Sunergy, Inc. (fka SNEY)

[mikeymgd]

The big question at these levels, are undervalued or overvalued?

That's a tough question and each investor can form his own opinion, and it is opinion not fact.

The value of a company is usually based on certain items, Asset, Revenue, Income, Product, expectations for growth.

With that we need to look at SNEY and try to get an idea of these issues.

Here is what we do know:

As of 9/23/2011

OS - 1,454,657,334
Float - 765,391,836
Restricted 689,265,498

Market cap based on yesterday's close - 8.724m
Fully diluted market cap based on today's close - 12m

All time low for the stock is .00125
http://stockcharts.com/h-sc/ui?s=SNEY&p=W&b=5&g=0&id=p46765837036
Market cap at that time was about - 1.225m based on 980m

So with that information the stock is currently trade almost 800% higher than its low 1 year ago (adjusted for dilution).

Next are the assets.

To date we are only aware of a cash balance below 1m(based on known funding and time period) and assets last known to be 1m plus the dredges. I say 2m in assets is fair.

Based on known assets we are trading at about 400% asset value.
I did not remove for liabilities since it is not know what they are and what the burn rate of cash is so I called it a wash. The last item is the value of the dredges, site equipment and value of licenses. Well the dredges are not worth much(100k at best), they will have a huge loss in value since they currently used, the other equipment is still unknown if exists and the licenses are likely a reason for the delay in the 10K. Creating a benchmark value to an intangible item like license value tends to make audits difficult.

Next would be revenue. Unfortunate that is only known to be 0 so again we are overvalued dramatically based on revenue. We have a pile of material but can only play games as to value based on sampling. We also don't know if the black sands can get sold at all.

Profits again are 0 with a mostly likely event of it being in the losses category. Leaving us as overvalued at this time

Final item is expectations. Well with the company with an appearance of incompetent management and lack of progress, we need to dramatically scale back expectations. Sure we can get a nice surprised but any educated investor knows don't expect surprises but rather hope for them. Hope is not a reason for investing so we will expect Revenue for the year to come dramatically short of 1m and I would not expect to exceed 2 million without a change in the CEO position. Again with a reason to expect operations to pick up we are overvalued.

The stock ran on a pump...yes it sounds bad but its factual. We all expected results, we knew the dredges arrived, we knew the assay reports and we had several PR pumps to increase the share value like, Sampling value, the increase in black sands, the supposed purchase of processing equipment, the timelines for financial reports and finally continued timelines for financial reports.

The stock followed the exact pump and dump scenario all penny stocks do. The question is was it a true pump and dump or just poor decisions by management that lead to that appearance? Well until we know the truth about the company we can only assume.

In short here is the current valuation as is known.

Market cap - 8.75m
OS - 1.47m
Stock price .006
52 week low .00125
52 week low on market cap 1.175m
Assets around 2m based on what is known and we trade 4x book
Revenue only known to be 0
Income likely negative based on cost and lack of revenue
Growth expectation, should remain low based on 6 months of operations with little to show for the efforts.

6 months ago the company moved on forward expectations do to going into operations. That along with several PR's lead to a run. We are now very disappointed int he lack of progress and have no PR's for the most part. That leads to a drop in shareholder value and remains a large impact on future expectations.

I say we are still overvalued as a comparison to the 52 week low. I would be more comfortable with 2-3 times the 52 week low based on operations have began with little to show for it and not 8x the low based on operations. Also we need to find out where the additional 100k in funding went. They have yet to disclose why the OS increased and what that increase was used for. In other words who has that money? We also need to remain concerned over further dilution of value in the stock. We only have history to guide expectations since management has turned their backs on shareholders and that says SNEY is a dilution machine at present. With an OS increase of over 100% in the last 12 months, we cannot rule out another round.

That is were I see the stock and each month that passes with lack of disclosure the lower the stock will trend the lower we should expect the next run to be. They dilute into a depressed share price. There is only 4 reason a company does that, they are running out of money and cannot get operations going properly, they can care less about the OS since they will just R/S anyway, they are actually a scam operation just pocketing the money, or the most common reason which is they are just not competent to run a public company. My guess is 2 and 4. Most companies would consider the share price a commodity and do what they can to keep it maintained if they need it for funding. Weird SNEY does not. I am stuck wondering if management is purposely trying to depress the stock price so they can screw the warrant holders. There are 500m warrants and if they can keep the price down for another year the warrant holders would be fools to exercise them.

Wow that was way to long a post..Kind of raddled on a bit there.