United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of Report (date of earliest event reported):
November 29, 2020
Puget Technologies, Inc.
(Exact Name of Registrant as Specified in Charter)
| Nevada |
| (State of Incorporation) |
| |
| 333-179212 |
|
01-0959140 |
| Commission File Number |
|
(I.R.S. Employer Identification
No.) |
| |
|
|
|
1200 North Federal Highway, Suite
200-A;
Boca Raton, Florida
|
|
33432 |
| (Address of Principal Executive
Offices) |
|
(Zip Code) |
| |
|
|
| 1 561 2108535 |
| (Registrant’s Telephone Number, Including Area
Code) |
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
| ☐ |
Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425). |
| |
|
| ☐ |
Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12). |
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| ☐ |
Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b)). |
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|
| ☐ |
Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c)). |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of
1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the
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. ☐
Section 1 - Registrant’s Business and Operations
Item
1.01 Entry into a Material Definitive Agreement.
Qest
forbearance, conversion & accommodation
agreement
Qest
Consulting Group, Inc., a Colorado corporation and affiliate of the
Registrant (“Qest”) was asked by the Registrant to amend conversion
formulas associated with the two 8% Convertible Notes Qest has held
since 2016 and with respect to a debt arising from a transaction on
November 14, 2016, when, at the Registrant’s request, Qest made
available to Union Capital LLC, a New York limited liability
company (and, at the time, a holder of the Registrant 8%
Convertible Notes in default), 5,000,000 shares of the Registrant’s
Common Stock owned by Qest then valued at $0.0024 per share (a
total of $12,000) pursuant to an agreement to treat such
transaction as a $12,000 loan to the Registrant yielding interest
at the rate then paid for the Registrant’s 8% Convertible Notes
(the “Union Capital Loan”). Such interest, as of November 30, 2020,
was $10,934.14 (resulting in a total due Qest thereunder of
$22,934.14). The balance currently due to Qest under the notes and
loans described above is approximately $118,650.18 which would have
converted into 2,063,481,394 shares of the Registrant’s Common
Stock under the conversion formula contained in the 8% Convertible
Notes[1]. Noting that Qest had advised the Registrant
that conversion at below par value may not be legal, the Registrant
asked Qest to agree to accept a fixed number of shares of the
Registrant’s Common Stock based on conversion at $0.001 as a result
of which, for illustrative purposes, instead of receiving the
2,063,481,394 shares of the Registrant’s Common Stock, Qest would
have received, it would only receive 118,650,180 shares
(approximately 5.75%).
Qest
is also the holder of 2,366,482 shares of the Registrant’s Class B
Convertible Preferred Stock obtained when its principals, Hermann
Burckhardt and Thomas Jaspers, who are also principals of the
Registrant, agreed to convert approximately $2,241,279 in debt owed
to them by the Registrant into such stock, and further, Messrs.
Burckhardt and Jaspers agreed to contribute all such Class B
Convertible Preferred Stock to Qest in exchange for Qest’s deferral
of rights to cash compensation under its current consulting
Agreement with the Registrant as previously disclosed in prior
reports of current events. With respect thereto, the Registrant
requested that Qest agree to a modification in the attributes of
its Class B Convertible Preferred Stock so that conversions thereof
into shares of the Registrant’s Common Stock would not be
undertaken until on and after January 1, 2022. Such request was
made so that the Registrant could defer required increases in its
authorized capitalization until it is better able to pay initial
and ongoing costs associated therewith and the Registrant could be
provided with time to develop its proposed business operations in a
manner that would better justify the absorption of such securities
by the investment community.
Qest
agreed to such requests but in consideration for the Registrant’s
agreement to concurrently amend the certificate of designation for
its Class B Convertible Preferred Stock to provide certain
antidilutive protections, specifically, that none of the
Registrant’s Class B Convertible Preferred Stock be subject to a
reduction in number, for example, as a result of a reverse stock
split, nor the conversion formula applicable to conversion of Class
B Convertible Preferred Stock for shares of the Registrant’s Common
Stock be affected by any reduction in the number of shares of such
Common Stock, for example, as a result of a reverse stock split,
without the prior written approval of the holders of a majority of
the shares of Class B Preferred Stock.
