United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended:
For the transition period from _______________ to _____________________
Commission
file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ |
| ☐ | Smaller Reporting Company | ||
| Emerging Growth Company |
If
an emerging growth company, indicate by check mark if this registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒ No ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The number of shares outstanding of all of the Registrant’s classes of common equity as of September 14, 2021 is as follows:
| Class of Securities | Shares Outstanding September 14, 2021 | |||
| Common Stock, $0.001 par value, 4,990,000,000 shares authorized | ||||
| Series A Super Voting Preferred Stock, $0.001 par value, 500,000 shares authorized | 500,000 | |||
| Class B Convertible Preferred Stock, , $0.001 par value, 5,000,000 shares authorized | 3,001,904 | |||
| Preferred Stock, $0.001 par value, currently without designations, 4,500,000 shares authorized | 0 | |||
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Table of Contents
Forward Looking Statements
This Quarterly report on Form 10-Q contains forward-looking information. This document contains forward-looking statements. Any statements contained in this document that are not statements of historical fact may be deemed to be forward-looking statements. You can identify forward-looking statements as those that are not historical in nature, particularly those that use terminology such as “may”, “will”, “should”, “expects”, “anticipates”, “contemplates”, “estimates”, “believes”, “plans”, “projects”, “predicts”, “potential” or “continue” or the negative of these similar terms. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether the Registrant is able to manage its planned growth efficiently and operate profitably, (c) whether it is able to generate sufficient revenues or obtain financing to sustain and grow its operations, and (d) whether it is able to successfully fulfill its primary requirements for cash. The Registrant’s actual results may differ significantly from the results projected in the forward-looking statements. The Registrant assumes no obligation to update forward-looking statements.
Reports to Shareholders
The Registrant is required to file reports with the Commission pursuant to the Exchange Act. These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Due to lack of funds, during the period commencing on October 31, 2015 and ending on July 31, 2020, the Registrant was unable to maintain current in its reporting obligations; however, curing that deficiency is current management’s highest priority. The Registrant intends to file delinquent reports in reverse chronological order in order to assure that the most current information is the first available but with priority for filing reports as they become due which it has done since the annual report on Form 10-K for the fiscal year ended October 31, 2020. Interested persons may obtain copies of these reports from the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10 A.M. to 3 P.M., on the Commission’s website, at www.sec.gov or on the Registrant’s website at https://www.pugettechnologies.com/. You may obtain information on the operation of the Commission’s Public Reference Room by calling the Commission at 1-800-Commission-0330.
XBRL Explanatory Note
Pursuant to Rule 406T of Regulation S-T, the XBRL files contained in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
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Part I – Financial Information
Item 1. Financial Statements.
Puget Technologies, Inc.
Balance Sheets
| 31-July-21 | 31-Oct-20 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Related Party Debt | ||||||||
| Current portion of Notes Payable | ||||||||
| Accrued interest on Current portion of Notes Payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Notes payable | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $ par value; | ||||||||
| Authorized - 2020 - | ||||||||
| Issued - 2021 - ; 2020 - | ||||||||
| Preferred A - $ par value; Authorized and Issued - | ||||||||
| Preferred B - $ par value; Authorized - ; | ||||||||
| Issued - 2021 - ; 2020 - | ||||||||
| Paid in Capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes to the unaudited financial statements are an integral part of these statements.
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Puget Technologies, Inc.
Statements of Operations
(Unaudited)
| For the Quarter Ended | For the Quarter Ended | For the Nine Months Ended | For the Nine Months Ended | |||||||||||||
| 31-July-21 | 31-July-20 | 31-July-21 | 31-July-20 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||
| Cost of Sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operations | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Officer compensation | ||||||||||||||||
| Management fees to related party | ||||||||||||||||
| Legal and professional fees | ||||||||||||||||
| Other general and administrative | ||||||||||||||||
| Total expenses | ||||||||||||||||
| (Loss) from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision (credit) for taxes on income | ||||||||||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of shares outstanding | ||||||||||||||||
| Basic and diluted (loss) per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes to the unaudited financial statements are an integral part of these statements.
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Puget Technologies, Inc.
Statements of Stockholders’ Deficit
(Unaudited)
| Common Stock | PREFERRED | |||||||||||||||||||||||||||
| Shares | Amount | A | B | Additional Paid-In Capital | Accumulated Deficit | Total Equity | ||||||||||||||||||||||
| Balance, October 31, 2020 | $ | $ | 500 | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Issued for AP conversion | — | |||||||||||||||||||||||||||
| Issued for debt conversions | ( | ) | ||||||||||||||||||||||||||
| Issued for stock compensation | ||||||||||||||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance July 31, 2021 | $ | $ | 500 | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
The accompanying notes to the unaudited financial statements are an integral part of these statements.
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Puget Technologies, Inc.
Statements of Cash Flow
(Unaudited)
| For the Nine Months Ended | For the Nine Months Ended | |||||||
| 31-July-21 | 31-July-20 | |||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net (loss) to cash provided (used) by developmental stage activities: | ||||||||
| Stock compensation | ||||||||
| Conversion Interest Expense | ||||||||
| Change in current assets and liabilities: | ||||||||
| Expenses paid by related parties | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Net cash flows from operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Advances from shareholders and related parties | ||||||||
| Proceeds/(Payment) of notes payable | ( | ) | ||||||
| Net cash flows from financing activities | ||||||||
| Net cash flows | ( | ) | ( | ) | ||||
| Cash and equivalents, beginning of period | ||||||||
| Cash and equivalents, end of period | $ | $ | ||||||
| Supplemental cash flow disclosures: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental non-cash transaction disclosures: | ||||||||
| Shares issued for services | $ | $ | ||||||
| Debt converted to equity | $ | $ | ||||||
The accompanying notes to the unaudited financial statements are an integral part of these statements.
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Puget Technologies, Inc.
Notes to the Unaudited Financial Statements
July 31, 2021
Note 1 Description of Business and Going Concern
Puget Technologies, Inc. (the “Registrant”) is a publicly held corporation incorporated in the State of Nevada on March 17, 2010, and, since May 25, 2012, when its registration statement on Form S-1 pursuant to Section 5 of the Securities Act was declared effective by the Commission, has been subject to reporting requirements pursuant to Sections 13 and 15(d) of the Exchange Act. It was initially organized to engage in the distribution of luxury wool bedding products produced in Germany. Its principal executive offices, originally in Fort Lauderdale, Florida, are currently located at 1200 North Federal Highway, Suite 200-A; Boca Raton, Florida 33432.
Description of Business
Historical
The Registrant has never filed for bankruptcy, receivership or similar proceedings nor, since the date of the last annual report on Form 10-K filed (for the fiscal year 2020), has it been involved in any reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business. From 2015 until July of 2020, the Registrant was inactive as its prior management resigned leaving it indebted and without business operations. Consequently, during such period it lacked the funds required to comply with its reporting obligations under the Exchange Act. Since July of 2020, with the assistance of its Parent (“a person that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified”, Rule 405 of Commission Regulation C) and strategic consultant, Qest Consulting Group, Inc., a Colorado corporation (“Qest”), the Registrant has eliminated its convertible debt and resumed filing of reports to the Commission. Most of the Registrant’s efforts during the period from 2015 until July of 2020 involved first, repudiation of the series of 8% convertible notes issued by prior management under terms which current management considered toxic (the “Convertible Notes”) but, after the Registrant and its management were sued by two of the noteholders in the United States District Court for the Southern District of New York (Case No. 15-cv-08860 entitled Adar Bays LLC v Puget Technologies Inc. and Hermann Burckhardt and Case No. 15-cv-09542 entitled Union Capital LLC v Puget Technologies Inc. and Herman Burckhardt), lacking adequate funds to defend such actions, the Registrant entered into settlement agreements and until July of 2020, was active only in conjunction with seeking to discharge such liabilities. As a material subsequent event, all Convertible Note liabilities were discharged during the period from July of 2020 through January of 2021.
On October 22, 2020, the Registrant entered into a retainer and consulting agreement with Qest (the “Qest Agreement”) and in conjunction therewith, in order to induce Qest to defer cash compensation, the Registrant’s officers and directors (who are also the principal stockholders, officers and directors of Qest), contributed all of their securities in the Registrant, including rights to compensation in the form of securities, to Qest. In conjunction with its role under the Qest Agreement, Qest advanced the Registrant funds used to pay for auditing and legal fees in conjunction with its annual report, to pay balances due to the Registrant’s transfer agent and to settle remaining obligations under the Convertible Notes and is temporarily providing it with office space, utilities and the use of its personnel.
Current Strategic Business Plan
The Registrant’s current strategic business plan calls for it to operate as a holding company operating in four diverse areas through subsidiaries. The four diverse areas in which the Registrant intends to concentrate through subsidiaries are, in the order in which it is anticipated projects will be undertaken, as follows:
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| 1. | Through traditional acquisition of development stage operating companies that the Registrant’s Board of Directors determines provide positive business opportunities. In that regard, the Registrant is considering the acquisition of a consolidated company currently engaged in the operation of behavioral health clinics in the State of Florida and is considering a joint venture in the solar energy industry involving proprietary nanotechnologies with current members of its Board of Advisors; |
| 2. | Through acquisition of promising privately held operating companies that eventually want to attain independent publicly traded status after a an incubation period as subsidiaries of the Registrant, during which time they would control most of their own operations but learn the intricacies of being regulated under state and federal securities regulation. The Registrant would control all legal and accounting operations and seek to generate savings and synergy by coordinating activities (e.g., purchases, marketing, warehousing, etc., among its subsidiaries); |
| 3. | Through organization and operation of a Business Development Company under the limited exemptive provisions of Sections 54(a) through 65 of the Investment Company Act; and |
| 4. | By formation of specialty acquisition vehicles for operating companies that desire to become public. |
In addition to the foregoing, given the experience that the Registrant’s president has with tax related benefits of doing business in the Commonwealth of Puerto Rico, the Registrant intends to explore opportunities for potential subsidiaries there.
The Registrant’s Proposed Program for Consolidated Operating Subsidiaries
The Registrant proposes to seek out business opportunities its management deems promising and which its Board of Directors feels it can supervise and develop. Initially, as described below, this involves ownership and operation of healthcare related enterprises. Furthermore, the Registrant has formed a Board of Advisors and believes that with the assistance of its Advisory Board, its strategic consultant, Qest, and the efforts of its officers, it can find projects of interest that can be developed into diverse lines of business, with the Registrant itself serving as a resource center for its diverse subsidiaries, providing savings in operational expenditures based on size and coordinated efforts and generating synergy among its corporate family.
The Registrant’s Proposed Program for Operating Incubator Subsidiaries
The Registrant proposes a program for promising privately held operating companies that eventually want to attain independent publicly traded status but realize that subjection to regulation under federal and state securities laws as well involvement with investors and the investment banking community has as many pitfalls as benefits and thus justify a period of supervised mentoring. The former owners will be able to continue to grow and manage their businesses on their own through the grant of a proxy to vote such subsidiary’s capital stock subject to the following conditions: the Registrant will have the right to designate one member of the subsidiary’s board of directors, the Registrant will control, with the advice and input of the subsidiary’s management, the subsidiary’s legal and auditing matters, and the subsidiary will contribute along with all other subsidiaries, a proportional share of its net-after tax profits to the Registrant for payment of administrative and overhead expenses. After a period as a subsidiary of the Registrant during which time the subsidiary’s management would learn the intricacies of being regulated under state and federal securities regulation, the subsidiary’s original stockholders or their successor’s in interest would, if they so elect, have the right to spin out as independent public companies. That would be accomplished by having 15% of their common stock transferred as a stock dividend to the Registrant’s stockholders, registered for such transfer with the Commission pursuant to Section 5 of the Securities Act, making them reporting companies with the Commission pursuant to Sections 13 and 15(d) of the Exchange Act. Ten percent of the subsidiary’s securities would be temporarily retained by the Registrant and either sold off or conveyed to the subsidiary operating as a Small Business Development Company, and the rest would be returned to the operating subsidiary’s original stockholders in exchange for 75% of the Registrant’s securities issued to acquire the operating subsidiary. To the extent the subsidiary’s original stockholders had disposed of the Registrant stock received in the reorganization, they would have to either reacquire it for tender to the Registrant, or forfeit their spinout options. In the event the original stockholders could not or did not elect to exercise their spinout rights, the Registrant would elect to either retain the operating subsidiary as wholly owned, or, spin it out in whole or in part to its stockholders through a registered dividend distribution procedure similar to the one described above anyway.
