Yesterday, thanks to an anonymous source, I found out that the CEO of “3D Printing” startup Changing Technologies (CHGT) was previously charged with fraud and breach of contract.
If you check the Harris County Court Docket #200847398, FIDELITY BANK vs. DURHAM, OMAR (INDIVIDUALLY AND DBA MINDS (Court 061), you will see that Fidelity Band was granted a default judgment in the amount of $285,000 plus accrued interest. Omar and his wife apparently had a daycare center called “Minds”, on which they took out a loan. They failed to pay the loan back, and left everyone hanging, from the parents to the bank. Omar and his wife eventually declared (Chapter 7) bankruptcy. This isn’t the most promising sign of a competent CEO. But who is Changing Technologies anyway?
First of all, I know most people probably haven’t been following this story. But I’ve been investigating this suspicious looking 3D printing company since November of 2014. The reason they caught my attention was because 3DPI wanted to take a look at the overly fluffy nature of their press releases.
Basically, every new release contained a 3D printing industry headline like “HP’s Entry into 3D Printing Signals Mainstream Acceptance, Gives Momentum to CHGT’s Upcoming 3D On-Demand Retail Portal.” It would also have an unusually generic comment about industry forecasts from their CEO Omar T. Durham. For example, the HP press release had this quote: “Thanks to HP’s massive global reach we now have a giant spotlight on the 3D printing industry, which is good news for the rest of us already in the space, and the arrival of a major technology company means mainstream acceptance by consumers, which positively affects CHGT and our 3-D on-demand retail portal currently in development.” More or less, the company was usurping actual headlines and linking them with hyperbolic stretches to giant legacy corporations, like Hewlett Packard. Clever, but I’m still astonished that something like this generates investor interest and cash for the company.
A quick recap of what I’ve done so far: I began by trying to untangle a series of odd actions in their formation in part 1. After this investigation, I figured out that the company’s market cap was insanely high for a company with a tiny amount of assets and zero products. At the time, if you wanted to purchase this company, that had maybe $50,000 of questionable assets to its name, it would cost you $80,000,000 dollars. Almost every step they’ve taken has been sketchy, from issuing 12 million shares of commercial stock, selling 90 million shares to what seemed like an untraceable Panamanian Corporation named Bordesly Group Corp. I wasn’t able to trace who bought other 12 million shares. CHGT announced their IPO, and in two weeks announced a 5:1 split, which drove the stock price up to $3.48. They also made a purchase of SumLin Technologies LLC (a company with no website -mighty unusual), which was touted as an innovative 3D printing technology that turned out to have a few patents for yarns. The purchase price was $150,000 of which CHGT paid $65,000.
In part II, I looked into AdvarionInc, a company that was supposedly building this innovative 3D printing service platform software for CHGT. Their website wasn’t maintained very well, and they didn’t respond to any requests for information by phone or email, and neither did CHGT. I also found that there’s no mention of 3D printing in CHGT’s most recent 10-Q: “Changing Technologies, Inc., a Florida corporation (the “Company”), was formed to develop apps primarily focused on improving personal and business productivity and health and fitness monitoring.” Hmm.
So, after a few different people picked up the story about CHGT, and as they continued to produce no actual product whatsoever, the stock price went as low as 30 cents.
The interesting thread that runs throughout this story is how,by using the Berkshire-Hathaway-owned Businesswire to release their press releases, they have popped up in the New York Times, Bloomberg, the Wall Street Journal, and Yahoo! and Google Finance. And, almost every time they release one of these ridiculous press releases through Business Wire, their stock pumps up just a little bit. I wouldn’t be surprised if one of their few expenses is to be listedin those penny stock newsletters that go out to millions of people.
According to the my source, Omar Durham is “another Kathleen Delaney minion, hired from Central Casting to cover her involvement with CHGT. Omar appears to be good friends with Jammie Hawkins who works for Delay at the corporate office. The Bordesly Group is yet another in a long line of Panamanian shell business entities that Delaney has used to control the company. CHGT’s corporate headquarters at 777 S. Post Oak Lane, One Riverway Suite 1700 is a virtual office near Kathleen’s real offices a block or two away. Delaney has a long history of involvement with a number of SEC suspended companies.” According to the company’s 10K, Omar T. Durham is receiving $10,000 a month for his services.
Boom.
In my opinion, you’d have to be completely insane to invest in this company. This company has about $26,000 dollars in cash, and $65,000 in “intangible assets.” If you wanted to buy Changing Technologies, you’d need millions of dollars. They’ve been a self-underwritten company, funded only by the sale of stock since 2013, and have produced absolutely nothing besides puffed-to-the-max press releases and a trail of suspicious backers and behavior.
Companies like this need to be exposed as fraudsters before people lump them in with real companies in the 3D printing industry, who are trying to actually move the industry forward. Changing Technologies has no problem lumping themselves in with top companies on every single press release: “Changing Technologies, Inc. is in the cutting-edge technology sphere alongside companies like Voxeljet AG (VJET), Arcam AB (AMAVF), and ExOne Co. (XONE).”
Bullshit.
