as specified in its charter)
Nevada 35-2090110
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
7202 East 87th Street, Indianapolis, Indiana 46256
(Address of principal executive offices)
(317) 806-3000
(Issuer's telephone number)
BrowseSafe.com, Inc.
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the 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. Yes [ X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Outstanding as of August 11, 2000: 23,543,826 shares of common stock, $0.001 par
value per share; no shares of preferred stock, $0.001 par value per share.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X]
<PAGE>
PART I - FINANCIAL INFORMATION
----------------------------------------------------------------------------
Item 1. Financial Statements.
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(formerly BrowseSafe.com, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
(Unaudited) December 31,
June 30, 2000 1999
CURRENT ASSETS
<S> <C> <C>
Cash $857,763 $6,475
Accounts receivable 21,400
Prepaid consulting expense - Note 10 1,670,975 177,344
Prepaid expenses and other 91,697 54,950
----------- -----------
Total Current Assets 2,641,835 238,769
----------- -----------
OFFICE EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net of accumulated 379,906 93,281
----------- -----------
depreciation and amortization of $39,037 at June 30, 2000 and $11,395 at
December 31, 1999
OTHER ASSETS
Web design costs, net of accumulated amortization of $75,645 at June 65,215 50,430
30, 2000 and $50,430 at December 31, 2999
Product development costs 78,950 78,950
Deposits 31,622 24,034
---------- ---------
Total Other Assets 175,787 153,414
---------- ---------
TOTAL ASSETS $3,197,528 $485,464
========== =========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
CURRENT LIABILITIES
<S> <C> <C>
Bank line of credit $198,944
Accounts payable $265,237 348,442
Accrued payroll and related expenses 101,313 127,875
Payable to related party 105,847
Accrued stock issuance 35,625 337,500
Deferred revenue 19,552
Current maturities of long-term debt 36,970 34,314
Note payable - 176,389
---------- ----------
Total Current Liabilities 458,697 1,329,311
LONG-TERM DEBT 10,136 29,310
CONTINGENCIES - -
---------- ---------
Total Liabilities 468,833 1,358,621
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.001 par value; 85,000,000 shares authorized at June 23,523 17,575
30, 2000 and 25,000,000 shares authorized at December 31, 1999,
23,522,826 shares issued and outstanding at June 30, 2000 and
19,075,346 shares issued and 17,575,346 shares outstanding at
December 31, 1999
Preferred stock, 15,000,000 shares authorized at June 30, 2000 - -
Additional paid-in capital 7,842,867 793,899
Warrants outstanding 1,458,281 71,094
Deficit accumulated during development stage (6,595,976) (1,755,725)
---------- ------------
Total Stockholders' Equity (Deficit) 2,728,695 (873,157)
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $3,197,528 $485,464
=========== ===========
Unaudited Interim Financial Statements
</TABLE>
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(formerly BrowseSafe.com, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
Three Months
Ended June 30,
2000 1999
<S> <C> <C>
REVENUES $1,778 $
COST OF GOODS SOLD 593 -
---------- --------
GROSS MARGIN 1,185 -
--------- --------
MARKETING, GENERAL AND ADMINISTRATIVE
Product development and internet expenses 1,580 495
Marketing and advertising 4,152 1,447
Payroll expenses 413,256 77,364
Legal and professional 313,419 25,492
Non-cash consulting services - Note 10 1,171,369 -
Hardware lease expense 21,841 45,642
Contract termination
Depreciation and amortization 31,021 14,170
Interest expense 2,117 4,302
Other general and administrative expenses 117,055 5,281
------------ ---------
Total General and Administrative 2,075,810 174,193
----------- ---------
Net Loss before Income Taxes (2,074,625) (174,193)
INCOME TAXES - -
----------- ---------
NET LOSS $(2,074,625) $(174,193)
============= =========
NET LOSS PER COMMON SHARE $0.0840 $0.0138
============== =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 24,687,837 12,625,231
============= ==========
</TABLE>
Unaudited Interim Financial Statements
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(formerly BrowseSafe.com, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
Period from
February 10, 1998
Six Months (Inception) to
Ended June 30, June 30,
2000 1999 2000
<S> <C> <C> <C>
REVENUES $1,778 $ $1,778
COST OF GOODS SOLD 593 - 593
---------- ------------ ---------
GROSS MARGIN 1,185 - 1,185
---------- ------------- ---------
MARKETING, GENERAL AND ADMINISTRATIVE
Product development and internet expenses 2,212 1,445 121,624
Marketing and advertising 10,268 6,403 314,076
Payroll expenses 583,517 167,839 1,081,599
Legal and professional 495,342 29,312 693,693
Non-cash consulting services - Note 10 3,483,869 3,515,119
