Item 1. Business
Corporate Background and Business Overview
The Company was incorporated in the State of Nevada on March 17, 2010 to engage in the development and operation of a business engaged in the distribution of luxury wool bedding products produced in Germany. Our principal executive offices are located at 401 East Las Olas Blvd., Suite 1400, Fort Lauderdale, FL 33301. Our phone number is (954) 332-2471.
Our financial statements for the year ended October 31, 2013 report $0 in revenues and a net loss from inception of $189,830. All revenues from inception have been from the sale of imported wool through the Companys website. As of the fiscal year ending October 2012, the Company divested itself from the business of distributing luxury wool due to low margins when taking into consideration strong competition from more established retail operations.
During the year ended October 31, 2013, the Company redefined its business purpose to
developing and selling leading edge consumer oriented products ready for rapid commercialization. Much of its resources are dedicated to research and development in order to provide consumers with quality options while meeting the expectations of its investors.
B-29 Energy, Inc.
On September 2, 2013, the Company, B-29 ENERGY INC., a Colorado corporation (B-29), and Ronald Leyland, sole director, president, and registered holder of 100% of the shares of B-29 (the Shareholder) and Chairman and Chief Executive Officer of the Company, entered into share exchange agreement whereby the Company acquired all of the issued and outstanding common stock of B-29 held by the Shareholder (100 shares) and, in exchange, issued 15,000,000 shares of the Company to the Shareholder (Shareholder now holds 35.2% of the capital stock of the Company).
At the same time as the issuance of the above 15,000,000 Company shares to Shareholder, current shareholder Allanwater Enterprises Corp. surrendered its 15,000,000 shares which were cancelled, resulting in a zero net increase in the issued and outstanding shares of the Company as a result of the issuance in the share exchange transaction.
As a result of the above share exchange, B-29 became a wholly owned subsidiary of PUGE. B-29 Energy Inc.s business is the development and distribution of effective and tasty energy products. B-29 is in the development stage as defined under Accounting Codification Standard, Development Stage Entities (ASC-915), as the Company is still devoting substantial efforts on establishing the business.
The assets of B-29 include, but are not limited to, all intellectual property, trade name, trade secrets, trademarks, personnel contracts, website domain and content, strategic partnerships, publications, operating model, manuals, licenses, and all other confidential information related to the B-29 Energy Drink. Product lines under development include B-29 Energy Drinks and several medical marijuana products through its subsidiary, Cannabis Biotech. Much of B-29s resources are dedicated to research and development in order to provide consumers with quality options while meeting investor expectations.
Weistek USA
In December 2013, the Company announced that it intended to launch a new division that will pursue the rapidly expanding 3D printing marketplace and plans to file patent and mark protection to protect intellectual property specific to industry applications. The Company is developing these supporting technologies that will extend the usefulness of the My3DP personal printer
by
leveraging the growing interest in personal 3D printing for crafting, jewelry, and domestic goods.
4
Quick Link to
Table of Contents
Our financial statements for the fiscal year ended October 31, 2013 report $0 in revenues and a net loss of $170,133. Our independent registered public accountant has issued an audit opinion for our Company which includes a statement expressing substantial doubt as to our ability to continue as a going concern.
Website Marketing Strategy
We use our website www.pugettechinc.com to market and display our products. We intend to continue to attract traffic to our website by a variety of online marketing tactics such as registering with top search engines using selected key words and metatags, and utilizing link and banner exchange options. We will also promote our website by displaying it on our promotion materials.
To enhance our sales and to advertise our product we plan to keep improving and developing our website to make it as user friendly as possible. The website will be available 24 hours a day, seven days a week allowing customers to shop for our products directly from their homes or offices. We will attempt to provide a customer service department via email where consumers can resolve order and product questions.
Bankruptcy or Similar Proceedings
There has been no bankruptcy, receivership or similar proceeding.
Reorganizations, Purchase or Sale of Assets
There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business other than the acquisition of B-29 ENERGY INC., a Colorado corporation on September 2, 2013, through a share exchange agreement which resulted in a zero net increase in the issued and outstanding shares of the Company.
Compliance with Government Regulation
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the construction and operation of any facility in any jurisdiction which we would conduct activities. We do not believe that government regulation will have a material impact on the way we conduct our business.
Patents, Trademarks and Copyrights
We do not own, either legally or beneficially, any patents or trademarks. We intend to protect our website with copyright laws. Beyond our trade name, we do not hold any other intellectual property.
Research and Development Activities and Costs
We have incurred $17,500 in research and development costs to date.
Facilities
We currently do not own any physical property or own any real or intangible property. Our current business address is 401 East Las Olas Blvd., Suite 1400, Fort Lauderdale, FL 33301. Our telephone number is (954) 332-2471.
Ronald Leyland, our sole officer and director, works on Company business from a home office. This location serves as our primary office for planning and implementing our business plan. Management believes the current arrangements are sufficient for its corporate needs for at least the next 12 months. The Company intends to lease its own corporate office at such time needs warrant.
Employees and Employment Agreements
We have only one employee as of the date of this prospectus.
