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

June 30, 2014

 

or

 

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

For the transition period from

to

  

Commission File Number

000-52767

  

SUNERGY, INC.

(Exact name of registrant as specified in its charter)

  

Nevada		26-4828510
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

  

14362 N. Frank Lloyd Wright Blvd., Suite 1000, Scottsdale, AZ		85260
(Address of principal executive offices)		(Zip Code)

  

480.477.5810

(Registrant’s telephone number, including area code)

N/A

(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 o

 

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 x NO o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small 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	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. YES o NO o

 

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.

 

2,382,248,399 as of June 30, 2014

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The condensed interim financial statements included herein are unaudited but reflect, in management's opinion, all adjustments, consisting only of normal recurring adjustments that are necessary for a fair presentation of our financial position and the results of our operations for the interim periods presented. Because of the nature of our business, the results of operations for the quarterly period ended June 30, 2014 are not necessarily indicative of the results that may be expected for the full fiscal year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUNERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

		June 30,				December 31,
		2014				2013
		(Unaudited)				(Audited)
ASSETS
Current assets
Cash		$	734			$	2,463
Prepaid expenses			1,009				–
Total current assets			1,743				2,463
Long-term assets
Exploratory properties			1,753,497				1,753,497
Property and equipment, net			146,686				128,620
Total long-term assets			1,900,183				1,882,117
Total assets		$	1,901,926			$	1,884,580
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities		$	676,810			$	436,543
Notes payable			147,085				48,085
Convertible debt, net of discount			74,000				128,246
Accrued interest			656,398				537,488
Accounts payable to related parties			26,262				110,944
Derivative liability			–				23,531
Total current liabilities			1,580,555				1,284,837
Total liabilities			1,580,555				1,284,837
Commitments and Contingencies
Stockholders' equity
Common stock, authorized 3,750,000,000 shares, par value $0.001, issued and outstanding on June 30, 2014 and December 31, 2013 is 2,382,248,399 and 2,136,465,762 respectively			2,382,251				2,136,467
Additional paid-in capital			4,729,077				4,580,399
Retained earnings			(6,789,957	)			(6,117,123	)
Total stockholders' equity			321,371				599,743
Total liabilities and stockholders' equity		$	1,901,926			$	1,884,580

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

SUNERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2014				2013				2014				2013
Revenue		$	–			$	–			$	–			$	–
Operating expenses
Depreciation and amortization			13,468				13,467				26,935				25,848
General and administrative			110,048				54,614				158,613				124,873
Management salary			10,500				10,500				21,000				21,000
Exploration and development			72,545				43,649				119,300				63,149
Professional fees			83,356				146,277				90,667				164,424
Total expenses			289,917				268,507				416,515				399,294
(Loss) from operations			(289,917	)			(268,507	)			(416,515	)			(399,294	)
Other income (expenses)
Interest expense			(150,933	)			(59,600	)			(238,520	)			(119,017	)
Financing costs			–				–				–				(4,000	)
Derivative expense			(32,846	)			–				(32,846	)			–
Gain on change in fair value of derivatives			14,582				–				15,047				–
(Loss) before income taxes			(459,114	)			(328,107	)			(672,834	)			(522,311	)
Provision for income taxes			–				–				–				–
Net (loss)		$	(459,114	)		$	(328,107	)		$	(672,834	)		$	(522,311	)
Loss per common share:
Basic & Diluted		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted average shares outstanding:
Basic & Diluted			2,313,692,903				1,896,856,989				2,243,464,700				1,878,464,058

   

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

SUNERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Six months ended June 30,
		2014				2013
Operating activities
Net loss		$	(672,834	)		$	(522,311	)
Adjustments to reconcile net loss
Depreciation and amortization			26,935				25,848
Stock-based compensation			–				73,750
Non-cash interest expense			65,687				14,416
Change in fair value of derivative liability			(15,047	)			–
Derivative expense			32,846				–
Change in assets and liabilities
(Increase)/decrease in prepaid expenses			(1,009	)			1,000
Increase in accrued interest payable			118,910				108,600
Increase in accounts payable and accrued liabilities			240,267				182,507
Increase/(decrease) in accrued-related party			(84,684	)			(5,414	)
Net cash used by operating activities			(288,929	)			(121,604	)
Investment activities
Acquisition of property and equipment			(45,000	)			(6,500	)
Net cash used by investment activities			(45,000	)			(6,500	)
Financing activities
Repayments of convertible debit			(106,000	)			–
Repayments of debt			(16,000	)			–
Proceeds from issuance of debt			115,000				100,000
Proceeds from issuance of convertible debt			74,000				–
Proceeds from the sale of stock			265,200				28,500
Net cash provided by financing activities			332,200				128,500
Net increase / (decrease) in cash			(1,729	)			396
Cash, beginning of period			2,463				451
Cash, end of period		$	734			$	847
Supplemental Information:
Interest paid		$	53,924			$	–
Income taxes paid		$	–			$	–
Non-cash activities:
Stock issued to settle debt		$	48,000			$	–

  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

SUNERGY, INC.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

June 30, 2014

 

NOTE 1. GENERAL ORGANIZATION AND BUSINESS

 

SUNERGY, Inc. (the “Company”) was organized in the state of Nevada on January 28, 2003 and is an exploration phase mineral and mining company.