Hardware lease expense 33,988 56,645 110,871
Contract termination 200,000
Depreciation and amortization 52,856 28,288 114,683
Interest expense 11,952 7,597 105,192
Other general and administrative expenses 167,432 12,429 340,304
------------ ---------- ----------
Total General and Administrative 4,841,436 309,958 6,597,161
----------- --------- ----------
Net Loss before Income Taxes (4,840,251) (309,958) (6,595,976)
INCOME TAXES - - -
--------------- ----------- ----------
NET LOSS $(4,840,251) $(309,958) $(6,595,976)
============= =========== ============
NET LOSS PER COMMON SHARE $0.2175 $0.0260 $0.4492
================ ============= ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 22,249,178 11,916,552 14,684,022
============== =========== ===========
</TABLE>
Unaudited Interim Financial Statements
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(formerly BrowseSafe.com, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Period from February 10, 1998 (date of inception) to June 30, 2000
<TABLE>
Additional
Members' Common Paid-in Warrants Accumulated
Deficit Stock Capital Outstanding Deficit Total
Capital contributions from members
<S> <C> <C> <C> <C> <C> <C>
of BrowseSafe LLC at inception
on February 10, 1998 $190,000 $190,000
Net loss (541,420) (541,420)
Reclassification of members'
deficit to reflect contribution
of BrowseSafe LLC assets and
liabilities to BrowseSafe
Technology, Inc.in exchange
for 11,200,000 shares
of BrowseSafe Technology, Inc.
common stock 351,420 $11,200 $178,800 $(541,420) -
---------- ---------- ----------- ------------ ---------
BALANCE AT DECEMBER 31, 1998 - 11,200 178,800 (541,420) (351,420)
Issuance of 2,738,000 shares of
common stock 2,738 24,645 27,383
Issuance of 2,100,000 shares of
common stock in connection
with Motioncast transaction 2,100 372,720 374,820
500,000 shares issued and held in
escrow as collateral for liability -
1,000,000 shares issued and held in
escrow pursuant to consulting
agreement
Issuance of warrants to purchase
350,000 shares of common stock
for services $71,094 71,094
Interest expense attributable to
the beneficial conversion
feature of debentures 66,667 66,667
Conversion of debentures to
1,537,346 shares of common
stock 1,537 151,067 152,604
Net loss - - - - (1,214,305) (1,214,305)
----------------------------------------------------------------- ------------
</TABLE>
Unaudited Interim Financial Statements
<PAGE>
<TABLE>
Additional
Members' Common Paid-in Warrants Accumulated
Deficit Stock Capital Outstanding Deficit Total
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1999 - 17,575 793,899 71,094 (1,755,725) (873,157)
Issuance of 128,571 shares of
common stock 129 44,871 45,000
Issuance of 6,036,000 shares of
common stock and warrants to
purchase 550,000 shares of
common stock 6,036 2,556,996 256,968 2,820,000
Issuance of 975,000 shares of
common stock and warrants to
purchase 300,000 shares of
common stock for services 975 3,521,525 935,000 4,457,500
Issuance of 500,000 shares of
common stock for repayment of
contract termination liability 500 199,500 200,000
Issuance of 250,000 shares of
common stock upon exercise of
warrants 250 205,531 (50,781) 155,000
Issuance of 360,000 shares of
common stock and warrants to
purchase 570,000 shares of
common stock related to Swartz
financing transaction 360 (266,673) 266,313 -
Net loss for the quarter ended
March 31, 2000 - - - - (2,765,626) (2,765,626)
------------- ----------- ------------ -------- ---------- ------------
BALANCE AT MARCH 31, 2000
(UNAUDITED) - 25,825 7,055,649 1,478,594 (4,521,351) 4,038,717
Issuance of 335,909 shares of
common stock for services 336 624,267 624,603
Issuance of 100,000 shares of
common stock upon exercise of
warrants 100 160,213 (20,313) 140,000
Cancellation of 2,738,000 shares of
common stock (2,738) 2,738 -
Net loss for the quarter ended June
30, 2000 - - - - (2,074,625) (2,074,625)
------------- -------------- ---------- -------- ----------- ------------
BALANCE AT JUNE 30, 2000 (UNAUDITED) $ - $23,523 $7,842,867 $1,458,281 $(6,595,976) $2,728,695
================ ======== =========== =========== ============ ==========
</TABLE>
Unaudited Interim Financial Statements
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(formerly BrowseSafe.com, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
Period from February
Six Months 10,1998(Inception)to
Ended June 30, June 30,
2000 1999 2000
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $(4,840,251) $(309,958) $(6,595,976)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Depreciation and amortization 52,856 28,288 114,682
Noncash consulting services 3,483,869 3,515,119
Noncash settlement 200,000
Interest expense attributable to beneficial
conversion feature of debentures 66,667
(Increase) decrease in certain current assets:
Accounts receivable (21,400) (21,400)
Inventories 6,889
Prepaid expenses and other (36,747) (54) (91,697)
