SunWorks Inc (SUNWQ)

[Intotheblack]

I too was happy to see today's pop. I wanted to lay out a few breadcrumbs for the "what's it worth" and what's happening. I'll leave it up to readers to form their own conclusions.

Bread crumb #1.) The 8K "Change of Control Agreement".

This is a document that locks in the CEO, CFO, Abe, and one other un-named, "employee" to ensure they continue performing in the event the company is bought out, or merges with another entity where change of control happens. What this means is if the buyout or merger happens, and these guys are let go because of the deal, they not only get the usual Salary, PTO and bonus payments as a solid golden parachute, in addition to all of these, the four people's options vest immediately and can be sold. Not bad. I wonder who that 4th person is and why they are un-named?

I have two thoughts on this breadcrumb. One is that the company is actively seeking suitors and a buyout/merger is legitimately on the table, otherwise why take the time and money to file the paperwork. The other is that this is simply a tactic to put a floor under the share price as many traders will pick up small positions simply in the hopes of a buyout occurring.

Here is the link to the 8k:
https://www.sec.gov/Archives/edgar/data/1172631/000149315217011036/form8-k.htm

Bread crumb #2.) Today's news of the "Largest Contract to Date".

This PR is great news for a company that has been nailing down larger and larger contracts. Moving away from Residential in favor of the Commercial, Agricultural and Industrial, ACI, or C&I if we leave the Agri business for the moment. The PR even mentioned Residential behind the other three, "a leading provider of solar power solutions for agriculture, commercial, industrial (ACI) and residential markets" and the recent ER CC mentioned something like only 25% Residential so it makes sense. The part of the PR that caught my eye was this, "Forefront Power selected Sunworks as the prime engineering, procurement and construction (EPC) contractor..."

The company, "Forefront" I'd never heard of so I Googled it:

"SunEdison's commercial and industrial solar development team has been reincarnated as ForeFront Power.

Earlier this month, the Japanese industrial and energy giant Mitsui & Co. acquired the remainder of SunEdison's commercial business for $15 million. The acquisition included 50 employees -- down from 300 at SunEdison's peak -- focused on building and financing projects. The projects include a backlog built up under SunEdison."

This is from a Greentech Media article in Feb, 2017.

Also in the article is this,

"SunEdison's operations, maintenance and construction teams were slashed during the restructuring. So ForeFront won't retain all of its projects. It will partner with other EPCs and sell off projects on a case-by-case basis to generate cash for future development."

The breadcrumb here is the "sell off projects", which makes me wonder exactly how the deal with Sunworks is structured. Did Sunworks buy the bid here? Are they profit sharing with Forfront? Will more business come from this pipeline? Will Forefront BUY Sunworks?

This breadcrumb is also interesting in that it could simply be another great contract that will be profitable at a decent margin, but it could also be the new name of the company's parent should the 8K released the night prior have anything to do with this. However this could also just be the usual excellent PR machine coming back online, where everyone speculates to the moon that; high priced buyouts are coming, more huge contracts are coming, blowout ER's are coming, all causing the stock to rally in the near term.

Of course they could all be true. It could be a great contract, that is the beginning of more, which raises the stock price, which causes a buzz, at the end of the quarter, which could lead to another PR about the fabulously profitable quarter, which will further rally the PPS, which would in the event of a blowout ER create even more buzz and a higher PPS, which could then lead to a buyout offer that is actually significant.


The long and short?

Long- all good things, price going up, chart reversal, profits, potential buy outs, nice ER's increased tute holdings, price targets and analyst coverage...

Short- all the same old, fluffy PR with a big name and a mediocre margin. Timed nicely before what should be a great ER that will inevitably be lackluster, name calling, pump and dump, that allows numerous insiders to convert shares blah blah blah.

What's different this time? The 8K. The company is growing- still- The company is done with the major conversions and bonuses, leaving small potatoes in the conversion/debt department that if they can show that have the ability to scale from here, makes them a suitable candidate to add to a larger company that needs some boots on the ground and logistics to get those boots where they need to be. If I recall, right before SunEdison went belly up, they were looking to acquire a large solar installer.... Breadcrumbs...