 

The Company has precious and rare earth element (“REE”) mineral properties located in the Republic of Ghana and Sierra Leone, Africa and has not yet determined whether these properties contain reserves that are economically recoverable. The recoverability, if any, of amounts from these properties will be dependent upon the discovery of economically recoverable reserves located within the property interests held by the Company, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property agreements to complete the development of the properties and upon future profitable production or proceeds for the sale thereof.

 

NOTE 2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2014, and for all periods presented herein, have been made.

 

In accordance with Article 8-03 of Regulation S-X certain information and footnote 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. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2013 audited financial statements. The results of operations for the period ended June 30, 2014 are not necessarily indicative of the operating results for the full year.

 

The condensed consolidated financial statements include the accounts of Sunergy, Inc. and its subsidiaries, Mikite Gold Resources Limited, a Ghanaian company, Sunergy Liberia Ltd., a Liberia corporation, and Allied Mining and Supply LLC, a Nevada limited liability company (100%). Allied Mining and Supply LLC also has one 100% owned subsidiary, a Sierra Leone company, Allied Mining and Supply Ltd. which are 100% consolidated in the condensed consolidated financial statements. All inter-company accounts and transactions have been eliminated.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions included in our condensed consolidated financial statements relate to the valuation of long-lived assets, estimates of sales returns, inventory reserves and accruals for potential liabilities, and valuation assumptions related to derivative liability, equity instruments and share based compensation.

 

Cash

 

Cash include cash in banks and financial instruments which mature within three months of the date of purchase. The Company had no cash equivalents as of June 30, 2014 and December 31, 2013.

 

Earnings per Share

 

Basic earnings per share excludes dilution and is computed by dividing net income (loss) by the weighted-average common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company has potentially dilutive common shares consisting of warrants, which are excluded from the diluted earnings per share computation in periods where the Company has incurred net loss.

  

Stock Based Compensation

 

The Company has on occasion issued equity and equity linked instruments to non-employees in lieu of cash to various vendors for the receipt of goods and services and, in certain circumstances the settlement of short-term loan arrangements. The applicable GAAP establishes that share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

 

In these transactions, we issue unregistered and restricted equity instruments along with equity-linked instruments that are convertible into unregistered and restricted shares of our common stock.

 

 

While we have an active market of freely-traded stock with a quoted market price (a Level 1 input within the GAAP hierarchy), the fair value of the unregistered and restricted shares issued as valued by the quoted market price does not reflect the economic substance of the transactions; correspondingly, the quoted market price is not the most reliably measurable fair value.

 

When unregistered common shares and equity-linked instruments convertible into unregistered common shares are issued for the settlement of short-term financing arrangements (that are not initially convertible), the reacquisition price of the extinguished financing arrangement is determined by the value of the debt which is more clearly evident, and no additional inducement expense is recognized.

 

In situations in which we issue unregistered restricted common shares and equity-linked instruments in exchange for goods and services, and the value of the goods and services are not the most reliably measurable, we recognize the fair value of the unregistered restricted equity instruments based on the value of similar instruments issued in private placements in exchange for cash in the most recent transactions (a Level 2 input within the GAAP hierarchy). We have determined this methodology reflects the risk adjusted fair value of our unregistered restricted equity instruments using a commercially reasonable valuation technique.

 

Derivative Financial Instruments

 

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

 

Recently Issued Accounting Pronouncements

 

As of the date of this filing, the Company has implemented accounting standards updated 2014-10, Development Stage Entities as codified in Topic 915 which eliminates the inception-to-date reporting for development state entities and identification of the financial statements of a exploration stage company. Adoption of this new guidance was permitted early for any financial statements not yet issued as of the date of the guidance. Adoption of this new guidance resulted in only changes removal of the inception-to-date reporting in the financial statements and certain related disclosures.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s condensed consolidated financial statements.

 

NOTE 3. GOING CONCERN

 

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of June 30, 2014, the Company had an accumulated deficit of $6,789,957. The Company has not generated any revenue and continues to incur operating losses and negative cash flows. This raises substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financials do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

 

While we have been successful in raising enough capital to pay for our exploration and general and administrative fees, we have not had the ability to raise any significant additional capital to materially advance our exploration and mining operations. We continue to actively pursue additional sources of capital, however, there is no guarantee these efforts will be successful.

 

 

NOTE 4. PROPERTY AND EQUIPMENT

 

Property and Equipment consisted of the following at June 30, 2014 and December 31, 2013:

 

		June 30,				December 31,
		2014				2013
		(Unaudited)				(Audited)
Exploration equipment		$	298,759			$	253,759
Rolling stock			13,500				13,500
Office furniture and equipment			4,753				4,753
Subtotal		$	317,012			$	272,012
Less accumulated depreciation			(170,326	)			(143,392	)
Property and equipment – net		$	146,686			$	128,620

 

NOTE 5. NOTES PAYABLE

 

During the period ended June 30, 2014 we accrued $108,600 of penalty expense, and $25,000 of financing costs related to shares issuance as an inducement to enter into a short-term commercial financing agreement. As of June 30, 2014, our outstanding notes payable balance was $147,085 and $74,000 in convertible note agreements net of debt discount, of which $48,085 are in default as of June 30, 2014. The individual notes in default carry daily interest penalties between $100 and $500. Balance of notes payable at December 31, 2013 totaled $48,085 and $128,246 of convertible debt, net of discount.