Mr. Leyland is our sole employee who currently provides his services under an Employment Agreement consummated on September 1, 2013
. Under the Agreement, Mr. Leyland will be paid $7,500 per month and plans to devote as much time as the Board of Directors determines is necessary for him to manage the affairs of the Company. As our business and operations increase, we will hire full time management and administrative support personnel.
Reports to Stockholders
5
Quick Link to
Table of Contents
We are required to file reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act). These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You may obtain copies of these reports from the SECs 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. or on the SECs website, at www.sec.gov. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Item 1A. Risk Factors
Risks Relating to our Business
Because our independent registered public accountants have issued a going concern opinion, there is substantial uncertainty that we will continue operations, in which case you could lose your investment.
Our independent registered public accountants have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
We have a limited operating history and have maintained losses since inception, which we expect to continue into the future.
We were incorporated on March 17, 2010 and have very limited operations. We have realized $58,815 in revenues to date. Our net loss from inception to October 31, 2013 is $189,830. Based upon our proposed plans, we expect to incur significant operating losses in future periods. This will happen because there are substantial costs and expenses associated with the development, marketing and distribution of our product. We may fail to generate sufficient revenues in the future. If we cannot attract a significant number of purchasers, we will not be able to generate any significant revenues or income. Failure to generate revenues will cause us to go out of business because we will not have the money to pay our ongoing expenses.
In particular, additional capital may be required in the event that:
·
the actual expenditures required to be made are at or above the higher range of our estimated expenditures;
·
we incur unexpected costs in completing the development of our business or encounter any unexpected difficulties;
·
we incur delays and additional expenses related to the development of our product or a commercial market for our product; or
·
we are unable to create a substantial market for our products; or we incur any significant unanticipated expenses.
The occurrence of any of the aforementioned events could adversely affect our ability to meet our business plans and achieve a profitable level of operations.
If we are unable to build and maintain our brand image and corporate reputation, our business may suffer.
We are a new company, having been formed and commenced operations in 2010. Our success depends on our ability to build and maintain the brand image for our products and effectively build the brand image for any new products. We cannot assure you that any additional expenditure on advertising and marketing will have the desired impact on our products brand image and on consumer preferences. Actual or perceived product quality issues or allegations of product flaws, even if false or unfounded, could tarnish the image of our brand and may cause consumers to choose other products. Allegations of product defects, even if untrue, may require us from time to time to recall a product from all of the markets in which the affected product was distributed. Product recalls would negatively affect our profitability and brand image.
Changes in economic conditions that impact consumer spending could harm our business.
Our financial performance is sensitive to changes in overall economic conditions that impact consumer spending. Future economic conditions affecting consumer income such as employment levels, business conditions, interest rates, and tax rates could reduce consumer spending or cause consumers to shift their spending to other products. A general reduction in the level of consumer spending or shifts in consumer spending to other products could have a material adverse effect on our growth, sales and profitability.
Because we will import some of our products from China and distribute them in the US, a disruption in the delivery of exported products may have a greater effect on us than on our competitors.
6
Quick Link to
Table of Contents
We import some of our product from China. Because we import our product and deliver it directly to our customers, we believe that disruptions in shipping deliveries may have a greater effect on us than on competitors who manufacture and/or warehouse products in Asia and North America. Deliveries of our products may be disrupted through factors such as:
·
raw material shortages, work stoppages, strikes and political unrest;
·
fuel price increases;
·
problems with ocean shipping, including work stoppages and shipping;
·
container shortages;
·
increased inspections of import shipments or other factors causing delays in shipments; and
·
economic crises, international disputes and wars.
Some of our competitors warehouse products they import from overseas, which allows them to continue delivering their products for the near term, despite overseas shipping disruptions. If our competitors are able to deliver products when we cannot, our reputation may be damaged and we may lose customers to our competitors.
Price competition could negatively affect our gross margins.
Price competition could negatively affect our operating results. To respond to competitive pricing pressures, we will have to offer our products at lower prices in order to retain or gain market share and customers. If our competitors offer discounts on products in the future, we will need to lower prices to match the competition, which could adversely affect our gross margins and operating results.
We depend to a significant extent on certain key personnel, the loss of any of whom may materially and adversely affect our company.
Currently, we have only one employee who is also our sole officer and director. We depend entirely on Mr. Leyland for all of our operations. The loss of Mr. Leyland will have a substantial negative effect on our company and may cause our business to fail. There is intense competition for skilled personnel and there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms. The loss of Mr. Leylands services could prevent us from completing the development of our business plan and related products, thus generating revenues. In the event of the loss of services of such personnel, no assurance can be given that we will be able to obtain the services of adequate replacement personnel.
We do not maintain key person life insurance policies on our sole officer and director and we do not anticipate acquiring key man insurance in the foreseeable future.
We may not be able to compete effectively against our competitors.
