Editors' Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
Puget Technologies (PUGE). I first heard of Puget Technologies when I clicked on a link to a Forbes article and saw this ad. I have seen the ad several more times on sites like Bloomberg and MarketWatch.
Given that the ad says it's a 3-D printing concern I was surprised to see this in the most recent 10-Q.
PUGET TECHNOLOGIES, INC. ("the Company") was incorporated under the laws of the State of Nevada, U.S. on March 17, 2010. Our business is the distribution of Luxury wool bedding sets produced in Germany.
Those are two very different businesses and investors are currently much more attracted to the 3-D printing space than a company that distributes luxury wool bedding sets that are produced in Germany. That 10-Q was filed on September 12th so it's possible that the business underwent a drastic change over that time period. It's possible, but it would have also required some sort of SEC filing. No 8-K or amended 10-Q has been filed since September 4th, which was before the 10-Q that said it was a luxury wool distributor. In that 8-K Puget Technologies announced the acquisition of all B-29 Energy Inc. stock.
On September 2, 2013, PUGET TECHNOLOGIES, INC., a Nevada corporation (" PUGE " or 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 PUGE, entered into share exchange agreement whereby PUGE 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 PUGE to the Shareholder (Shareholder now holds 35.2% of the capital stock of PUGE).
So what does B-29 Energy do? Well its business is the development of effective and tasty energy drinks.
B-29 Energy, Inc. ("the Company") was incorporated under the laws of the State of Colorado, U.S. on May 24, 2013. Our business is the development and distribution of effective and tasty energy products.
B-29 Energy doesn't appear to have any relationship to 3-D printing either.
The next logical question could be that perhaps the ad was a mistake, or that it was put out by some very unethical shareholders. A quick look at the company's website will put that out of the questioning, however.
Puget claims that it has "the most advanced personal 3D printing solution." I find this almost impossible to believe. Just two months ago it issued this press release:
Puget Technologies' subsidiary, Cannabis Biotech, is investigating smoke-free delivery systems offering several benefits, including ease of use, portability, dosing accuracy and a wider variety of natural cannabis compounds.
So two months ago it was presenting itself as a pot stock, but has since dropped all signs of that from its website and is now just a 3D printing concern. This is somewhat ironic because when marijuana was legalized in Colorado recently many stocks that had even a passing connection to marijuana skyrocketed.
What's Up With This?
This is hands down the strangest thing I've ever seen in a 10-Q.
If revenue supports the expense we intend to spend $12,000 to hire one salesperson to introduce our products. The salesperson's job would be to find new potential purchasers, and to set up agreements with wholesale customers to buy our luxury wool products.
I don't think that a company that can't pay a part-time salesman $12,000 should be publicly traded at all, much less awarded a $40,000 million market cap, no matter what industry it is in. This also makes me question this statement from the homepage of Puget's website.
At Puget, we seek the opportunities to make a difference every day as a leading developer of advanced personal electronic 3D cutting machines that makes it easy to create stunning DIY projects-with or without a computer. Our team of researchers and specialists understand the positive impact we can make in the lives of our customers and partners. Puget Technologies is growing fast and working hard to ensure maximum returns for each of its shareholders.
While it sounds great to say you have a team of researchers in what is arguably the hottest sector right now, I don't believe it in this case. The 3D printing industry attracts top talent, and they are paid pretty well. When just six months ago your company couldn't pay someone $12,000 to sell German wool products there is simply no way you have a top team of researchers and specialists.
Can It Be Making The Best 3D Printers?
Puget Technologies claims that it has the "most advanced 3D printing solution." I don't think this is possible. (For another reason besides being a pot stock two months ago.) There is literally no R&D. To be competitive in the 3D printing industry you have to at some point spend money on R&D and Puget simply hasn't done that. Like at all.
Even if you look really close it's not there.
Like many companies that feel the need to promote themselves via ads on popular financial websites, the financial situation at Puget Technologies isn't great, to say the least. As of July 31st they had just $8,800 in cash and hand only $11,000 in total assets. Compare that to a market cap of around $40 million and total liabilities of around $56,000. Does $8,000 in cash seem like enough to properly launch the best 3D printing solution? I don't think so.
If you are looking for a 3D printing stock then this is not it. If you are looking for a pot stock then this is not it. If you are looking for a beverage play then this is not it. And if for some reason you are looking for a German bedding set distributor, even then you are out of luck. If you are so inclined and have a broker that allows it then a short may be in order. If you don't, then you can sit back and watch the slow fall of the share price to where it belongs.
Note: I have contacted the company about my concerns. I have not heard back. I will provide an update if and/or when I hear back.
Disclosure: I am short PUGE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.