UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
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 Number 000-27437
PLANETRX.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3227733
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2207 Sawgrass Village Drive
Ponte Vedra Beach, Fl 32082
(Address of principal executive offices)
Registrant's telephone number, including area code: (904) 285-0000
Indicate by check mark whether the Registrant (1) has filed all reports required
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 [ ]
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 October 7, 2002
----- ------------------------------
Common Stock, $0.0001 par value 62,192,744
Table of Contents
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements 1
Balance Sheets at June 30, 2002 1
(unaudited) and December 31, 2001
Statements of Operations (unaudited) for the Three and Six Months 2
Ended June 30, 2002 and Period From Inception (August 3, 2001)
Through June 30, 2002
Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2002 3
and Period From Inception (August 3, 2001) Through June 30, 2002
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 10
Item 6. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 10
SIGNATURE 11
PART I
ITEM 1. FINANCIAL STATEMENTS
PLANETRX.COM, INC.
(A Development Stage Company)
Balance Sheets
(in thousands, except per share amounts)
June 30, December 31,
2002 2001
(Unaudited)
------------------ ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 204 $ --
Deposits 5
------------------ ---------------------
Total current assets 209 --
Property and equipment, net 1
------------------- ---------------------
Total assets $ 210 $ --
=================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 155 $ 42
Accrued salaries and related benefits 425 154
Accrued expenses 61
---------------- ---------------------
Total liabilities 641 196
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred Stock: issuable in series, $0.0001 par value;
5,000 shares authorized; no shares issued and outstanding -- --
Common Stock: $0.0001 par value; 200,000 shares authorized;
61,734 and 33,822 shares issued and outstanding at June 30, 2002 and
December 31, 2001, respectively 6 3
Additional paid-in capital 929 --
Subscriptions receivable ( 2 ) ( 3 )
Deficit accumulated during the development stage ( 1,025 ) ( 196 )
Deferred compensation ( 339 )
------------------- ---------------------
Total stockholders' equity ( 431 ) ( 196 )
------------------- ---------------------
Total liabilities and stockholders' equity $ 210 $ --
=================== =====================
The accompanying notes are an integral part of these financial statements.
PLANETRX.COM, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited, in thousands, except per share amounts)
Cumulative
From
Inception
Three Months Ended Six Months Ended (August 3, 2001)
June 30, June 30, through June 30,
--------------------- ---------------------
2002 2002 2002
--------------------- --------------------- -----------------
Net revenue $ -- $ -- $ --
Operating expenses:
Salaries, wages and related benefits 157 271 425
Professional fees 218 271 296
Non cash stock compensation 46 261 261
General and administrative 19 26 43
----------------- ------------------ -----------------
Total operating expenses 440 829 1,025
----------------- ------------------ -----------------
Net loss available to common shareholders $ ( 440 ) $ ( 829 ) $ ( 1,025 )
================== ================== ==================
Basic and diluted net loss per share $ ( 0.01 ) $ ( 0.02 )
================== ==================
Weighted average shares used to compute basic and diluted
net loss per share 42,804 39,106
================== ==================
The accompanying notes are an integral part of these financial statements.
PLANETRX.COM, INC.
(A Development Stage Company)
Statements of Cash Flows
(in thousands)
Period
From
Inception
Six Months Ended (August 3,
June 30, 2001)
(Unaudited) through June 30,
--------------------- ----------------
2002 2002
--------------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ ( 829 ) $ ( 1,025 )
Adjustments to reconcile net loss to change in cash
Depreciation 1 1
Non cash stock compensation 261 261
Changes in assets and liabilities:
Deposits ( 5 ) ( 5 )
Accounts payable 113 155
Accrued salaries and related benefits 271 425
------------------ ----------------
Net cash used in operating activities ( 188 ) ( 188 )
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment ( 2 ) ( 2 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 394 394
------------------- ----------------
Increase in cash and cash equivalents 204 204
Cash and cash equivalents at beginning of period -- --
------------------- -----------------
Cash and cash equivalents at end of period $ 204 $ 204
=================== ================
Non cash effect of merger, assumption of certain liabilities (Note 1) 61 61
The accompanying notes are an integral part of these financial statements.