The Company expects competition to intensify in the future. We compete in each of our markets with numerous national, regional and local companies, many of which have substantially greater financial, managerial and other resources that are presently not available to us. Numerous well-established companies are focusing significant resources on providing similar products that will compete with our products. No assurance can be given that we will be able to effectively compete with these other companies or that competitive pressures, including possible downward pressure on the prices we charge for our products, will not rise. In the event that we cannot effectively compete on a continuing basis or competitive pressures arise, such inability to compete or competitive pressures will have a material adverse effect on our business, results of operations and financial condition.
Our officers and directors are engaged in other activities and may not devote sufficient time to our affairs, which may affect our ability to conduct operations and generate revenues.
Our sole officer and director has existing responsibilities and has additional responsibilities to provide management and services to other entities. We initially expect Mr. Leyland to spend approximately 30 hours a week on the business of our company. As a result, demands for the time and attention from Mr. Leyland from our company and other entities may conflict from time to time. Because we rely primarily on Mr. Leyland to maintain our business contacts and to promote our products, his limited devotion of time and attention to our business may hurt the operation of our business.
Our insiders beneficially own a significant portion of our stock, and accordingly, may have control over stockholder matters, our business and management.
7
Quick Link to
Table of Contents
As of the date of this prospectus, our sole officer and director, Mr. Leyland, beneficially owns 15,000,000 shares of our common stock in the aggregate, or 35% of our issued and outstanding shares of common stock. As a result, our sole officer and director will have significant influence to:
·
Elect or defeat the election of our directors;
·
amend or prevent amendment of our articles of incorporation or bylaws;
·
effect or prevent a merger, sale of assets or other corporate transaction; and
·
affect the outcome of any other matter submitted to the stockholders for vote.
Moreover, because of the significant ownership position held by Mr. Leyland, new investors may not be able to effect a change in our business or management, and therefore, stockholders would have no recourse as a result of decisions made by management.
In addition, sales of significant amounts of shares held by our Mr. Leyland, or the prospect of these sales, could adversely affect the market price of our common stock. Managements stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
We are subject to the periodic reporting requirements of the Securities Exchange Act of 1934, which requires us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs will negatively affect our ability to earn a profit.
We are required to file periodic reports with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. In order to comply with such requirements, our independent registered public accountants will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our independent registered public accountants and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit.
The lack of public company experience of our management team could adversely impact our ability to comply with the reporting requirements of U.S. securities laws.
Mr. Leyland lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our CEO has never been responsible for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended, which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company.
Risks Associated with our Common Stock
Due to the lack of an active trading market for our securities, you may have difficulty selling any shares you purchase in this offering.
Our shares are quoted on the Over-the-Counter Bulletin Board (OTCBB). The OTCBB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter securities. The OTCBB is not an issuer listing service, market or exchange. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC or applicable regulatory authority. Market makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 to 60 day grace period if they do not make their required filing during that time. We cannot guarantee that our application will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between us and anyone acting on our behalf, with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all.
8
Quick Link to
Table of Contents
Broker-dealers may be discouraged from effecting transactions in our shares because they are considered penny stocks and are subject to the penny stock rules.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customers account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. Our common stock is subject to the penny stock rules, and shareholders may have difficulty in selling their shares.
Because we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future. Investors that need to rely on dividend income should not invest in our common stock, as any income would only come from any rise in the market price of our common stock, which is uncertain and unpredictable. Investors that require liquidity should also not invest in our common stock. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no established trading market and should one develop, it will likely be volatile and subject to minimal trading volumes.
Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and may experience further dilution.
We are authorized to issue up to 110,000,000 shares of common stock. As of October 31, 2013, there were 42,500,000 issued and outstanding shares of common stock. Our Board of Directors has the authority to cause us to issue additional shares of common stock without consent of any of our stockholders.
Consequently, our stockholders may experience more dilution in their ownership of our Company in the future, which could have an adverse effect on the trading market for our shares of common stock.
Anti-takeover effects of certain provisions of Nevada state law hinder a potential takeover of the company.
Though not now, we may be or in the future we may become subject to Nevadas control share law. A corporation is subject to Nevadas control share law if it has more than 200 stockholders, at least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada or through an affiliated corporation. The law focuses on the acquisition of a controlling interest which means the ownership of outstanding voting shares sufficient, but for the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors: (i) one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more. The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others.
The effect of the control share law is that the acquiring person, and those acting in association with it, obtains only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders. The control share law contemplates that voting rights will be considered only once by the other stockholders. Thus, there is no authority to strip voting rights from the control shares of an acquiring person once those rights have been approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire a controlling interest, their shares do not become governed by the control share law.
If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, any stockholder of record, other than an acquiring person, who has not voted in favor of approval of voting rights, is entitled to demand fair value for such stockholders shares.
9
Quick Link to
Table of Contents
Nevadas control share law may have the effect of discouraging takeovers of the corporation.
In addition to the control share law, Nevada has a business combination law which prohibits certain business combinations between Nevada corporations and interested stockholders for three years after the interested stockholder first becomes an interested stockholder, unless the corporations board of directors approves the combination in advance. For purposes of Nevada law, an interested stockholder is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term business combination is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquiror to use the corporations assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.
The effect of Nevadas business combination law is to potentially discourage parties interested in taking control of us from doing so if it cannot obtain the approval of our board of directors.