PUGET TECHNOLOGIES, INC. - Quarter Report: 2021 April (Form 10-Q)

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: April 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________________________________________________________________  _____________________________________________________ to _______________________________________

Commission file number: 333-179212

Puget Technologies, Inc.

(Exact name of registrant as specified in its charter)

1200 North Federal Highway, Suite 200-A; Boca Raton, Florida 33432

(Address of principal executive offices)

561- 210 - 8535

(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. Yes ☐ No ☒

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). Yes ☒ No ☐

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.

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐

The number of shares outstanding of all of the Registrant’s classes of common equity as of February 16, 2021 is as follows:

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 QUARTERLY reports on Form 10-Q and current reports on Form 8-K. Due to lack of funds, during the past five years the Registrant has been 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. 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.

Part I – Financial Information

Item 1. Financial Statements.

Puget Technologies, Inc.

Balance Sheets

The accompanying notes to the unaudited financial statements are an integral part of these statements.

Puget Technologies, Inc.

Statements of Operations

(Unaudited)

The accompanying notes to the unaudited financial statements are an integral part of these statements.

Puget Technologies, Inc.

Statements of Stockholders’ Deficit

(Unaudited)

The accompanying notes to the unaudited financial statements are an integral part of these statements.

Puget Technologies, Inc.

Statements of Cash Flow

(Unaudited)

The accompanying notes to the unaudited financial statements are an integral part of these statements.

Puget Technologies, Inc. 

Notes to the Unaudited Financial Statements

January 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

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 2014), 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 Registrant funds Registrant 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.

During October of 2020, the Registrant, at the suggestion of Qest, decided to implement a new business model as a holding company operating through subsidiaries in four different albeit related areas. These primarily involve assisting promising operating companies to attain independent public company status. In order to properly implement the following described business plan, the Registrant’s current limited management has been directed to recruit conduct a nationwide search for new members of its Board of Directors and replacement officers prior to the next scheduled annual meeting of its stockholders currently anticipated for February of 2022. As disclosed in a current report filed by the Registrant with the Commission on January 15, 2021, Qest has recommended that the Registrant’s Board of Directors be expanded to nine or more members, at least three of whom should be independent so that audit and compensation committees could be implemented as envisioned by the Registrant’s articles of incorporation and bylaws. In terms of experience, Qest has recommended that the new board of directors continue to employ persons with investment banking and accounting experience but also with experience with mutual funds, the insurance industry, innovative technologies (e.g., alternative energy), the medical industry, intellectual property and regulatory compliance.

On March 2, 2021, at the suggestion of Qest Consulting Group, Inc., a Colorado corporation and the Registrant’s “parent” (as that term is defined in Rule 405 of Commission Regulation C) and strategic consultant, the Registrant and Behavioral Centers of South Florida LLC, currently a Florida limited liability company (hereinafter “BCSF”) signed a letter denominated “preliminary understandings and agreements pertaining to a proposed corporate reorganization” pursuant to Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended as a result of which:

The parties have tentatively agreed, subject to conducting required due diligence and confirmations, that Puget would acquire BCSF as part of its incubation program at an initial valuation, subject to verification, of $5,000,000 in exchange for shares of its common stock, currently par value $0.001 per share. In addition to the Puget shares received by the former BCSF equity holders, during the initial two years following the reorganization, the BCSF subsidiary would be entitled to receive up to an additional $1,000,000 in Puget securities to distribute as it deemed appropriate, based on attaining net pre-tax profit performance goals, currently envisioned to be $1,000,000 for the calendar year ended December 31, 2022 and $2,000,000 for the calendar year ended December 31, 2023. In both of the foregoing instances, the holders of such securities would be granted piggyback registration rights in the event that Puget filed a registration statement for any of its securities.

During the three year period following closing on the proposed reorganization, the former BCSF equity holders would hold a proxy to vote the shares of the BCSF subsidiary’s voting securities with respect to the election of all but one director (that director to be designated by Puget) and thus be in a position to control most aspects of the BCSF subsidiary’s affairs, subject to specified exceptions involving legal matters, audits and strategic transactions (which would have to be coordinated with Puget). Two and a half years after closing on the acquisition the former equity holders of BCSF would have the option of tendering back 75% of the Puget Common Stock received, both under the reorganization and based on performance, for 75% of the shares of the BCSF subsidiary’s shares held by Puget, with the commitment by Puget to register 15% of the remaining 25% of such shares with the Commission under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) for distribution as a stock dividend to Puget’s shareholders, and to assign the remaining ten percent to a business development company organized under Sections 54 through 65 of the Investment Company Act of 1940, as amendment (the “Investment Act”). In such case the former equity holders of BCSF would retain 25% of the Puget common stock they had received in the reorganization and as performance bonuses to do with as they pleased. If the former equity holders of BCSF elected to retain all of the Puget common stock they had received in the reorganization and as performance bonuses rather than to exercise their spinout rights, then the BCSF subsidiary would remain a subsidiary of Puget which could either continue to operate it, sell it, or spin it out to its shareholders as it saw fit.