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Business Development Companies
Assuming success in implanting the initial two stages of its proposed plan of operation, the Registrant expects that it would next move on to the organization and operation of a business development company under Sections 54 through 65 of the Investment Company Act (a “BDC”) which it believes would generate significant synergy with the operating subsidiaries program described above. For example, the Registrant must not accumulate investment securities or else it will be subject to regulation as an investment company. By having a BDC subsidiary, it can transfer the balance of the securities remaining when it spins off a subsidiary to the business development company eliminating such risk as well as helping capitalize the business development company. BDCs must concentrate on developing companies, must provide continuing management assistance to the companies in which they invest but enjoy significant advantages in the form of limited regulation compared to ordinary mutual funds and advantages in raising capital. It is anticipated that such project would not be initiated prior to 2023. BDCs are similar to venture capital funds, they are. However, there are some key differences. One relates to the nature of the investors each seeks. Venture capital funds are available mostly to large institutions and wealthy individuals through Limited Offerings. In contrast, business development companies allow smaller, non- accredited investors to invest in them, and by extension, in small growth companies.
Special Purpose Acquisition Companies (“SPAC”)
Subsequent to organization of a BDC subsidiary, assuming success in doing so, the Registrant plans to organize a sequential series special purpose acquisition companies which its current management and Qest believe will complement the other three proposed segments of its proposed business plans providing an additional, more independent option for more seasoned companies that desire to attain publicly traded status. As in the foregoing case, the Registrant would either distribute securities it retains in SPACs it organizes to its shareholders in the form of stock dividends, or distribute them to its business development company subsidiary avoiding direct regulation as an investment company. A SPAC is a “blank check” shell corporation designed to take companies public without going through the traditional IPO process. SPACs allow retail investors to invest in private equity type transactions, particularly leveraged buyouts.
Caveat
The foregoing plans and business models are speculative, totally reliant on the experience of the Registrant’s management and independent consultants and contractor’s to be recruited and retained by the Registrant, and on market conditions beyond the Registrant’s control, and, on the Registrant’s ability to obtain significant additional financing, as to which there can be no assurances. In addition, the Registrant is likely to encounter significant competition in its quest for desirable acquisition candidates and thereafter, even if successful, in the operations of the acquired companies. Consequently, no assurances can be provided that the Registrant’s ambitious current business plans can or will be implemented as envisioned, or that even if implemented, they will prove successful.
Recent Acquisition Related Activities:
As material subsequent events, the Registrant has initiated implementation of the initial two aspects of its strategic plan as follows:
BCSF
As disclosed in the recently executed Acquisition & Option Agreement with Behavioral Centers of South Florida LLC (“BCSF”), a copy of which has been filed with the Commission (see current report on Form 8-K dated August 25, 2021), BCSF is a centralized community behavioral health center providing its clients/patients with mental health services ranging from psychiatry, individual therapy, psycho-social rehabilitation services and case management in clinics located in the Florida Counties of Dade and Broward and, in collaboration with the Registrant, plans to expand into Palm Beach County. It is currently organized under the laws of the State of Florida as a limited liability company but, pursuant to the Acquisition & Option Agreement, it will convert into a Florida corporation as permitted under Section 607.11933, Florida Statutes.
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BCSF currently operates a multi-location clinic employing or independently contracting with 119 individuals, including two psychiatrists, one licensed mental health counselor supervisor, one licensed clinical social worker supervisor and one licensed marriage and family therapy supervisor who supervise seventeen therapists in the mental health department; one board certified behavior analyst, one board certified assistant behavior analyst and two registered behavior technicians; and, five advanced registered nurse practitioners in the field of psychiatry. In the area of case management four licensed clinical social worker supervisors supervise forty-nine licensed clinical social workers. The clinic has provided services to approximately 2,150 patient/clients who remain in the system of which they have an active patient base of approximately 1,100 at any one time but anticipate material expansion after the proposed Acquisition through the acquisition of compatible and complementary businesses, as well as by establishing additional clinics, initially in the State of Florida. Its major areas of concentration involve group therapy, psycho-social rehabilitation and comprehensive behavioral assessment but BCSF is also highly involved in individual therapy, development of management skills, speech therapy, physical therapy, occupational therapy, targeted case management, mental health treatment plans and medication management. Its activities are licensed by the State of Florida through the Agency for Health Care Administration and are subject to conditions imposed by major insurance carriers as well as government insurance programs such as Medicaid with which it coordinates its activities.
BCSF’s total revenues for the calendar years ended
December 31, 2018 (nine months), 2019 and 2020 (all unaudited and thus subject to material adjustments) increased from $
The proposed acquisition will take place in two stages. First, the acquisition of 50% of all of BCSF’s securities and equity interests plus an irrevocable option to purchase the balance of BCSF, in each case the price being $2,500,000 payable in cash ($1,000,000) and in shares of the Registrant’s Class B Convertible Preferred Stock. The Class B Convertible Preferred Stock issuable in conjunction with the initial part of the acquisition will be valued at $2.00 per share, reflecting the Registrant’s lack of assets, income and operations and shell status under the Exchange Act at such time, but at $5.00 per share for the exercise of the option to acquire the balance of BCSF’s securities, reflecting the fact that at such time, the Registrant will have already become a company with assets, operations, income and profits, and will no longer be classified as a “shell” for purposes of the Exchange Act.
D & D
On August 5, 2021, the Registrant entered into a letter of intent to acquire D & D Rehab Center, Inc., a Florida corporation organized on February 5, 2010 (“D & D”). D & D is a health care provider which trains or retrains individuals disabled by disease or injury to help them attain their maximum functional capacity. It is registered in Centers for Medicare & Medicaid Services (CMS), National Plan and Provider Enumeration System (NPPES). Its NPI number is 1952748709, assigned on June 2013. Its primary taxonomy code is 225400000X. It currently uses 92 persons to provide services to its client/patients, six of whom are administrative employees and 86 are independent contractors comprised of the following:
| ● | Twenty-five persons implement various therapeutic modalities to children and adults at D & D’s clinic in Hialeah, nine of whom are occupational therapists, seven are physical therapists and nine are speech therapists. |
| ● | An additional sixty-one people provide applied behavioral analysis therapy for children with autism spectrum and other issues that impede their proper quotidian function at their homes, the latter being comprised of 45 registered behavioral technicians supervised by eleven board certified behavioral analysts (each with at least a master’s degree) assisted by five board certified assistant behavioral analysts. |
D & D’s total revenues for the calendar years
ended December 31, 2019 and 2020 were $
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The proposed transaction with D & D has been structured
in a manner similar to that reflected in the BCSF Acquisition Agreement. The D & D parties have tentatively agreed, subject
to conducting required due diligence and confirmations, that the Registrant will acquire D & D in two stages, first, a 50%
interest in exchange for $
Transactions under Negotiation
The Registrant has entered into two additional letters of intent to acquire companies in the health care industry but prices and terms have yet to be negotiated:
| ● | The first, Florida Behavioral Center, Inc. (dba “Florida Healthcare System” and referred to as “FHS”), organized in 2015 and based in Doral, Florida, is a healthcare organization that provides mental health services through an experienced team of psychiatrists, mental health counselors, case managers, and administrative staff. Common mental health concerns treated include anxiety, substance abuse, depression, suicide risk, trauma, bipolar disorder, and attention deficit disorder; and targeted case management services are offered for mental illness in patients of all ages. |
| ● | The second, Glades Medical Centers of Florida LLC (“Glades”), a Florida limited liability company is the successor in interest to Glades Medical Centers LLC, a Florida limited liability company organized on May 28, 2014 after its entry into a joint venture with Primary Medical Physicians, LLC, also a Florida limited liability company (all collectively referred to as “The Glades Group”). Its services focus on primary care diagnosis of and treatments for illnesses such as colds, flu, stomach aches or ear infections; minor injury care such as less severe bumps, cuts, abrasions or sprains; pediatrics from common childhood illnesses like influenza, bronchitis, rashes or infections, to minor injury care for cuts, lacerations, sprains or breaks; x-rays and in-house lab testing, and occupational medicine. |
In each case, the companies have granted the Registrant a 90 day exclusive right to negotiate specific terms after it conducts required due diligence and the parties determine the most appropriate valuations and form of acquisition. In each case, the acquired companies would become consolidated subsidiaries of the Registrant and incorporated into the Registrant’s health care division, along with Behavioral Centers of South Florida, LLC and D & D Rehab Center Inc., in order to generate synergy and attain significant operational savings. FHS’s total revenues for the calendar years ended December 31, 2019, and 2020 (currently unaudited) were approximately $3.9 million and $4.1 million, respectively; and, revenues for the Glades Group for the calendar years ended December 31, 2019, and 2020 (currently unaudited) were $700,000 and $500,000, respectively. While it is anticipated that the FHS transaction will involve a traditional acquisition, the Glades Group acquisition would probably be part of the Registrant’s incubator program for companies that are interested in potential future spinouts as independent public companies. In all three cases, the Registrant intends to conclude related negotiations on or before November 30, 2021 with closings occurring by December 31, 2021.
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Comments
The Registrant feels that the acquisition of D & D and the additional transactions currently under negotiation will complement its proposed acquisition of BCSF generating significant synergy and savings and looks forward to the possibility of acquiring other healthcare related businesses in the near future. As in the case of BCSF, the foregoing constitute forward looking statements and the proposed transaction is reliant on successful completion of this Limited Offering.
Caveat
The foregoing plans and business models are speculative, totally reliant on the experience of the Registrant’s management and independent consultants and contractor’s to be recruited and retained by the Registrant, and on market conditions beyond the Registrant’s control, and, on the Registrant’s ability to obtain significant additional financing, as to which there can be no assurances. In addition, the Registrant is likely to encounter significant competition in its quest for desirable acquisition candidates and thereafter, even if successful, in the operations of the acquired companies. Consequently, no assurances can be provided that the Registrant’s ambitious current business plans can or will be implemented as envisioned, or that even if implemented, they will prove successful.
Going concern and Liquidity Considerations
The accompanying financial statements
have been prepared assuming that Registrant will continue as a going concern which contemplates the realization of assets and the
liquidation of liabilities in the normal course of business. As of July 31, 2021, the Registrant had recurring losses from operations,
an accumulated deficit of $
The ability of the Registrant to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings and to acquire one or more operating companies. These factors, among others, raise substantial doubt about the Registrant’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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Note 2 Summary of Significant Accounting Policies
Basis of Presentation of Unaudited Interim Financial Statements
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“Commission”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Registrant’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Registrant as of July 31, 2021 and the results of operations and cash flows for the periods presented. The results of operations for the quarterly period ended July 31, 2021 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited interim financial statements should be read in conjunction with the financial statements and related notes thereto included in the Registrant’s Annual Report on Form 10-K for the year ended October 31, 2020 filed with the Commission on February 12, 2021.
The Registrant computes loss per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
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Registrant has shares of Class B Convertible Preferred Stock (“Class B”) which can convert to common shares at a rate 10 shares common for each Preferred B share. However since the inclusion of the effects of these potential conversions on the net loss per share would be anti-dilutive, loss and diluted loss per share are equal. The total potential shares not included in the calculation are as of July 31, 2021.
Recently Issued Accounting Pronouncements
Management has considered all recent accounting pronouncements issued. The Registrant’s management believes that these recent pronouncements will not have a material effect on the Registrant’s unaudited interim financial statements.
Note 3. Related Party Transactions
During the nine-month period ended July 31, 2021, the Registrant entered into the following transactions with related parties:
Qest converted $46,844 of principal and $71,995 of accrued interest owed to it by the Registrant into 118,839,180 common shares.
109,108,002 common shares were issued to Qest as compensation under the Registrant’s employment agreement with its president, the rights to which have been assigned to Qest.
Qest advanced $105,297 in cash and Registrant accrued $90,000 in contract fees in the nine- month period ended July 31, 2021.
