LETTER TO OUR SHAREHOLDERS
March 17, 2021
To the Shareholders
Puget Technologies, Inc.
Re: Proposals for 2021 annual meeting
As always we trust you are doing well and taking care during these difficult times. We have tentatively scheduled this year’s annual meeting for Saturday, May 15, 2021 in the City of San Juan, Puerto Rico and want to provide all of you with an opportunity to share your opinions and observations concerning our current plans prior to setting them in stone. Consequently, this is not a notice of meeting. That will be provided soon after we've worked out details to maximize your opportunities to participate and selected an appropriate record date, in consultation with our transfer agent.
We selected the City of San Juan because our Company hopes to be actively involved in activities in Puerto Rico where I enjoy important friendships and contacts, as a result of which I have an understanding of the important tax benefits available to companies with operations there. We selected Saturday so as to minimize interference with your business and employment obligations. Should you join us, we feel it will prove a productive, informative and very pleasant experience. While we encourage your participation, we must advise you that Qest Consulting Group, Inc., a Colorado corporation (“Qest”) which serves as our strategic consultant and is also our “parent” (as that term is defined in Rule 405 of United States Securities and Exchange Commission [the “Commission”]) Regulation C), controls enough votes to adopt all actions to be considered at the meeting and thus, no proxies are being or will solicited on behalf of management or the Board of Directors; however, because Qest values your opinions, it has requested that we make our proposals available to you early enough for you to comment on them, something Qest has advised us it will take into account before it exercises its voting rights, although voting decisions will be in Qest’s sole discretion. You may, of course, elect to be represented by a proxy of your choice and assuming there are no legal impediments, we propose to provide a written ballot for shareholders who desire to participate in voting but do not have the ability to participate in person or through a proxy.
Management’s proposals for the meeting are currently as follows:
First, a number of introductory and procedural matters including reports by our officers concerning the current status of our Company, our Company’s financial statements and related documents for the years ended October 31, 2020 and 2019, selection of our auditor for this year as well as for reports for the years ended October 31, 2015, 2016, 2017, 2018 and 2019. Discussion by our president, Hermann Burckhardt concerning what our Company has done and what it plans to do to assure that it remains current in all reporting obligations to the Commission and, an explanation concerning implementation of previously approved gradual increments in our Corporation’s authorized capitalization and why management believes it would be appropriate to grant the board of directors authority to determine whether the par value, currently $0.001 per share, should be retained, eliminated or modified.
Second, discussion of an item which we feel will be of great interest to the holders of our Common Stock: a one million share stock dividend to them in shares of our Class B Convertible Preferred Stock. That has already been approved by our board of directors but, prior to determination of an appropriate record date, requires that we first:
A. Comply with requirements under Nevada Revised Statutes Section 78.215(4)(b) that the dividend be approved by the current holders of our Company’s Class B Convertible Preferred Stock.
B. Comply with required pre-approval of the stock dividend by the Financial Industry Regulatory Authority. That approval will only be granted if our Company files all past due annual reports under the Exchange Act. It is our hope that all such reports will be filed prior to the annual meeting.
C. Prepare and file a registration statement on Commission Form S-1 registering the stock dividend so that, when received, it will involve free trading shares, facilitating development of a public market therefor.
Third, consideration of a proposal by Qest that our Company adopt incentive equity compensation plans pursuant to applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), something Qest feels is essential both in conjunction with recruitment and retention of qualified personnel for our Company’s management, for its board of directors, for its board of advisors and for its proposed subsidiaries, but also in conjunction with our Company’s acquisitions programs.
Fourth, an explanation concerning the forms of debenture and warrant indentures developed by Qest for our Company which management has recommended and the board of directors has approved in conjunction with a limited offering of our Company’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”). We will also disclose our Company’s plans with respect to the proceeds of such limited offering and plans for significantly greater offerings in the future in conjunction with our revised plan of operations.
Fifth, a presentation concerning the operating plan developed by Qest for our Company pursuant to which is has become a holding company with four separate lines of businesses conducted through subsidiaries, alliances, joint ventures, etc., and which are expected to include:
A. The formation, registration and operation of a business development company subsidiary pursuant to Sections 54 through 65 of the Investment Company Act of 1940, as amended (the “Investment Company Act”);
B. A sequential series of specialty acquisition (“SPAC) vehicles;
C. An incubation program for operating companies that might eventually hope to partially spin out as independent public companies; and,
D. Acting as a holding company for diverse operating subsidiaries in lines of business where our Company perceives promising opportunities with substantial synergy and potential operating savings based on group purchasing power, especially including potential for sequential roll ups.
Sixth, an explanation by our president concerning why it is appropriate to consider a name change for our Company that more accurately reflects its new status as a diversified holding company aspiring to conglomerate status, which, as in the case of the proposed stock dividend, will require approval by FINRA and a change in our Company’s stock symbol and CUSIP number as well as, for persons holding shares in certificate rather than book entry form, the suggestion that they exchange their existing certificates for updated certificates minimizing potential transactional problems.
Seventh, a panel discussion by our Company’s current officers and directors concerning why they feel it is time to introduce additional management and concerning their hope that, after assisting in the recruitment and selection of new officers and directors, they will be able to step back, continuing to assist our Company through their roles in Qest. Messers. Burckhardt and Jaspers will explain the conditions under which they have agreed to serve at least one more term as members of our Company’s board of directors and as its principal executive officers based on the understanding that they will be free to resign if, during such term, they have recruited and trained adequate replacements. They will also touch on the need to immediately increase the size of our Company’s board of directors from two to nine members, at least three of whom should be independent, and should include individuals with investment banking and accounting experience, experience with mutual funds, the insurance industry, innovative technologies (e.g., alternative energy), the medical industry, intellectual property and regulatory compliance.
Finally, Mr. Jaspers, who also serves as our Company’s secretary, would present our president with a compilation of the written questions, observations and suggestions presented to the meeting by you and Messrs. Burckhardt and Jaspers, with the assistance of a representative of Qest, would seek to answer them, possibly, time permitting, thereafter opening the floor to brief oral observations by accredited voters moderated by Mr. Burckhardt and to suggestions for consideration of other business.
Much of the foregoing may involve forward looking statements which are any statements that are not statements of historical fact. 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 such forward-looking statements you should consider various factors including the following: (a) risks and uncertainties related to general economic conditions, (b) whether our Company will be able to manage its planned growth efficiently and operate profitably, (c) whether it will be able to generate sufficient revenues or obtain financing to sustain and grow its operations, and (d) whether it will be able to successfully fulfill its primary requirements for cash. Our Company’s actual results may differ significantly from the results projected in the forward-looking statements and we assume no obligation to update them.
As you know, our Company is required to file reports with the Commission pursuant to Sections 13 and 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) but has no securities registered with the Commission pursuant to Sections 12(b) or 12(g) of the Exchange Act. Consequently, it is not required to comply with the proxy or information statement requirements of Section 14 thereof. Nonetheless, our Company plans to voluntarily provide you with information similar to that which would be provided in Commission Schedules 14A and 14E through a summary information statement supplementing the detailed information found in our annual report on Commission Form 10-K for the fiscal year ended October 31, 2020 and our report filed on Commission Form 10-Q for the fiscal quarter ended January 31, 2021, both of which can be found at the Commission’s EDGAR website or on our Company’s website at https://www.pugettechnologies.com/sec-filings.
On behalf of all of the Directors, we look forward to hearing from you and perhaps, for those interested in attending, seeing you at the annual meeting.
Very truly yours,
President & Chief Executive Officer