UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

--------------------------------

FORM 10-Q

--------------------------------

 

(Mark One)

 

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For The Quarterly Period Ended September 30, 2013

 

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For The Transition Period from __________ To _________

 

Commission file number: 333-176820

 

KLEANGAS ENERGY TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		45-53499508
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)
3001 N. Rocky Pt. Rd, Suite 200
Tampa, FL		33771
(Address of Principal Executive Offices)		(Zip Code)

 

_____(888) 720-0806______

(Registrant’s telephone number, including area code)

 

(Former Name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ X ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer                             [    ]		Accelerated filer                            [     ]
Non-accelerated filer                               [    ]		Smaller reporting company           [ X ]

 

(Do not check if a smaller reporting company)

 

 

Indicate by check mark whether the issuer is a shell company (as defined in rule 12b-2 of the Exchange Act) Yes [ ] No [ X ]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Check whether the registrant filed all documents and reports required by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court Yes [ ] No [ ]

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

As of November 14, 2013, there were 2,423,648,517 of the Registrant’s Common Stock outstanding

 

 

 

 

KLEANGAS ENERGY TECHNOLOGIES, INC.

For The Quarterly Period Ended September 30, 2013

 

TABLE OF CONTENTS

 

 

PART 1 - FINANCIAL INFORMATION		Page Number
Item 1.	Financial Statements.	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	9
Item 4	Controls and Procedures	9
PART II - OTHER INFORMATION
Item 1	Legal Proceedings	10
Item 1A	Risk Factors	10
Item 2	Unregistered Sales of Equity Securities And Use of Proceeds	10
Item 3	Defaults Upon Senior Securities	10
Item 4	(Removed and Reserved)	10
Item 5	Other Information	10
Item 6	Exhibits	10
SIGNATURES		10

 

 

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY AND ITS INDUSTRY. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND PROSPECTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

KLEANGAS ENERGY TECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

 

		September 30,				December 31,
		2013				2012
		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash		$	29			$	40
TOTAL ASSETS		$	29			$	40
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accrued expenses - related parties		$	174,743			$	75,251
Other accrued expenses			13,117				8,500
Due to shareholder			4,340				3,300
Note payable			2,534				—
Note payable - related party			275,000				275,000
TOTAL CURRENT LIABILITIES			469,734				362,051
STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.000001 par value,
Series A - 10,000,000 shares authorized,
0 shares issued and outstanding			—
Common stock, $0.000001 par value,
3,000,000,000 shares authorized,
2,416,648,358 shares issued and outstanding			2,417				2,417
Additional paid in capital			25,238				24,683
Deficit accumulated during development stage			(497,360	)			(389,111	)
TOTAL STOCKHOLDERS' DEFICIENCY			(469,705	)			(362,011	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY		$	29			$	40

 

 

The accompanying notes are an integral part of these financial statements

 

KLEANGAS ENERGY TECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

														From inception				From inception
		Three months ended								Nine months ended				(May 10, 2012) to				(May 10, 2012) to
		September 30, 2013				September 30, 2012				September 30, 2013				September 30, 2012				September 30, 2013
Revenue		$	—			$	—			$	—			$	—			$	—
COSTS AND EXPENSES:
General and administrative expenses			36,510				42,480				107,640				45,000				197,010
Interest expense (loss) - related party			164				27				492				27				744
Interest expense			76				—				117				—				117
Total Cost and expenses			36,750				42,507				108,249				45,027				197,871
NET LOSS		$	(36,750	)		$	(42,507	)		$	(108,249	)		$	(45,027	)		$	(197,871	)
Basic and diluted loss per common share:		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted average number of shares outstanding:			2,416,648,358				2,416,648,358				2,416,648,358				2,416,648,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

 