 

On February 20, 2014, the Company entered into a short-term commercial financing agreement for the placement of dredging machinery in country in the amount of $20,000 due and payable in monthly installments of $4,000 per month or 15% of net profit from operations, whichever is greater over the next six months until $24,000 is repaid.

 

On March 7, 2014, the Company entered into a short-term commercial financing agreement for the placement of dredging machinery in country in the amount of $25,000 due and payable in monthly installments of $5,000 per month or 15% of net profit from operations, whichever is greater over the next six months until $30,000 is repaid. The Company issued 5,000,000 common shares $0.001 as incentive to the lien holder to enter into the financing arrangement.

 

On March 11, 2014, the Company entered into a short-term commercial financing agreement for the placement of dredging machinery in country in the amount of $20,000 due and payable in monthly installments of $4,000 per month or 15% of net profit from operations, whichever is greater over the next six months until $24,000 is repaid.

 

On March 17, 2014, the Company entered into a short-term commercial financing agreement for the placement of dredging machinery in country in the amount of $25,000 due and payable in monthly installments of $5,000 per month or 15% of net profit from operations, whichever is greater over the next six months until $30,000 is repaid. The lender has 30 days from the date of the agreement to provide the full $25,000. The Company issued 5,000,000 common shares $0.0015 as incentive to the lien holder to enter into the financing arrangement.

 

On June 6, 2014, the Company entered into a short-term commercial financing agreement for the placement of dredging machinery in country in the amount of $25,000 due and payable full in one year per month. The Company issued 5,000,000 common shares $0.0025 as incentive to the lien holder to enter into the financing arrangement.

 

On January 6, 2014, the remaining unpaid and unconverted principal balance due under the June 2013 convertible note of $15,500 was converted by the note holder into 28,620,690 common shares of the company.  In conjunction with conversion of the note, the Company recognized $846 of interest expense related to the amortization of the debt discount, $24,907 of interest expense on the related conversion of the note from fair value of common shares issued to the principal amount of debt relieved. The Company recognized a gain on the change in the value of the derivative related to the convertible note from December 31, 2013 to the date of conversion of $465.

 

In April 2014, the unpaid and unconverted principal balance due under the October 2013 convertible note of $32,500 was converted by the note holder into 12,004,808 common shares of the company.  In conjunction with conversion of the note, the Company recognized $1,972 of interest expense related to the amortization of the debt discount, $12,961 of interest expense on the related conversion of the note from fair value of common shares issued to the principal amount of debt relieved. The Company recognized a gain on the change in the value of the derivative related to the convertible note from December 31, 2013 to the date of conversion of $14,582.

 

In May 2014, the Company repaid the amounts due under convertible note agreement #4 of $53,000. The Company repaid $78,894 that included a 45% prepayment penalty on the principal and interest due under the note and recognized $25,894 as interest expense during the period.

 

 

In June 2014, the Company repaid the amounts due under convertible note agreement #5 of $53,000. The Company repaid $78,929 that included a 45% prepayment penalty on the principal and interest due under the note and recognized $25,929 as interest expense during the period.

 

During the six months ended June 30, 2014, the Company recognized $10,310 of interest expense related to the short-term commercial financing agreements noted above.

 

The Company entered in convertible note agreement #3, #4 and #5 in the amounts of $32,500, $53,000, and $53,000 respectively, on October 13, 2013, November 14, 2013, and December 10, 2013 respectively.  As of June 3, 2014, these notes had been converted or repaid in cash. In April 2014 and May 2014, the Company entered into convertible note agreement #2014-1 and #2014-2 for $41,500 and $32,500 respectively these amounts remain outstanding as of June 30, 2014. As of December 31, 2013, total convertible notes outstanding was $128,246 including $25,754 of debt discount related to the remaining principal amount outstanding convertible portion of note #2 of $15,500 that was converted on January 6, 2014. As of December 31, 2013, the Company carries a derivative liability related to the potential conversion of the outstanding principal amount remaining unpaid of Note #2 in the amount of $23,531. On January 6, 2014, the holder of the note converted the remaining outstanding principal balance of $15,500 plus accrued interest into 28,620,690 common shares of the Company. In April 2014, the holder of the note #3 converted the outstanding principal balance of $32,500 plus accrued interest into 12,004,808 common shares of the Company. The notes are nine month convertible promissory notes from the date of funding and carry an 8% annual interest rate. Interest is recognized over the life of the note which is 9 months from the date of issuance. The notes may be repaid anytime from the date of funding until 180 days post-funding. The repayment starts at 120% of the outstanding principal and accrued interest in the first 30 days after funding.  and may be prepaid by the Company for the first six months with an increasing repayment amount that increased by 5% for each 30 day period after funding until repaid or 181 days, whichever comes first. From day 181 till maturity, the note may be converted by the note holder at a 44% discount to the average of the three lowest trading days in the ten days prior to notice of conversion.

 

As of June 30, 2014, Convertible Note #2014-1 may be converted into approximately 26,791,478 common shares of the Company beginning at day 181 since date of issuance and up until the date maturity of the note. As of June 30, 2014, Convertible Note #2014-2 may be converted into approximately 20,981,278 common shares per note, for a total of 47,772,756, of the Company beginning at day 181 since date of issuance and up until the date maturity of the note.

