January 29, 2014 (Editor's Note): Shortly after we published this advisory, KGET issued a press release which claimed that the company had received a $100 million purchase order. This press release was made with no accompanying 8-K filing, no identity of the customer and no offering of the purchase order. ***WARNING*** This is EXACTLY the kind of press release that could instigate an SEC trading halt "due to a lack of current and accurate information about the company."
Written by Janice Shell
Prior to early December 2013, KGET had been more or less trading sporadically, but then began to pick up some volume and valuation, though not in what could be called dramatic fashion. All that changed a month later: the stock spiked on 16 January on the first contract announcement, rising from $0.0050 to close at $0.0245 on volume of 277 million. The next day it hit an irrational intraday high of $0.2110, only to fall back on profit taking. For the past week, it's been treading water as traders consider whether it was a two-day wonder, or is a play with legs. Those that bought stock at those inflated prices are wondering if they can meet next month's rent.
KGET's revival began with the reported acquisition of Green Day Technologies, ratified by an agreement signed on 25 November 2013. Kleangas was represented by William Wylie, then its president; Green Day by actor come penny stock hound, Bo Linton, its president. As a result, Green Day was to become a wholly owned subsidiary of KGET. The transaction took the form of a share exchange. The agreement was amended on 25 November; the changes made were not substantive. It was stated that closing was anticipated within ten days, though no SEC filing confirming the finalization of the deal has been submitted thus far. Neither was any audit of Green Day attached as an exhibit to a filing. That is a serious disclosure problem that needs to be addressed.
By early January, Bo Linton had become CEO of the company, though that was never officially announced. Wylie remained as president.
Bo Linton is an actor with an interest in penny companies. Evidently he longs to play Gordon Gekko. Will he get the role? You be the judge. We think Michael Douglas has nothing to worry about.
Linton is fond of cars, Porsches in particular. That interest led to his peripheral involvement in last year's grotesque Cal-Bay International (CBYI) Pump & Dump disaster. It's a story well-known to anyone who follows OTC stocks: Linton met John Scott of Cambertire, and introduced Scott to his old friend Roger Pawson, a serial penny peculator who's presided over the fast rise and faster fall of a number of OTC issues. Pawson persuaded Scott he needed to go public, and announced the pending acquisition of Cambertire by CBYI. In the end, Scott wisely concluded that the deal he'd be getting wouldn't be good for him or for his company, and terminated the agreement. The stock crashed and burned in the blink of an eye, to the horror of many who believed it'd be their ticket to untold riches.
Linton previously served as President of notorious Albert Reda's GDT Tek, Inc (GDTK). He was appointed to that position in July 2010. As will be seen, GDT Tek, whose registration was revoked by the SEC in July 2013, became Green Day Technologies, KGET's new subsidiary. It is controlled by Linton.
The KGET shell
KGET began life as a Vancouver shell company incorporated in Florida. Its first name was Minex Minerals, but that was changed in 1999 to Redmond Capital Corp. Its officers and directors were from British Columbia and the U.K. It filed an initial Form 10-SB registration statement with the SEC in August 2000.
Redmond Capital never bothered to make any more filings. In August 2007, then claiming a New York City address, it filed a Form 15 to terminate registration.
Something happened in the same year that may suggest the shell, long since abandoned by its original owners, had been hijacked. An S-1 filed in 2009 states that a Brian Goldenberg had applied to the Circuit Court of the Eleventh Judicial Circuit for Miami-Dade County, Florida, to be appointed receiver of Redmond, which was still a Florida company, though not in good standing. Goldenberg had already reinstated the company's corporate status; the judge duly appointed him receiver, and he, in turn, named Mark Renschler sole officer and interim president.
Rentschler controlled an entity called Williams Capital Corp. Williams was granted common and preferred stock sufficient to give Rentschler 99% control of the public company. He then changed its name to Windsor Resource Corp. This series of corporate actions was completed by a 1:2000 reverse split of the common stock.