KLEANGAS ENERGY TECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

						From inception				From inception
		Nine months ended				(May 10 2012) to				(May 10, 2012) to
		September 30, 2013				September 30, 2012				September 30,2013
OPERATING ACTIVITIES:
Net loss			(108,249	)			(45,027	)			(197,870	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Changes in operating assets and liabilities
Accrued expenses - related parties			99,492				42,027				174,743
Other accrued expenses			4,617				—				13,117
NET CASH USED IN OPERATING ACTIVITIES			(4,140	)			(3,000	)			(10,010	)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock							27,610				27,610
Proceeds of loan from a shareholder			1,040				700				4,340
Proceeds from note payable			2,534				—				2,534
Capital contribution			555				—				555
Gain on forgiveness of Debt			—				(25,000	)			(25,000	)
NET CASH PROVIDED BY FINANCING ACTIVITIES			4,129				3,310				10,039
INCREASE (DECREASE) IN CASH			(11	)			310				29
CASH - BEGINNING OF PERIOD			40				—				—
CASH - END OF PERIOD			29				310				29
Supplemental disclosures of cash flow information:
Non-cash financing activities
Note issued to prior shareholder in exchange of
common and preferred stock			—				275,000				275,000

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements

 

Notes to Consolidated Financial Statements

September 30, 2013

 

Note 1. Nature of Business and Basis of Presentation

 

Basis of Presentation

 

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the requirements of Regulation S-X of the Securities and Exchange Commission (the "SEC"). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the SEC. The unaudited interim financial statements reflect all adjustments (consisting only of normal recurring adjustments), which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods presented. There have been no significant changes in accounting policies since December 31, 2012. The results of operations for the periods are not indicative of the results expected for the full fiscal year or any future period. These unaudited financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2012 included in the company's Form S-1, Amendment No. 5 filed on May 10, 2013.

 

A development stage company

 

The Company did not have any business since inception. Accordingly, the Company’s activities have been accounted for as those of a Development Stage Enterprise. The Company’s financial statements are identified as those of a development stage company, and the statements of operations, stockholders’ equity and cash flows disclose activity since the date of the Company’s inception.

 

Business

 

Kleangas Energy Technologies, Inc. (“the Company”) is a development stage company. The Company’s purpose is to design, manufacture and sell Oxy-Hydrogen Systems.

 

Merger

 

On August 15, 2012, the Company completed a Plan and Agreement of Merger, dated as of August 15, 2012, by and among Windsor Resource Corp. (“Windsor”), KNGS Acquisition, Inc. and the Company, whereby Windsor issued 2,100,000,000 shares of its common stock to the stockholders of the Company and the Company became the wholly owned subsidiary of Windsor. The Company was considered to be the accounting acquirer, and the merger was accounted for as a reverse merger, with the Company being the accounting survivor. Accordingly, the historical financial statements presented herein are those of Kleangas Energy Technologies, Inc. and do not include the historical financial results of Windsor. Subsequently, Windsor changed its corporate name to Kleangas Energy Technologies, Inc., which is the same as its Florida subsidiary.

 

In connection with the merger, Richard S. Astrom, the president and sole director of Windsor, entered into an Exchange Agreement, under which 2,000,000 shares of Series A Preferred Stock and 2,000,000 shares of common stock of Windsor and $71,044 of its indebtedness to him were exchanged for its secured promissory note to him in the principal amount of $275,000 which bears interest at the rate of 0.24% per annum and $25,000 in cash. The promissory note is due on August 15, 2013, is subject to acceleration in the event of certain events of default and contains certain restrictive covenants. On October 1, 2013, the note was satisfied by the Company.

 

Note 2 – Significant accounting policies

 

Use of Estimates

 

The preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. 

 

Earnings per Share

 

FASB ASC 260, "Earnings per Share" provides for calculation of "basic" and "diluted" earnings per share. Basic net earnings per common share are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net earnings per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period.

 

Basic and diluted loss per share were the same, as there were no common stock equivalents outstanding.

 

Income Taxes

 

 

We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

 

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

 

Note 3 – Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenues since inception, has incurred losses since inception, and its current cash balances will not meet working capital needs. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon, among other things, the continued financial support from its shareholders or the attainment of profitable operations. There is no assurance that the Company will be able to generate revenues in the future. These financial statements do not give any effect to any adjustments that would be necessary should the Company be unable to continue as a going concern.

 

Note 4 – Accrued expenses – related parties

 

Accrued expenses – related parties consists following:

 

Accrued salary (a)		$	160,000
Accrued rent (b)			14,000
Accrued interest			743
		$	174,743

 

(a)

On May 31, 2012, the company entered into one year employment agreements with its officers. The salary for each officer is $60,000 per year. No cash has been paid to any officers. Salary from June 2012 to September 2013 has been accrued.