PLANETRX.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited, in thousands, except per share amounts)
1. The Company and Basis of Presentation
The Company
On May 31, 2002 PlanetRx.com ("PlanetRx" or the "Company"), a public shell
company, merged with Paragon Homefunding, Inc., ("Paragon") a privately held,
development stage company based in Ponte Vedra Beach, Florida, that intends to
enter the financial services market through acquisitions. For accounting
purposes, the transaction has been treated as a recapitalization of Paragon with
Paragon viewed as the acquirer in a reverse acquisition. As a result, the
financial statements presented before the merger are those of Paragon. The
historical stockholders' equity of Paragon prior to the merger has been
retroactively restated for the equivalent number of shares received in the
merger by Paragon after giving effect to the difference in par value of the
PlanetRx's and Paragon's stock with the difference recorded as paid-in capital.
Also, as a result of the Merger, Paragon also assumed approximately $61 of
PlanetRx's accrued liabilities for legal services. Paragon was incorporated in
Delaware on August 3, 2001. We are a development stage company that has recorded
no revenue since inception. Accordingly, we have no operating history and prior
periods do not exist for comparison to the periods presented. These financial
statements have been prepared in accordance with Statement of Financial
Accounting Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises," to recognize the fact that the Company is devoting substantially
all of its efforts to establishing a new business and planned principal
operations have not commenced.
PlanetRx was incorporated in Delaware on March 31, 1995 and operated as an
online healthcare destination for commerce, content and community. The Company
closed its online health store in March 2001 and shortly thereafter began the
process of liquidating and dissolving the Company. The merger with Paragon
completed this process.
Pursuant to the merger, a wholly-owned subsidiary of the Company merged with and
into Paragon, and the Company issued approximately 55,561 shares of common stock
to the Paragon stockholders equaling 90% of the total outstanding shares of the
Company's common stock immediately after the merger. As a result, the then
existing stockholders of the Company saw their ownership stake reduced from 100%
to 10% of the outstanding common stock. As a result of the merger, Paragon also
assumed approximately $61 of PlanetRx's accrued liabilities for legal services.
There could be further dilution of this interest following the merger in the
event that the Company issues additional shares of common stock. Paragon's
management has assumed control of the Company. Paragon has no operating history
and we give no assurance when or if we will ever commence operations. Thus, our
ability to continue to exist will depend on a number of factors, including the
ability to secure adequate sources of capital as well as locating and funding
acquisitions of suitable companies.
The accompanying unaudited condensed financial statements reflect all
adjustments, which include only normal recurring adjustments, which, in the
opinion of management, are necessary for the fair statement of the results of
operations for the periods shown. The results of operations for such periods are
not necessarily indicative of the results to be expected for the full fiscal
year or any future period. The information included in this Form 10-Q should be
read in conjunction with the 2001 audited financial statements and notes thereto
included herewith.
2. Net Loss per Share
Basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of shares of
common stock outstanding during the period. Diluted net loss per share is
computed using the weighted average number of common shares and common
equivalent shares if dilutive. Common equivalent shares consist of the
incremental common shares issuable upon the exercise of stock options and
warrants (using the treasury stock method), and the common shares outstanding
subject to repurchase. The periods presented below exclude common equivalent
shares, as the effect of such shares on a weighted average basis is
anti-dilutive.
The following table sets forth the computation of basic and diluted net loss per
share for the periods indicated (in thousands, except per share amounts):
Period
From Inception
(August 3,
Three Months Ended Six Months Ended 2001)
June 30, June 30, through June 30,
---------------------- ------------------- -------------------
2002 2002 2002
---------------------- ------------------- -------------------
Numerator: Net loss available to common shareholders $ ( 440 ) $ ( 829 ) $ ( 1,025 )
Denominator: Weighted average common shares 42,804 39,106 35,849
---------------------- ------------------- -------------------
Basic and diluted net loss per share $ ( 0.01 ) $ ( 0.02 ) $ ( 0.03 )
====================== =================== ===================
3. Accrued Salaries and Related Benefits
The Company has entered into employment agreements with its executive officers.
All executive officers have elected to defer receipt of the salaries, benefits
and other items due them pursuant to such contracts until the Company acquires
sufficient operating capital through the acquisition of operating companies,
fundraising or both. At June 30, 2002 and December 31, 2001 the Company had
accrued $425 and $154 pursuant to these contracts, respectively.
4. Stockholders' Equity
The Company has been seeking capital through the sale of its common stock via
private placement transactions. During February, March and May of 2002 the
Company sold 10,783 shares of common stock for approximately $394 to private
investors.