Increase (decrease) in certain current liabilities:
Accounts payable (80,477) 19,790 267,965
Accrued payroll and related expenses (26,562) 62,211 101,313
Payable to related party (105,847) 10,854
Deferred revenue 19,552 - 19,552
----------------- --------------------- -----------------
Net Cash (Used) by Operating Activities (1,555,007) (181,980) (2,423,775)
------------ --------------- --------------
INVESTING ACTIVITIES
Cash purchases of office equipment and
leasehold improvements (314,266) (636) (344,798)
Increase in deposits (7,588) (31,622)
Cash paid for web design costs (40,000) (140,860)
Cash paid for product development costs - (16,684) (78,950)
--------------------- --------------- --------------
Net Cash (Used) by Investing Activities (361,854) (17,320) (596,230)
--------------- --------------- -------------
FINANCING ACTIVITIES
Proceeds from notes payable 43,000 194,389
Repayments of notes payable (176,389) (10,000) (194,389)
Payments on capital lease (16,518) (27,039)
Borrowings on line of credit 95,542 198,944
Payments on line of credit (198,944) (1,608) (198,944)
Proceeds from debentures 152,604
Proceeds from issuance of common stock 3,160,000 77,383 3,562,203
Contributed capital - - 190,000
------------------- ---------------- -------------
Net Cash Provided by Financing 2,768,149 204,317 3,877,768
------------- ------------ ------------
NET INCREASE IN CASH 851,288 5,017 857,763
CASH
Beginning of Period 6,475 418 -
----------------- ---------------- --------
End of Period $857,763 $5,435 $857,763
============== ============== ========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $13,867 $1,297 $36,747
Noncash investing and financing activities:
Assets acquired through capital lease 74,145
Conversion of debentures to common stock 152,604
Stock issued in repayment of accounts payable 2,728 2,728
Stock and warrants issued for consulting services 2,691,875 1,635,350
Issuance of stock accrued 337,500
Stock to be issued for consulting services 35,625 35,625
</TABLE>
Unaudited Interim Financial Statements
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(formerly BrowseSafe.com, Inc.)
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
In the opinion of the management of PlanetGood Technologies, Inc. (the
"Company"), the accompanying unaudited consolidated financial statements contain
all adjustments (consisting of only normal, recurring adjustments) necessary to
present fairly the financial position of PlanetGood Technologies, Inc. and its
wholly owned subsidiary, BrowseSafe Technology, Inc., as of June 30, 2000, and
the results of their operations and their cash flows for the three-month and
six-month periods ended June 30, 2000 and 1999, and for the period from February
10, 1998 (date of inception) to June 30, 2000. The results of operations for any
interim period are not necessarily indicative of the results for the year. These
interim unaudited consolidated financial statements should be read in
conjunction with PlanetGood Technologies, Inc.'s annual consolidated financial
statements and related notes in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1999.
The unaudited consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, as well as the accounts of the
Company's predecessor, BrowseSafe LLC, which was organized on February 10, 1998.
All intercompany balances and transactions have been eliminated from the
unaudited consolidated financial statements.
Effective July 20, 2000, the Company's name was changed from
BrowseSafe.com, Inc. to PlanetGood Technologies, Inc. and the Articles of
Incorporation were amended to increase the number of authorized shares of common
stock to 85,000,000 and to authorize 15,000,000 shares of preferred stock.
NOTE 2 - REORGANIZATION AND SHARE EXCHANGE
In July 1998, BrowseSafe Technology, Inc., the current operating
subsidiary of the Company, was incorporated as a Nevada corporation as part of a
plan to enter into an Asset and Liability Contribution Agreement and thereafter
to effect a share exchange with Motioncast Television Corporation of America
("Motioncast").
In early 1999, BrowseSafe, LLC and BrowseSafe Technology agreed to
enter into a two-step transaction with a group of related companies
(collectively the "Funding Group") and Motioncast, which was controlled by the
Funding Group. The two-step transaction contemplated that BrowseSafe, LLC and
the Funding Group would, among other things, contribute certain monies, assets
and liabilities to BrowseSafe Technology in exchange for its common shares, and
thereafter, BrowseSafe, LLC and the Funding Group would exchange their
BrowseSafe Technology shares for common shares of Motioncast. As a result,
BrowseSafe Technology would become a wholly-owned operating subsidiary of
Motioncast. At the time of these transactions, Motioncast was a Nevada
corporation whose stock was listed on the OTC Bulletin Board. Motioncast had no
operations or other subsidiaries.