 

(b)

On May 30, 2012, the company entered into a six-month lease agreement with one of its officers. The term of the lease is from August 1, 2012, to January 31, 2013. The lease then continues as a month-to-month tenancy until terminated in accordance with the provisions of the agreement. No rent has been paid. Rental expense for August 2012 to September 2013 has been accrued.

 

Note 5 – Note payable

 

Note payable – Related Party

 

Note payable – Related Party consists of a note payable to Richard Astrom, the prior president and sole director of Windsor, bearing interest at 0.24% and due in August 15, 2013. This note is secured by a pledge of all of the shares of the Company’s operating subsidiary of the Company. On October 1, 2013, the note was satisfied by the Company.

 

Note Payable

 

Note payable consists of a promissory note with an aggregate principal amount of $10,000 issued to an unrelated company on January 10, 2013. The note bears interest at the rate of 12% and is to be collateralized by the assets of the corporation. This note is not negotiable and may be repaid at any time without penalty or premium at the sole option of the company. The company has received $2,534 as of September 30, 2013.

 

Note 6 – Due to shareholder

 

Due to shareholder consists advances from a shareholder. The amount is non-interest bearing and due on demand.

 

 

Note 7 – Income Taxes

 

The reconciliation of income tax benefit at the U.S. statutory rate of 34% for the period ended September 30, 2013 to the Company’s effective tax rate is as follows:

 

U.S. federal statutory rate			-34.0	%
State income tax, net of federal benefit			-6.0	%
Increase in valuation allowance			40.0	%
Income tax provision (benefit)			0.0	%

 

The benefit for income tax is summarized as follows:

 

Federal:
Current		$	—
Deferred			36,805
State and local:
Current			—
Deferred			6,495
Change in valuation allowance			(43,300	)
Income tax provision (benefit)		$	—

 

As of September 30, 2013 the Company had approximately $197,000 of federal and state net operating loss carryovers (“NOLs”) which begin to expire in 2032. Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under regulations.

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.

 

Note 8 – Subsequent Events

 

Management has evaluated events occurring after the date of these financial statements through the date that these financial statements were issued. On October 1, 2013, the note of $275,000 was satisfied by the Company (see note 5).

 

 

 

 

 

 

 

 

ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY’S FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS AND OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS REPORT.

 

General

 

The Company is the parent of Kleangas Energy Technologies, Inc., a Florida corporation (“KET”) and conducts no business. The Company has no material assets other than all of the outstanding shares of KET and has no plans to conduct any business activities other than obtaining or guaranteeing financing for the business conducted by KET or assisting KET in obtaining such financing.

 

Through KET, we design, manufacture and sell Oxy-Hydrogen Systems. Initially and until we obtain the financing necessary to develop our own products, all of these systems will be manufactured by a third. The purpose of these systems is to promote fuel economy and engine life and to reduce harmful emissions by reducing the amount of fuel required to be used to operate an engine and by reducing the temperatures as which engines operate. These systems function by creating oxygen and hydrogen from distilled water through electrolysis and injecting these gases into the mixture of fuel and air used in gasoline and diesel internal combustion engines. Electrolysis is performed by passing electric current generated by a vehicle’s electrical system through distilled water. The gases thus generated are moved through valves and tubing into the fuel mixture, and is burned in the engine, together with the fuel. Hydrogen is an explosive gas; in order to reduce the possibility of an explosion, the systems that we sell will not store hydrogen, but create it on an “on demand” basis.

 

We plan to market directly to OEMs and fleet owners with our own sales force, by direct marketing and an internet presence. Products sold to OEMs will be installed and serviced by OEM-trained technicians and products sold to fleet owners will be installed and serviced by us or by their technicians. We commenced operations in May 2012, are a development-stage company and have not yet manufactured any product nor have we sold any products, whether or not manufactured by us.

 

We will rely initially on third parties for the oxy-hydrogen systems that we sell and, as and if our business develops such that we are able to manufacture these systems in our own facilities, we will rely on third parties for certain components and raw materials used in these systems.