As of July 31, 2021 and October 31,
2020, there were $
The employment agreements for the Registrant’s officers as of July 31, 2021, expired on October 31, 2021 and were orally renewed without compensation, as the Registrant seeks their eventual replacements. As a material subsequent event, on August 19, 2021 the Registrant hired Ms. Karen Lynn Fordham as its new president and chief executive officer with Hermann Burckhardt, its president and chief executive officer until that point remaining as the chairman of the Registrant’s board of directors. Details concerning Ms. Forbes compensation are disclosed in Note 1.
Note 4. Notes Payable
A summary of notes payable and accrued interest for nine months ended July 31, 2021 is as follows:
| Adar | LG | Union | Vis Vires | TOTAL | ||||||||||||||||
| Notes Payable | ||||||||||||||||||||
| Balance 10/31/2020 | $ | $ | $ | $ | $ | |||||||||||||||
| Conversions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Payments | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Balance 7/31/2021 | $ | $ | $ | $ | $ | |||||||||||||||
| Accrued Interest | ||||||||||||||||||||
| Balance 10/31/2020 | $ | $ | $ | $ | $ | |||||||||||||||
| Conversions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Payments | ( | ) | ( | ) | ||||||||||||||||
| Balance 7/31/2021 | $ | $ | $ | $ | $ | |||||||||||||||
| 15 |
Convertible Note Payable – Number 1 Adar
On February 2, 2015, the Registrant issued an unsecured 8% Convertible Redeemable Note to Adar Bays LLC (Note Number 1), in the amount of $75,000, which was due January 30, 2016 with interest on the unpaid principal balance thereof at the rate of eight percent (8%) per annum until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise (Adar). The principal and any accrued interest was convertible into shares of common stock at the discretion of the note holder. The conversion price (the “Conversion Price”) was equal to 57.5% multiplied by the Market Price (as defined therein) (representing a discount rate of 42.5%). The Registrant had the right to prepay the note only during the initial 180 days.
During 2015 a law suit was filed in the United States District Court for the Southern District of New York (Case No. 15-cv-08860 entitled Adar Bays LLC v Puget Technologies Inc. and Hermann Burckhardt against the Registrant and its management by Adar Bays LLC after the note (issued by prior management) was repudiated by the Registrant’s current president as an invalid “toxic note”. Registrant was unable to contest the litigation and the case was settled with the Registrant’s allegations formally withdrawn and the cases settled during 2017, subject to the courts’ continuing jurisdiction to enforce the terms of the settlement agreement. As a result. The Registrant recognized an additional $64,600 in debt related to the settlement. The Registrant was contractually and judicially deprived of the ability to contest the validity of subsequent conversions and sales of Common Stock by being required to honor irrevocable written instructions to its transfer agent issued by prior management. As a material subsequent event, by January of 2021, all of the Registrant’s obligations pertaining to the note had been discharged through conversions and a cash payment of $132.54, thus, as of the date of this quarterly report, the Registrant is subject to no legal proceedings nor does its management know of any basis for any material legal proceedings against the Registrant.
At October 31, 2018 the Registrant had
a balance principal balance owed under the note of $118,000 and accrued interest of $
During fiscal 2019, 141,927,826 shares were issued to the holder to convert $8,736 in principal and $0.00 in accrued interest. Interest expense of $5,600 was recognized. At October 31, 2019, the Registrant had a balance principal balance owed of $9,099 and accrued interest of $5,295.
During fiscal 2020, 2,112,921,739 shares were issued to the holder to convert $100,165 in principal and $27,122 in accrued interest. Interest expense of $5,600 was recognized. At October 31, 2020, the Registrant had a balance principal balance owed of $109,264 and accrued interest of $26,817.
In the first quarter of fiscal 2021, 186,518,261 shares were issued to the holder to convert $9,099 in principal and $5,295 in accrued interest and a cash payment was made of $132.54. At July 31, 2021, the Registrant had a balance principal balance owed of $0 and accrued interest of $0.
Over the course of this note, a total of 2,441,367,826 shares were issued and $132.54 was paid to cover $139,600 in principal and $32,417 of interest.
Convertible Note Payable – Number 2 LG
On February 2, 2015, the Registrant finalized a Convertible Redeemable Note with LG Capital Funding LLC (Note Number 2) in the amount of $53,500, which was due January 28, 2016 with interest on the unpaid principal balance thereof at the rate of eight percent (8%) per annum until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The principal and any accrued interest was convertible into shares of common stock at the discretion of the note holder. The conversion price (the “Conversion Price”) was equal to 54% multiplied by the Market Price (as defined therein) (representing a discount rate of 46%). The Registrant had the right to prepay the note only during the initial 180 days.
| 16 |
At October 31, 2018 the Registrant had a balance principal balance owed of $21,256 and accrued interest of $19,594.
During fiscal 2019, interest expense of $5,840 was recognized. At October 31, 2019, the Registrant had a balance principal balance owed of $21,256 and accrued interest of $25,434.
During fiscal 2020, interest expense of $5,600 was recognized. At October 31, 2020, the Registrant had a balance principal balance owed of $21,256 and accrued interest of $31,274.
In the first quarter of fiscal 2021, 52,530,000 shares were issued to the holder to convert $21,256 in principal and $31,274 in accrued interest. At July 31, 2021, the Registrant had a balance principal balance owed of $0 and accrued interest of $0.
Over the course of this note, a total of 64,142,007 shares were issued to cover $53,500 in principal and $32,746 of interest.
Convertible note payable – Number 4 Union
The Registrant finalized an 8% Convertible
Redeemable Note with Union Capital LLC (Note Number 4) in the amount of $
During 2015 a law suit was filed in the United States District Court for the Southern District of New York Case No. 15-cv-09542 entitled Union Capital LLC v Puget Technologies Inc. and Herman Burckhardt) against the Registrant and its management by the holder after the Registrant’s current president repudiated the notes issued to Union Capital LLC as invalid “toxic notes” (the “Convertible Notes”). Because the Registrant had been left by prior management without funds, the Registrant was unable to contest the litigation and both cases were settled with the Registrant’s allegations formally withdrawn and the cases settled during 2017, subject to the courts’ continuing jurisdiction to enforce the terms of the settlement agreement. As a result, the Registrant recognized an additional $81,980 in debt related to the settlement, paid a forbearance payment of $8,000 in cash and transferred 5,000,000 common shares as an additional forbearance payment, of which 1,027 shares were from the Registrant and 4,998,973 were borrowed from a shareholder (Qest). The Registrant was contractually and judicially deprived of the ability to contest the validity of conversions and subsequent sales of Common Stock by being required to honor irrevocable written instructions to its transfer agent issued by prior management. As a material subsequent event, by January of 2021, all of the Registrant’s obligations pertaining to the Convertible Notes had been discharged through conversions or payments, thus, as of the date of this quarterly report, the Registrant is subject to no legal proceedings nor does its management know of any basis for any material legal proceedings against the Registrant.
At October 31, 2018 the Registrant had a balance principal balance owed of $128,600 and accrued interest of $26,624.
During fiscal 2019, 406,279,540 shares
were issued to the holder to convert $60,400 in principal and $7,795 in accrued interest. Interest expense of $7,800 was recognized.
At October 31, 2019, the Registrant had a balance principal balance owed of $
During fiscal 2020, 343,486,654 shares
were issued to the holder to convert $13,341 in principal and $6,410 in accrued interest. Interest expense of $6,710 was recognized.
At October 31, 2020, the Registrant had a balance principal balance owed of $
In the first quarter of fiscal 2021, 733,192,576 shares were issued to the holder to convert $54,859 in principal and $26,929 in accrued interest. At July 31, the Registrant had a balance principal balance owed of $0 and accrued interest of $0.
Over the course of this note, a total of 1,515,989,330 shares were issued to cover $156,980 in principal and $42,741 of interest.
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Convertible note payable – Number 5 Vis Vires
On February 27, 2015, the Registrant finalized a Convertible Promissory Note with Vis Vires Group, Inc. (Note Number 5) in the amount of $50,000, which was due December 3, 2015 with interest on the unpaid principal balance thereof at the rate of eight percent (8%) per annum until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The principal and any accrued interest was convertible into shares of common stock at the discretion of the note holder. The conversion price (the “Conversion Price”) was equal to 58% multiplied by the Market Price (as defined therein) representing a discount rate of 42%. The Registrant had the right to prepay the note only during the initial 180 days.
At October 31, 2018 the Registrant had a balance principal balance owed of $14,460 and accrued interest of $3,040.
During fiscal 2019, interest expense of $0 was recognized. At October 31, 2019, the Registrant had a balance principal balance owed of $14,460 and accrued interest of $3,040.
During fiscal 2020, interest expense of $0 was recognized. At October 31, 2020, the Registrant had a balance principal balance owed of $14,460 and accrued interest of $3,040.
In the first quarter of fiscal 2021, $17,500 was paid in cash to the holder to convert $14,460 in principal and $3,040 in accrued interest. At July 31, 2021, the Registrant had a balance principal balance owed of $0 and accrued interest of $0.
Over the course of this note, a total of 12,087,383 shares were issued to cover $20,540 in principal, and $32,500 was paid in cash to cover $29,460 in principal and $3,040 of interest.
Note 5. Subsequent Events
The Registrant has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. There were no material subsequent events through September 14, 2021 which needed to be disclosed in the accompanying financial statements, except as disclosed in Note 1 and as follows.
In conjunction with the Registrant’s plan to revise and improve its management disclosed in the Registrant’s annual report on Form 10-K for the fiscal year ended October 31, 2020 and in order to provide the leadership the Registrant’s board of directors believes the Registrant requires as it enters into the healthcare field with the proposed acquisitions of Behavioral Centers of South Florida LLC and D & D Rehab Center, Inc., etc., the Registrant has replaced Herman Burckhardt as its president and chief executive officer with Ms. Karen Lynn Fordham, MBA. Mr. Burckhardt, first elected as the Registrant’s president and chief executive officer in October of 2015, will remain as a member of and the chairman of the Registrant’s board of directors.
Pursuant to the terms of the Registrant’s employment agreement with Ms. Fordham entered into on August 19, 2021, a copy of which was filed as exhibit 10.01 to a current report on Form 8-K filed with the Commission on August 25, 2021 (the “Employment Agreement” and the “August 25 Current Report”), Ms. Fordham will serve as the Registrant’s principal executive officer to whom all other executive officers will be subordinate, subject to the directions of the Registrant’s board of directors. She will supervise all of the Registrant’s affairs and be responsible for implementation of the business plans approved by the board of directors and for assuring compliance by the Registrant and the Registrant personnel with all applicable laws. She will be subject to all duties and responsibilities associated with the position of chief executive officer, subject to such limitations or specifications imposed by the Registrant’s board of directors, including, serving as the Registrant’s general agent and spokesperson, subject to compliance with the directions of its board of directors. Subject to ratification by the Registrant’s board of directors, Ms. Fordham will be permitted to serve as a director of other public, private or governmental corporations, with or without compensation therefrom, and is in fact, urged to do so provided that in the event of any conflicts of interest with her duties to the Registrant, her duties to the Registrant will prevail, absent specific waiver on a case by case basis by the Registrant’s board of directors. The term of the employment agreement is five years with automatic annual renewals thereafter unless one of the parties notifies the other on a timely basis of its intention not to renew. It contains strict confidentiality and non-competition provisions requiring Ms. Fordham to devote her full time to the Registrant unless otherwise permitted by the Registrant’s board of directors. Pursuant to the terms of the Employment Agreement, Ms. Fordham will be entitled to compensation as follows:
| 18 |
| ● | Ms. Fordham will be entitled to a signing bonus of $100,000 from proceeds of the Limited Offering of the Registrant securities being effected in reliance on Commission Rule 506(b), payable within 15 business days following initial closing on such Limited Offering; | |
| ● | Ms. Fordham will be entitled to a base monthly salary, payable in arrears, of $30,000 accruing until initial closing on the Limited Offering of the Registrant securities being effected in reliance on Commission Rule 506(b); | |
| ● | Ms. Fordham will be entitled to share with the Registrant’s other senior executives approved by the board of directors in an annual cash bonus plan in an aggregate amount equal to 3% of the Registrant’s net, after tax profits, payable within 15 business days following the filing of the Registrant’s annual report on Commission Form 10-K, based on the audited financial disclosure contained therein, to be allocated among such officers in accordance with criteria established by Ms. Fordham and ratified by the Board of Directors; | |
| ● | Ms. Fordham will be entitled to participate in the Registrant’s qualified incentive equity compensation stock option plans with other senior executives entitling them, in the aggregate, to options to acquire designated Registrant securities with an aggregate market value on the grant date (which will coincide with the end of the Registrant’s fiscal year but will be determined on the date of filing of the Registrant’s annual report on Commission Form 10-K, based on the audited financial disclosure contained therein), equal to 10% percent of the Registrant’s after tax profits for the subject year, to be allocated among such officers in accordance with criteria established by Ms. Fordham and ratified by the Board of Directors; and | |
| ● | Ms. Fordham will be entitled to expense reimbursement, including reimbursement for the use of her personal automobile, or, at her option to a company vehicle, and for itemized eligible business expenses including travel, lodging and entertainment, subject to ratification by the board of directors. |
The foregoing information is qualified in its entirety by the information contained in the Employment Agreement.