<PAGE>
In May 1999, BrowseSafe, LLC, BrowseSafe Technology and the Funding
Group entered into an Asset and Liability Contribution Agreement to complete the
first step of the transaction. Under this Agreement, BrowseSafe, LLC contributed
all of its assets and liabilities, including intellectual property, to
BrowseSafe Technology in exchange for 11,200,000 common shares. Also under this
Agreement, BrowseSafe Technology agreed to issue 2,738,000 of its common shares
to the Funding Group, provided the Funding Group contributed certain monies to
BrowseSafe Technology and to Motioncast in connection with the two step
transaction. Further, the Funding Group agreed to cause additional funds of
between $1,500,000 and $5,000,000 to be raised on behalf of Motioncast no later
than November 30, 1999. Prior to this transaction, BrowseSafe Technology had not
commenced operations and had no assets or liabilities. For accounting purposes,
BrowseSafe LLC was treated as the acquiror. All transferred assets and
liabilities were recorded at their historical cost.
Effective as of June 24, 1999, BrowseSafe, LLC and the Funding Group entered
into a Share Exchange Agreement with Motioncast to complete the second step of
the transaction. At this time, the Company believed that the Funding Group had
not satisfied all of its obligations under the Asset and Liability Contribution
Agreement, but the Company anticipated that the Funding Group would fulfill its
obligations thereunder. The Share Exchange Agreement required the Funding Group
to contribute additional funds to Motioncast. The Share Exchange Agreement
provided that all of the outstanding common shares of BrowseSafe Technology
would be exchanged for an equal number of common shares of Motioncast. As a
result of the share exchange, BrowseSafe Technology became a wholly owned
subsidiary of Motioncast. Motioncast changed its name to BrowseSafe.com, Inc.
and changed its trading symbol from MCTV to PGPG.
Because the Company believed the Funding Group failed to comply with is
contribution obligations under the Asset and Liability Contribution Agreement
and the Share Exchange Agreement, it issued the 2,738,000 common shares into
escrow but did not deliver them to the Funding Group. In a letter dated November
19, 1999, the Company advised all members of the Funding Group that the Company
believed they were in breach of the agreements and asked them to remedy the
breaches. The Company is currently in litigation with the Funding Group over
these transactions. (see Note 5).
For financial statement purposes, BrowseSafe Technology, Inc. was
considered as the acquiring company, and the share exchange was treated as a
"reverse acquisition". Pursuant to this accounting treatment, BrowseSafe
Technology, Inc. is deemed to have issued stock for the acquisition of
Motioncast. Prior to this transaction, Motioncast had 2,100,000 common shares
outstanding and tangible net assets (cash) of $374,820. The accompanying
consolidated statement of stockholders' equity reflects this transaction as if
BrowseSafe Technology, Inc. issued 2,100,000 common shares to Motioncast.
NOTE 3 - MANAGEMENT'S PLANS AND ISSUES AFFECTING LIQUIDITY
The unaudited consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has a
limited operating history and has sustained losses since inception. The Company
experienced negative cash flow from operations aggregating approximately
$1,555,000 for the six-month period ended June 30, 2000. As a result, the
Company has had to rely principally on private equity funding to continue its
activities.
<PAGE>
On March 14, 2000, the Company entered into an Investment Agreement
with Swartz Private Equity, LLC for the sale of up to $30 million of common
stock upon the exercise of certain put rights (the "Put Rights"). The Put Rights
become available upon the effectiveness of a registration statement to be filed
with the Securities and Exchange Commission to register the stock that will be
sold under the Agreement, which expires after three years. Management intends to
use these proceeds to fund its operations. The Company intends to file the
Registration Statement on the appropriate form with the Security and Exchange
Commission in the near future. Regardless of when the Registration Statement
becomes effective and the Company becomes entitled to exercise its Put Rights,
the Company will need additional cash to continue to fund its operations. The
Company currently is in discussions with several third parties with respect to
obtaining equity or debt financing. The Company will not be able to continue
operations without obtaining such interim financing.
NOTE 4 - ROYALTY AGREEMENT
The Company's PlanetGood product was developed with a third party, and
the Company purchased software and technology from the third party on a royalty
basis. The purchase agreement requires the Company to remit 2.5% of gross
revenues received from Internet service providers ("ISP's"). Royalty payments
continue for a two-year period commencing when the Company has 15,000 active ISP
customers; notwithstanding the above, royalty payments will not exceed in the
aggregate $200,000. As of June 30, 2000, the Company had not incurred any
royalty expenses relating to this contract.