 

NOTE 6. STOCKHOLDERS’ EQUITY

 

Common Stock

 

The following provides additional information for certain stock transactions that occurred since January 1, 2014. For additional details for all stock transactions please see the consolidated statement of changes in stockholders’ equity as reported in the Company’s 10-K for the period ended December 31, 2013 and filed with the Securities Exchange Commission on April 15, 2014.

 

A summary of shares issued follows:

 

·

During the three months March 31, 2014, the Company issued 28,620,690 shares upon the conversion of the note payable #2 dated June 2013 for outstanding principal balance of $15,500; 30,000,000 equity units at $0.001 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.002 per share for total cash of $30,000; 9,999,998 equity units at $0.0015 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.003 per share for total cash of $15,000, the Company issued 5,000,000 common shares as an incentive to provide short-term commercial financing in the amount of $25,000 valued at $0.001 per share or $5,000.

  

·

During the three months ended June 30, 2014, the Company issued 12,004,808 shares upon the conversion of the note payable #3 dated October 2013 for outstanding principal balance of $32,500; 60,000,000 equity units at $0.001 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.002 per share for total cash of $60,000; 52,099,999 equity units at $0.0015 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.003 per share for total cash of $78,200; 32,000,000 equity units at $0.002 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.004 per share for total cash of $64,000; 3,200,000 equity units at $0.0025 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.005 per share for total cash of $8,000; 2,857,142 equity units at $0.0035 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.007 per share for total cash of $10,000; the Company issued 5,000,000 common shares as an incentive to provide short-term commercial financing in the amount of $25,000 valued at $0.0015 per share or $7,500; the Company issued 5,000,000 common shares as an incentive to provide short-term commercial financing in the amount of $25,000 valued at $0.0025 per share or $12,500.

 

 

Outstanding Warrants

 

On June 30, 2014, the Company had warrants outstanding summarized in the table below:

 

					Warrants				Exercise			Expiration
					Outstanding				Price			Date
					10,000,000				0.003			1-Jul-14
					6,400,000				0.003			19-Jul-14
					3,333,333				0.003			24-Jul-14
					40,000,000				0.003			1-Aug-14
					8,000,000				0.003			1-Aug-14
					13,333,333				0.003			1-Aug-14
					13,333,333				0.003			1-Aug-14
					30,000,000				0.002			13-Sep-14
					5,000,000				0.002			18-Sep-14
					25,000,000				0.002			22-Nov-14
					7,500,000				0.002			23-Jul-14
					25,000,000				0.002			26-Nov-14
					20,000,000				0.002			7-Mar-15
					10,000,000				0.002			13-Mar-15
					1,666,666				0.003			17-Mar-15
					1,666,666				0.003			24-Mar-15
					6,666,666				0.003			28-Mar-15
					3,333,333				0.003			1-Apr-15
					1,200,000				0.005			2-Apr-15
					13,300,000				0.003			2-Apr-15
					2,000,000				0.005			4-Apr-15
					3,333,333				0.003			7-Apr-15
					3,333,333				0.003			8-Apr-15
					6,666,667				0.003			17-Apr-15
					1,428,571				0.007			23-Apr-15
					1,428,571				0.007			29-Apr-15
					5,000,000				0.004			6-May-15
					10,000,000				0.004			6-May-15
					2,000,000				0.004			9-May-15
					30,000,000				0.002			9-May-15
					9,900,000				0.002			9-May-15
					19,000,000				0.002			12-May-15
					2,500,000				0.004			12-May-15
					1,100,000				0.002			12-May-15
					3,400,000				0.003			21-May-15
					17,333,333				0.003			6-Jun-15
					12,500,000				0.004			6-Jun-15
					1,400,000				0.003			16-Jun-15
	Total				377,057,138

 

 

Information relating to warrant activity during the reporting period follows:

 

Weighted

Average

Number of

Contingent

Exercise

Warrants

Warrants

Price

Total Warrants outstanding at December 31, 2013

256,266,331

–

0.0023

Plus: Warrants Issued

190,157,139

–

0.0028

Less: Warrants Exercised

–

–

–

Less: Warrants Expired

(69,366,332

)

–

0.0033

Total Warrants outstanding at June 30, 2014

377,057,138

0.0026

 

NOTE 7. RELATED PARTY TRANSACTIONS

 

Certain related parties assist in financing operations by personally paying expenses which the Company considers to be in the nature of accounts payable since the obligations are incurred within the normal course of business and classified as related party accounts payable. Certain amounts for unpaid officer and director fees were classified as accounts payable to related parties in prior periods and have been reclassified for the current periods as accounts payable as they relate to normal operating business expenses of the Company. The balance due to related parties was $26,262, and $110,944 as of June 30, 2014 and December 31, 2013, respectively.

 

As of June 30, 2014, Garrett Hale, our CEO, is due $59,500 in wages due from the time he became our CEO in February 2013. Additionally, Mr. Hale incurs expenses in his role as CEO related to payment of expenses in country and travel. As of June 30, 2014, Mr. Hale is owed $75,019 for unpaid reimbursement requests. As these are incurred in the normal course of our business operations, these amounts are included in accounts payable.  As of December 31, 2013, Mr. Hale was owed $89,914 for related wages and expenses which is included as accounts payable. Additionally at as of June 30, 2014 and December 31, 2013, Mr. Hale provided short-term funding in the amount of $16,200 and $22,915 respectively that was included in accounts payable to related party payables.