1
Reference is made to disclosure in Item 3.02 concerning the
conversion formula heretofore used by holders of the Registrant’s
8% Convertible Notes incorporated herein by
reference.
Puget
Technologies, Inc., current report on Commission Form 8-K, Page 2
(excluding exhibits)
In
addition to the foregoing, so that recapitalization would not
remain open-ended, Qest was granted the irrevocable right to have
the Registrant increase its capitalization as required for delivery
of the subject securities to Qest at such time as Qest, in its sole
discretion sees fit, subject only to provision to the Registrant of
ten business days prior written notice. Based on the foregoing, the
Registrant agreed to immediately amend the certificate of
designation for its Class B Convertible Preferred Stock and the
related provisions of its articles of incorporation dealing with
the attributes of its Class B Convertible Preferred Stock to effect
the foregoing.
Agreements
with Initial Members of Board of Advisors
The
response to Item 8.01 is hereby incorporated by reference
herein.
Section 2 - Financial Information
Item
2.02 Results of Operations and Financial Condition.
The
Registrant is continuing to settle its outstanding debt and making
arrangements to audit its financial statements in order to prepare
and file the reports on forms 10-K and 10-Q due for the fiscal
years ended October 31, 2019 and 2020. In conjunction therewith,
the 8% Convertible Notes payable to Union Capital LLC, a New York
limited liability company has been fully paid through conversion
into the Registrant’s Common Stock and the related settlement
agreement, judgment and court order of the United States District
Court for the Eastern District of New York in Case No. 15-cv-09542
entitled Union Capital LLC v Puget Technologies Inc. and
Herman Burckhardt, have all been fully complied with.
Additional details are provided in response to Item 3.02 below. As
a result of the foregoing, all heretofore pending litigation
against the Registrant has been resolved, an essential step,
according to Qest, in the Registrant’s plans to eliminate existing
problems, to become and maintain current with its Exchange Act
reporting obligations and to implement an innovative new business
model.
Reference
is made to disclosure of additional relevant information in Item
1.01 incorporated herein by reference.
Section 3 - Securities and Trading Markets
Item
3.02 Unregistered Sales of Equity Securities.
As of
the date of this report of special event, all of the 8% Convertible
Notes have been fully converted except for three with an aggregate
current balance due of approximately $130,000 and which to date
have received an aggregate of 30,937,044 shares of the Registrant’s
Common Stock. As indicated in Item 2.02, Union Capital LLC
completed conversion of its 8% Convertible Notes on November 17,
2020, converting $32,560.24 in principal and accrued interest into
324,555,374 shares of the Registrant’s Common Stock. Additional
details are provided in response to Item 2.02 above and email
communications between the parties confirming the foregoing are
filed as exhibit 99.01 to this current report.
The
original issuance of the 8% Convertible Notes during 2015, 2016 and
2017 relied on the exemption from registration provided by Section
4(a)(2) of the Securities Act. Conversion of the 8% Convertible
Notes into shares of Common Stock has been effected since then in
reliance on Section 3(a)(9) of the Securities Act. Subsequent sales
of the Common Stock received on conversion have, in some instances,
been effected in reliance on Section 3(a)(10) of the Securities Act
(as a result of a judgment by the United States District Court for
the Southern District of New York previously disclosed) or on the
provisions of Section 4(a)(1) of the Securities Act pursuant to the
so called Section 4(a)(11/2) exemption.
Puget
Technologies, Inc., current report on Commission Form 8-K, Page 3
(excluding exhibits)
The
following excerpts from the 8% Convertible Notes detail their
conversion formula:
|
4. |
(a) The
Holder of this Note is entitled, at its option, at any time, to
convert all or any amount of the principal face amount of this Note
then outstanding into shares of the Company's common stock (the
"Common Stock"), at a price ("Conversion Price") for
each share of Common Stock equal to 57.5% of the average of
the three lowest closing bid prices of the Common Stock as
reported on the National Quotations Bureau OTCQB exchange which the
Company’s shares are traded or any exchange upon which the Common
Stock may be traded in the future ("Exchange"), for the
fifteen prior trading days including the day
upon which a Notice of Conversion is received by the Company
(provided such Notice of Conversion is delivered by fax or other
electronic method of communication to the Company after 4 P.M.