NOTE 5 - LEGAL PROCEEDINGS
On or about April 14, 2000, the Funding Group (see Note 2) filed a
lawsuit against the Company, our President and Chief Executive Officer and our
Chief Financial Officer in the Federal District Court for the State of Nevada
alleging, among other things, that the investor group is entitled to general
damages in a sum in excess of $10,000,000, punitive damages in a sum in excess
of $10,000,000 and title to 2,738,000 shares of common stock of the Company. The
lawsuit also alleges certain inaccuracies in the Company's SEC filings. The
Company believes it has meritorious defenses and is vigorously defending the
lawsuit.
NOTE 6 - CONSULTING CONTRACT TERMINATION
On October 11, 1999, the Company agreed to pay a former consultant
$200,000 to settle a dispute. To secure the payment of this amount, the Company
issued and placed in escrow 500,000 shares of its common stock. Because the
$200,000 payment was not remitted within 120 days, the stock was delivered to
the consultant in February 2000 in lieu of the payment.
NOTE 7 - SENIOR SUBORDINATED CONVERTIBLE DEBENTURE
In December 1999, the Company issued a senior subordinated convertible
debenture (the "Debenture") to a single investor. The Debenture had a maximum
funding amount of $750,000 and accrued interest at 8% maturing on December 10,
2001. An initial funding of $100,000 was required, and made, in connection with
the closing of the Debenture. However, future funding was discretionary. The
Debenture was convertible (at the holder's option) into shares of the Company's
common stock at a conversion price equal to 75% of the lowest closing bid price
for the three days preceding the notice of conversion. Interest on the Debenture
was to be paid by issuing common stock of the Company based on 75% of the
closing bid price for the three days preceding the monthly interest due date.
All fundings outstanding were required to be converted to stock of the Company
prior to January 19, 2000. As of December 30, 1999, the investor had funded
$200,000 of the Debenture and had converted all of this amount into 1,537,346
common shares under the terms of the Debenture (including 3,734 shares issued
for accrued interest of $476). The Debenture was cancelled shortly before the
Company became a reporting company on January 22, 2000. The Company recorded as
interest expense the amount arising from the beneficial conversion feature
contained in the Debenture. As of December 31, 1999, the discount was
approximately $67,000. In connection with the Debenture, the Company placed
1,000,000 common shares in escrow. The escrowed shares were returned to the
Company and were cancelled in March 2000.
<PAGE>
NOTE 8 - INVESTMENT AGREEMENT
On March 14, 2000, the Company entered into an Investment Agreement with
Swartz Private Equity, LLC to raise up to $30 million during a three-year period
through a series of private sales of its common shares to Swartz, who, in turn,
intends to sell those shares in the public market or in privately negotiated
transactions. The dollar amount of each sale is limited by the common shares
trading volume, and certain other factors. Also, the Company may not sell more
than $2,000,000 to Swartz at any one time, and a minimum amount of time must
occur between sales.
The Company also agreed to pay a consultant a 4% fee for this
transaction. The consultant was issued 360,000 shares of the Company's common
stock for this transaction and will be paid up to $30,000 in cash. The cash will
be paid as the Put Rights are exercisable. The Company will record as a
reduction of the equity proceeds, the cash paid and the value of the stock based
on the quoted market value.
Based on current volume levels of trading in the Company's common stock,
the Company will not be able to raise a sufficient amount pursuant to the
Investment Agreement on a continual basis to support current operations. The
Company is currently negotiating with third parties to raise additional equity
or debt financing to sustain ongoing operations.
NOTE 9 - OTHER
In February 2000, the Company entered into an agreement with
GenesisTank.com, formerly known as California Applied Research, Inc., under
which Genesis Tank agreed to buy 6,000,000 shares of the Company's common stock.
The purchase price of the stock was $.50 per share payable $500,000 upon
execution of the agreement, $1,000,000 on or before February 29, 2000, and
$1,500,000 on or before March 31, 2000. All amounts have been paid to the
Company.
In addition, the Company issued a five-year warrant to an individual
for his services in arranging this financing. The warrant provides for the
purchase of up to 550,000 shares of the Company's common stock at the lower of
$.50 per share or the lowest reset price (the terms of the warrant provide that
the purchase price will be reset every six months).
In January 2000, the Company entered into a consulting agreement
whereby the consultant will receive a fee for financing secured by the
consultant. The fee is 4% of the transaction, payable 3% in shares of the
Company's common stock (based on a market price of $2.50) and 1% in cash. In
connection with the GenesisTank financing, the Company issued 36,000 shares to
this consultant and remitted $30,000. The Company estimated the value of the
stock to be approximately $160,000.
In March, 2000, the Company entered into an amended and restated
consulting agreement for business advisory services with an individual in
exchange for 50,000 shares of the Company's common stock. The consultant was
fully vested in the stock as of the date of the contract. At June 30, 2000,
$225,000 is included in legal and professional fees representing the value of
the stock based on the quoted market price on the date the stock was earned.