 

As of June 30, 2014, Mr. Robert Levich, a member of our Board of Directors and former Africa Country manager, is owed $89,967 for wages due to his time as our country manager or fees earned as a member of the Board of Directors. As these are incurred in the normal course of our business operations, these amounts are included in accounts payable. As of December 31, 2013, Mr. Levich was owed $77,967 which was included in accounts payable to related parties. No repayments were made to Mr. Levich during the period ended June 30, 2014. The amounts due Mr. Levich were reclassified to accounts payable due to the incurring of the wages and fees as a normal course of our operating business.

 

As of June 30, 2014, Mr. Larry Bigler, a member of our Board of Directors and former CEO, is owed $29,500 for wages due to his time as our CEO or fees earned as a member of the Board of Directors. As these are incurred in the normal course of our business operations, these amounts are included in accounts payable. As of December 31, 2013, Mr. Bigler was owed $17,500 which was included in accounts payable to related parties. No repayments were made to Mr. Bigler during the period ended June 30, 2014. 

 

NOTE 8. SUBSEQUENT EVENTS

 

Since June 30, 2014, our Company received the remaining $4,850 in short-term funding from our CEO in demand notes payable. On July 23, 2014, we received $32,500 under convertible debenture #2014-3 with the same terms and conditions as described in Note 5 above. Additionally, the Company has raised $30,000 in funding from private placements with investors, with the purpose of funding operations.

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

FORWARD-LOOKING STATEMENTS

 

This quarterly and unaudited report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our unaudited financial statements are stated in United States dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly and unaudited report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common stock" refer to the common shares in our capital stock.

 

As used in this quarterly and unaudited report, the terms "we", "us", "our", "our company" and "Sunergy" mean Sunergy, Inc. and our wholly owned subsidiaries, Mikite Gold Resources Limited, a Ghanaian company, Allied Mining and Supply LLC, a Nevada limited liability, which wholly owns Allied Mining and Supply Limited, a Sierra Leone Company and our newly incorporated wholly owned subsidiary Sunergy Sierra Leone, Limited a Sierra Leone Company, unless otherwise stated.

 

Overview and Current Business

 

We were incorporated in the State of Nevada, USA, on January 28, 2003. We are an exploration stage company engaged in the acquisition, exploration and development of mineral properties with a view to exploiting any mineral deposits we discover that demonstrate economic feasibility. Our current exploration efforts are focused on our two properties; one of which is located in Sierra Leone, Africa and the other is located in Ghana, Africa. We are embarking on our development stage of operations by pursuing direct mining operations in Ghana, Sierra Leone and this year, Liberia geared to producing cash flow from the extraction of Gold, Diamonds and Black Sands wherever available in our operations.

 

Nyinahin Concession, Ghana:

 

We continue to seek a reliable and substantial Joint Venture partner to handle alluvial gold extraction and recovery, but have not been able to finalize any contract to date. Additional licensing and permitting are required to do so, and we have not had adequate funding to do so. Ghana economic conditions are having a negastive effect on mining now. Newmont has ceased all exploration activities and Kinross has just laid off over 300 persons. The Ghana government is seeking an IMF or World Bank bailout assistance at this time, so the viable future of our Ghana concession is questionable at this time.

 

The Nyinahin concession is located between two geological gold belts, the Bibiani Belt to the west and the Asankrangwa to the east.  The license allows for the exploration and mining of gold, silver, base metals and diamonds. About 80% of the Nyinahin concession lies to the west of the Offin River within the Ashanti region of Ghana. There are several historical pits and adits with a strong clustering of artisan pits located along the Offin River. Three old gold prospects exist on the concession. The property is accessed via the main Kumasi-Bibiani trunk road. It falls under the jurisdiction of the Atwima Mponua District Assembly with headquarters at Nyinahin. The Offin River area offers strong alluvial operations potential as well as the underlying bedrock is a continuation of the Keegan Esaase-Jeni Project. The large area west of the Offin River area contain some significant geological anomalies that warrant additional exploration activities. In the overall, this concession represents a significant future development opportunity for our Company.

 

Pampana River Concession, Sierra Leone:

 

The Pampana River concession is an alluvial mining concession consisting of renewable Exploration License No. EXPL 5/2009 which was issued to Allied Mining and Supply Ltd. (AMS) on August 12, 2009. We have submitted an application for the renewal of such license with the Sierra Leone Ministry of Mines. During this process of renewal, we were required to identify certain areas that could be shed from the exploration licenses as part of the requirement of renewal. We identifed approximately 25 sq km of non-river and non-gold bearing land that was shed in the pending application. We continue to discuss the exploration budget required going forward, to arrive at an amount that we are prepared to commit to. Under the new laws covering exploration licenses, any amount agreed to and not able to be audited as having been spent, the difference must be paid to the Treasury of Sierra Leone.

 

When we purchased the Pampana River concession in October of 2010, Allied Mining and Supply had been conducting exploration there for two years and had laid out a program to exploit the newly discovered rare earth elements in the heavy mineral sands that exist in association with the gold.

 

 

Rare earth elements are a unique group of chemical elements that exhibit a range of special electronic, magnetic, optical and catalytic properties. REEs are used in a wide range of alloys and compounds, and can greatly affect the performance of complex engineered systems. They occur in a variety of chemical forms and have a wide variety of applications, including the processing of materials. REEs are used in components in engineered products, and their uses include fluid cracking catalysts, automotive catalytic convertors, polishing materials, permanent magnets, energy storage, phosphors, and glass additives. In modern society, many of these uses are critical for high tech devices including electronics, jet planes and rocks, and vital engineered components.

