U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- ------
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- ------
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to__________________________
Commission File No. 1-13048
HEALTHY PLANET PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 92-2601764
- -------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1700 Corporate Circle, Petaluma, California 94954
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (707) 778-2280
- ------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Check whether the Issuer (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
--------- --------
As of August 7, 1998, there were issued and outstanding 2,282,368 shares of
common stock of the registrant (exclusive of 31,335 shares of voting Series D
Preferred Stock convertible into 31,335 shares of common stock).
Transitional Small Business Disclosure Format Yes No X
----- -----
Page 1 of 17
<PAGE>
Prefatory Note to Amendment No. 1 on Form 10-QSB/A.
Healthy Planet Products, Inc. (the "Company") has filed this Amendment No. 1 on
Form 10-QSB/A to revise and restate certain portions of Part 1, Item 2
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations."
Page 2 of 17
<PAGE>
HEALTHY PLANET PRODUCTS, INC.
INDEX
Page
----
Form 10-QSB Cover Page 1
Index 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet at June 30, 1998 4
Statements of Operations for the three-months ended 6
and six months ended June 30, 1998 and 1997
Statements of Cash Flows for the three-months ended 7
and six months ended June 30, 1998 and 1997
Notes to the Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial 13
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securityholders 14
Item 6. Exhibits and Reports on Form 8-K 16 & 17
Signature 17
Page 3 of 17
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
HEALTHY PLANET PRODUCTS, INC.
BALANCE SHEET
ASSETS
June 30,
1998
-----------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $2,499,568
Marketable securities 333
Accounts receivable - net of allowances for doubtful
accounts and returns of $140,310 486,180
Inventories 1,311,974
Advance on royalties 239,413
Prepaid expenses 210,016
Deferred income taxes 264,900
-----------
Total current assets 5,012,384
-----------
PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation and amortization 809,930
-----------
OTHER ASSETS
Deferred income taxes 385,800
Security deposits 34,277
Publishing rights - net of accumulated
amortization of $443,562 114,827
Other 107,198
-----------
Total other assets 642,102
-----------
TOTAL ASSETS $6,464,416
===========
The accompanying notes are an integral
part of these financial statements.
Page 4 of 17
<PAGE>
HEALTHY PLANET PRODUCTS, INC.
BALANCE SHEET (continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30,
1998
------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 260,542
Royalties payable 14,858
Commissions payable 36,577
Series B preferred stock redemption and dividends payable 161,500
Accrued wages, bonuses and payroll taxes 42,860
Accrued liabilities 25,466
Current portion of long-term debt 104,001
------------
Total current liabilities 645,804
OTHER LIABILITIES
Long-term debt, net of current portion 47,740
Accrued rent payable 105,515
------------
799,059
------------
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 12,000,000 shares
authorized, 2,282,368 shares issued and outstanding 22,823
Preferred stock, Series D, $.10 par value, with
aggregate liquidation preferences of $160,122,
371,009 shares authorized, 31,335 issued and outstanding 3,134
Additional paid-in capital 13,320,278
Accumulated deficit (7,680,878)
------------
Total shareholders' equity 5,665,357
------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,464,416
============
The accompanying notes are an integral
part of these financial statements.