In March, 2000, the Company also agreed to a contract with an
organization and its principal owner to provide financing, advisory and
consulting services. The Company agreed to issue up to 450,000 shares of its
common stock if the quoted market price met certain levels at March 31, 2000.
The performance measurements pursuant to this contract were achieved, and the
stock was issued. At June 30, 2000, $2,025,000 is included in legal and
professional fees, representing the value of the stock based on the quoted
market price on the date the stock was earned.
<PAGE>
In March, 2000, the Company entered into a contract with a consultant
for advisory services. The contract requires a monthly fee of $10,000, issuance
of 275,000 shares of the Company's common stock and a warrant to purchase
300,000 shares of the Company's common stock at prices ranging from $5 to $15
per share. The consultant is fully vested in the stock. The Company has valued
the stock at $1,135,000 based on its quoted market price on the contract date
and has valued the warrants at $935,000 using the Black-Scholes method. The
amounts will be expensed over the term of the agreement. At June 30, 2000,
$1,035,000 is included in prepaid consulting fees.
In May 2000, the Company entered into a six-month agreement with a
consultant to develop, implement and maintain an on-going market awareness
program. The Company issued 200,000 shares of the Company's common stock as
compensation for this agreement. The consultant is fully vested in the stock as
of the contract date. The Company has valued the stock at $375,000 based on its
quoted market price on the contract date. At June 30, 2000, $312,500 is included
in prepaid consulting fees.
In May 2000, the Company entered into a business development agreement
with two individuals to provide business contacts and business structure
consulting. The Company issued 100,000 shares of the Company's common stock as
compensation for this agreement. The consultants are fully vested in the stock
as of the contract date. The Company valued the stock at $187,500 based on its
quoted market price on the contract date. At June 30, 2000, $160,714 is included
in prepaid consulting fees.
In June 2000, the Company entered into a six-month agreement with a
consulting firm to provide corporate and investor relation services. The
agreement required the Company to issue 56,000 shares of its common stock as
compensation. The consulting firm is fully vested in the stock as of the
contract date. The Company valued the stock at $95,000 based on the value of
services stated in the agreement. At June 30, 2000, the Company had issued
35,000 shares to the consulting firm. The remaining shares were issued to the
consulting firm in July of 2000. At June 30, 2000, $79,167 is included in
prepaid consulting fees.
In June 2000, the Company issued a warrant to a European market
awareness firm. The warrant provides for the purchase of up to 2,500,000 shares
of the Company's common shares for $2 per share on or before October 1, 2000.
In July 2000, the Company issued a warrant to purchase 150,000 common
shares to a company affiliated with Swartz Private Equity, LLC for arranging the
financing with the European market awareness firm. The exercise price for the
warrant is $2.00 per share, subject to revision every six months, and the term
of the warrant is for a period of five years.
NOTE 10 - PREPAID CONSULTING EXPENSES
As described in Note 9, the Company has entered into consulting and
advisory contracts with various third party consultants. The $1,670,975 of
prepaid consulting expenses at June 30, 2000, represents the value of stock
exchanged for these services. The consulting contracts expire at various times
through December 31, 2000. The consulting fees are being expensed over the terms
of the agreements.
Forward Looking Statement
This Report on Form 10-QSB includes "forward looking" statements that
reflect our current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties, including specifically the absence of significant revenues, a
history of losses, no assurance that we can review sites accurately and on a
timely basis due to the explosive growth of the Internet, significant
competition, the uncertainty of protecting our intellectual property,
uncertainty as to indemnification risks, possible adverse effects of those other
risks and uncertainties discussed herein, that could cause actual results to
differ materially from historical results or those anticipated. In this report,
the words "anticipates," "believes," "expects," "intends," "future" and similar
expressions identify certain of the forward-looking statements. Readers are
cautioned not to place undue reliance on the forward-looking statements
contained herein, which speak only as of the date hereof. We undertake no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that may arise after the date hereof. All subsequent written
and oral forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by this section.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
PlanetGood Technologies, Inc. (the "Company" or "we") is a development
stage company, has yet to generate any meaningful revenues and is seeking
additional capital through an investment capital company and other sources.
We incurred a net loss of $6,595,976 from February 10, 1998 (date of
inception) through June 30, 2000 due to expenses related to the formation and
operation of the Company, continuing costs of raising capital, normal expenses
of operating over an extended period of time, funds applied to research and
development, product development and development of our Web site.
Comparison of June 30 fiscal periods
Total expenses increased from $174,193 and 309,958 for the three months
and six months ended June 30, 1999 to $2,075,810 and $4,841,436 for the same
period in 2000. The increase in expenses relates to increased payroll, financing
activities and professional fees in 2000, including $3,483,869 of noncash
consulting services exchanged for stock and warrants. We expect general and
administrative expenses to increase in the future as we complete development of
our products, prepare for market launch and begin to support our products. We
will also begin to incur additional sales and marketing expenses.
