PUGET TECHNOLOGIES, INC. - Quarter Report: 2013 January (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2013
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Commission file number 333-179212
PUGET TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
227 Bellevue Way NE, 411, Bellevue, WA 98004
(Address of principal executive offices, including zip code.)
(206) 350-6345
(Telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days. YES x NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). YES x NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer, "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | Accelerated filer | o |
| Non-accelerated filer | o | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 3,300,000 shares as of March 14, 2013.
ITEM 1. FINANCIAL STATEMENTS
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PUGET TECHNOLOGIES, INC.
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(A Development Stage Company)
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Balance Sheet
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As of
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As of
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January 31, 2013
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October 31, 2012
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(Unaudited)
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(Audited)
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ASSETS
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Current Assets
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Cash
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$ | 1,601 | $ | 36 | ||||
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Inventory
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- | - | ||||||
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Total Current Assets
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1,601 | 36 | ||||||
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Total Assets
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$ | 1,601 | $ | 36 | ||||
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LIABILITIES & STOCKHOLDERS' EQUITY
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Current Liabilities
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Notes Payable
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$ | 5,058 | $ | 4,733 | ||||
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Total Current Liabilities
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5,058 | 4,733 | ||||||
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Total Liabilities
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5,058 | 4,733 | ||||||
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Stockholders' Equity
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Common stock, $.001 par value, 110,000,000 authorized 3,300,000 and 3,300,000 shares issued and outstanding as of January 31, 2013 and October 31, 2012
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$ | 3,300 | $ | 3,300 | ||||
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Additional Paid-In Capital
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11,700 | 11,700 | ||||||
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Income (deficit) accumulated during development stage
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(18,457 | ) | (19,697 | ) | ||||
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Total Stockholders' Equity (Deficit)
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(3,457 | ) | (4,697 | ) | ||||
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Total Liabilities & Stockholders' Equity
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$ | 1,601 | $ | 36 | ||||
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PUGET TECHNOLOGIES INC.
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(A Development Stage Company)
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Statement of Operations
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March 17, 2010
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3 Months
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3 Months
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(inception)
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ended
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ended
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through
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31-Jan-13
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31-Jan-12
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31-Jan-13
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Revenues
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Revenues
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$ | 32,275 | $ | - | $ | 91,089 | ||||||
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Cost of Sales
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27,741 | - | 91,502 | |||||||||
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Gross Profit
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4,534 | - | (412 | ) | ||||||||
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General & Administrative Expenses
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Legal and professional fees
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3,064 | - | 10,524 | |||||||||
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Marketing and advertising
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- | 94 | 7,130 | |||||||||
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Other general and administrative
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230 | - | 392 | |||||||||
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Total Expenses
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3,294 | 94 | 18,045 | |||||||||
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Net Income (Loss)
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$ | 1,240 | $ | (94 | ) | $ | (18,457 | ) | ||||
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Net Loss Per Basic and
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Dilited share
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$ | 0.00 | $ | (0.00 | ) | |||||||
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Weighted average number of Common Shares outstanding
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3,300,000 | 3,000,000 | ||||||||||
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PUGET TECHNOLOGIES, INC.
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(A Development Stage Company)
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Statement of Cash Flows
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(Unaudited)
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March 17, 2010
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3 Months
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3 Months
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(inception)
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ended
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ended
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through
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31-Jan-13
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31-Jan-12
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31-Jan-13
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income (loss)
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$ | 1,240 | (94 | ) | $ | (18,457 | ) | |||||
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Adjustments to reconcile net loss to net cash
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provided by (used in) operating activities:
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Changes in operating assets and liabilities:
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Increase (decrease) in Notes Payable
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325 | 3,036 | 5,058 | |||||||||
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Increase (decrease) in Inventory
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- | - | - | |||||||||
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Net cash provided by (used in) operating activities
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1,565 | 2,942 | (13,399 | ) | ||||||||
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CASH FLOWS FROM INVESTING ACTIVITIES
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Net cash provided by (used in) investing activities
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- | - | - | |||||||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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Issuance of common stock
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- | - | 15,000 | |||||||||
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Net cash provided by (used in) financing activities
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- | - | 15,000 | |||||||||
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Net increase (decrease) in cash
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1,565 | 2,942 | 1,601 | |||||||||
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Cash at beginning of period
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36 | 5,100 | - | |||||||||
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Cash at end of period
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$ | 1,601 | 8,042 | $ | 1,601 | |||||||
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
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Cash paid during year for :
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Interest
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$ | - | - | $ | - | |||||||
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Income Taxes
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$ | - | $ | - | $ | - | ||||||
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PUGET TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Financial Statements
JANUARY 31, 2013
1. ORGANIZATION AND BUSINESS OPERATIONS
PUGET TECHNOLOGIES, INC. ("the Company") was incorporated under the laws of the State of Nevada, U.S. on March 17, 2010. Our business is the distribution of Luxury wool bedding sets produced in Germany. The Company is in the development stage as defined under Accounting Codification Standard, Development Stage Entities ("ASC-915"). The Company has generated $91,089 in revenue to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise. For the period from inception on March 17, 2010 through January 31, 2013 the Company has accumulated losses of $18,457.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.