In March 2002 the Company and the founding shareholders issued 16,432 shares of
restricted and unrestricted common stock to its Chief Executive Officer, John W.
Brink in connection with his employment agreement. As a result of the issuance
of 5,477 shares of unrestricted stock the Company recorded $200 of non-cash
stock compensation in March 2002. Of the restricted shares, 8,216 were to vest
over time with the value of the stock award amortized over the appropriate
vesting period. The remaining 2,739 restricted shares were to vest upon the
Company's initial acquisition, with a compensation charge recorded based on the
market value of the stock at the time of the acquisition. These shares have been
recorded as issued and outstanding at June 30, 2002 and $400 of deferred
compensation has been recorded in stockholders' equity
On July 16, 2002 Mr. Brink resigned as Chief Executive Officer of the Company.
In connection with his resignation he rescinded and cancelled the above
mentioned stock grant as well as all options that he had been granted. Pursuant
to the terms of the merger agreement, the shares given to Mr. Brink by the
founding shareholders were returned to them and the remaining shares were
reallocated to the shareholders that existed at the time of the merger described
above.
5. Commitments and Contingencies
On March 27, 2001, SDR Investors, LP filed a lawsuit against PlanetRx, certain
underwriters of the Company's initial public offering in October 1999 (the
"IPO"), and certain former and current directors of the Company. Named as
additional defendants in the suit, which was filed in the United States District
Court for the Southern District of New York, are The Goldman Sachs Group, Inc.,
BancBoston Robertson Stephens, Inc., Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, and Salomon Smith Barney, Inc., each of which was an underwriter
of the IPO; William J. Razzouk and Christos M. Cotsakos, who are former
directors of the Company; and David M. Beirne and Michael Moritz, who were
current directors of the Company at the time the complaint was filed, but are
now former directors of the Company. Between April 19, 2001 and May 4, 2001,
five virtually identical additional complaints were filed. One of the additional
complaints also names as defendants Hambrecht & Quist LLC, William Blair & Co.
LLC, Bear Stearns & Co., Inc., additional underwriters of the IPO, Morgan
Stanley Dean Witter & Co. Incorporated and Credit Suisse First Boston Corp.,
which were not underwriters of the IPO, and Steve Valenzuela, a former officer
of the Company. The suits generally allege that the defendants violated federal
securities laws by not disclosing certain actions allegedly taken by the
underwriter defendants in
connection with the IPO. The suits allege specifically that the underwriter
defendants, in exchange for the allocation to their customers of shares of the
Company's common stock sold in the IPO, solicited and received from their
customers undisclosed commissions on transactions in other securities and
required their customers to purchase additional shares of the Company's common
stock in the aftermarket at pre-determined prices that were above the IPO price.
The suits seek unspecified monetary damages and certification of a plaintiff
class consisting of all persons who acquired shares of the Company's common
stock between October 6, 1999, and December 6, 2000. The Action, which is being
coordinated with several hundred other nearly identical actions filed against
other companies before one judge in the U.S. District Court for the Southern
District of New York. A motion to dismiss addressing issues common to the
companies and individuals sued in this action was filed on July 15, 2002. As of
the date hereof, the Company is unable to predict the outcome of the suit and
its ultimate effect, if any, on the Company's financial condition, results of
operations or cash flows.
On June 19, 2001, vTraction, Inc. filed a complaint for breach of contract in
the Chancery Court of Tennessee for the Thirtieth Judicial District at Memphis
alleging that the Company entered into an oral agreement with vTraction to sell
certain equipment and later reneged, and claiming damages in an amount
including, but not limited to, the difference between the price agreed to in the
alleged oral contract and the market price of the equipment. The Company has
filed an answer asserting the affirmative defenses of failure of consideration
and statute of frauds and denying the existence of an oral contract. As of the
date hereof, the Company is unable to predict the outcome of the suit and its
ultimate effect, if any, on the Company's financial condition, results of
operations or cash flows.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward Looking Statements
Certain information contained in the matters set forth in this Quarterly Report
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, and is subject to the safe harbor created by that
act. PlanetRx cautions readers that certain important factors may affect the
PlanetRx's actual results and could cause such results to differ materially from
any forward-looking statements which may be deemed to have been made in this
item and elsewhere in this Quarterly Report, or which are otherwise made by or
on behalf of PlanetRx. For this purpose, any statements contained in this
Current Report that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as may, will, expect, believe, explore, consider, anticipate, intend,
could, estimate, plan, or continue or the negative variations of those words or
comparable terminology are intended to identify forward-looking statements.
