Solar Energy Initiatives Inc (OTCMKTS:SNRY) Shed Some Light On Their Situation
Generating a single-day trading value of over $200 thousand is not easy when the share price is just $0.0006. Yet, Solar Energy Initiatives Inc (OTCMKTS:SNRY) managed to do just that on Friday and when we checked out the announcement that caused all the commotion, we weren’t exactly surprised.
It’s the same old bullet-proof strategy – mention the words “medical” and “marijuana” in a press release and watch traders go crazy about the ticker. The news came out around noon on Thursday and the timing prevented it from generating huge volume on that particular day, but even so, by the end of the session, the price had doubled. The percentage movement was not that dramatic on Friday, but still the ticker moved above its previous close throughout the day, safe for the last few minutes of the trading session. As we mentioned the current price is $0.0006 and some would say that, with the medical marijuana contracts in place, SNRY is the bargain of the century. Is that the case, though?
From a purely financial standpoint, no. At the current price, SNRY‘s market cap amounts to just $218 thousand, and for this rather dismal amount you get a company with even more grim-looking figures. Here are the financials as found in the 10-Q covering the period before April 30:
- cash: $12 thousand
- current assets: $17 thousand
- current liabilities: $2.4 million
- no revenue
- quarterly net loss: $388 thousand
- accumulated deficit: $17 million
As we all know, however, the financial side of things is not always decisive and the contracts that the press release talks about should bring SNRY some much needed revenues. Will they be enough to offset the huge losses that the company has been experiencing so far, though? And even if they manage to do it, we’re still a bit pessimistic about the names of Asher Enterprises, Magna Group and Hanover Holdings that we see in the financial statement. If you follow our articles regularly, you will probably know that these three entities are providers of toxic debt financing to a number of small cap companies. Cereplast Inc (OTCMKTS:CERP) (a former NASDAQ venture) even announced recently that they are starting some legal actions against Magna and Hanover blaming them for the 92% loss that the ticker has experienced in just six months. This goes to show that even a revenue-generating enterprise with solid operations like CERP can suffer from the effects of the convertible debentures issued to the aforementioned entities.
SNRY have yet to definitively show us that they’re capable of running their operations properly and the whole medical cannabis business looks even more shady when you consider the fact that SNRY‘s partners are not even disclosed in the press release not to mention the lack of any deadlines for the installation of the solar panels.
The thing that disturbs us most of all, however, is the fact that SNRY‘s management team and, more specifically, their CEO, Mr. Michael Gelmon seems to be very busy running other small cap ventures dealing in completely different business sectors. We managed to find Mr. Gelmon’s name in the filings of Novation Holdings Inc (OTCMKTS:NOHO) (a manufacturer of medical devices; NOHO and SNRY share the exact same corporate office), Alternative Energy Partners Inc (OTCBB:AEGY) (engaged in the development of renewable fuels) and Golden Patriot, Corp. (OTCMKTS:GPTC) (a mineral exploration venture with no official filings since 2011).
That’s a pretty diverse portfolio of companies and Mr. Gelmon is at the helm of every single one of them except AEGY where he acts as the Chairman of the Board. If you take a closer look at ventures, you will see that they’ve all been deep in triple-zero territory for quite a while with little or no revenue, huge losses and optimistic press releases. With that in mind, what are the chances of Mr. Gelmon finally achieving success with SNRY?
Well, only time will tell but we’ve seen something of a trend for small cap ventures to suddenly decide to switch direction and start talking about the virtues of medical cannabis. This is what Creative Edge Nutrition Inc (OTCMKTS:FITX) did back on March 25 and you can see that the immediate effect on the ticker was quite impressive – 191% gained in a single day. A couple of months later, however, they are hovering around 88% below the marijuana-induced hype. A similar drop for SNRY will be catastrophic for the people who bought in on Thursday’s press release and if you want to avoid the losses, you should make sure to weight all the risks carefully.