Going Concern
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $18,457 as of January 31, 2013 and further losses are anticipated in the development of its business raising substantial doubt about the Company's ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and or private placement of common stock.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. The Company had $1,601 cash and $-0- cash equivalents as of January 31, 2013.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In management's opinion, all adjustments necessary for a fair statement of the results for the interim periods have been made, and all adjustments are of a normal recurring nature.
Foreign Currency Translation
The Company's functional currency and its reporting currency is the United States dollar.
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Financial Instruments
The carrying value of the Company's financial instruments approximates their fair value because of the short maturity of these instruments.
Stock-based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Income Taxes
Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Basic and Diluted Loss Per Share
The Company 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.
The Company has no potential dilutive instruments and accordingly basic loss and diluted loss per share are equal.
Fiscal Periods
The Company's fiscal year end is October 31.
Recent accounting pronouncements
We have reviewed all the recent accounting pronouncements issued to date of the issuance of these financial statements, and we do not believe any of these pronouncements will have a material impact on the company.
Advertising
The Company follows the policy of charging the costs of advertising to expenses incurred. The Company incurred $7,130 in advertising costs during the period March 17, 2010 (inception) to January 31, 2013.
3. COMMON STOCK
The authorized capital of the Company is 110,000,000 common shares with a par value of $0.001 per share.
On October 01, 2010, the Company issued 3,000,000 shares of common stock at a price of $0.001 per share for total cash proceeds of $3,000.
During the month of June 2012 the Company issued 300,000 shares of common stock at a price of $0.04 per share for total cash proceeds of $12,000.
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4. INCOME TAXES
As of January 31, 2013 the Company had net operating loss carry forwards of $18,457 that may be available to reduce future years' taxable income through 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
5. RELATED PARTY TRANSACTIONS
On October 01, 2010, the Company sold 3,000,000 shares of common stock at a price of $0.001 per share to its director.
As of January 31, 2013 the total loan amount unpaid to the Company’s director was $5,058. The loan is non-interest bearing, due upon demand and unsecured.
6. RISK CONCENTRATION
Major Customers
During 2012, all of the company’s revenues were derived from one major customer, Elite Products, Inc.
Major Vendors
During 2012, all of the company’s purchases were from two major vendors, Martherm Company and Comfort Inc.
7. SUBSEQUENT EVENTS
The Company has evaluated subsequent events from January 31, 2013 through the date whereupon the financial statements were issued and has determined that there are no items to disclose.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Forward Looking Statements
This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking states are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or out predictions.
Results of Operations
We are still in our development stage and have generated $91,089 in revenues to date.
We generated revenues of $32,275 and $0 for the three month periods ended January 31, 2013 and 2012. The cost of sales for the same three month periods were $27,741 and $0, respectively. We generated $91,089 with $91,502 in cost of sales resulting in a loss of $412 for the period from inception (March 17, 2010) through January 31, 2013. Our expenses for the same period consisted of $10,524 in legal and professional fees, $7,130 in marketing and advertising and $392 in other general and administrative expenses.
Our net income for the three months ended January 31, 2013 was $1,240. Our net loss from inception (March 17, 2010) through January 31, 2013 was $18,457.
We received our initial funding of $3,000 through the sale of common stock to Andre Troshin who purchased 3,000,000 shares of our common stock at $0.001 per share in October, 2010.
On July 31, 2012, the Company closed its registered offering raising $12,000 from the sale of 300,000 shares of common stock, par value $0.001, at the offering price of $0.04 per share.
Liquidity and Capital Resources
We had $1,601 in cash at January 31, 2013, and there were outstanding liabilities of $5,058. Mr. Troshin has verbally agreed to continue to loan the company funds for operating expenses in a limited scenario until we have adequate revenue, but he has no legal obligation to do so.
Plan of Operation
Our current cash balance is $1,601. We believe our cash balance along with anticipated revenue from sales will be sufficient to cover the expenses we will incur during the next twelve months.
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Our business is the distribution if Luxury wool bedding sets produced in Germany to North America. We have generated revenues of $91,089 and our principal business activities to date consist of creating a business plan, entering into a Supply Agreement, dated October 7, 2011, with Wollwarenfabrik und Handelsgesellschaft mbH, a German company, which is an established distributor of wool products and working on selling our offering of our common stock. Wollwarenfabrik und Handelsgesellschaft mbH is a large and well-established supplier and distributor of wool products in Germany. The terms and conditions of the Supply Agreement provide that, among other things, we have the right to purchase Luxury wool products at item prices identified in the Supply Agreement.