As of the date of this quarterly report, Ms. Fordham does not, directly or indirectly, own any of the Registrant’s securities, a situation which is expected to change soon. Her initial priority will be closing on the BCSF acquisition and the Limited Offering; negotiating the definitive agreement with D & D; seeking additional healthcare related acquisitions; and, recruiting a complete management team including a new secretary, a new treasurer and chief financial officer, a chief compliance officer and an operational team. In addition, she will supervise the preparation of a business plan seeking to consolidate healthcare related acquisitions in order to maximize synergy and minimize costs. Acquisitions outside of the healthcare field will, unless an unusual opportunity arises, be given a lower priority until the 2022 fiscal year.
The following information is summarized from Ms. Fordham most recent bio provided to the Registrant:
Ms. Fordham, age 46, was born and raised in Grosse Pointe, Michigan. She earned a master’s degree in business administration and a bachelor’s degree in science with minors in business, social work and criminal justice from Western Michigan University. She is an accomplished healthcare executive with more than 20 years of diverse experience specializing in operations, service line development, strategic planning, physician recruitment, process improvement and financial management for large healthcare organizations. Her experience includes managing behavioral health divisions in various large hospital settings, expertise valuable to Puget as it concentrates its emerging health care acquisition strategy towards acquiring and developing integrated health care delivery systems that fuse behavioral and traditional primary care. Analyzing her background disclosed below, the Registrant’s board of directors has determined that she is the ideal candidate to implement its healthcare related acquisition strategy as well as to consolidate and supervise healthcare related operations and determined that her management and leadership skills would work well in other areas as well.
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For much of the past decade, Ms. Fordham has served in executive roles as chief operating officer and then chief executive officer with the Detroit Medical Center (DMC) system where from 2015 to 2017 she was president and chief executive officer of Huron Valley-Sinai Hospital, a 158-bed full-service community teaching hospital near downtown Detroit and Detroit Surgery Hospital, a behavioral health and acute care hospital, in the same market. Ms. Fordham was also the service line leader for two of the Detroit Medical Center’s largest service lines, Orthopedics and Sports Medicine and Imaging Services. In 2017 she founded Topside Strategies, a consulting firm working with physicians and healthcare companies across the country. Ms. Fordham served as chief executive officer of Venice Regional Bayfront Health and Gulf Coast Medical Group based in Venice, Florida from 2018 to 2020. Venice Regional Bayfront Health is a 313-bed facility and while in this role, Ms. Fordham increased the operating margin by focusing on surgical growth in orthopedics, neurosurgery, and gynecology, along with enhancing the organization’s quality scores to the highest level achievable as defined by the Leapfrog Group. Gulf Coast Medical Group was comprised of seventy-one multidisciplinary physicians across. Ms. Fordham also served as the president and chief executive officer of St. Joseph Hospital and St. Joseph Medical Group in Fort Wayne, Indiana where she increased earnings by 40% year over year in the first quarter under her management and increased operating margin by 28%. From 2020-2021 Ms. Fordham also served as the market chief executive officer for the East Coast Division for Wellvana Health based out of Nashville, Tennessee. In that role she acted as the primary architect and executor of the revenue strategy for that division, identifying and executing on new market and new product opportunities. She was also responsible for identifying and forming strategic partnerships that would advance the company’s growth agenda and market position.
Ms. Fordham sits on the boards of Tidewell Hospice, Avidity Home Health Care, and the Venice Chamber of Commerce, and has received many honors and awards, including inclusion in Detroit Crain’s Business Top 40 under 40 in 2014 and the 2014 Esteemed Women of Michigan. In addition, in 2019, Ms. Fordham was recognized as a Top 40 Business Professional by the Venice Gondolier and by SRQ Media as a Women in Business nominee.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations
Nine-Month Period Ended July 31, 2021 Compared to Nine-Month Period Ended July 31, 2020
The Registrant’s results of operations for the nine-month periods ended July 30, 2021 and 2020 are summarized below:
| Nine months ended | ||||||||
| 7/31/2021 | 7/31/2020 | |||||||
| Revenues | $ | — | $ | — | ||||
| Operating Expenses | 671,040 | 317,104 | ||||||
| Net Loss | $ | (671,040 | ) | $ | (317,104 | ) | ||
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Revenues and Other Income
During the nine-month periods ended July 31, 2021 and 2020, the Registrant did not realize any revenues from operations.
Operating Expenses
Operating expenses of $671,040and $317,104 for the nine-month periods ended July 31, 2021 and 2020, respectively consisted entirely of costs related to maintaining reporting status with the Securities and Exchange Commission (the “Commission”) and finalizing payments of the Registrants convertible debts.
Net Losses
The Registrant incurred a net loss of $(671,040) for the nine-month period ended July 31, 2021 compared to a net loss of $317,104) for the corresponding nin-month period ended July 31, 2020.
Liquidity and Capital Resources
Liquidity and capital reserves at July 31, 2021 and October 31, 2020 are summarized as follows:
| Increase | ||||||||||||
| 4/30/2021 | 10/31/2020 | (Decrease) | ||||||||||
| Cash | $ | 49 | $ | 55 | $ | (6 | ) | |||||
| Total assets | $ | 49 | $ | 55 | $ | (6 | ) | |||||
| Total Liabilities | $ | 228,245 | $ | 324,147 | $ | (95,902 | ) | |||||
| Stockholders’ Deficit | $ | (228,245 | ) | $ | (324,092 | ) | $ | 95,847 | ||||
| Working Capital Deficit | $ | (228,196 | ) | $ | (324,092 | ) | $ | 95,896 | ||||
As of the date of this report, the Registrant had yet to generate any revenues from its business operations.
As of July 31, 2021, the Registrant had current assets of $49, liabilities of $228,245, and its working capital deficiency was $(228,196). The Registrant anticipates that its current liquidity is not sufficient to meet the obligations associated with being a fully reporting company with the Commission without recourse to additional financing.
Except for a $50,000 revolving loan agreement with its parent, Qest Consulting Group, Inc., the Registrant currently has no external sources of liquidity such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on its financial condition or immediate access to capital.
The Registrant’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplates its continuation as a going concern. The Registrant has not yet generated any revenue except for a total of approximately $49,000 from previous now discontinued operations and has incurred losses to date of $(6,637,606). In addition, the Registrant’s current liabilities exceed its current assets by $(228,245). These factors raise substantial doubt about the Registrant’s ability to continue operating as a going concern. The Registrant’s ability to continue its operations as a going concern, realize the carrying value of its assets, and discharge the Registrant’s liabilities in the normal course of business is dependent upon the Registrant’s ability to raise capital sufficient to fund the Registrant’s commitments and ongoing losses, and ultimately generate profitable operations.
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Cash Flows
Cash flows for the nine months ended July 31, 2021 and 2020 are summarized as follows:
| Six months ended | ||||||||
| 7/31/2021 | 7/31/2020 | |||||||
| Cash (used) Provided by: | ||||||||
| Operations | $ | (165,544 | ) | $ | (234 | ) | ||
| Investing | — | — | ||||||
| Financing | 165,538 | 170 | ||||||
| Net change in cash | $ | (6 | ) | $ | (64 | ) | ||
Operating Activities
For the nine-months ended July 31, 2021, net cash used in operating activities was $(165,544), related to the Registrant’s net loss of $(671,040), reduced by an increase in cash provided from financing activities and from loans the Registrant received from a shareholder.
For the nine-months ended July 31, 2020, net cash used in operating activities was $(234), related to the Registrant’s net loss of $(317,104), reduced by an increase in cash provided from financing activities from advances the Registrant received from a shareholder.
During the nine months ended July 31, 2021, the Registrant received loans of $195,297 ($105,297 in cash and $90,000 in accrued contract fees) from shareholders for business operation purpose, respectively.
Investing Activities
The Registrant did not use any funds for investing activities during the six-months ended July 31, 2021 and 2020, respectively.
Financing Activities
Financing activities provided $165,538 and $170 during the six-months ended July 31, 2021 and 2020, respectively.
Recent Accounting Pronouncements
For a description of the Registrant’s recently issued accounting pronouncements, see “Note 2 – Summary of Significant Accounting Policies” of this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to select appropriate accounting policies and to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
Off-Balance Sheet Arrangements
The Registrant has never entered into any off-balance sheet financing arrangements and has not formed any special purpose entities. The Registrant has not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
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Contractual Obligations
The Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this item.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As a smaller reporting company (as defined by §229.10(f)(1) of Commission Regulation SK), the Registrant is not required to provide the information required by this Item
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Registrant maintains disclosure controls and procedures [as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended] that are designed to ensure that information required to be disclosed in the Registrant’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in Commission rules and forms and that such information is accumulated and communicated to the Registrant’s management, as appropriate, to allow timely decisions regarding required disclosure.
The Registrant’s management has evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, management has concluded that, as of the end of the period covered by this report, the Registrant’s disclosure controls and procedures were not effective.
Changes in Internal Control over Financial Reporting
There has been no change in the Registrant’s internal control over financial reporting identified in connection with the evaluation conducted on the effectiveness of its internal control over financial reporting as of July 31, 2021, that occurred during the Registrant’s third fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
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Part II - Other Information
Item 1. Legal Proceedings.
As of the date of this quarterly report, the Registrant is subject to no legal proceedings nor does its management know of any basis for any material legal proceedings against the Registrant.
Item 1A. Risk Factors.
As a smaller reporting company (as defined by §229.10(f)(1) of Commission Regulation SK), the Registrant is not required to provide the information required by this Item. However, it is noted that the Registrant voluntarily reports with respect to Risk Factors in its annual report on Form 10-K and interested parties are referred to such disclosure.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
| Purchaser | Security Sold | Shares | Consideration | Exemption from registration relied on | Terms of conversion or exercise | |||||||||||||
| Qest | Common | 109,108,002 | $ | 240,038 | 3 | (a)(9) | Officer compensation | |||||||||||
| Qest | Common | 118,839,180 | $ | 118,839 | 3 | (a)(9) | (1 | ) | ||||||||||
| Union Capital LLC | Common | 163,849,863 | 16,385 | 3 | (a)(9) | (1 | ) | |||||||||||
| Union Capital LLC | Common | 244,787,339 | 32,842 | 3 | (a)(9) | (1 | ) | |||||||||||
| Adar Bays LLC | Common | 94,243,478 | 5,419 | 3 | (a)(9) | (1 | ) | |||||||||||
| Adar Bays LLC | Common | 92,274,783 | 8,843 | 3 | (a)(9) | (1 | ) | |||||||||||
| Union Capital LLC | Common | 324,555,374 | 32,560 | 3 | (a)(9) | (1 | ) | |||||||||||
| LG Capital Funding LLC | Common | 52,530,000 | 52,530 | 3 | (a)(9) | (1 | ) | |||||||||||
| 1,091,080,017 | $ | 267,419 | ||||||||||||||||
| Alejandro Funes, Esquire | Class B Convertible Preferred | 1,904 | $ | 1,803 | 4 | (2) | (2 | ) | ||||||||||
Notes:
| (1) | The terms of conversion or exercise are disclosed in Note 4 to the Financial Statements. |
| (2) | Ten shares of Common Stock for every share of Class B Convertible Preferred, with antidilution rights. |
Item 3. Defaults upon Senior Securities.