Factors that may affect PlanetRx's results include, but are not limited to the
risks and uncertainties associated with the following:
o our ability to raise capital necessary to sustain our operations and
implement our business plan,
o our ability to implement our business plan,
o our ability to obtain regulatory permits and approvals to operate in the
financial services area,
o our ability to identify and complete acquisitions and successfully
integrate the businesses we acquire, if any,
o changes in the real estate market, interest rates or the general economy of
the markets in which we operate,
o our ability to employ and retain qualified management and employees,
o changes in government regulations that are applicable to our regulated
brokerage, lending and property management businesses,
o general volatility of the capital markets and the establishment of a market
for our shares,
o changes in the demand for our services,
o the degree and nature of our competition,
o our ability to generate sufficient cash to pay our creditors, and
o disruption in the economic and financial conditions primarily from the
impact of past terrorist attacks in the United States, threats of future
attacks, police and military activities overseas and other disruptive
worldwide political events.
PlanetRx is also subject to other risks detailed herein or detailed from time to
time in PlanetRx's Securities and Exchange Commission filings.
History and Recent Events
Paragon was incorporated in Delaware in August 2001 and our headquarters are
located in Ponte Vedra Beach, Florida. We intend to enter the financial services
industry through a series of acquisitions and initially plan to pursue the
acquisition of companies who originate or broker residential mortgages. We
believe our acquisition candidates would be willing to be acquired in exchange
for securities of a publicly traded company and, as a result, subsequent to
incorporation Paragon began to pursue the acquisition of a public company. On
April 26, 2002, we announced that we had entered into a definitive agreement to
merge with Paragon. Prior to commencing liquidation, PlanetRx was a leading
online healthcare destination for commerce, content and community. The merger
was completed on May 31, 2002. Pursuant to the merger, a wholly-owned subsidiary
of PlanetRx merged with and into Paragon, and we issued shares of common stock
to the Paragon stockholders equaling 90% of the total outstanding shares of
PlanetRx's common stock immediately after the merger. As a result, PlanetRx's
then existing stockholders saw their ownership stake reduced from 100% to 10% of
the outstanding common stock. There could be further dilution of this interest
following the merger in the event that we issue additional shares of common
stock. Paragon's management has assumed control of PlanetRx. For accounting
purposes, the transaction has been treated as a recapitalization of Paragon with
Paragon viewed as the acquirer in a reverse acquisition. As a result, the
financial statements presented before the merger are those of Paragon.
As discussed above, we plan to acquire companies in the financial services
market and have initially targeted companies that specialize in originating or
brokering residential home mortgages. To date we have raised approximately
$394,000 through the sale of common stock to individual investors. We are a
development stage company that has recorded no revenue since inception.
Accordingly, we have no operating history and prior periods do not exist for
comparison to the periods presented.
Results of Operations
For the Three Months ended June 30, 2002
Net Revenue
Net revenues were zero the three months ended June 30, 2002.
Operating Expenses
Salaries, wages and related expenses. For the three months ended June 30, 2002
salaries, wages and related expenses were $157,000. These are primarily related
to salaries accrued for the executive officers pursuant to employment
agreements. Such officers have elected to defer receipt of the accrued amounts
until we acquire businesses with cash flow sufficient to pay the amounts or when
sufficient additional capital is secured.
Professional fees. For the three months ended June 30, 2002 professional fees
were $218,000 and primarily relate to legal and accounting fees incurred in
connection with the merger with Paragon.
Non cash stock compensation. For the three months ended June 30, 2002 non cash
stock compensation costs were $46,000 and relate to the amortization of a
restricted stock awarded to the Chief Executive Officer.
General and Administrative expenses. For the three months ended June 30, 2002,
general and administrative expenses were $19,000 and relate to the operation and
maintenance of the corporate offices.
For the Six Months Ended June 30, 2002
Net Revenue
Net revenues were zero for the six months ended June 30, 2002.
Operating Expenses
Salaries, wages and related expenses. For the six months ended June 30, 2002
salaries, wages and related expenses were $271,000. These are primarily related
to salaries accrued for the executive officers pursuant to employment
agreements. As discussed above, such amounts will be deferred until we acquire
businesses with cash flow sufficient to pay the amounts or when sufficient
additional capital is secured.
