| Description of Business and Going Concern | N ote
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 Union Capital LLC v Puget Technologies Inc. and Herman Burckhardt 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:
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. 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 3,237,687 5,540,711 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 $ 3,595,291 3,635,240 221,252 252,242 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 1,500,000 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. 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 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. |