Research and development costs increased from $0 for the three months
and six months ended June 30, 1999 to $62,373 and $105,150 for the three months
and the six months ended June 30, 2000. The increase was primarily related to
the increase in the number of site reviewers and programmers we utilize. We
expect R&D spending to continue to increase as we review new sites, make
modifications to our product and develop new products.
Interest expense of $2,117 and $11,952 for the three months and the six
months ended June 30, 2000 increased over interest expense of $4,302 and $7,597
for the three months and the six months ended June 30, 1999. The increase in the
six-month period was caused by a capital lease entered into in late 1999 and
increased activity on bank debt, which was repaid in February 2000. The decrease
in the three-month period was caused by the repayment of bank debt in February
2000.
For the three-month period ended June 30, 2000, we had a loss of
$2,074,625 as compared to a loss of $174,193 for the same period in 1999. This
increase was a result of higher general and administrative expenses (including
an increase in payroll and payroll-related costs) and non-cash consulting
expenses of $1,171,369.
For the six-month period ended June 30, 2000, we had a loss of
$4,840,251 as compared to a loss of $309,958 for the same period in 1999. This
increase was a result of higher general and administrative expenses (including
an increase in payroll and payroll related costs), interest expense and non-cash
consulting expenses of $3,483,869.
<PAGE>
As of June 30, 2000, we had obtained equity and debt financing of
approximately $4,298,000 since our inception, and we had invested approximately
$419,000 in equipment (including equipment subject to a capitalized lease of
$74,000). We have also invested approximately $141,000 in capitalized Web site
development costs and approximately $79,000 in capitalized product development
costs.
Our short and long term capital requirements will depend upon many
factors, including the ability to continue to obtain adequate funding, the rate
of market acceptance of our products, the level of resources required to expand
our marketing and sales organization and other factors, some of which may be
beyond our control. A slower than expected rate of acceptance of our products
and services or lower than expected revenues generated from the sale of our
products and services and other costs associated with upgrading our equipment
would materially adversely affect our liquidity.
Investor Relations Team
During the second quarter we entered into contracts with a team of
Investor Relations Specialists for a market awareness program for the Company
and the PlanetGood product. The agreements were with Corporate Identities Inc.,
who received 56,000 shares valued at $95,000, and Tradeway Consulting Inc.,who
received 200,000 shares valued at $375,000. Corporate Identities was also paid
$40,000 in cash to produce a financial website which can be accessed at
www.planetgoodinfo.com, and for an ad campaign which is intended for the
branding of the PlanetGood product.
Corporate Development
During the second quarter we entered into an agreement with John
Thompson and Karl Flowers of Thompson, Flowers and Associates, pursuant to which
they each received 50,000 shares valued at a total of $187,500. Pursuant to the
agreement, they are responsible for finding and cultivating those companies who
have products and services that have synergy with the PlanetGood product and the
Company.
Private Label ISP
As of June 30, 2000, programming was being completed for dial up access
for some of the companies that the Company currently has under signed contracts.
We began signing up customers in July. A press release was issued on August 1,
2000, announcing the kickoff for the CyberCross.net, advertising and promotional
campaign. In addition to CyberCross, the Gospel Music Television Network is
currently shipping CD's and will be starting a 3-year $30 Million advertising
campaign aimed at its subscribers and other cable television viewers. Other
ISP's expected to begin signing up customers in August are Praisenet,
JustBrowseIt, Native Nation and City Source. AchievementYou.com is expected to
go on-line in September 2000.
Additional Capital Requirements
We believe our current cash reserves (which came from the GenesisTank
financing) will be sufficient to fund operations at our current and expected
levels only through the end of September, 2000. We will need to obtain
additional short term financing prior to our ability to obtain funds under the
Investment Agreement with Swartz. However, we have no written commitment for
additional financing with any party, and there is no assurance that we can
obtain additional financing in amounts and on terms that are satisfactory to us.
If we are not able to obtain additional financing in the near future, we will
have to curtail sharply our operations and, ultimately cease all activities.
<PAGE>
Based on our history of operating expenditures and our current plans,
we anticipate our cash requirements for the next 12 months will need to come
primarily from (i) interim equity or debt financing and (ii) the proceeds of the
Investment Agreement with Swartz. As previously mentioned, our ability to obtain
funds under the Investment Agreement is subject to certain conditions, including
the volume of trading in our common shares. Based on the current volume of
trading in our common shares, we will not be able to utilize the Investment
Agreement with Swartz to obtain sufficient funds to continue operations on an
ongoing basis.
We anticipate that our future cash requirements may be partially
fulfilled by sales of our products and services and/or debt or equity financing.