Professional fees. For the six months ended June 30, 2002 professional fees were
$271,000 and primarily relate to legal and accounting fees incurred in
connection with the merger with Paragon.
Non cash stock compensation. For the six months ended June 30, 2002 non cash
stock compensation costs were $261,000 and relate to the granting of stock to
the Chief Executive officer and the amortization of a restricted stock awarded
to the Chief Executive Officer.
General and Administrative expenses. For the six months ended June 30, 2002,
general and administrative expenses were $26,000 and relate to the operation and
maintenance of the corporate offices.
Liquidity and Capital Resources
We invest excess cash predominantly in instruments that are highly liquid, of
high-quality investment grade, and predominantly have maturities of less than
one year with the intent to make such funds readily available for operating
purposes. At June 30, 2002, we had cash and cash equivalents totaling
approximately $204,000.
Net cash used in operating activities was approximately $188,000 since we were
formed in August 2001 and primarily represent the payment of legal and
accounting fees. As discussed above, we have raised approximately $394,000 from
the issuance of common stock to individual investors. As of June 30, 2002 all of
our executive officers have elected to defer receipt of any salaries and bonuses
until sufficient additional capital is secured or we acquire a business with
sufficient cash flow to allow us to continue our existence.
We have entered into a non-binding letter of intent to acquire a company in the
financial services field. The proposed transaction contemplates, among other
things, that PlanetRx will issue approximately 53,000,000 unregistered shares of
common stock to the seller. We are currently negotiating the terms of definitive
agreements and determining the ultimate structure of, and consideration in, the
transaction. We cannot assure that this transaction will be entered into or
closed.
There can be no guarantees that we will be successful in either securing
additional capital or acquiring businesses with sufficient cash flow to allow us
to continue our existence and execute our business plan.
We presently have no revenues, and we do not anticipate generating revenues from
operations unless we close an acquisition of a company operating in the
financial services industry. We will need to raise more capital to allow us to
continue our existence and implement our business plan.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have assessed our vulnerability to certain market risks, including interest
rate risk associated with financial instruments included in cash and cash
equivalents. Due to the short-term nature of these instruments and our
investment policies
and procedures, we have determined that the risk associated with interest rate
fluctuations related to these financial instruments does not pose a material
risk to us.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 27, 2001, SDR Investors, LP filed a lawsuit against PlanetRx, certain
underwriters of the Company's initial public offering in October 1999 (the
"IPO"), and certain former and current directors of the Company. Named as
additional defendants in the suit, which was filed in the United States District
Court for the Southern District of New York, are The Goldman Sachs Group, Inc.,
BancBoston Robertson Stephens, Inc., Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, and Salomon Smith Barney, Inc., each of which was an underwriter
of the IPO; William J. Razzouk and Christos M. Cotsakos, who are former
directors of the Company; and David M. Beirne and Michael Moritz, who were
current directors of the Company at the time the complaint was filed, but are
now former directors of the Company. Between April 19, 2001 and May 4, 2001,
five virtually identical additional complaints were filed. One of the additional
complaints also names as defendants Hambrecht & Quist LLC, William Blair & Co.
LLC, Bear Stearns & Co., Inc., additional underwriters of the IPO, Morgan
Stanley Dean Witter & Co. Incorporated and Credit Suisse First Boston Corp.,
which were not underwriters of the IPO, and Steve Valenzuela, a former officer
of the Company. The complaints have been consolidated into a single action and a
consolidated amended complaint has been filed. The consolidated amended
complaint names PlanetRx, Mr. Razzouk, Mr. Cotsakos, Mr. Beirne, Mr. Moritz, Mr.