There have been no material defaults upon senior securities during the fiscal quarter ended July 31, 2021, although, with the consent of the persons entitled thereto, the Registrant has not issued securities called for under its retainer and consulting agreement with the Registrant’s parent, as that term is defined in Rule 405 of Commission Regulation C, Qest Consulting Group, Inc. (“Qest”), or under its employment agreement with its president, Hermann Burckhardt, which have been assigned to Qest. The securities will be issued at such time as the Registrant increases its authorized capitalization in a manner permitting it to do so without impairing its other obligations (e.g., to maintain adequate reserves of authorized but unissued for conversion of its Class B Convertible Preferred Stock, for potential acquisitions or to recruit new officers and directors.
| 25 |
Item 4 Mine Safety Disclosure.
This item is not applicable to the Registrant as it is not involved in any mineral extraction activities.
Item 5. Other Information.
On June 7, 2021 the Registrant held its 2021 annual meeting of shareholders. The meeting was held at 2:00 p.m., EDT, at the Registrant’s offices in Boca Raton Florida and also broadcast through Zoom to shareholders who could not attend. The record date for determining shareholders able to participate at the meeting was April 21, 2021 and shareholders either in person or by proxy holding 90,815,201 shares of Common Stock, each entitled to one vote (an aggregate of 90,815,201 votes); 500,000 shares of the Series A Super Majority Preferred Stock, each entitled to 10,000 votes (an aggregate of 5,000,000,000); and 3,001,904 shares of the Class B Convertible Preferred Stock, each entitled to 1,000 votes were present representing an aggregate of 8,092,719,201 out of 12,747,632,041 potential votes. Thus, a quorum was present with 4,046,359,601 affirmative votes representing a majority; however, each of the following described actions were passed by 8,092,719,201 votes in favor, none opposed and none present abstaining. The following items were approved at the meeting:
Approval and ratification of the conduct of the Registrant’s business by its president and chief executive officer, Hermann Burckhardt, and its treasurer, secretary and chief financial officer, Thomas M. Jaspers, as well as by its strategic consultant and parent, Qest, since they assumed their offices and roles starting in 2015. Approval of the Registrant’s financial statements and related documents for the years ended October 31, 2020 and 2019. Ratification of the selection of BF Borgers CPA PC, of 5400 W Cedar Ave, Lakewood, CO 80226, independent certified public accountants, as auditors for the Registrant’s financial statements for the years ended October 31, 2021 as well as for the years ended October 31, 2015, 2016, 2017, 2018 and 2019.
Ratification of the gradual increase in our Corporation’s authorized capitalization first authorized by the shareholders during 2017, to ten billion shares, 9,990,000,000 of which are to be common stock and 10,000,000 of which are already preferred stock and also, the grant of authority to the Registrant’s Board of Directors to determine whether the par value, currently $0.001 per share, should be retained, eliminated or modified, as it deems appropriate.
Ratification and approval of incentive stock option plans (qualified for employees and non-qualified for others) pursuant to applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”) which management has recommended and the Board of Directors has approved as a means of assisting in the recruitment of new management, new directors and new members to the Registrant’s Board of Advisors as well as for inducing promising operating companies to become subsidiaries of the Registrant. Copies of such plans are available on the Registrant’s website. Copies of such plans are filed as exhibits 4.01 (qualified plan) and 4.02 (non-qualified plan) to this quarterly report on Form 10-Q. Furthermore, the shareholders approved the proposed plan to repurchase outstanding and publicly trading Company securities from non-Affiliates as a means of providing securities necessary for issuance pursuant to the proposed incentive stock option plans at such times as the Registrant’s Board of Directors determines that such securities are undervalued, provided that such repurchases are conducted in full compliance with any and all applicable laws, regulations and rules and will not result in adverse tax consequences to the Registrant.
Ratification of the forms of debenture and warrant indentures which management has recommended and the Board of Directors has approved in conjunction with a limited offering of the Registrant’s securities pursuant to Rule 506(b) of Regulation D adopted by the Commission in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). Copies of such indentures are filed as exhibits 4.03 (debenture indenture) and 4.02 (non-qualified plan) to this quarterly report on Form 10-Q.
The shareholders ratified the Registrant’s plan of operation described in the Registrant’s annual report on Form 10-K for the fiscal year ended October 31, 2021, delegated to the Board of Directors the selection of a new name for the Registrant, without further shareholder approval and approved the increase of the size of the Board of Directors to up to nine members, at least three of whom should be independent, delegating to the current Board of Directors members authority to fill resulting vacancies on the Board of Directors until the next annual meeting of the Registrant’s shareholders, expected to be during June of 2022. Messrs. Hermann Burckhardt and Thomas M. Jaspers were reelected as members of the Board of Directors with the understanding that if they found properly qualified replacements they could elect them as replacements and concurrently resign.
| 26 |
Finally, as required under Nevada Revised Statutes Section 78.215(4)(b), the current holders of the outstanding Class B Convertible Preferred Stock ratified the Board of Directors’ decision to issue a dividend of 1,000,000 shares of Class B Convertible Preferred Stock to the holders of the Registrant’s Common Stock with a record date to be selected by the Registrant’s Board of Directors after the Registrant files past due reports for the years 2015, 2016, 2017, 2018 and 2019 under the Exchange Act, as required for approval by the Financial Industry Regulatory Authority.
Immediately following the 2021 annual meeting of shareholders, the newly elected directors held an organizational meeting of the Registrant’s Board of Directors at which the following actions were taken: Herman Burckhardt was elected as the chairman of the Registrant’s Board of Directors, as the Registrant’s chief executive officer and as its president; Thomas M. Jaspers was elected at the Registrant’s chief financial officer, vice president, treasurer and secretary; and, the Registrant’s newly appointed officers were authorized, empowered and directed to implement all of the actions approved by the shareholders at the meeting.
Item 6. Exhibits.
The following exhibits are included as part of this report:
| * | Incorporated by reference to exhibit 3(i) filed as an exhibit to the current report on Form 8-K filed with the Commission on August 27, 2021. | |
| ** | Incorporated by reference to exhibit 10.01 filed as an exhibit to the current report on Form 8-K filed with the Commission on August 25, 2021. | |
| *** | Incorporated by reference to exhibit 10.01 filed as an exhibit to the current report on Form 8-K filed with the Commission on August 27, 2021. | |
| **** | Incorporated by reference to exhibit 99.01 filed as an exhibit to the current report on Form 8-K filed with the Commission on August 27, 2021. |
| 27 |
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
Puget Technologies, Inc.
President and Chief Executive Officer
Dated: September 14, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Hermann Burckhardt
Chairman of the Board Directors
Dated: September 14, 2021
Karen Lynn Fordham
President and Chief Executive Officer
Dated: September 14, 2021
By /s/ Thomas Jaspers
Chief Financial Officer, Treasurer, Secretary andDirector
Dated: September 14, 2021
28
Exhibit 31.1
CERTIFICATION
I, Karen Fordham, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 31, 2021 of Puget Technologies, Inc. (the “registrant”);
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: September 15, 2021 | /s/ Karen Fordham |
| Karen Fordham | |
| President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Thomas Jaspers, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended July 31, 2021 of Puget Technologies, Inc. (the “registrant”);
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: September 15, 2021 | /s/ Thomas Jaspers |
| Thomas Jaspers | |
| Chief Financial Officer, Treasurer, Secretary and Director |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Puget Technologies, Inc. (the “Company”) on Form 10-Q pursuant for the quarter ended July 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Karen Fordham, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: September 15, 2021
| /s/ Karen Fordham | |
| Karen Fordham | |
| President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Puget Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended July 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas Jaspers, Chief Financial Officer, Treasurer, Secretary and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: September 15, 2021
| /s/ Thomas Jaspers | |
| Thomas Jaspers | |
| Chief Financial Officer, Treasurer, Secretary and Director |
Balance Sheets (Unaudited) - USD ($) |
Jul. 31, 2021 |
Oct. 31, 2020 |
|---|---|---|
| Current assets: | ||
| Cash | $ 49 | $ 55 |
| Total current assets | 49 | 55 |
| Total assets | 49 | 55 |
| Current liabilities: | ||
| Accounts payable and accrued expenses | 32,948 | 36,971 |
| Related Party Debt | 195,297 | 120,964 |
| Current portion of Notes Payable | 99,674 | |
| Accrued interest on Current portion of Notes Payable | 66,538 | |
| Total current liabilities | 228,245 | 324,147 |
| Long-term liabilities: | ||
| Notes payable | ||
| Total long-term liabilities | ||
| Total liabilities | 228,245 | 324,147 |
| STOCKHOLDERS’ EQUITY | ||
| Common stock, $.001 par value; Authorized - 2020 - 4,990,000,000 Issued - 2021 - 4,745,728,041; 2020 - 3,545,540,022 | 4,745,728 | 3,545,540 |
| Paid in Capital | 1,760,180 | 2,193,434 |
| Accumulated deficit | (6,637,606) | (6,066,566) |
| Total stockholders’ equity (deficit) | (228,196) | (324,092) |
| Total liabilities and stockholders’ equity | 49 | 55 |
| Preferred Class A [Member] | ||
| STOCKHOLDERS’ EQUITY | ||
| Preferred stock value | 500 | 500 |
| Preferred Class B [Member] | ||
| STOCKHOLDERS’ EQUITY | ||
| Preferred stock value | $ 3,002 | $ 3,000 |
Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jul. 31, 2021 |
Oct. 31, 2020 |
|---|---|---|
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, authorized | 4,990,000,000 | 4,990,000,000 |
| Common stock, issued | 4,745,728,041 | 3,545,540,022 |
| Preferred Class A [Member] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred b stock, authorized | 500,000 | 500,000 |
| Preferred b stock, issued | 500,000 | 500,000 |
| Preferred Class B [Member] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred b stock, authorized | 5,000,000 | 5,000,000 |
| Preferred b stock, issued | 3,001,904 | 3,000,000 |
Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jul. 31, 2021 |
Jul. 31, 2020 |
Jul. 31, 2021 |
Jul. 31, 2020 |
|
| Income Statement [Abstract] | ||||
| Sales | ||||
| Cost of Sales | ||||
| Gross profit | ||||
| Operations | ||||
| Interest expense | 30,510 | 257,677 | 46,870 | |
| Officer compensation | 90,000 | 240,038 | 270,000 | |
| Management fees to related party | 30,000 | 90,000 | ||
| Legal and professional fees | 10,790 | 37,500 | ||
| Other general and administrative | 5,720 | 78 | 45,825 | 234 |
| Total expenses | 46,510 | 120,588 | 671,040 | 317,104 |
| (Loss) from operations | (46,510) | (120,588) | (671,040) | (317,104) |
| Provision (credit) for taxes on income | ||||
| Net (loss) | $ (46,510) | $ (120,588) | $ (671,040) | $ (317,104) |
| Weighted average number of shares outstanding | 4,745,728,041 | 858,343,342 | 4,649,914,942 | 848,477,778 |
| Basic and diluted (loss) per common share | $ (0.00000980) | $ (0.00014049) | $ (0.00014431) | $ (0.00037373) |
Statements of Stockholders' Equity Deficit (Unaudited) - 9 months ended Jul. 31, 2021 - USD ($) |
Common Stock [Member] |
Preferred Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Total |
|---|---|---|---|---|---|
| Beginning balance, value at Oct. 31, 2020 | $ 3,545,540 | $ 3,000 | $ 2,193,434 | $ (6,066,566) | $ (324,092) |
| Beginning balance shares at Oct. 31, 2020 | 3,545,540,022 | ||||
| Issued for AP conversion | 2 | 1,801 | 1,803 | ||
| Issued for debt conversions | $ 1,091,080 | (565,985) | 525,095 | ||
| Issued for debt conversions,shares | 1,091,080,017 | ||||
| Issued for stock compensation | $ 109,108 | 130,930 | 240,038 | ||
| Issued for stock compensation,shares | 109,108,002 | ||||
| Net income (loss) | (671,040) | (671,040) | |||
| Ending balance, value at Jul. 31, 2021 | $ 4,745,728 | $ 3,002 | $ 1,760,180 | $ (6,737,040) | $ (228,196) |
| Ending balance shares at Jul. 31, 2021 | 4,745,728,041 |
Description of Business and Going Concern |
9 Months Ended | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2021 | |||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||
| Description of Business and Going Concern | Note 1 Description of Business and Going Concern
Puget Technologies, Inc. (the “Registrant”) is a publicly held corporation incorporated in the State of Nevada on March 17, 2010, and, since May 25, 2012, when its registration statement on Form S-1 pursuant to Section 5 of the Securities Act was declared effective by the Commission, has been subject to reporting requirements pursuant to Sections 13 and 15(d) of the Exchange Act. It was initially organized to engage in the distribution of luxury wool bedding products produced in Germany. Its principal executive offices, originally in Fort Lauderdale, Florida, are currently located at 1200 North Federal Highway, Suite 200-A; Boca Raton, Florida 33432.
