Borislav Tonev

Petrosonic Energy Inc (OTCMKTS:PSON) Drops Below $0.40

by Borislav Tonev September 4, 2013
84PSON.pngAs we mentioned yesterday, Petrosonic Energy Inc (OTCMKTS:PSON, PSON message board) put on a rather poor performance last week. Apparently, we weren't the only ones who noticed the fall and in an attempt to break it, the management team decided to update their shareholders on the developments around the company. The PR went online about half an hour into the session and the first thing that draws the attention is the second sentence according to which an engineering firm "has completed third-party sonification tests in the Richmond BC facility".

If you take the time to do a quick Wikipedia search, you'll see that "Sonification is the use of non-speech audio to convey information or perceptualize data". It could also describe the act of producing sounds similar to the ones made by insects but, more importantly, it has nothing to do with crude oil and PSON's business. The word that they were looking for is, most likely, "Sonication" which is, as Wikipedia is once again ready to explain, "the act of applying sound energy to agitate particles in a sample".

An embarrassing typo, you would agree, and it might have played a role in yesterday's chart movement. The ticker hasn't generated a single green session in a week and while it was sliding down, the daily losses were never that scary. Yesterday, however, it dropped by about 21% finishing the session at $0.395 and registering a new 52-week low of $0.352.

Losing a fifth of its value is not something you expect from an emerging leader in the heavy oil industry, but we can't say that we're all that surprised. If you've been following our PSON articles closely, you know that the ticker underwent a massive promotional campaign. The budget was $3 million, there was endless touting from numerous entities through paper mailer brochures, emails and landing pages and while it did give traders a chance for a profit while the value was flying well above the $1 per share mark, the amount of incinerated investments is absolutely mind-boggling.

Looking at the one-month chart, we can see that the stock is still suffering the consequences and it would appear that fewer and fewer traders are willing to trust their hard-earned cash with PSON. But are they wrong? Is there something to suggest that the current prices might turn out to be an opportunity for larger profits in the future?

We're not so sure. On June 10, for example, they issued a press release (that one contained no typos) saying that they have successfully completed their first sale. Every one was very excited by the news and in a matter of just a couple of days, the ticker gained around 23%.

71PSON_logo.gifYet, when the report for the three months that ended on June 30 came out a couple of months later, it still contained a zero under the revenues section. The start of the sales isn't even mentioned in the 10-Q which is all the more disconcerting.

A few months earlier, in April, they said that they have signed a master toll agreement with an Albanian company called IDK Petrol Albania Sila. We didn't expect to find much information about them in the Yellow Pages and, sure enough, we didn't. The problem is, even when you look for the entity in the Albanian Registration Center, you still get nothing in terms of results.

Of course, these might all be some sort of misunderstandings and PSON might actually be working hard to get things together, but the fact remains that there are some discrepancies and it's also pretty clear that the pump is far from forgotten. With that in mind, even a new promotion, if it ever happens, might fail to give the price a push and instead of gains similar to the ones displayed by Vitamin Blue Inc (OTCBB:VTMB) yesterday, the ticker might tank further, just like Axxess Pharma Inc (OTCMKTS:AXXE) did. That's why, being extra cautious around PSON is definitely a good call.

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