Valenzuela, Goldman Sachs, Robertson Stephens (as successor to BancBoston),
BancBoston, J.P. Morgan (as successor to Hambrecht & Quist LLC), Hambrecht &
Quist LLC, William Blair & Co. LLC, Bear Stearns & Co., Inc., Merrill Lynch,
Pierce, Fenner & Smith, Incorporated and Salomon Smith Barney, Inc. as
defendants. The action generally alleges that the defendants violated federal
securities laws by not disclosing certain actions allegedly taken by the
underwriter defendants in connection with the IPO. The action alleges
specifically that the underwriter defendants, in exchange for the allocation to
their customers of shares of the Company's common stock sold in the IPO,
solicited and received from their customers undisclosed commissions on
transactions in other securities and required their customers to purchase
additional shares of the Company's common stock in the aftermarket at
pre-determined prices that were above the IPO price. The action seeks
unspecified monetary damages and certification of a plaintiff class consisting
of all persons who acquired shares of the Company's common stock between October
6, 1999, and December 6, 2000. The action is being coordinated with over three
hundred other nearly identical actions filed against other companies before one
judge in the U.S. District Court for the Southern District of New York. A motion
to dismiss addressing issues common to the companies and individuals sued in
these actions was filed on July 15, 2002. As of the date hereof, we are unable
to predict the outcome of the suit and its ultimate effect, if any, on the
Company's financial condition, results of operations, or cash flows.
On June 19, 2001, vTraction, Inc. filed a complaint for breach of contract in
the Chancery Court of Tennessee for the Thirtieth Judicial District at Memphis
alleging that PlanetRx entered into an oral agreement with vTraction to sell
certain equipment and later reneged, and claiming damages in an amount
including, but not limited to, the difference between the price agreed to in the
alleged oral contract and the market price of the equipment. We have filed an
answer asserting the affirmative defenses of failure of consideration and statue
of frauds and denying the existence of an oral contract. As of the date hereof,
we are unable to predict the outcome of the suit and its ultimate effect, if
any, on the Company's financial condition, results of operations, or cash flows.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
The following amends and restates, in its entirety, Item 7 of PlanetRx.com,
Inc.'s (the "Company" or "PlanetRx") Form 8-K dated and filed June 17, 2002 (the
"Form 8-K") pursuant to which, on May 31, 2002, a change in control of PlanetRx
occurred as a result of the closing of the announced Agreement and Plan of
Merger dated April 22, 2002 among PlanetRx, PHI Acquisition Corp., and Paragon
Homefunding, Inc.
Form 8-K ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired
Audited financial statements of Paragon Homefunding, Inc., as of and
for the period from inception (August 3, 2001) to December 31, 2001
and the independent accountants report thereon, are attached hereto as
Exhibit 99.1.
Unaudited condensed interim financial statements of Paragon
Homefunding, Inc., as of March 31, 2002 are attached hereto as Exhibit
99.2.
(b) Exhibits
99.1 Audited financial statements of Paragon Homefunding, Inc., as of
and for the period from inception (August 3, 2001) to December
31, 2001, and the independent accountants report thereon, filed
herewith.
99.2 Unaudited condensed interim financial statements of Paragon
Homefunding, Inc,, as of March 31, 2002 filed herewith.
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits
The document listed in the Exhibit Index following the signature page of
this report is filed as part of this report.
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K on June 17, 2002 for an
event dated May 31, 2002 with the Securities and Exchange Commission under
items 1, 2 and 7 that it had completed a merger with Paragon Homefunding,
Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLANETRX.COM, INC.
By: /s/ Steven A. Burleson
-----------------------------
Steven A. Burleson
Chief Executive Officer and
Principal Accounting Officer
Date: October 8, 2002
CERTIFICATION
UNDER
SECTION 302
OF THE
SARBANES-OXLEY ACT OF 2002
I, Steven A. Burleson, being the Chief Executive Officer and principal
accounting officer of PlanetRx.com, Inc., a Delaware corporation (PlanetRx),
certify that:
1. I have reviewed this quarterly report on Form 10-Q for the period
ended June 30, 2002 of PlanetRx;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
Dated: October 8, 2002
/s/ Steven A. Burleson
--------------------------
Steven A. Burleson
Chief Executive Officer and
Principal Accounting Officer
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ---------------- -----------------------------------------------------------
2 Agreement and Plan of Merger dated as of April 22, 2002, among
PlanetRx.com, Inc., PHI Acquisition Corp., and Paragon
Homefunding, Inc.*
99.1 Audited financial statements of Paragon Homefunding, Inc., as of
and for the period from inception (August 3, 2001) to December
31, 2001, and the independent auditors' report thereon, filed
herewith.
99.2 Unaudited condensed interim financial statements of Paragon
Homefunding, Inc., as of March 31, 2002 filed herewith
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* Incorporated herein by reference to Exhibit 2 to PlanetRx's Quarterly Report
on Form 10-Q for the period ended March 31, 2002.