Eastern Standard or Daylight Savings Time if the Holder wishes to
include the same day closing price) …. In the event the Company
experiences a DTC “Chill” on its shares, the conversion price shall
be decreased to 47.5% instead of 57.5% while that “Chill” is in
effect. |
(b) Interest
on any unpaid principal balance of this Note shall be paid at the
rate of 8% per annum. Interest shall be paid by the Company in
Common Stock ("Interest Shares"). Holder may, at any time, send in
a Notice of Conversion to the Company for Interest Shares based on
the formula provided in Section 4(a) above. The dollar amount
converted into Interest Shares shall be all or a portion of the
accrued interest calculated on the unpaid principal balance of this
Note to the date of such notice.
|
7. |
….
Upon an Event of Default, interest shall accrue at a default
interest rate of 24% per annum or, if such rate is usurious or not
permitted by current law, then at the highest rate of interest
permitted by law. In the event of a breach of Section 8(k) the
penalty shall be $250 per day the shares are not issued beginning
on the 4th day after the conversion notice was delivered
to the Company. This penalty shall increase to $500 per day
beginning on the 10th day. The penalty for a breach of
Section 8(n) shall be an increase of the outstanding principal
amounts by 20%. In case of a breach of Section 8(i), the
outstanding principal due under this Note shall increase by 50%. If
this Note is not paid at maturity, the outstanding principal due
under this Note shall increase by 10%. |
All
of the foregoing default conditions occurred during the past four
years and have been applied by holders of the Registrant’s 8%
Convertible Notes.
Section 9 - Financial Statements and Exhibits
Item
8.01 Other Events.
On
November 29, 2020 the Registrant entered into agreements with David
E. Burnett, a Michigan resident, and, Andrew Spencer, a Connecticut
resident, pursuant to which they became the initial members of the
Registrant’s Board of Advisors (“Advisor[s]). Copies of such
agreements are filed as exhibits 10.02 and 10.03 to this current
report. The material terms of such agreements pertaining to
compensation are as follows:
Each
Advisor will be granted Common Stock purchase options issuable
under the terms and provisions of the Registrant’s then current
Non-Qualified Stock Option & Stock Incentive Plan which will
vest during the term of the agreement on a prorated monthly basis,
as follows:
Puget
Technologies, Inc., current report on Commission Form 8-K, Page 4
(excluding exhibits)
|
(1) |
For
basic service of on the Registrant’s Board of Advisors, grant of a
five year option to purchase 240,000 shares of the Registrant’s
Common Stock. |
|
(2) |
For
services of on committees, the option will be increased by an
aggregate of an additional 120,000 shares; and |
|
(3) |
For
services of as vice chair of committees (the Registrant’s president
serving as the chair of the Board of Advisors and of all committees
thereof) the option will be increased by an aggregate of an
additional 120,000 shares. |
|
(4) |
The
shares subject to the option will be adjusted to reflect any
changes in the Registrant’s Common Stock as a result of any stock
split or reverse stock split thereof using as a basis the
Registrant’s authorized capitalization as of November 30,
2020. |
In
addition to the Common Stock purchase options described above
(unless comparable compensation is provided for under the terms of
a separate employment or consulting agreement) and subject to
applicable legal restrictions based on licensing and other
requirements, except with reference to transactions that benefit
the Advisor as an inventor of proprietary technologies or
established contacts generated by him in the past that may be
referred to the Registrant:
|
(A) |
In
the event that the Advisor arranges or provides funding for the
Registrant on terms more beneficial than those reflected in the
Registrant’s current principal financing agreements, the Advisor
shall be entitled, at his election, to either: |
|
(1) |
A fee
equal to 5% of such savings, on a continuing basis; or |
|
(2) |
If
equity funding is provided through the Advisor or any of his