 

Our sources of revenue will be sales of products, parts and service fees for the products that we sell after the expiration of the warranty thereon and sales of maintenance materials and consumables for products, such as electrolyte solution.

 

Our History

 

Prior to the Merger

 

The Company was incorporated in Delaware on January 8, 2008.

 

The Merger

 

On August 15, 2012, the Company entered into a Plan and Agreement of Merger by and among the Company, KNGS Acquisition, Inc., a Florida corporation and the Company’s wholly owned subsidiary (“Acquisition”), and KET, under which Acquisition was merged with and into KET, with KET being the surviving corporation. As a result of the Merger, the Company was no longer considered a shell company. In connection with the Merger, the Company issued 2,100,000,000 shares of Common Stock to the holders of the common stock of KGS. As a result of the Merger, William B. Wylie and Dennis J. Klein, who are respectively the president and chairman of the board and who are directors

of the Company, became its controlling stockholders.

 

Also in connection with the Merger:

 

_

The Company completed a private placement with 11 investors of 316,500,000 shares of Common Stock for proceeds of $25,000 in cash and payment for services under Securities Purchase Agreements (the “Private Placement”). The Company also entered into Registration Rights Agreements with these investors, under which the Company was obligated to file a registration statement under the Securities Act covering the shares issued in the Private Placement (the “Registration Statement”). The Registration Statement was declared effective under the Securities Act on May 14, 2013.

 

_

Richard S. Astrom, the Company’s president and sole director, entered into an Exchange Agreement with the Company, under which 2,000,000 shares of its Common Stock, 2,000,000 shares Series A Preferred Stock and $71,044 of its indebtedness to him were exchanged for a secured promissory note of the Company payable to him in the principal amount of $275,000 and bearing interest at the rate of 0.24% per annum and a payment of $25,000. The promissory note is due August 15, 2013, is subject to acceleration in the event of certain events of default and contains certain restrictive covenants.

 

_

On August 28, 2012, KGS filed with the Secretary of State of the State of Florida Certificate of Merger Consummating the Merger and on September 26, 2012, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware changing its name from “Windsor Resource Corp.” to “Kleangas EnergyTechnologies, Inc.”

 

 

As a result of the Merger, our business is now that of the design, manufacture and sale of Oxy-Hydrogen Systems for use in motor vehicles.

 

Our Common Stock is quoted on OTCQB under the trading symbol “KGET.”

 

RESULTS OF OPERATIONS

 

THREE MONTHS ENDED SEPTEMBER 30, 2013

 

Revenues

 

We had no revenues for the three month periods ended September 30, 2013, and September 30, 2012.

 

General and Administrative Expenses

 

General and administrative expenses for the three months ended September 30, 2013, and 2012 were $36,510 and $42,480 respectively consisting primarily of salaries to officers of $30,000. For the period that began with our inception on May 10, 2012, and ended September 30, 2013, general and administrative expenses were $197,010.

 

Net Loss

 

We had a net loss for the three month period ended September 30, 2013 and 2012 of $36,750 and $42,507 respectively. For the period that began with our inception on May 10, 2012, and ended September 30, 2013, our net loss was $197,871.

 

NINE MONTHS ENDED SEPTEMBER 30, 2013

 

Revenues

 

We had no revenues for the nine month periods ended September 30, 2013, and for the period from inception (May 10, 2012) to September 30, 2012.

 

General and Administrative Expenses

 

General and administrative expenses for the nine months ended September 30, 2013, were $107,640 consisting primarily of salaries to officers of $90,000. There are no comparable results for the nine months ended September 30, 2012, because we commenced operations on May 10, 2012.

 

Net Loss

 

We had a net loss of $108,249 for the Nine month period ended September 30, 2013. There are no comparable results for the nine months ended September 30, 2012, because we commenced operations on May 10, 2012.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our net loss at September 30, 2013, was $108,249 and our accumulated deficit at that date was $497,360. Our cash balance at that date was $29. We financed our operations during this period through capital contributions and proceeds from a note payable.