Description of Business
Historical
The Registrant has never filed for bankruptcy, receivership or similar proceedings nor, since the date of the last annual report on Form 10-K filed (for the fiscal year 2020), has it been involved in any reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business. From 2015 until July of 2020, the Registrant was inactive as its prior management resigned leaving it indebted and without business operations. Consequently, during such period it lacked the funds required to comply with its reporting obligations under the Exchange Act. Since July of 2020, with the assistance of its Parent (“a person that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified”, Rule 405 of Commission Regulation C) and strategic consultant, Qest Consulting Group, Inc., a Colorado corporation (“Qest”), the Registrant has eliminated its convertible debt and resumed filing of reports to the Commission. Most of the Registrant’s efforts during the period from 2015 until July of 2020 involved first, repudiation of the series of 8% convertible notes issued by prior management under terms which current management considered toxic (the “Convertible Notes”) but, after the Registrant and its management were sued by two of the noteholders in the United States District Court for the Southern District of New York (Case No. 15-cv-08860 entitled Adar Bays LLC v Puget Technologies Inc. and Hermann Burckhardt and Case No. 15-cv-09542 entitled Union Capital LLC v Puget Technologies Inc. and Herman Burckhardt), lacking adequate funds to defend such actions, the Registrant entered into settlement agreements and until July of 2020, was active only in conjunction with seeking to discharge such liabilities. As a material subsequent event, all Convertible Note liabilities were discharged during the period from July of 2020 through January of 2021.
On October 22, 2020, the Registrant entered into a retainer and consulting agreement with Qest (the “Qest Agreement”) and in conjunction therewith, in order to induce Qest to defer cash compensation, the Registrant’s officers and directors (who are also the principal stockholders, officers and directors of Qest), contributed all of their securities in the Registrant, including rights to compensation in the form of securities, to Qest. In conjunction with its role under the Qest Agreement, Qest advanced the Registrant funds used to pay for auditing and legal fees in conjunction with its annual report, to pay balances due to the Registrant’s transfer agent and to settle remaining obligations under the Convertible Notes and is temporarily providing it with office space, utilities and the use of its personnel.
Current Strategic Business Plan
The Registrant’s current strategic business plan calls for it to operate as a holding company operating in four diverse areas through subsidiaries. The four diverse areas in which the Registrant intends to concentrate through subsidiaries are, in the order in which it is anticipated projects will be undertaken, as follows:
In addition to the foregoing, given the experience that the Registrant’s president has with tax related benefits of doing business in the Commonwealth of Puerto Rico, the Registrant intends to explore opportunities for potential subsidiaries there.
The Registrant’s Proposed Program for Consolidated Operating Subsidiaries
The Registrant proposes to seek out business opportunities its management deems promising and which its Board of Directors feels it can supervise and develop. Initially, as described below, this involves ownership and operation of healthcare related enterprises. Furthermore, the Registrant has formed a Board of Advisors and believes that with the assistance of its Advisory Board, its strategic consultant, Qest, and the efforts of its officers, it can find projects of interest that can be developed into diverse lines of business, with the Registrant itself serving as a resource center for its diverse subsidiaries, providing savings in operational expenditures based on size and coordinated efforts and generating synergy among its corporate family.
The Registrant’s Proposed Program for Operating Incubator Subsidiaries
The Registrant proposes a program for promising privately held operating companies that eventually want to attain independent publicly traded status but realize that subjection to regulation under federal and state securities laws as well involvement with investors and the investment banking community has as many pitfalls as benefits and thus justify a period of supervised mentoring. The former owners will be able to continue to grow and manage their businesses on their own through the grant of a proxy to vote such subsidiary’s capital stock subject to the following conditions: the Registrant will have the right to designate one member of the subsidiary’s board of directors, the Registrant will control, with the advice and input of the subsidiary’s management, the subsidiary’s legal and auditing matters, and the subsidiary will contribute along with all other subsidiaries, a proportional share of its net-after tax profits to the Registrant for payment of administrative and overhead expenses. After a period as a subsidiary of the Registrant during which time the subsidiary’s management would learn the intricacies of being regulated under state and federal securities regulation, the subsidiary’s original stockholders or their successor’s in interest would, if they so elect, have the right to spin out as independent public companies. That would be accomplished by having 15% of their common stock transferred as a stock dividend to the Registrant’s stockholders, registered for such transfer with the Commission pursuant to Section 5 of the Securities Act, making them reporting companies with the Commission pursuant to Sections 13 and 15(d) of the Exchange Act. Ten percent of the subsidiary’s securities would be temporarily retained by the Registrant and either sold off or conveyed to the subsidiary operating as a Small Business Development Company, and the rest would be returned to the operating subsidiary’s original stockholders in exchange for 75% of the Registrant’s securities issued to acquire the operating subsidiary. To the extent the subsidiary’s original stockholders had disposed of the Registrant stock received in the reorganization, they would have to either reacquire it for tender to the Registrant, or forfeit their spinout options. In the event the original stockholders could not or did not elect to exercise their spinout rights, the Registrant would elect to either retain the operating subsidiary as wholly owned, or, spin it out in whole or in part to its stockholders through a registered dividend distribution procedure similar to the one described above anyway.
Business Development Companies
Assuming success in implanting the initial two stages of its proposed plan of operation, the Registrant expects that it would next move on to the organization and operation of a business development company under Sections 54 through 65 of the Investment Company Act (a “BDC”) which it believes would generate significant synergy with the operating subsidiaries program described above. For example, the Registrant must not accumulate investment securities or else it will be subject to regulation as an investment company. By having a BDC subsidiary, it can transfer the balance of the securities remaining when it spins off a subsidiary to the business development company eliminating such risk as well as helping capitalize the business development company. BDCs must concentrate on developing companies, must provide continuing management assistance to the companies in which they invest but enjoy significant advantages in the form of limited regulation compared to ordinary mutual funds and advantages in raising capital. It is anticipated that such project would not be initiated prior to 2023. BDCs are similar to venture capital funds, they are. However, there are some key differences. One relates to the nature of the investors each seeks. Venture capital funds are available mostly to large institutions and wealthy individuals through Limited Offerings. In contrast, business development companies allow smaller, non- accredited investors to invest in them, and by extension, in small growth companies.
Special Purpose Acquisition Companies (“SPAC”)
Subsequent to organization of a BDC subsidiary, assuming success in doing so, the Registrant plans to organize a sequential series special purpose acquisition companies which its current management and Qest believe will complement the other three proposed segments of its proposed business plans providing an additional, more independent option for more seasoned companies that desire to attain publicly traded status. As in the foregoing case, the Registrant would either distribute securities it retains in SPACs it organizes to its shareholders in the form of stock dividends, or distribute them to its business development company subsidiary avoiding direct regulation as an investment company. A SPAC is a “blank check” shell corporation designed to take companies public without going through the traditional IPO process. SPACs allow retail investors to invest in private equity type transactions, particularly leveraged buyouts.
Caveat
The foregoing plans and business models are speculative, totally reliant on the experience of the Registrant’s management and independent consultants and contractor’s to be recruited and retained by the Registrant, and on market conditions beyond the Registrant’s control, and, on the Registrant’s ability to obtain significant additional financing, as to which there can be no assurances. In addition, the Registrant is likely to encounter significant competition in its quest for desirable acquisition candidates and thereafter, even if successful, in the operations of the acquired companies. Consequently, no assurances can be provided that the Registrant’s ambitious current business plans can or will be implemented as envisioned, or that even if implemented, they will prove successful.
Recent Acquisition Related Activities:
As material subsequent events, the Registrant has initiated implementation of the initial two aspects of its strategic plan as follows:
BCSF
As disclosed in the recently executed Acquisition & Option Agreement with Behavioral Centers of South Florida LLC (“BCSF”), a copy of which has been filed with the Commission (see current report on Form 8-K dated August 25, 2021), BCSF is a centralized community behavioral health center providing its clients/patients with mental health services ranging from psychiatry, individual therapy, psycho-social rehabilitation services and case management in clinics located in the Florida Counties of Dade and Broward and, in collaboration with the Registrant, plans to expand into Palm Beach County. It is currently organized under the laws of the State of Florida as a limited liability company but, pursuant to the Acquisition & Option Agreement, it will convert into a Florida corporation as permitted under Section 607.11933, Florida Statutes.
BCSF currently operates a multi-location clinic employing or independently contracting with 119 individuals, including two psychiatrists, one licensed mental health counselor supervisor, one licensed clinical social worker supervisor and one licensed marriage and family therapy supervisor who supervise seventeen therapists in the mental health department; one board certified behavior analyst, one board certified assistant behavior analyst and two registered behavior technicians; and, five advanced registered nurse practitioners in the field of psychiatry. In the area of case management four licensed clinical social worker supervisors supervise forty-nine licensed clinical social workers. The clinic has provided services to approximately 2,150 patient/clients who remain in the system of which they have an active patient base of approximately 1,100 at any one time but anticipate material expansion after the proposed Acquisition through the acquisition of compatible and complementary businesses, as well as by establishing additional clinics, initially in the State of Florida. Its major areas of concentration involve group therapy, psycho-social rehabilitation and comprehensive behavioral assessment but BCSF is also highly involved in individual therapy, development of management skills, speech therapy, physical therapy, occupational therapy, targeted case management, mental health treatment plans and medication management. Its activities are licensed by the State of Florida through the Agency for Health Care Administration and are subject to conditions imposed by major insurance carriers as well as government insurance programs such as Medicaid with which it coordinates its activities.
BCSF’s total revenues for the calendar years ended December 31, 2018 (nine months), 2019 and 2020 (all unaudited and thus subject to material adjustments) increased from $959,871 to $3,237,687 and then to $5,540,711. Such numbers are currently unaudited but BCSF acknowledged that its financial statements must be audited in accordance with requirements of Commission Regulation S-X and filed with the Commission no longer than 74 days after closing (see SEC Adopts New Financial Statement Disclosure Requirements For Acquisitions And Dispositions).
The proposed acquisition will take place in two stages. First, the acquisition of 50% of all of BCSF’s securities and equity interests plus an irrevocable option to purchase the balance of BCSF, in each case the price being $2,500,000 payable in cash ($1,000,000) and in shares of the Registrant’s Class B Convertible Preferred Stock. The Class B Convertible Preferred Stock issuable in conjunction with the initial part of the acquisition will be valued at $2.00 per share, reflecting the Registrant’s lack of assets, income and operations and shell status under the Exchange Act at such time, but at $5.00 per share for the exercise of the option to acquire the balance of BCSF’s securities, reflecting the fact that at such time, the Registrant will have already become a company with assets, operations, income and profits, and will no longer be classified as a “shell” for purposes of the Exchange Act.
D & D
On August 5, 2021, the Registrant entered into a letter of intent to acquire D & D Rehab Center, Inc., a Florida corporation organized on February 5, 2010 (“D & D”). D & D is a health care provider which trains or retrains individuals disabled by disease or injury to help them attain their maximum functional capacity. It is registered in Centers for Medicare & Medicaid Services (CMS), National Plan and Provider Enumeration System (NPPES). Its NPI number is 1952748709, assigned on June 2013. Its primary taxonomy code is 225400000X. It currently uses 92 persons to provide services to its client/patients, six of whom are administrative employees and 86 are independent contractors comprised of the following:
D & D’s total revenues for the calendar years ended December 31, 2019 and 2020 were $3,595,291 and $3,635,240, respectively, with profits of $221,252 and $252,242 and D & D anticipates income of approximately $5,000,000 for calendar 2021 with anticipated profits of $1,000,000. Such numbers are currently unaudited but D & D acknowledged that its financial statements must be audited in accordance with requirements of Commission Regulation S-X and filed with the Commission no longer than 74 days after closing (see SEC Adopts New Financial Statement Disclosure Requirements For Acquisitions And Dispositions). D & D’s activities are licensed by the State of Florida through the Agency for Health Care Administration and are also subject to contractual conditions imposed by major insurance carriers as well as government insurance programs such as Medicaid with which it coordinates its activities. While its client/patient base is currently centered on the Hispanic market in Dade County, it plans to incrementally increase its area of service throughout the State of Florida, as permitted by its current license, and to all demographic groups.