 

Sunergy Sierra Leone Limited: 2014 Exploration Work through Second Quarter 2014

 

Our work in 2013 consisted of focusing our efforts in the renewal of the exploration license in Sierra Leone with the Ministry of Mines and deploying available equipment to currently operating projects. We have three dredges that we own in Sierra Leone, two vehicles and a medium sized wash plant suitable for handling up to 100 ton/hour of feed material. Two dredges are currently operating on projects. The third is being used for support. We have a land based operation we operate in Kono District. We now have 4 licensed opportunities in Sierra Leone and plan to grow our fleet to accommodate this activity. The ebola virus outbreak in Sierra Leone has not interrupted our operations, but has required us to move our equipment into the Kono area because this is the region in Sierra Leone that is least affected by the virus. Our expenditures for the next 12 months are projected to be approximately $250,000 inclusive of operations and equipment purchases.

 

Liberia, Sunergy Liberia Limited:

 

We continue our development work of relationships across the African region which included the opening of a wholly-owned subsidiary in Liberia, Sunergy Liberia Ltd. We started visiting Liberia in October 2013, pursuant to an invitation by a local businessman to come and see what mining and business opportunities were available. Since that time and subsequent to December 31, 2013 we have entered into formal agreements to engage in support of existing artisanal (Class C) licensed operations. We now have two dredges that we own operating in Liberia, one vehicle and a larger wash plant capable of processing from 50 tons/hour up to 300tons/hour. We had planned to move the new wash plant to Sierra Leone, but early rains and a bad road have deferred those plans until the rains stop. The Sierra Leone government has signed a highway improvement contract which will finish the new construction on the road to Liberia by next summer. This will enable free travel between the countries any time of year in the future. We now have 3 licensed opportunities that we own in Liberia and 12 licenses we support and partner with local artisan miners.

 

Ebola virus in Liberia has not interrupted our mining activities there to date. We are mindful of the risks and follow all the recommended procedures by the Department of Health. Our expenditures for the next 12 months are budgeted to be $250,000 inclusive of operations and equipment purchases.

 

Housing Sierra Leone: We have undertaken an affordable housing project in Sierra Leone where we are proposing to relocate all or a portion of 30 villages in the area of the new airport outside Freetown. This is a five year project and we have hired a local Civil Engineer in Freetown to provide hands on liaison with the Civil Aviation authorities, Ministries of Finance and Transportation for the purpose of finalizing our proposal.

 

Housing Nigeria: Recent meetings with Nigeria’s Ministry of Housing and Directors of Access Bank of Nigeria have resulted in our being invited to submit building proposals for an initial 10,000 affordable homes in Nigeria. Their ongoing housing needs exceed 12,000,000 housing units over the next five to 10 years. A trip to Nigeria is planned around mid September.

 

Solar Power Projects: We have signed a Joint Venture agreement with a substantial US solar power provider to assist in developments of solar projects in Liberia. We are discussing a Joint development plan for Nigeria with our partner as well. Our projects typically involve installations of PV solar panels from 50 to 100 mega watts to dovetail with existing Hydro Electric projects. In Liberia, during the dry season, river water is low and so is power output, so the solar acts to even the power out. Management of these installations is required as well and our partner is in this business globally. We have just completed meetings with Nigerian Power Ministry and have been invited to submit solar power proposals. Discussions with Senegal regarding solar projects is ongoing. More detail will be forthcoming as available.

 

Liquidity and Capital Requirements

 

As we do not have all the funds necessary to cover our projected operating expenses for the next twelve month period, we will be required to raise additional funds through the issuance of equity securities, through loans or through debt financing. There can be no assurance that we will be successful in raising the required capital or that actual cash requirements will not exceed our estimates. We intend to fulfill any additional cash requirement through the sale of our equity securities.

 

If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to scale down or perhaps even cease the operation of our business.

 

The continuation of our business is dependent upon obtaining further financing, a successful program of exploration and/or development, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

 

There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

 

 

We continue to explore opportunities for the receipt of funding in either equity or financing transactions. As we receive these funds, the Board of Directors and Management evaluate the best use of the funding received so as to continue on the path of fast ramp up to production.

 

Management is currently working on closing certain finance commitments that have been made to advance our operations plan immediately. Details will follow in an appropriate 8-K.

 

Results of Operations – Three months Ended June 30, 2014 and 2013

 

The following discussion should be read in conjunction with our unaudited financial statements and the related notes contained in this report for the three months ended June 30, 2014. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed in this interim report.

 

Our operating expenses for the three months ended June 30, 2014 and 2013 are outlined in the table below:

 

		Three Months Ended June 30,
		2014				2013
Depreciation and amortization		$	13,467			$	13,467
General and administrative		$	110,048			$	54,614
Management salary		$	10,500			$	10,500
Exploration and development		$	72,545			$	43,649
Professional fees		$	83,356			$	146,277

 

Revenue

 

We are an exploration stage entity and have not commenced any revenue producing activities since our inception. We do not anticipate earning revenues until such time as we have entered into commercial production on the Nyinahin or Pampana River concessions.