Page 5 of 17
<PAGE>
<TABLE>
HEALTHY PLANET PRODUCTS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -------------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 739,740 $ 884,912 $ 1,716,998 $ 1,713,193
COST OF GOODS SOLD 934,940 416,775 1,362,993 779,773
----------- ----------- ----------- -----------
GROSS PROFIT (LOSS) (195,200) 468,137 354,005 933,420
----------- ----------- ----------- -----------
OPERATING EXPENSES
Selling, shipping and marketing 280,399 230,628 582,927 458,045
General and administrative 478,892 373,156 927,333 790,284
----------- ----------- ----------- -----------
759,291 603,784 1,510,260 1,248,329
----------- ----------- ----------- -----------
OPERATING LOSS (954,491) (135,647) (1,156,255) (314,909)
OTHER INCOME/EXPENSE
Interest expense (6,441) -- (10,146) --
Interest income 27,993 28,439 64,063 73,405
Other income 37,307 28 65,985 4,671
----------- ----------- ----------- -----------
58,859 28,467 119,902 78,076
----------- ----------- ----------- -----------
LOSS BEFORE TAXES (895,632) (107,180) (1,036,353) (236,833)
PROVISION FOR INCOME TAXES 300,000 222,000 300,000 222,000
----------- ----------- ----------- -----------
NET LOSS $(1,195,632) $ (329,180) $(1,336,353) $ (458,833)
=========== =========== =========== ===========
BASIC AND DILUTED LOSS PER SHARE $ (0.52) $ (0.18) $ (0.59) $ (0.25)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,282,368 1,827,362 2,257,367 1,827,362
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral
part of these financial statements.
</FN>
</TABLE>
Page 6 of 17
<PAGE>
<TABLE>
HEALTHY PLANET PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(1,195,632) $ (329,180) $(1,336,353) $ (458,833)
Non-cash items included in net loss
Depreciation and amortization 74,094 48,761 147,654 99,429
Decrease in allowances for
doubtful accounts and returns (28,352) (21,961) (182,770) (296,387)
Change in inventory reserves 346,000 81,000 346,000 81,000
Decrease in deferred income taxes 300,000 217,920 300,000 217,920
Changes in:
Accounts receivables 458,851 (6,644) 450,853 543,386
Inventories 94,474 (141,223) (116,949) (524,766)
Advances on royalties 79,189 85,594 (239,413) (225,850)
Prepaid expenses 32,692 45,099 (94,290) (6,554)
Accounts payable (19,636) (163,860) (115,447) (150,181)
Royalties payable (5,434) 1,400 10,285 2,604
Commissions payable (5,462) 5,719 (57,604) (72,455)
Accrued wages, bonus and payroll taxes (14,721) (16,988) (3,910) (44,257)
Income taxes payable -- -- (800) (16,300)
Accrued liabilities 19,997 (14,327) 5,163 (41,158)
Accrued rent payable 9,933 10,660 19,866 25,270
----------- ----------- ----------- -----------
Net cash (used) provided by operating activities 145,993 (198,030) (867,715) (867,132)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales/Purchases of marketable securities -- 18,798 249,667 (6,816)
Purchases of equipment and color separations (53,539) (32,758) (66,591) (62,882)
Security deposits -- 2,075 -- 2,075
Other (12,348) (15,510) (9,201) (58,436)
Net cash (used) provided by investing activity (65,887) (27,395) 173,875 (126,059)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal repayments on note payable (66,559) -- (92,654) --
----------- ----------- ----------- -----------
Net cash used by financing activities (66,559) -- (92,654) --
----------- ----------- ----------- -----------
INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS 13,547 (225,425) (786,494) (993,191)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 2,486,021 882,945 3,286,062 1,650,711
----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,499,568 $ 657,520 $ 2,499,568 $ 657,520
=========== =========== =========== ===========
SUPPLEMENTARY CASH FLOW INFORMATION INCLUDES THE FOLLOWING:
Cash paid during the period for:
Interest $ 6,441 $ 0 $ 10,146 $ 0
Income taxes $ 0 $ 4,080 $ 1,600 $ 20,380
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
Page 7 of 17
<PAGE>
HEALTHY PLANET PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
It is believed, however, that the disclosures are adequate to make the
information presented not misleading.
The financial statements, in the opinion of management, reflect all adjustments
necessary, which are of a normal recurring nature, to fairly state the financial
position and the results of operations. These results are not necessarily to be
considered indicative of the results for the entire year.