affiliates, a discount of 5% from the bid price for the subject
equity securities, if they are issuable as free trading securities,
or, a discount of 25% from the bid price for the subject equity
securities, if they are issuable as restricted securities (as the
term restricted is used for purposes of SEC Rule 144);
and |
|
(3) |
If
equity funding is arranged for the Registrant by the Advisor and
the Registrant is not obligated to pay any other source
compensation in conjunction therewith, other than the normal
commissions charged by broker dealers in securities in compliance
with the compensation guidelines of the Financial Industry
Regulatory Authority, Inc., the Advisor shall be entitled to a
bonus in a sum equal to 5% of the net proceeds of such
funding. |
|
(B) |
In
the event that the Advisor generates business for the Registrant,
then, on any sales resulting therefrom, the Advisor shall be
entitled to a commission equal to 5% of the net income derived by
the Registrant therefrom, on a continuing basis. |
Puget Technologies, Inc., current report on Commission Form 8-K,
Page 5 (excluding exhibits)
Biographies:
David
E. Burnett
David
E. Burnett, a resident of Michigan, is a founding member of Seven
Innovators Corporation, Inc., a South Dakota corporation founded by
seven individuals involved in the invention development and
marketing of innovative technologies. Mr. Burnett has held founding
and executive positions in technology, manufacturing and retail
companies, and has worked in advertising, communications, and
marketing research. He is co-founder, president and chief executive
officer of nanoScience Engineering Corporation which was founded in
2005 to design, manufacture and market nanocomposite materials
produced using the supercritical fluid method of processing. Its
nanoSEC technology uses supercritical carbon dioxide to exfoliate
and disperse organo clays into polymer matrix, enhancing mechanical
and barrier properties to improve performance of existing plastic
and rubber products. Mr. Burnett co-founded and served as president
of Prizmalite Industries, Inc., a developer of glass micro bead
technology used in the coatings, textiles, plastics and friction
materials industries, and co-founded TIOXOCLEAN, Inc., a developer
of titanium dioxide based photo catalytic cleaners. In addition,
Mr. Burnett holds patents for the use of micro spheres of barium
titanate glass in conventional friction compositions for molding
automotive and other brake and clutch elements and for compositions
where glass micro beads and crumb rubber are combined for superior
binding and optical properties in paints, plastics and other
similar compounds. Mr. Burnett has more than 30 years executive
level experience in launching and managing industrial and consumer
brands, including as president and owner of Burnett and Radano,
Inc., a New York based advertising and public relations firm whose
clients have included Izod/David Crystal, Standard Industries,
Summit Laboratories and BMW Motorcycle. His corporate experience
includes serving as director of sales and operations of Cresco
Corporation and Arbee Fine Foods. His communications experience
includes management of radio stations in New York, Atlanta, and
Norfolk. David was also general manager/director of sales at the
New York Amsterdam News, the nation’s leading minority newspaper.
Mr. Burnett is a member of the Society of Automotive Engineers,
served on the board of directors of Detroit based Ecumenical
Theological Seminary and as a member of the Board of Visitors, the
College of Liberal Arts and Sciences, Wayne State
University.
Summary
of patents held or applied for: 6,579,920 friction pads and disks
and compositions and methods for producing same; 20030018118
(application) micro bead coating composition and methods;
13,834,992 modular supercritical material processing system;
13,836,300 modified nano-clay materials and nanocomposites;
61,808,073 antimicrobial polymer coating formulations; applied:
sensors to detect endotoxins for application in medical devices;
applied: fuel containers for compressed natural gas; applied:
solvent free processing using supercritical CO2 as
solvent.