The proposed transaction with D & D has been structured in a manner similar to that reflected in the BCSF Acquisition Agreement. The D & D parties have tentatively agreed, subject to conducting required due diligence and confirmations, that the Registrant will acquire D & D in two stages, first, a 50% interest in exchange for $1,500,000 in cash equivalents and $ in unregistered shares of the Registrant’s Class B Convertible Preferred Stock, with an option to acquire the balance of D & D’s securities at the same price and comparable terms within one year after the initial closing, although it is anticipated that the Registrant will exercise such option considerably sooner. The Class B Convertible Preferred Stock would be valued based on the most recent price therefore paid to the Registrant by investors or in conjunction with exercise of the Option for the BCSF acquisition unless a trading market had developed for shares of the Registrant’s Class B Convertible Preferred Stock (unlikely at that time), in which case the mean between the high offered and low bit price therefore on the fifth trading day prior to closing will be used as the valuation. In addition to the Registrant`s shares received by the former D & D equity holders, during the initial two years following the acquisition the D & D subsidiary would be entitled to receive up to an additional $100,000 in the Registrant Common Stock, $0.001 par value, based on attaining net pre-tax profit performance goals, currently envisioned to be $2,000,000 for the calendar year ended December 31, 2022 and $3,000,000 for the calendar year ended December 31, 2023.
Transactions under Negotiation
The Registrant has entered into two additional letters of intent to acquire companies in the health care industry but prices and terms have yet to be negotiated:
In each case, the companies have granted the Registrant a 90 day exclusive right to negotiate specific terms after it conducts required due diligence and the parties determine the most appropriate valuations and form of acquisition. In each case, the acquired companies would become consolidated subsidiaries of the Registrant and incorporated into the Registrant’s health care division, along with Behavioral Centers of South Florida, LLC and D & D Rehab Center Inc., in order to generate synergy and attain significant operational savings. FHS’s total revenues for the calendar years ended December 31, 2019, and 2020 (currently unaudited) were approximately $3.9 million and $4.1 million, respectively; and, revenues for the Glades Group for the calendar years ended December 31, 2019, and 2020 (currently unaudited) were $700,000 and $500,000, respectively. While it is anticipated that the FHS transaction will involve a traditional acquisition, the Glades Group acquisition would probably be part of the Registrant’s incubator program for companies that are interested in potential future spinouts as independent public companies. In all three cases, the Registrant intends to conclude related negotiations on or before November 30, 2021 with closings occurring by December 31, 2021.
Comments
The Registrant feels that the acquisition of D & D and the additional transactions currently under negotiation will complement its proposed acquisition of BCSF generating significant synergy and savings and looks forward to the possibility of acquiring other healthcare related businesses in the near future. As in the case of BCSF, the foregoing constitute forward looking statements and the proposed transaction is reliant on successful completion of this Limited Offering.
Caveat
The foregoing plans and business models are speculative, totally reliant on the experience of the Registrant’s management and independent consultants and contractor’s to be recruited and retained by the Registrant, and on market conditions beyond the Registrant’s control, and, on the Registrant’s ability to obtain significant additional financing, as to which there can be no assurances. In addition, the Registrant is likely to encounter significant competition in its quest for desirable acquisition candidates and thereafter, even if successful, in the operations of the acquired companies. Consequently, no assurances can be provided that the Registrant’s ambitious current business plans can or will be implemented as envisioned, or that even if implemented, they will prove successful.
Going concern and Liquidity Considerations
The accompanying financial statements have been prepared assuming that Registrant will continue as a going concern which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of July 31, 2021, the Registrant had recurring losses from operations, an accumulated deficit of $6,737,606 and had earned no revenues. The Registrant intends to fund operations through equity financing arrangements which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending October 31, 2021.
The ability of the Registrant to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings and to acquire one or more operating companies. These factors, among others, raise substantial doubt about the Registrant’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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Summary of Significant Accounting Policies |
9 Months Ended |
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Jul. 31, 2021 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | Note 2 Summary of Significant Accounting Policies
Basis of Presentation of Unaudited Interim Financial Statements
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“Commission”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Registrant’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Registrant as of July 31, 2021 and the results of operations and cash flows for the periods presented. The results of operations for the quarterly period ended July 31, 2021 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited interim financial statements should be read in conjunction with the financial statements and related notes thereto included in the Registrant’s Annual Report on Form 10-K for the year ended October 31, 2020 filed with the Commission on February 12, 2021.
The Registrant computes loss per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
Registrant has shares of Class B Convertible Preferred Stock (“Class B”) which can convert to common shares at a rate 10 shares common for each Preferred B share. However since the inclusion of the effects of these potential conversions on the net loss per share would be anti-dilutive, loss and diluted loss per share are equal. The total potential shares not included in the calculation are as of July 31, 2021.
Recently Issued Accounting Pronouncements
Management has considered all recent accounting pronouncements issued. The Registrant’s management believes that these recent pronouncements will not have a material effect on the Registrant’s unaudited interim financial statements.
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Related Party Transactions |
9 Months Ended |
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Jul. 31, 2021 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Note 3. Related Party Transactions
During the nine-month period ended July 31, 2021, the Registrant entered into the following transactions with related parties:
Qest converted $46,844 of principal and $71,995 of accrued interest owed to it by the Registrant into 118,839,180 common shares.
109,108,002 common shares were issued to Qest as compensation under the Registrant’s employment agreement with its president, the rights to which have been assigned to Qest.
Qest advanced $105,297 in cash and Registrant accrued $90,000 in contract fees in the nine- month period ended July 31, 2021.
As of July 31, 2021 and October 31, 2020, there were $195,297 and $120,964 due to related parties, respectively.
The employment agreements for the Registrant’s officers as of July 31, 2021, expired on October 31, 2021 and were orally renewed without compensation, as the Registrant seeks their eventual replacements. As a material subsequent event, on August 19, 2021 the Registrant hired Ms. Karen Lynn Fordham as its new president and chief executive officer with Hermann Burckhardt, its president and chief executive officer until that point remaining as the chairman of the Registrant’s board of directors. Details concerning Ms. Forbes compensation are disclosed in Note 1.
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| Notes Payable | Note 4. Notes Payable
A summary of notes payable and accrued interest for nine months ended July 31, 2021 is as follows:
Convertible Note Payable – Number 1 Adar
On February 2, 2015, the Registrant issued an unsecured 8% Convertible Redeemable Note to Adar Bays LLC (Note Number 1), in the amount of $75,000, which was due January 30, 2016 with interest on the unpaid principal balance thereof at the rate of eight percent (8%) per annum until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise (Adar). The principal and any accrued interest was convertible into shares of common stock at the discretion of the note holder. The conversion price (the “Conversion Price”) was equal to 57.5% multiplied by the Market Price (as defined therein) (representing a discount rate of 42.5%). The Registrant had the right to prepay the note only during the initial 180 days.
During 2015 a law suit was filed in the United States District Court for the Southern District of New York (Case No. 15-cv-08860 entitled Adar Bays LLC v Puget Technologies Inc. and Hermann Burckhardt against the Registrant and its management by Adar Bays LLC after the note (issued by prior management) was repudiated by the Registrant’s current president as an invalid “toxic note”. Registrant was unable to contest the litigation and the case was settled with the Registrant’s allegations formally withdrawn and the cases settled during 2017, subject to the courts’ continuing jurisdiction to enforce the terms of the settlement agreement. As a result. The Registrant recognized an additional $64,600 in debt related to the settlement. The Registrant was contractually and judicially deprived of the ability to contest the validity of subsequent conversions and sales of Common Stock by being required to honor irrevocable written instructions to its transfer agent issued by prior management. As a material subsequent event, by January of 2021, all of the Registrant’s obligations pertaining to the note had been discharged through conversions and a cash payment of $132.54, thus, as of the date of this quarterly report, the Registrant is subject to no legal proceedings nor does its management know of any basis for any material legal proceedings against the Registrant.
At October 31, 2018 the Registrant had a balance principal balance owed under the note of $118,000 and accrued interest of $21,217.
During fiscal 2019, 141,927,826 shares were issued to the holder to convert $8,736 in principal and $0.00 in accrued interest. Interest expense of $5,600 was recognized. At October 31, 2019, the Registrant had a balance principal balance owed of $9,099 and accrued interest of $5,295.
During fiscal 2020, 2,112,921,739 shares were issued to the holder to convert $100,165 in principal and $27,122 in accrued interest. Interest expense of $5,600 was recognized. At October 31, 2020, the Registrant had a balance principal balance owed of $109,264 and accrued interest of $26,817.
In the first quarter of fiscal 2021, 186,518,261 shares were issued to the holder to convert $9,099 in principal and $5,295 in accrued interest and a cash payment was made of $132.54. At July 31, 2021, the Registrant had a balance principal balance owed of $0 and accrued interest of $0.
Over the course of this note, a total of 2,441,367,826 shares were issued and $132.54 was paid to cover $139,600 in principal and $32,417 of interest.
Convertible Note Payable – Number 2 LG
On February 2, 2015, the Registrant finalized a Convertible Redeemable Note with LG Capital Funding LLC (Note Number 2) in the amount of $53,500, which was due January 28, 2016 with interest on the unpaid principal balance thereof at the rate of eight percent (8%) per annum until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The principal and any accrued interest was convertible into shares of common stock at the discretion of the note holder. The conversion price (the “Conversion Price”) was equal to 54% multiplied by the Market Price (as defined therein) (representing a discount rate of 46%). The Registrant had the right to prepay the note only during the initial 180 days.
At October 31, 2018 the Registrant had a balance principal balance owed of $21,256 and accrued interest of $19,594.
During fiscal 2019, interest expense of $5,840 was recognized. At October 31, 2019, the Registrant had a balance principal balance owed of $21,256 and accrued interest of $25,434.
During fiscal 2020, interest expense of $5,600 was recognized. At October 31, 2020, the Registrant had a balance principal balance owed of $21,256 and accrued interest of $31,274.
In the first quarter of fiscal 2021, 52,530,000 shares were issued to the holder to convert $21,256 in principal and $31,274 in accrued interest. At July 31, 2021, the Registrant had a balance principal balance owed of $0 and accrued interest of $0.
Over the course of this note, a total of 64,142,007 shares were issued to cover $53,500 in principal and $32,746 of interest.
Convertible note payable – Number 4 Union
The Registrant finalized an 8% Convertible Redeemable Note with Union Capital LLC (Note Number 4) in the amount of $75,000, which was due January 30, 2016 with interest on the unpaid principal balance thereof at the rate of eight percent (8%) per annum until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The principal and any accrued interest was convertible into shares of common stock at the discretion of the note holder. The conversion price (the “Conversion Price”) was equal to 57.5% multiplied by the Market Price (as defined in the note) representing a discount rate of 42.5%. The Registrant could only prepay the note during its initial 180 days.
During 2015 a law suit was filed in the United States District Court for the Southern District of New York Case No. 15-cv-09542 entitled Union Capital LLC v Puget Technologies Inc. and Herman Burckhardt) against the Registrant and its management by the holder after the Registrant’s current president repudiated the notes issued to Union Capital LLC as invalid “toxic notes” (the “Convertible Notes”). Because the Registrant had been left by prior management without funds, the Registrant was unable to contest the litigation and both cases were settled with the Registrant’s allegations formally withdrawn and the cases settled during 2017, subject to the courts’ continuing jurisdiction to enforce the terms of the settlement agreement. As a result, the Registrant recognized an additional $81,980 in debt related to the settlement, paid a forbearance payment of $8,000 in cash and transferred 5,000,000 common shares as an additional forbearance payment, of which 1,027 shares were from the Registrant and 4,998,973 were borrowed from a shareholder (Qest). The Registrant was contractually and judicially deprived of the ability to contest the validity of conversions and subsequent sales of Common Stock by being required to honor irrevocable written instructions to its transfer agent issued by prior management. As a material subsequent event, by January of 2021, all of the Registrant’s obligations pertaining to the Convertible Notes had been discharged through conversions or payments, thus, as of the date of this quarterly report, the Registrant is subject to no legal proceedings nor does its management know of any basis for any material legal proceedings against the Registrant.