NOTE 2 - INVENTORIES
Inventories consist of the following:
June 30,
1998
-----------
Raw materials $ 40,670
Work-in-process 870,843
Finished goods 400,461
-----------
$ 1,311,974
===========
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
June 30,
1998
-----------
Machinery, equipment and leasehold improvements $ 727,397
Molds 418,553
Color separations 300,162
Furniture and fixtures 72,664
Computer software 38,171
------------
1,556,947
Less accumulated depreciation and amortization (747,017)
------------
$ 809,930
============
Page 8 of 17
<PAGE>
HEALTHY PLANET PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 4 - INCOME TAXES
Deferred income tax assets and liabilities are recognized using enacted tax
rates and reflect the expected future tax consequences of temporary differences
between recorded amounts of assets and liabilities for financial reporting
purposes and tax basis of such assets and liabilities. A valuation allowance is
recognized to offset a deferred tax asset if the eventual realization of all or
a portion of the asset is uncertain.
The provision for income taxes is based on pre-tax earnings as reported in the
financial statements and adjusted for requirements of current tax law, and
changes in deferred taxes.
The provision for income taxes at June 30, 1998 consists of a valuation
allowance on deferred taxes.
As of January 1, 1998 the Company had available net operating loss carryovers of
approximately $6,230,500 to be applied against future federal taxable income.
Due to a change in ownership during 1988, $2,638,000 of these amounts are
subject to a Section 382 limitation of a maximum of $476,950 per year. If the
Company does not generate sufficient income to use the maximum limitation,
remaining amounts accumulate for use in future periods until the operating loss
expires. The remaining net operating loss carryovers generated after 1988 are
available to be used without yearly limitation. For federal tax purposes, net
operating losses expire as follows:
Year Ending December 31,
------------------------
2002 $2,638,600
2003 1,222,000
2004 1,299,100
2005 383,300
2006 31,700
2012 655,800
-----------
$6,230,500
The Company has available approximately $25,500 of federal Alternative Minimum
Tax credits which can be carried forward indefinitely and offset against future
income taxes.
The Company has available approximately $326,000 of California net operating
losses which can be carried forward and offset against future taxable income.
These loss carryforwards expire in 2002.
Page 9 of 17
<PAGE>
HEALTHY PLANET PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 4. INCOME TAXES (continued)
The Company has substantial net operating loss carryforwards and credits
available to offset future income tax liabilities. The expected tax effect of
these losses and credits are reflected as deferred tax assets on the
accompanying balance sheet. A valuation allowance has been established since the
realization of tax benefits of net operating loss carryforwards is not assured.
The amount of the valuation allowance will be reviewed on a quarterly basis.
Deferred tax assets consist of the following:
Net operating loss carryforwards $ 2,147,200
AMT carryforwards 25,500
Other 278,000
-----------
2,450,700
Valuation allowance on net operating
loss carryforwards (1,800,000)
Deferred income taxes expected to be
utilized currently (264,900)
-----------
Deferred income taxes $ 385,800
===========
Page 10 of 17
<PAGE>
HEALTHY PLANET PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 5. - EARNINGS PER SHARE
Three Months Ended June 30, 1998
---------------------------------
Per-Share
Loss Shares Amount
------------ --------- --------
Net loss $(1,195,632)
============
Basic loss per share:
Loss available to common shareholders $(1,195,632) 2,282,368 $ (.52)
Effect of dilutive securities -- -- --
------------ --------- --------
Diluted loss per share:
Loss available to common shareholders
plus assumed conversions $(1,195,632) 2,282,368 $ (.52)
============ ========= ========
Six Months Ended June 30, 1998
---------------------------------
Per-Share
Loss Shares Amount
------------ --------- --------
Net loss $(1,336,353)
============
Basic loss per share:
Loss available to common shareholders $(1,336,353) 2,257,367 $ (.59)
Effect of dilutive securities -- -- --
------------ --------- --------
Diluted loss per share:
Loss available to common shareholders
plus assumed conversions $(1,336,353) 2,257,367 $ (.59)
============ ========= ========
Warrants to purchase 368,117 shares of common stock at a weighted average price
per share of $4.45 and options to purchase 325,000 shares of common stock at a
weighted average price per share of $6.19 were outstanding at June 30, 1998, but
were not included in the computation of diluted earnings per share as the
exercise prices were greater than the average market price of the common shares.