 

Expenses

 

The increase in operating expenses for the three months ended June 30, 2014, compared to the same period in fiscal 2013, was mainly due to a decrease in general and administrative expenses related to certain marketing contracts and an increase in exploration and development related to the hiring of David Price in late FY2013 to run the Company’s exploration projects in Africa. During the period, members of the Company’s exploration team were able to visit operations in Sierra Leone and Liberia and expended funds to further exploration operations.

 

Other Expenses

 

		Three Months Ended June 30,
		2014				2013
Interest expense		$	150,933			$	59,600
Derivative expense		$	32,846			$	–
Gain on change in fair value of derivatives		$	(14,582	)		$	–

 

Interest and financing expenses increased by $91,333 primarily relating to the prepayment interest penalty of 45% on the repayment of convertible note #4 and #5 from 2013. Additionally, we recognized $32,846 of derivative expense relating to the 181 day recognition of the ability for the note holder to convert note #3 into common shares of the company. From the date of available conversion to the actual conversion by the note holder, the Company recognized a gain of $14,582.

 

Results of Operations – Six months Ended June 30, 2014 and 2013

 

The following discussion should be read in conjunction with our unaudited financial statements and the related notes contained in this report for the six months ended June 30, 2014. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed in this interim report.

 

 

Our operating expenses for the six months ended June 30, 2014 and 2013 are outlined in the table below:

 

		Six Months Ended June 30,
		2014				2013
Depreciation and amortization		$	26,935			$	25,848
General and administrative		$	158,613			$	124,873
Management salary		$	21,000			$	21,000
Exploration and development		$	119,300			$	63,149
Professional fees		$	90,667			$	164,424

 

Expenses

 

The increase in operating expenses for the six months ended June 30, 2014, compared to the same period in fiscal 2013, was mainly due to a decrease in general and administrative expenses related to certain marketing contracts and an increase in exploration and development related to the hiring of David Price in late FY2013 to run the Company’s exploration projects in Africa. During the period, members of the Company’s exploration team were able to visit operations in Sierra Leone and Liberia and expended funds to further exploration operations.

 

Other Expenses

 

		Six Months Ended June 30,
		2014				2013
Interest expense		$	238,520			$	119,017
Financing costs		$	–			$	4,000
Derivative expense		$	32,846			$	–
Gain on change in fair value of derivatives		$	(15,047	)		$	–

 

Interest and financing expenses increased by $119,503 primarily relating to the prepayment interest penalty of 45% on the repayment of convertible note #4 and #5 from 2013 and recognition of interest on the notes. Additionally, we recognized $32,846 of derivative expense relating to the 181 day recognition of the ability for the note holder to convert note #3 into common shares of the company. From the date of available conversion to the actual conversion by the note holder, the Company recognized a gain of $15,047.

 

Equity Compensation

 

We currently do not have any formalized stock option or equity compensation plans or arrangements however; from time to time we settle obligations via the issuance of equity and equity-linked instruments.

 

 

Liquidity and Financial Condition

 

		June 30, 2014				December 31, 2013				Change
Current assets		$	1,743			$	2,463			$	(720	)
Current liabilities		$	1,580,555			$	1,284,837			$	295,718
Working Capital		$	(1,578,812	)		$	(1,282,374	)		$	(294,998	)

 

Cashflow

 

		Six Months Ended June 30,
		2014				2013				Change
Net cash used in operating activities		$	(288,929	)		$	(121,604	)		$	(167,325	)
Net cash provided/(used) in investing activities		$	(45,000	)		$	(6,500	)		$	(38,500	)
Net cash provided/(used) by financing activities		$	332,200			$	128,500			$	203,700
Net increase/(decrease) in cash during period		$	(1,729	)		$	396			$	2,125

 

Our total assets at June 30, 2014 were $1,901,926. Our financial statements report a net loss of $672,834 for the six months ended June 30, 2014 and a net loss of $6,789,957 for the period from January 28, 2003 (date of inception) to June 30, 2014. We had a cash balance of $734 as of June 30, 2014.

 

We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. In this regard we have raised additional capital through equity offerings and loan transactions.  We have been successful in structuring deals in which expenses are paid for through the issuances of common shares.  In addition, we have raised additional funds and expect to continue to raise additional funds through private placement equity offerings sufficient to fund our current plan of operations.

 

We continue to explore and seek funding opportunities through either equity or loan transactions. As we receive funding, the use of available funding is evaluated by Management and the Board of Directors for its priority of use.

 

Our principal sources of funds have been from sales of our common stock and we expect this to be consistent for at least the next twelve months.

 

During the first six months, the Company has focused its efforts on deploying available equipment within Liberia and Sierra Leone to mining concessions available to the Company under contract with the mineral concession owner or under our own license. The company has been successful in covering our on-going operational expenses, through the issuance of equity instruments which will allow a larger percentage of incoming capital to be used to expand our exploration activity.

 

Contractual Obligations

 

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Critical Accounting Policies

 

The Company has on occasion issued equity and equity linked instruments to non-employees in lieu of cash to various vendors for the receipt of goods and services and, in certain circumstances the settlement of short-term loan arrangements. The applicable GAAP establishes that share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

 

In these transactions, we issue unregistered and restricted equity instruments along with equity-linked instruments (warrants) that are convertible into unregistered and restricted shares of our common stock.