At October 31, 2018 the Registrant had a balance principal balance owed of $128,600 and accrued interest of $26,624.
During fiscal 2019, 406,279,540 shares were issued to the holder to convert $60,400 in principal and $7,795 in accrued interest. Interest expense of $7,800 was recognized. At October 31, 2019, the Registrant had a balance principal balance owed of $68,200 and accrued interest of $26,629.
During fiscal 2020, 343,486,654 shares were issued to the holder to convert $13,341 in principal and $6,410 in accrued interest. Interest expense of $6,710 was recognized. At October 31, 2020, the Registrant had a balance principal balance owed of $54,859 and accrued interest of $26,629.
In the first quarter of fiscal 2021, 733,192,576 shares were issued to the holder to convert $54,859 in principal and $26,929 in accrued interest. At July 31, the Registrant had a balance principal balance owed of $0 and accrued interest of $0.
Over the course of this note, a total of 1,515,989,330 shares were issued to cover $156,980 in principal and $42,741 of interest.
Convertible note payable – Number 5 Vis Vires
On February 27, 2015, the Registrant finalized a Convertible Promissory Note with Vis Vires Group, Inc. (Note Number 5) in the amount of $50,000, which was due December 3, 2015 with interest on the unpaid principal balance thereof at the rate of eight percent (8%) per annum until the same became due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The principal and any accrued interest was convertible into shares of common stock at the discretion of the note holder. The conversion price (the “Conversion Price”) was equal to 58% multiplied by the Market Price (as defined therein) representing a discount rate of 42%. The Registrant had the right to prepay the note only during the initial 180 days.
At October 31, 2018 the Registrant had a balance principal balance owed of $14,460 and accrued interest of $3,040.
During fiscal 2019, interest expense of $0 was recognized. At October 31, 2019, the Registrant had a balance principal balance owed of $14,460 and accrued interest of $3,040.
During fiscal 2020, interest expense of $0 was recognized. At October 31, 2020, the Registrant had a balance principal balance owed of $14,460 and accrued interest of $3,040.
In the first quarter of fiscal 2021, $17,500 was paid in cash to the holder to convert $14,460 in principal and $3,040 in accrued interest. At July 31, 2021, the Registrant had a balance principal balance owed of $0 and accrued interest of $0.
Over the course of this note, a total of 12,087,383 shares were issued to cover $20,540 in principal, and $32,500 was paid in cash to cover $29,460 in principal and $3,040 of interest.
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| Subsequent Events | Note 5. Subsequent Events
The Registrant has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. There were no material subsequent events through September 14, 2021 which needed to be disclosed in the accompanying financial statements, except as disclosed in Note 1 and as follows.
In conjunction with the Registrant’s plan to revise and improve its management disclosed in the Registrant’s annual report on Form 10-K for the fiscal year ended October 31, 2020 and in order to provide the leadership the Registrant’s board of directors believes the Registrant requires as it enters into the healthcare field with the proposed acquisitions of Behavioral Centers of South Florida LLC and D & D Rehab Center, Inc., etc., the Registrant has replaced Herman Burckhardt as its president and chief executive officer with Ms. Karen Lynn Fordham, MBA. Mr. Burckhardt, first elected as the Registrant’s president and chief executive officer in October of 2015, will remain as a member of and the chairman of the Registrant’s board of directors.
Pursuant to the terms of the Registrant’s employment agreement with Ms. Fordham entered into on August 19, 2021, a copy of which was filed as exhibit 10.01 to a current report on Form 8-K filed with the Commission on August 25, 2021 (the “Employment Agreement” and the “August 25 Current Report”), Ms. Fordham will serve as the Registrant’s principal executive officer to whom all other executive officers will be subordinate, subject to the directions of the Registrant’s board of directors. She will supervise all of the Registrant’s affairs and be responsible for implementation of the business plans approved by the board of directors and for assuring compliance by the Registrant and the Registrant personnel with all applicable laws. She will be subject to all duties and responsibilities associated with the position of chief executive officer, subject to such limitations or specifications imposed by the Registrant’s board of directors, including, serving as the Registrant’s general agent and spokesperson, subject to compliance with the directions of its board of directors. Subject to ratification by the Registrant’s board of directors, Ms. Fordham will be permitted to serve as a director of other public, private or governmental corporations, with or without compensation therefrom, and is in fact, urged to do so provided that in the event of any conflicts of interest with her duties to the Registrant, her duties to the Registrant will prevail, absent specific waiver on a case by case basis by the Registrant’s board of directors. The term of the employment agreement is five years with automatic annual renewals thereafter unless one of the parties notifies the other on a timely basis of its intention not to renew. It contains strict confidentiality and non-competition provisions requiring Ms. Fordham to devote her full time to the Registrant unless otherwise permitted by the Registrant’s board of directors. Pursuant to the terms of the Employment Agreement, Ms. Fordham will be entitled to compensation as follows:
The foregoing information is qualified in its entirety by the information contained in the Employment Agreement.
As of the date of this quarterly report, Ms. Fordham does not, directly or indirectly, own any of the Registrant’s securities, a situation which is expected to change soon. Her initial priority will be closing on the BCSF acquisition and the Limited Offering; negotiating the definitive agreement with D & D; seeking additional healthcare related acquisitions; and, recruiting a complete management team including a new secretary, a new treasurer and chief financial officer, a chief compliance officer and an operational team. In addition, she will supervise the preparation of a business plan seeking to consolidate healthcare related acquisitions in order to maximize synergy and minimize costs. Acquisitions outside of the healthcare field will, unless an unusual opportunity arises, be given a lower priority until the 2022 fiscal year.
The following information is summarized from Ms. Fordham most recent bio provided to the Registrant:
Ms. Fordham, age 46, was born and raised in Grosse Pointe, Michigan. She earned a master’s degree in business administration and a bachelor’s degree in science with minors in business, social work and criminal justice from Western Michigan University. She is an accomplished healthcare executive with more than 20 years of diverse experience specializing in operations, service line development, strategic planning, physician recruitment, process improvement and financial management for large healthcare organizations. Her experience includes managing behavioral health divisions in various large hospital settings, expertise valuable to Puget as it concentrates its emerging health care acquisition strategy towards acquiring and developing integrated health care delivery systems that fuse behavioral and traditional primary care. Analyzing her background disclosed below, the Registrant’s board of directors has determined that she is the ideal candidate to implement its healthcare related acquisition strategy as well as to consolidate and supervise healthcare related operations and determined that her management and leadership skills would work well in other areas as well.
For much of the past decade, Ms. Fordham has served in executive roles as chief operating officer and then chief executive officer with the Detroit Medical Center (DMC) system where from 2015 to 2017 she was president and chief executive officer of Huron Valley-Sinai Hospital, a 158-bed full-service community teaching hospital near downtown Detroit and Detroit Surgery Hospital, a behavioral health and acute care hospital, in the same market. Ms. Fordham was also the service line leader for two of the Detroit Medical Center’s largest service lines, Orthopedics and Sports Medicine and Imaging Services. In 2017 she founded Topside Strategies, a consulting firm working with physicians and healthcare companies across the country. Ms. Fordham served as chief executive officer of Venice Regional Bayfront Health and Gulf Coast Medical Group based in Venice, Florida from 2018 to 2020. Venice Regional Bayfront Health is a 313-bed facility and while in this role, Ms. Fordham increased the operating margin by focusing on surgical growth in orthopedics, neurosurgery, and gynecology, along with enhancing the organization’s quality scores to the highest level achievable as defined by the Leapfrog Group. Gulf Coast Medical Group was comprised of seventy-one multidisciplinary physicians across. Ms. Fordham also served as the president and chief executive officer of St. Joseph Hospital and St. Joseph Medical Group in Fort Wayne, Indiana where she increased earnings by 40% year over year in the first quarter under her management and increased operating margin by 28%. From 2020-2021 Ms. Fordham also served as the market chief executive officer for the East Coast Division for Wellvana Health based out of Nashville, Tennessee. In that role she acted as the primary architect and executor of the revenue strategy for that division, identifying and executing on new market and new product opportunities. She was also responsible for identifying and forming strategic partnerships that would advance the company’s growth agenda and market position.
Ms. Fordham sits on the boards of Tidewell Hospice, Avidity Home Health Care, and the Venice Chamber of Commerce, and has received many honors and awards, including inclusion in Detroit Crain’s Business Top 40 under 40 in 2014 and the 2014 Esteemed Women of Michigan. In addition, in 2019, Ms. Fordham was recognized as a Top 40 Business Professional by the Venice Gondolier and by SRQ Media as a Women in Business nominee.
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Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Jul. 31, 2021 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation of Unaudited Interim Financial Statements | Basis of Presentation of Unaudited Interim Financial Statements
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“Commission”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Registrant’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Registrant as of July 31, 2021 and the results of operations and cash flows for the periods presented. The results of operations for the quarterly period ended July 31, 2021 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited interim financial statements should be read in conjunction with the financial statements and related notes thereto included in the Registrant’s Annual Report on Form 10-K for the year ended October 31, 2020 filed with the Commission on February 12, 2021.
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| Basic and Diluted Loss per Share |
The Registrant computes loss per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
Registrant has shares of Class B Convertible Preferred Stock (“Class B”) which can convert to common shares at a rate 10 shares common for each Preferred B share. However since the inclusion of the effects of these potential conversions on the net loss per share would be anti-dilutive, loss and diluted loss per share are equal. The total potential shares not included in the calculation are as of July 31, 2021.
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| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
Management has considered all recent accounting pronouncements issued. The Registrant’s management believes that these recent pronouncements will not have a material effect on the Registrant’s unaudited interim financial statements.
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Notes Payable (Tables) |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of debt |
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Description of Business and Going Concern (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2021 |
Jul. 31, 2020 |
Jul. 31, 2021 |
Jul. 31, 2020 |
Dec. 31, 2018 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Apr. 30, 2021 |
Oct. 31, 2020 |
Oct. 31, 2019 |
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| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
| Total revenues | ||||||||||
| Cash equivalents | 49 | $ 33 | 49 | $ 33 | $ 55 | $ 97 | ||||
| Accumulated Deficit | 6,637,606 | 6,637,606 | $ 6,737,606 | $ 6,066,566 | ||||||
| B C S F [Member] | ||||||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
| Total revenues | $ 959,871 | $ 5,540,711 | $ 3,237,687 | |||||||
| D And D [Member] | ||||||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
| Total revenues | 3,635,240 | 3,595,291 | ||||||||
| Profits | $ 252,242 | $ 221,252 | ||||||||
| Cash equivalents | $ 1,500,000 | 1,500,000 | ||||||||
| Unregistered shares amount | $ 1,500,000 | |||||||||
Summary of Significant Accounting Policies (Details Narrative) |
9 Months Ended |
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Jul. 31, 2021
shares
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| Accounting Policies [Abstract] | |
| Anti-dilutive shares | 30,019,040 |
Related Party Transactions (Details Narrative) - USD ($) |
Jul. 31, 2021 |
Oct. 31, 2020 |
|---|---|---|
| Related Party Transactions [Abstract] | ||
| Due to Related Parties, Current | $ 195,297 | $ 120,964 |
Notes Payable (Details Narrative) - USD ($) |
Jul. 31, 2021 |
Oct. 31, 2020 |
Oct. 31, 2019 |
Oct. 31, 2018 |
Feb. 02, 2015 |
|---|---|---|---|---|---|
| Debt Instrument [Line Items] | |||||
| Accrued interest | $ 66,538 | ||||
| Convertible Note Payable [Member] | Adar Bays L L C [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Accrued interest | $ 21,217 | ||||
| Convertible Note Payable [Member] | Union Capital L L C [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Principal balance | $ 75,000 | ||||
| Convertible Note Payable [Member] | Union Capital L L C [Member] | Holder [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Principal balance | $ 54,859 | $ 68,200 |