Preferred stock convertible into 31,335 shares of common stock were outstanding
at June 30, 1998, but were not included in the computation of diluted earnings
per share as the effect would be anti-dilutive.
Page 11 of 17
<PAGE>
HEALTHY PLANET PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 5.
Three Months Ended June 30, 1997
-------------------------------
Per-Share
Loss Shares Amount
--------- --------- -------
Net loss $(329,180)
=========
Basic loss per share:
Loss available to common shareholders $(329,180) 1,827,362 $ (.18)
Effect of dilutive securities -- -- --
--------- --------- -------
Diluted loss per share:
Loss available to common shareholders $(329,180) 1,827,362 $ (.18)
========= ========= =======
Six Months Ended June 30, 1997
-------------------------------
Per-Share
Loss Shares Amount
--------- --------- -------
Net loss $(458,833)
=========
Basic loss per share:
Loss available to common shareholders $(458,833) 1,827,362 $ (.25)
Effect of dilutive securities -- -- --
--------- --------- -------
Diluted loss per share:
Loss available to common shareholders
plus assumed conversions $(458,833) 1,827,362 $ (.25)
========= ========= =======
Warrants to purchase 68,117 shares of common stock at a weighted average price
per share of $5.31 and options to purchase 310,000 shares of common stock at a
weighted average price per share of $6.31 were outstanding at June 30, 1997, but
were not included in the computation of diluted earnings per share as the
exercise prices were greater than the average market price of the common shares.
Preferred stock convertible into 190,010 shares of common stock were outstanding
at June 30, 1997, but were not included in the computation of diluted earnings
per share as the effect would be anti-dilutive.
Page 12 of 17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Statements
Certain statements in this Form 10-QSB, including information set forth under
this Item 2 "Management's Discussion and Analysis of Financial Condition and
Results of Operations" constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Act").
Healthy Planet Products, Inc. (the "Company") desires to avail itself of certain
"safe harbor" provisions of the Act and is therefore including this special note
to enable the Company to do so. Forward-looking statements included in this From
10-QSB or hereafter included in other publicly available documents filed with
the Securities and Exchange Commission, report to the Company's stockholders and
other publicly available statements issued or released by the Company involve
known and unknown risks, uncertainties, and other factors which could cause the
Company's actual results, performance (financial or operating) or achievements
to differ from the future results, performance (financial or operating)
achievements expressed or implied by such forward looking statements. Such
future results are based upon management's best estimates based upon current
conditions and the most recent results of operations. These include management's
forecasts for sales, the increase in net sales for the six month period ended
June 30, 1998, purchasing plans and programs of certain large chain buyers
relating to holiday product recently experienced decline in gross margin as well
as marginal increases in general and administrative expenses, the recent adverse
trend in the general retail environment, general economic conditions,
competition generally and specifically relating to greeting cards having
environmental, nature or wildlife themes and the ability of the Company to
sustain consumer demand for the Company's principal Sierra Club card line. In
addition, the ability of the Company to enhance and expand its product mix and
to successfully introduce new products which will meet with consumer acceptance
may also affect future results.
Sales
For the six months ended June 30, 1998, the Company's net sales amounted to
$1,716,998 which reflected a marginal increase versus last year's six month
results of $1,713,193 or 0.2%. Revenues from the Company's new Collectibles line
of $181,000 accounted for 10.5% of revenues for the period while sales for the
Sierra Club and Nature Baby lines decreased by 23.1% and 33.0%, respectively
compared to the 1997 period. The Sierra Club decrease was due in part by the
loss of Barnes & Noble as a customer in the fall of 1997.