A few months later, perhaps at the suggestion of the SEC, the registration statement was withdrawn, "due to technical complications during the filing process that left the Form S-1 deficient." There is no way of knowing whether any questions were asked about the receivership and reinstatement of the Florida shell. Sham receiverships are often used to hijack dormant public companies.
Brian Goldenberg is something of a specialist in reinstating and reviving public shells. In 2007, he became a receiver for so many--at least 14--that an Investor's Hub message board was created to discuss what he was up to.
Enter Richard Astrom
Once the S-1 was withdrawn, the shell that was to become KGET sank into obscurity once again. Nearly four years later, on 5 December 2012, yet another S-1 was filed. As required, it filled in some blanks: Renschler had resigned in 2009, and was replaced by Damian Guthrie. Guthrie was in turn replaced by Richard Astrom in 2010. Renschler's shares had been acquired by Astrom, and were subsequently cancelled. Perhaps Guthrie's hasty departure was prompted by the penny stock bar he and Astrom's son Christopher received on 29 October 2010 in connection with a civil suit brought against them by the SEC. Richard Astrom is Guthrie's father-in-law.
Astrom is well known in Pennyland as a shell peddler and serious dilutor. He takes over moribund companies, acquires a great deal of stock at very low prices, sees to it the stocks are promoted, and sells into those pumps. Like Goldenberg, Astrom has an Investors Hub message board dedicated to him and his activities. Over the years--he's now in his 60s--he's created a large number of companies in his home state of Florida and elsewhere. Those that were public did not treat shareholders well. His wife Pamela often works with him, as did their sons Christopher and Mark, until the former was popped by the SEC.
According to the S-1, on 15 August 2012, Astrom resigned as sole officer and directorof the soon-to-be KGET shell. Current President, William Wylie, and Dennis J. Klein were named as directors. Each held 1.02 billion shares of the company's common stock. That did not mean the end of Astrom's connection to KGET, however: he entered into an Exchange Agreement with the company, under which 2 million shares of common, 2 million shares of Series A preferred, and $71,044 of debt were exchanged for a promissory note payable to him in the amount of $275,000. The note was due on 15 August 2013.
The public company was renamed Kleangas Energy Technologies in the S-1 and in the Florida registry, but did not change the name and ticker with FINRA until late February 2013. Since it had also been incorporated in Delaware back in 2008, its name was changed there as well.
The new company's stated ambition was to go into the manufacture and sale of "oxy-hydrogen generation systems and other alternative energy products." At that time, it had $310 in the bank, and, as of 31 October 2012, a whopping 2,416,648,358 shares of common stock were issued and outstanding.
The selling shareholders
Before the December 2012 S-1 filing, KGET had conducted a private placement in which it sold 316.5 million shares of common stock to 11 investors for a mere $25,000. For those purchasers, the paper was practically free at $.000079 per share.
The private placement investors were, of course, the seed shareholders whose stock would be registered by the S-1 offering. Once the filing was deemed effective by the SEC, they'd be free to sell whenever they liked. Obviously, they have been ringing the register.
|KGET Seed Shareholders <click to enlarge>|
The document specifies that 1947 Inc. is Richard Astrom. Magnolia Equity is Rebecca Guthrie, Astrom's daughter. 1949 Wizard, Inc. is Pamela Astrom, Richard's wife. For Your Information, Inc. is Roger Pawson. Fidelis Deposit Corporation is Barry J. Miller, the attorney who compiled the S-1. Nothing like keeping a scheme incestuous.
All of the selling shareholders declared their intention to unload their entire positions. Among them, the Astroms would be dumping 185,500,000 shares. Pawson, Linton's old buddy, had a mere 2.5 million; perhaps he received them as a courtesy or a tribute. Barry Miller the lawyer is an interesting figure. Coming from Michigan, and licensed to practice law there, he's worked together with Astrom in the past. He spends some of his time in Panama--as do many penny stock people--and his Fidelis Deposit Corporation is registered there, naturally in the names of nominees.