However, we only recently began actively marketing our products and services
and, to date, have received very limited revenues from such marketing efforts.
There can be no assurance that any future funds will be generated from
operations or from other potential sources.
The Independent Auditors' Report dated March 10, 2000, and prepared by Katz
Sapper & Miller, LLP, contains an explanatory paragraph regarding our ability to
continue as a going concern. If the proceeds from the GenesisTank financing,
together with any interim equity or debt financing that we are currently
seeking, are not sufficient to fund our working capital needs through the date
that cash proceeds become available under the Swartz Investment Agreement, there
is substantial doubt about our ability to continue as a going concern.
Employees
Over the next 12 months, we expect to add more full time employees to
support technology, sales and service and marketing. We also plan to hire
mangers in several key areas of the organization. In addition, a substantial
number of part-time employees will be hired to support the Web content review
process.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is currently in litigation, a description of which was
provided under Item 1 of the Company's Quarterly Report on Form 10-Q for the
period ended March 30, 2000.
Item 2. Change in Securities.
(c) Sales of Unregistered Securities.
During the quarter ended June 30, 2000, the Company made the following
sales of securities in reliance upon exemptions from registration under the
Securities Act of 1933 (the "Securities Act"). All sales were made in reliance
upon the exemption provided by Section 4(2) of the Securities Act.
<PAGE>
Corporate Identities, Inc.
On June 1, 2000, the Company entered into a Website Development and
Corporate Awareness Services Agreement with Corporate Identities, Inc., whereby
we agreed to pay $40,000 in cash and agreed to issue them 35,000 of our common
shares in exchange for services they agreed to provide to us in connection with
designing and implementing a corporate due diligence Website and related
marketing services. On or about July 10, 2000, the Company issued an additional
21,000 shares to Corporate Identities for services provided and to be provided
under the agreement. This agreement has a six-month term.
Tradeway Consulting, Inc.
On May 23, 2000, we entered into an Agreement for Financial
Communication Services with Tradeway Consulting, Inc. whereby that company
agreed to provide us with a market awareness program and related services for a
period of six months in exchange for 200,000 of our common shares.
Karl Flowers and John Thompson
On May 23, 2000, we entered into a Financial Services Agreement with
Karl Flowers and John Thompson whereby they agreed to provide us with various
consulting and financial advisory services until December 31, 2000, in exchange
for 50,000 common shares each.
Global Marketing, G.M., L.T.D.A.
In June 2000, the Company issued a warrant to purchase 2,500,000 common
shares to Global Marketing, G.M., L.T.D.A. at $2.00 per share in exchange for
certain product marketing services to be provided by that company outside of the
United States. The warrant is exercisable in whole or in part until October 1,
2000.
Dunwoody Brokerage Services, Inc.
Pursuant to an Investment Banking Services Agreement between Dunwoody
Brokerage Services, Inc. d/b/a Swartz Institution Finance and the Company dated
February 29, 2000, the Company issued a warrant to purchase 150,000 common
shares to Dunwoody Brokerage Services, Inc.. The warrants may be exercised at
$2.00 per share, and the term of the warrant is for a period of five years.
Pursuant to the Investment Banking Services Agreement, this warrant was issued
to Dunwoody Brokerage Services, Inc. as a finder in connection with the Global
Marketing transaction described above.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
(a) A Special Meeting of the Company's shareholders was
held on June 30, 2000.
(b) The following matters were voted upon at the Special
Meeting:
<TABLE>
Against
or Broker
Description For Withheld Abstain Non-Votes
----------- --- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
(1) Amendment to Articles of Incorporation
to increase the authorized capital stock
from 25 million to 85 million shares of
common stock and to authorize 15 million
shares of preferred stock 17,649,869 2,800 0 0
(2) Amendment to Articles of Incorporation
to change name from BrowseSafe.com, Inc.
to PlanetGood Technologies, Inc. 17,652,669 0 0 0
(3) Adoption of Stock Option Plan 17,643,769 600 8,300 0
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Amendment to Articles of Incorporation
10.1 Business Development Agreement with Karl
Flowers and John Thompson dated May 23, 2000
10.2 Agreement for Financial Communication
Services with Tradeway Consulting, Inc.
dated May 23, 2000
10.3 Web Site Development and Corporate Awareness
Services Agreement with Corporate Identities,
Inc.dated June 1, 2000
27.1 Financial Data Schedule (June 30, 1999)
27.2 Financial Data Schedule (June 30, 2000)
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended June 30,
2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PLANETGOOD TECHNOLOGIES, INC.
Date: August 11, 2000 By /s/ Mark W. Smith
-----------------------
Mark W. Smith,
Chief Executive Officer
Date: August 11, 2000 By /s/ Gregory P. Urbanski
------------------------------
Gregory P. Urbanski,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