Andrew
Spencer
Andrew
Spencer, a resident of Connecticut, is a founding member of Seven
Innovators’ Corporation, Inc., a South Dakota corporation founded
by seven individuals involved in the invention development and
marketing of innovative technologies. He has several patents to his
credit, including one that is commercially marketed by DuPont. In
2012 he founded Respect American Glass Inc., involved in
development of lighter, stronger, and thinner glass. In February
2000, Mr. Spencer was featured on the cover of Paint & Coatings
Industry magazine for developing a particle color system that works
without color pigments, impacting the manner in which new cars are
painted. In 2000 he founded Respect Innovations, Inc., a research
and development company credited with creating new coating
technologies for the paint and coatings industry. In 1985, he
co-founded Flame-Tek LLC, a manufacturer of flame retardant, heat
resistant, and specialty coatings for applications with leading
aerospace companies. In September of 1997 he cofounded Prizmalite
Industries, Inc., a developers of glass micro bead technology used
in the coatings, textiles, plastics and friction materials
industries.
Puget
Technologies, Inc., current report on Commission Form 8-K, Page 6
(excluding exhibits)
Summary
of patents held or applied for: Applied: a composite amalgamation
of technologies to create a power generating barrier;
Micro-prismatic sheeting incorporating 47,000 microprisms per
square inch including photo luminescent technology; Micro prismatic
photo luminescent material including 47,000 microprisms per square
inch in addition in imprinting substrate with condition and surface
and second layer; Glow flex micro prismatic material incorporating
47,000 microprisms for the square inch with electroluminescent
technology; Micro prismatic material with 47,000 michael persons
per square inch included with electro luminescent technology
including embossing indicia and printing on surface and first layer
through another transparent layer; and, Micro bead paint and paint
composition incorporating microbead and micro particle mixtures for
the enhancement of light magnification reflect ability and texture
and flow for paint coatings plastics textiles.
Summary
of key trade secrets owned: Development of micro nano pico Zappa
and other particle integration for the purpose of identification
information retention incorporating RF ID and other types of
signatures for reading with handheld devices satellite and other
types of AI systems. Development of color without pigment. The
incorporation of microbead and Micro and Nano particle mixtures
that hold color within A particle and designs of particle geometric
shape for color systems PCS system also includes particle ID for
all systems by including artificial intelligence System also for
road lines and road markings barriers and all other applications
where reflective and luminescent technologies are needed.
Development of non-flammable technology for all industries Inc.
with 000 technology zero smoke zero flame zero toxicity with the
incorporation of multiple layers of ID and information platforms.
Development of hydrogen and on demand systems and designs.
Development of full loop energy systems that in corporate
generation of energy platforms for power generation and power
storage capacitor banks. Development of photovoltaic technologies
platforms and free-floating photovoltaic particulates particles and
geometric forms including microparticle integration and for
identification and information retention. Development of microbead
microparticle mixtures in the development of glass technology for
the benefits of ballistic resistance and explosive retention and
diffusing of energy, within the glass industry as a whole.
Development of window frames and systems that we incorporate
ballistic and explosion retention as well as diffusion of energy
with air system back last technologies. Development of coatings
paint and caulking's with micro particle and particle integration
that has characteristics of ballistic resistant and explosive and
blast mitigation energy diffusion technology. Development of micro
particle integration and laminate's that have characteristics of
bullet resistance blast mitigation and particle identification and
flexible and elastomeric substrates. Development of laminates.
Incorporating photovoltaic technology for the generation of energy
within the window system and then the storage of energy within its
frame for a full loop system of energy to storage within a window
and frame. Development ID tracking trace and location of ammunition
including projectile casing, powder and with the ability photo
luminescent technology as well as particles for the use of light
emitting technology for non incinerary technology.
Item
9.01 Financial Statements and Exhibits.
Exhibits
Puget Technologies, Inc., current report on Commission Form 8-K,
Page 7 (excluding exhibits)
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned hereunto duly authorized.
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Puget Technologies,
Inc. |
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|
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By: |
/s/Hermann Burckhardt |
| Date: November 30,
2020 |
|
Hermann Burckhardt, President and
Chief Executive Officer |
| |
|
| |
By: |
/s/Thomas Jaspers |
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|
Thomas Jaspers, Treasurer,
Secretary and Chief Financial Officer |
Puget Technologies, Inc., current report on Commission Form 8-K,
Page 8 (excluding exhibits)