For the three months ended June 30, 1998, the Company's net sales amounted to
$739,740 representing a shortfall of $145,712 versus last year's three month
results of $884,912 or 16.4%. Collectible product sales of $85,000 were offset
principally by a decrease, compared to the 1997 quarter, in Sierra Club and
Nature Baby sales of $181,000 and $13,000 respectively.
Gross Profit
For the six months ended June 30, 1998, gross profit amounted to $354,005 or
20.6% of sales. For the comparable prior year period, gross profit amounted to
$933,420 or 54.4% of sales. The period to period decline resulted primarily from
a close-out sale of obsolete holiday inventory at a cost of $230,000, and an
increase in inventory reserves of $346,000 for slow-moving inventory. The
Company in previous years during revenue growth periods pursued quantity
discounts on its card businesses to improve margins. The current downtrend in
revenues has now classified these inventories as slow-moving and has resulted in
the current quarter's increase in inventory reserves. The inventory reserve will
be evaluated quarterly based on actual and projected sales.
For the three months ended June 30, 1998, a loss at gross margin was incurred in
the amount of $195,200. This reflects the above referenced close-out sale and
inventory reserve which were recorded during the second quarter.
Page 13 of 17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Operating Expenses
For the six months ended June 30, 1998, selling, shipping and marketing expenses
amounted to $582,987 reflecting an increase of $124,882 versus the prior year's
level of $458,045 or 27.2%. Costs associated with the new Collectibles line for
advertising commissions and travel accounted for the year to year increase.
For the three months ended June 30, 1998, selling, shipping and marketing
expenses amounted to $280,399 reflecting an increase of $49,771 or 21.5% over
the previous year's level of $230,628. Costs associated with the new
Collectibles line for advertising, commissions, and travel accounted for the
year to year increase.
General and administrative expenses amounted to $927,333 for the six months
ended June 30, 1998, reflecting an increase of $137,049 or 17.3% versus the
prior year period of $790,284. Increased professional fees accounted for 38% of
the increase with the addition of personnel for the new Collectibles line
accounting for 42% of this year to year increase.
General and administrative expenses amounted to $478,892 for the three months
ended June 30, 1998, reflecting an increase of $105,736 or 28.3% versus the
prior year quarter of $373,156. The addition of personnel for the new
Collectibles line primarily accounted for the year to year increase.
Income
An operating loss of $1,156,255 or $.51 per share was incurred for the six
months ended June 30, 1998. Net interest and other income of $119,902 reduced
the operating loss to result in a net loss of $1,036,353 or $.46 per share. For
the prior year period, the operating loss amounted to $314,909 or $.17 per share
and loss before taxes amounted to $236,833. Increased operating costs associated
with the new Collectibles line, and the write-down of obsolete and slow-moving
inventory resulted in the six month loss. New loss for the six months ended June
30, 1998 amounted to $1,336,353 or $.59 per share, compared to the prior year's
net loss of $458,833 or $.25 per share. During the current quarter a $300,000
valuation allowance was placed on deferred tax assets. Under Statement of
Financial Accounting Standard No. 109, "Accounting for Income Taxes", a
valuation allowance is recognized to offset a deferred tax asset if the eventual
realization of all or a portion of the asset is uncertain. Due to the loss for
the six months ended June 30, 1998, the realization of tax benefits from net
operating loss carryforwards expected to be used in 1998 is not assured. The
amount of the valuation allowance will be reviewed and may be adjusted on a
quarterly basis.
Page 14 of 17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Balance Sheet
Total assets at June 30, 1998 amounted to $6,464,416 which reflected a decrease
versus the prior year level of $8,036,000 by $1,571,584 or 19.6%. A decline in
cash, fixed assets, deferred taxes, receivables and inventories were offset in
part by increases in fixed assets, prepaid expenses and royalties to result in
the period to period decline. Total current liabilities amounted to $645,804 as
of June 30, 1998 versus the December 31, 1997 level of $806,000. The decrease
was a result of the paydown of accrued seasonal commissions and trade payables
during the six month period.