Based on information provided by BCSF to Puget:

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 Puget, 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, should the Parties enter into a reorganization agreement as proposed below, it would convert into a Florida corporation as permitted under Section 607.11933, Florida Statutes. It 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 reorganization through the acquisition of compatible and complementary businesses, as well as by establishing additional clinics, initially in the State of Florida. Its total revenues for the calendar years ended December 31, 2018 (nine months), 2019 and 2020 increased from $959,871 to $3,237,687 and then to $5,540,711.

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. 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.

There are no assurances that the parties will in fact negotiate a definitive agreement, that even if they do, such agreement will close, or even if it were to close, that the proposed association would be successful. The foregoing is forward-looking information. 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.

A copy of the above described letter denominated “preliminary understandings and agreements pertaining to a proposed corporate reorganization” was included as an exhibit to the current report on Form 8-K filed by the Registrant on March 2, 2021. As a material subsequent event, the Registrant, the equity holders of BCSF and BCSF entered into a reorganization agreement embodying and amplifying on the terms of the letter of intent on +++. A copy of such agreement +++

On April 12, 2021, the Registrant entered into an agreement with Víctor Germán Quintero Toro pursuant to which Mr. Quintero was appointed as the Registrant’s Chief Technologies Officer. A copy of such agreement was filed as exhibit 10.04 to a report of current event filed by the Registrant on Form 8-K on or about April 13, 2021.

Mr. Quintero’s duties include responsibility for the design, development and maintenance of the Registrant’s internet presence including its website, its social media presence, information concerning Puget on the Internet, the Registrant’s internet security, etc., in coordination with the Registrant’s board of directors, board of advisors, strategic consultant and superior officers, evaluation of all potential acquisitions and monitoring all acquisitions and operating subsidiaries with respect to all matters involving technology; in coordination with the Registrant’s board of directors, board of advisors, strategic consultant and superior officers, coordination and monitoring of all research and development activities involving technology; development of personal proprietary information conceived by him with respect to software applications for use on computers and other intelligent devices in the areas of coordination of medical services and transportation systems, provided that they are not abandoned by the Registrant and are placed into operation prior to the end of the initial term of the Agreement, subject to a retained 10% royalty interest in favor of Mr. Quintero from all income derived therefrom by or through the Registrant; and, performance of such other duties as are assigned to him by the Registrant’s president and boards of directors, subject to compliance with all applicable laws and fiduciary obligations. Additional provisions involving intellectual property provide that except as specifically excluded in the agreement intellectual property developed by Mr. Quintero will belong to the Registrant subject to a ten percent royalty interest in favor of Mr. Quintero, provided that, if the intellectual property is not marketed within three years, then it will revert to Mr. Quintero and the Registrant will be entitled to a ten percent royalty interest.

Mr. Quintero is currently developing a proprietary transport control and programming system based on big data (a field that treats ways to analyze, systematically extract information from, or otherwise deal with data sets that are too large or complex to be dealt with by traditional data-processing application software) and artificial intelligence; and, a proprietary platform for improved doctor patient scheduling and treatment interaction. Such projects are expected to be developed and marketed by the Registrant and test marketed in the Commonwealth of Puerto Rico where the Registrant anticipates conducting a substantial portion of its activities in order to avail itself of benefits provided under the Puerto Rico Incentives Code Act (Act 60-2019). Excluded from the agreement is a proprietary hydroponic, hermetic, automated and controlled cultivation system using artificial intelligence (Colombian patent number NC2020 / 0000681) which Mr. Quintero will develop and market independently.

On or about May 10, 2021, Messrs. Andrew Spencer, Dr. Pranav Nawani, Ph.D., and Mr. David Burnett, three members of the Registrant’s Board of Advisors engaged in the development and implementation of photovoltaic nanotechnology for use in improving the performance of solar energy collection devices, including solar panels, have submitted a proposal outlining the terms under which they would transfer such technology to a joint venture with the Registrant. The Registrant is giving it serious consideration. However, given the Registrant’s current schedule involving BCSF and the proprietary applications involving improved transportation and medical service delivery contributed to the Registrant by its Chief Technologies Officer, it will need to carefully consider the proposal at the next meeting of its Board of Directors immediately following the annual meeting of shareholders.