 

During the nine-month period then ended, Messrs. Klein and Wylie each earned $60,000 in salary from KET and Mr. Klein was entitled to receive $6,000 under a lease between him and KET. We were unable to pay any of these obligations to Messrs. Klein and Wylie and they have been in our financial statements as “Accrued expenses – related party” and “Due to shareholder” in our financial statements. We will be able to pay these obligations only from revenues from our operations and/or financing. Given our current financial condition and prospects, we can give no assurance as to whether or when we will be able to do so.

 

Net cash used in operating activities for the six months ended September 30, 2013, was $4,140.

 

Net cash provided by financing activities for the six months ended September 30, 2013, was $4,129.

 

We financed our operations during the Nine months ended September 30, 2013, through stockholder contributions and loans.

 

Cash Requirements

 

The Company plans to fund its activities, including those of KET, during the balance of 2013 and beyond through the sale of debt or equity securities and/or financing by banks and private investors. The Company believes that it will require approximately $1.5 million fully to fund its operations for the next 12 months and $200,000 in order to commence many of the activities set forth in its plan of operations. We have met and continue to maintain contact with a number of prospective sources of financing and have received indications of interest from some of them, but we have received no firm offers from any of these prospective sources. We can give no assurance that sufficient funding will be available on acceptable terms,

 

 

or available at all. If we are unable to raise funds when required or on acceptable terms, we may have to significantly reduce, or discontinue, our operations. To the extent that we raise additional funds by issuing equity securities or securities that are convertible into the Company’s debt securities, stockholders may experience significant dilution.

 

Off-Balance Sheet Arrangements

 

We currently do not have any off-balance sheet arrangements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer and Acting Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of March 31, 2013. Based on this evaluation, our Chief Executive Officer and Acting Chief Financial Officer concluded that these disclosure controls and procedures were not effective as of such date, at a reasonable level of assurance, in ensuring that the information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is: (i) accumulated and communicated to our management (including the Chief Executive Officer and Acting Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

 

Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. We have assessed the effectiveness of those internal controls as of March 31, 2013, using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control – Integrated Framework as a basis for our assessment.

 

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of our annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified a material weakness in our internal control over financial reporting. This material weakness consisted of an insufficiency of individuals who have bookkeeping and accounting experience. This is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.

 

As we are not aware of any instance in which we failed to identify or resolve a disclosure matter or failed to perform a timely and effective review, we determined that the addition of personnel to our bookkeeping and accounting operations is not an efficient use of our very limited resources at this time and not in the interest of our stockholders.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over

 

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are not a party to any pending legal proceedings nor is any of our property the subject of any pending legal proceedings.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. (REMOVED AND RESERVED).

 

ITEM 5. OTHER INFORMATION

 

Subsequent Events

 

Management has evaluated events occurring after the date of these financial statements through the date that these financial statements were issued. On October 1, 2013, the note of $275,000 was satisfied by the Company (see note 5 of the Financial statements).

 

On November 8, 2013 the President agreed to return the 1,050,000,000 shares of Company stock issued to him and return those share to the Treasury and as agreed the Company issued a Note in the amount of $25,000 with a 6% interest rate per annum and all due and payable in six months for the return of those shares.

 

On November 15, 2013 President of the Company negotiated a merger agreement between Kleangas Energy Technologies, Inc. and Green Day Technologies, Inc., with Kleangas Energy Technologies, Inc., being the surviving Company. The Merger agreement is being prepared by the Companies Attorney and is to be finalized on or before November 30, 2013.

 

On November 20, 2013 The Board of Directors of Kleangas Energy Technologies, Inc., offered the position of CEO to Mr. Bo Linton who is also President of Green Day Technologies, Inc. which when the merger is complete will become Kleangas Energy Technologies, Inc.

 

ITEM 6. EXHIBITS

 

EXHIBIT		NUMBER DESCRIPTION
31.1		Certification of Principal Executive Officer pursuant to Sarbanes-Oxley Section 302
32.1		Certification of Chief Executive Officer pursuant to Sarbanes-Oxley Section 906

 

 

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 thereunto duly authorized.

 

KLEANGAS ENERGY TECHNOLOGIES, INC. November 20, 2013

 

By: /s/ William B. Wylie

Principal executive officer; Director;

Acting principal accounting officer;

Acting principal financial officer