Liquidity and Capital Resources
At June 30, 1998, the Company's working capital was $4,366,580 reflecting a
decrease of $1,039,420 versus the working capital at December 31, 1997 of
$5,406,000. Cash of $142,546 was provided for during the period from operating
activities primarily due to a reduction in receivables offset in part by
increases in inventory, advances on royalties, and payables. Cash of 173,875 was
generated by investment activities due primarily to the sale of marketable
securities. Cash of $92,654 was used to pay a note related to the Corlett
Collectibles acquisition. The Company remains liquid with a current ratio of
7.8:1.
The present primary sources of the Company's liquidity has been cash internally
generated from operations, proceeds obtained by the Company through the private
sale of its securities, and the availability of a secured line of credit. The
Company has a $500,000 secured line of credit from Westamerica Bank with
interest at the bank's Index Rate plus .75% or 8.5% as of 6/30/98. The Company
draws on this line from time to time on a short term basis, however, the Company
did not utilize the line of credit during this quarter. As of June 30, 1998,
there were no borrowings under this line of credit.
Effects of Inflation
The Company does not view the effects of inflation as having a material effect
upon its business. Increases in paper and labor costs have been offset by
increases in the price of the Company's cards and through higher print runs,
which have reduced the unit cost of the Company's card product. While the
Company has in the past increased its prices to its customers, it has maintained
its relative competitive price position within the general range of greeting
cards.
Page 15 of 17
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securityholders
On August 5, 1998 the Company held its Annual Meeting of
Shareholders. At the Meeting, the sole item of business was the election of two
(2) Class 1 Directors to the Board of Directors of the Company. The two (2)
Directors elected as Class 1 Directors and the percentage of the votes (both in
person and by proxy) was as follows:
Name of Director For Withheld
---------------- --- --------
Bruce A. Wilson 95.1% 4.9%
William J. Nance 95.1% 4.9%
At the meeting, 68.1% of all Common Stock and Series D Preferred Stock issued
and outstanding and entitled to vote were present in person or by proxy.
The Board of Directors elected Mr. Robert D. Sweitzer, Ph.D. as a
Class 3 Director to fill the vacancy on the Board that existed by reason of the
resignation of Joseph F. Furlong III.
The following individuals comprise the entire Board of Directors
and occupy the class indicated opposite his name:
Name of Director Class
---------------- -----
Bruce A. Wilson 1
William J. Nance 1
Daniel R. Coleman 2
Michael G. Zybala 2
John V. Winfield 3
Robert D. Sweitzer 3
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits
None
b) Reports on Form 8-K
During the quarter ended June 30, 1998, the following reports on
Form 8-K were filed by the Registrant.
Page 16 of 17
<PAGE>
<TABLE>
PART II. OTHER INFORMATION (continued)
--------------------------------------
<CAPTION>
b) Reports on Form 8-K (continued)
Date of Report Item Reported Description
- -------------- -----------
<S> <C> <C>
April 6, 1998 Item 6. Resignation of Resignation of Robert Fagenson
Registrant's Directors as Director
June 16, 1998 Item 6. Resignation of Resignation of Joseph F. Furlong III
Registrant's Directors as Director
June 23, 1998 Item 5. Other Events Election of Michael G. Zybala as Director
</TABLE>
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTHY PLANET PRODUCTS, INC.
Registrant)
DATED: August _____, 1998 by: /s/ Bruce A. Wilson
(February 4, 1999 -------------------------------
as to Amendment No. 1)
Bruce A. Wilson
President, Chief Executive, Chief Operating
and Chief Financial Officer.
(Principal Executive, Financial and
Accounting Officer)
Page 17 of 17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
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0
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