Our customers will be asked to 100% prepay for the products. Customers will have three options to pay for our products: by credit card, by wire transfer or by sending a check/money order. If customer decides to pay by check/money order, then we will apply a certain amount of days before shipping to have the check/money order cleared. Customers will be responsible to cover the shipping costs. Shipping costs will be added automatically to a customer’s final bill. As soon as we receive prepayment for the products from our customers we will purchase these products from our supplier by wire transfer or credit card payment including shipping costs. The purchased products will be shipped directly to the customers.
Milestones
We plan on accomplishing the following milestones during the next twelve months:
Set up Office.
Time Frame: 1st- 6th months.
We were not able to sell our entire offering so we will have to rely on sales revenue to generate the funds required to set up our office in the US and acquire the necessary equipment to furnish the office. In the meantime we will continue to utilize the premises provided by Andre Troshin. He will also continue to handle our administrative duties.
Continue to Expand Our Website.
Time Frame: 3rd-9th months.
We registered our web domain www.pugettechnologies.com and set up our website. As funds become available from sales we plan to expand our website, updating and improving it to provide options such as online ordering.
Continue Advertising/ Marketing Campaign.
Time Frame: 1st-12th months.
We intend to use marketing strategies, such as web advertisements, direct mailing, and phone calls to acquire potential customers. We also expect to get new clients from “word of mouth” advertising where our new clients will refer their friend and colleagues to us. As funds allow, we plan to attend trade shows in our industry to showcase our product with a view to find new customers. We also will use internet promotion tools on Facebook and Twitter to advertise our products and company.
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Negotiate service agreements with potential wholesale customers.
Time Frame: 1st-12th months.
Initially, our sole officer and director, Mr. Troshin, will look for potential wholesale customers. We will negotiate terms and conditions of collaboration. Even though the negotiation with potential wholesale customers will be ongoing during the life of our operations, we cannot guarantee that we will be able to find successful agreements, in which case our business may fail and we will have to cease our operations.
Even if we are able to obtain sufficient number of service agreements at the end of the twelve month period, there is no guarantee that we will be able to attract and more importantly retain enough customers to justify our expenditures. If we are unable to generate a significant amount of revenue and to successfully protect ourselves against those risks, then it would materially affect our financial condition and our business could be harmed.
Hire a Salesperson.
Time Frame: 6th-12th months.
If revenue supports the expense we intend to spend $12,000 to hire one salesperson to introduce our products. The salesperson’s job would be to find new potential purchasers, and to set up agreements with wholesale customers to buy our Luxury wool products.
We may also need to obtain additional financing to operate our business for the twelve months if sales from revenues are not sufficient. Additional financing, whether through public or private equity or debt financing, arrangements with the security holder or other sources to fund operations, may not be available, or if available, may be on terms unacceptable to us. Our ability to maintain sufficient liquidity is dependent on our ability to raise additional capital.
If we are unable to attract more customers we may have to suspend or cease operations. If we cannot generate sufficient revenues to continue operations, we will suspend or cease operations. If we cease operations we likely will dissolve and file for bankruptcy and shareholders would lose their entire investment in our company.
Limited Operating History; Need for Additional Capital
There is no historical financial information about us upon which to base an evaluation of our performance. We are a development stage corporation and have only begun to generate revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in products.
To become profitable and competitive, we will need to realize continued revenue from our product sales. If we do not realize revenues we believe that our current cash balance will allow us to operate for approximately three months.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Management maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of January 31, 2013.
Based on that evaluation, management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Changes in Internal Controls over Financial Reporting
As of the end of the period covered by this report, there have been no changes in the internal controls over financial reporting during the quarter ended January 31, 2013, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date of management’s last evaluation.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS.
The following exhibits are included with this quarterly filing. Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our original Registration Statement on Form S-1, filed under SEC File Number 333-179212, at the SEC website at www.sec.gov:
| Exhibit No. | Description | |
| 3.1 | Articles of Incorporation* | |
| 3.2 | Bylaws* | |
| 31.1 | Sec. 302 Certification of Principal Executive Officer & Chief Financial Officer | |
| 32.1 | Sec. 906 Certification of Principal Executive Officer & Chief Financial Officer | |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned thereunto duly authorized.
| Puget Technologies, Inc. | |||
| Registrant | |||
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Date: March 14, 2013
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By:
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/s/ Andre Troshin | |
| Andre Troshin, Chief Executive Officer, | |||
| Chief Financial and Accounting Officer and | |||
| Sole Director | |||
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