KGET didn't begin trading till the very end of July 2013, so none of the putative sellers could have sold until then. Though there were a few days of heavy volume in August and September--accompanied by several lackluster promotions--it seems unlikely the private placement investors managed to get rid of everything at the prices they were interested in. Today's bigger numbers would bring in a tidy sum for those who'd waited to sell. Perhaps a big family reunion on a tropical island is in order.
Can Bo give the stock a boost?
The S-1 was finally deemed effective on 14 May 2013, after five amendments to it had been filed in response to a rather large number of questions from the SEC. Since KGET was a shell company until that date, Rule 144 will not be available to any holders of restricted stock until a full year has passed. How they must be envious of the Astrom clan.
When the S-1 was filed, KGET had reportedly entered into a branding agreement with a Florida company called Global Hydrogen Technologies, Inc. (GHT) to resell GHT's products. Evidently that didn't work out; GHT is not even mentioned in later financial reports. And so Linton, who by then controlled Green Day Technologies, was called in to work his magic, which continues to consist chiefly of making appearances on Donald Baillargeon's MoneyTV. Despite the name, MoneyTV is far from being a "network," except for those who may believe that's what a YouTube channel is. The show is a perfect outlet for corporate onanists happy to pay $11,999 for three months of "international TV coverage."
Linton had been appointed president of GDTK before Reda's arrest, and was his logical successor. He took over in early January 2012. The company stopped filing financial reports with the SEC, and trading was suspended by the SEC in July 2013. Its registration was revoked less than a month later.
Even before Reda was convicted, Linton and John Domerego, who was by now a director of GDTK, had taken over GDT Tek, the Florida company. Reda's name had been expunged from the Sunbiz record by as early as 10 January 2012. The name was finally changed to Green Day Technologies in September 2013.
GDTK didn't have much in the way of assets, and nothing in the way of earnings, but even before the registration was revoked and trading ended forever, it began talking about a new venture: Refuse Derived Pellets. On 30 May 2013 it announced a new website, which was designed to be the "future platform of the sale of RDF Pellets." At the site, interested readers are assured that the pellets are eco-friendly, and will help end the energy crisis because they're an alternative to nasty, polluting coal. The kindest way to describe the site design would be to say it's very basic. So is the scant amount of information offered.
Linton himself is voluble on the subject. In his last MoneyTV presentation, he discussed KGET's projects with expected enthusiasm. He described one supposed product as working "like an air conditioner in reverse." Isn't that a heater? Go figure.
There's now yet another website, Kleangas.com, that is far more sophisticated. There, Linton offers several videos, and other material that is attractively presented, though not especially informative. He does not say the company has sold any pellets, or any other product. He instead discusses "pending orders," "pending revenue sources," and a "pending acquisition."
KGET has recently issued two press releases announcing orders that do not seem to be "pending" at all. In the first, from 16 January, it's said that an unnamed client in South Korea has arranged for the delivery of "between 5,000 to [sic] 10,000 Metric Tons of pellets per month" for a full 12-month period, and would represent revenue of $800,000 to $1.7 million monthly. Traders were excited, but neither that PR nor a second--which purported to build on the first, and seemed to suggest that two additional orders had been received--offered much in the way of clarity.
The press announcements were not accompanied by 8-Ks, which suggests that they should not be considered material. Without hard facts and hard numbers, a slick website whose message is simply that Green Is Good isn't worth much. Unless of course you are pumping stock to a gullible public.
In an effort to make KGET more attractive to new investors, the company dramatically reduced its shares outstanding. Klein died last year, and his stock was returned to Treasury. More recently, Wylie gave up his own. That lowered the shares outstanding from over 2 billion to a seemingly more manageable 315 million. It shouldn't be forgotten, though, that the Astroms likely have quite a bit left to dump as soon as they see an opportunity.
What of GDTK's shareholders? What happened to them? Certainly nothing good. Though they still own worthless shares in GDTK, they aren't part of the new company. If they want to join in the KGET "fun", they'll have to buy KGET stock. To judge from their comments online, very, very few feel inclined to do so.