 

When unregistered common shares and equity-linked instruments convertible into unregistered common shares are issued for the settlement of short-term financing arrangements (that are not initially convertible), the reacquisition price of the extinguished financing arrangement is determined by the value of the debt which is more clearly evident, and no additional inducement expense is recognized.

 

 

In situations in which we issue unregistered restricted common shares and equity-linked instruments in exchange for goods and services, and the value of the goods and services are not the most reliably measurable, we recognize the fair value of the unregistered restricted equity instruments based on the value of similar instruments issued in private placements in exchange for cash in the most recent transactions (a Level 2 input within the GAAP hierarchy). We have determined this methodology reflects the risk adjusted fair value of our unregistered restricted equity instruments using a commercially reasonable valuation technique.

 

Item 3. Quantitative Disclosures About Market Risks

 

As a "smaller reporting company", we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Management's Report on Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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 or procedures may deteriorate.

 

As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president(our principal executive officer) and our Chief Financial Officer (principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer) and our Chief Financial Officer ( principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US generally accepted accounting principles due to the existence of significant deficiencies constituting material weaknesses.

 

A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

 

Changes in Internal Control over Financial Reporting

.

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

Item 1A. Risk Factors

 

We have had no material changes in our risk factors as disclosed in our Form 10-K for the year ended December 31, 2013 filed on April 15, 2014.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

The following provides additional information for certain stock transactions that occurred during the months ended June 30, 2014.  For additional details for all stock transaction please see the consolidated statement of changes in stockholders’ equity as reported in the Company’s 10-K for the period ended December 31, 2013 and filed with the Securities Exchange Commission on April 15, 2014.

 

During the quarter ended March 31, 2014, the Company issued 28,620,690 shares upon the conversion of the note payable #2 dated June 2013 for outstanding principal balance of $15,500; 30,000,000 equity units at $0.001 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.002 per share for total cash of $30,000; 9,999,998 equity units at $0.0015 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.003 per share for total cash of $15,000, the Company issued 5,000,000 common shares as an incentive to provide short-term commercial financing in the amount of $25,000 valued at $0.001 per share or $5,000.

 

During the three months ended June 30, 2014, the Company issued 12,004,808 shares upon the conversion of the note payable #3 dated October 2013 for outstanding principal balance of $32,500; 60,000,000 equity units at $0.001 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.002 per share for total cash of $60,000; 52,099,999 equity units at $0.0015 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.003 per share for total cash of $78,200; 32,000,000 equity units at $0.002 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.004 per share for total cash of $64,000; 3,200,000 equity units at $0.0025 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.005 per share for total cash of $8,000; 2,857,142 equity units at $0.0035 with each unit consisting of one common share of stock and one 12 month share purchase warrant exercisable at $0.007 per share for total cash of $10,000; the Company issued 5,000,000 common shares as an incentive to provide short-term commercial financing in the amount of $25,000 valued at $0.0015 per share or $7,500; the Company issued 5,000,000 common shares as an incentive to provide short-term commercial financing in the amount of $25,000 valued at $0.0025 per share or $12,500.

 

Item 3. Defaults Upon Senior Securities

 

None

 

Item 4. [Removed and Reserved]

 

None.

 

Item 5. Other Information

 

None.

 

 

Item 6. Exhibits

 

Exhibit Number	Description
(3)	Articles of Incorporation and By-Laws
3.1	Articles of Incorporation (incorporated by reference from our Registration Statement on Form SB-2 filed on February 23, 2004)
3.2	Bylaws (incorporated by reference from our Registration Statement on Form SB-2 filed on February 23, 2004)
3.3	Certificate of Change (incorporated by reference from our Current Report on Form 8-K filed on October 8, 2008)
3.4	Certificate of Amendment (incorporated by reference from our Current Report on Form 8-K filed on August 26, 2010)
(10)	Material Contracts
10.1	Mineral Property Staking and Purchase Agreement dated April 10, 2003 (incorporated by reference from our Registration Statement on Form SB-2/A filed on June 30, 2004)
10.2	Mining Acquisition Agreement dated October 31, 2008 between our company and General Metals Corporation (incorporated by reference from our Current Report on Form 8-K filed on December 10, 2008)
10.3	Amending Agreement to the Mining Acquisition Agreement dated December 5, 2008 between our company and General Metals Corporation. (incorporated by reference from our Current Report on Form 8-K filed on December 10, 2008)
10.4	Membership Purchase Agreement dated October 18, 2010 between our company and Allied Mining and Supply, LLC. (incorporated by reference from our Current Report on Form 8-K filed on February 4, 2011)
(14)	Code of Ethics
14.1	Code of Ethics and Business Conduct (incorporated by reference to our Annual Report on Form 10-K filed on April 20, 2009)
(21)	Subsidiaries of the Registrant
21.1	Allied Mining and Supply, LLC, a Nevada limited liability company Mikite Gold Resources Limited, a Ghanaian company
(31)	Rule 13a-14(a)/15d-14(a) Certifications
31.1*	Certification of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)	Section 1350 Certifications
32.1*	Certification of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer filed pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data Files
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

 

*

Filed herewith

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

		SUNERGY, INC.
Date:	August 19, 2014	By:	/s/ Garrett Hale
		Name:	Garrett Hale
		Title:	Chief Executive Officer, President, Director
		Title:	Chief Financial Officer (Principal Financial and Accounting Officer)