The Registrant continues to actively pursue its business initiatives in the Commonwealth of Puerto Rico. Current activities include taking the steps needed to progress the creation of the new subsidiary in the region, pursuing the commercialization of the logistics software acquired from its Chief Technologies Officer and seeking out local corporate and government partners. The initial step will be the organization of a subsidiary under the laws of the Commonwealth of Puerto Rico and opening of related offices in the San Juan area expected sometime in July of 2021.

 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 April 30, 2021, the Registrant had recurring losses from operations, an accumulated deficit of $6,691,096 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.

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 April 30, 2021 and the results of operations and cash flows for the periods presented. The results of operations for the quarterly period ended January 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.

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 Preferred B shares 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 30,019,040 as of April 30, 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 six month period ended April 30, 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 $80,635 in cash and Registrant accrued $60,000 in contract fees in the six month period ended April 30, 2021.

As of April 30, 2021 and October 31, 2020, there were $159,254 and $120,964 due to related parties, respectively.

The Registrant’s officers and directors have agreed to suspend payment of their salaries as of the fiscal year ended October 31, 2020 until such time, if ever, as the Registrant’s income from operations provides adequate funds to pay such salaries and still comply with its other financial obligations. Thus officers’ salaries have not been accrued since such date.

Note 4. Notes Payable

A summary of notes payable and accrued interest for six months ended April 30, 2021 is as follows:

Schedule of Notes Payable

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 April 30, 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 April 30, 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 April 30, 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 April 30, 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 June 14, 2021 which needed to be disclosed in the accompanying financial statements.  

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.

As a material subsequent event, on June 7, 2021 the Registrant held its 2021 annual meeting of shareholders. Details of such meeting are reported hereafter under Part II – Other Information, Item 5 – Other Information.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

Three-Month Periods Ended January 31, 2021 Compared to Three-Month Periods Ended January 31, 2021

The Registrant’s results of operations for the six-month periods ended April 30, 2021 and 2020 are summarized below:

Revenues and Other Income

During the six-month periods ended April 30, 2021 and 2020, the Registrant did not realize any revenues from operations.

Operating Expenses

Operating expenses of $624,530 and $196,516 for the six month periods ended April 30, 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 $(624,530) for the six-months ended April 30, 2021 compared to a net loss of $(196,516) for the corresponding period ended April 30, 2020.

Liquidity and Capital Resources

Liquidity and capital reserves at April 30, 2021 and October 31, 2020 are summarized as follows:

As of the date of this report, the Registrant had yet to generate any revenues from its business operations.

As of April 30, 2021, the Registrant had current assets of $411, liabilities of $ 182,097, and its working capital deficiency was $(181,275). 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 $(6,691,096). In addition, the Registrant’s current liabilities exceed its current assets by $(181,275). 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.

Cash Flows

Cash flows for the six months ended April 30, 2021 and 2020 are summarized as follows:

Operating Activities

For the six-months ended April 30, 2021, net cash used in operating activities was $(129,140), related to the Registrant’s net loss of $(624,530), reduced by an increase in cash provided from financing activities and from loans the Registrant received from a shareholder.

For the six-months ended April 30, 2020, net cash used in operating activities was $(156), related to the Registrant’s net loss of $(196,516), reduced by an increase in cash provided from financing activities from advances the Registrant received from a shareholder.

During the six-months ended April 30, 2021, the Registrant received loans of $147,129 ($80,635 in cash and $60,000 in accrued contract fees) and $6,494 (cash advances) from shareholders for business operation purpose, respectively.

Investing Activities

The Registrant did not use any funds for investing activities during the six-months ended April 30, 2021 and 2020, respectively.

Financing Activities

Financing activities provided $129,496 and $110 during the six-months ended April 30, 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.

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 April 30, 2021, that occurred during the Registrant’s second fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

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.

Notes:

Item 3. Defaults upon Senior Securities.

There have been no material defaults upon senior securities during the fiscal quarter ended April 30, 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.

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.

As a material subsequent event, 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.

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:

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.

By /s/ Hermann Burckhardt 

President, Chief Executive Officer and Director

Dated: June 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

President, Chief Executive Officer and Director

Dated: June 14, 2021

By /s/ Thomas Jaspers

Chief Financial Officer, Treasurer, Secretary and Director

Dated: June 14, 2021

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