---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-Q

(Mark One)

|S                                                                                                                                                                                                                                                                                                                                                                                      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------
|For the quarterly period ended                                                                                                                                                                                                                                                                                                                                                         | June 30, 2012                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                       | or                                                                                     
|£                                                                                                                                                                                                                                                                                                                                                                                      | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934     
|For the transition period from                                                                                                                                                                                                                                                                                                                                                         |                                                                                        
|Commission File Number                                                                                                                                                                                                                                                                                                                                                                 | 000-52767                                                                              
|SUNERGY, INC.                                                                                                                                                                                                                                                                                                                                                                         
|(Exact name of registrant as specified in its charter)                                                                                                                                                                                                                                                                                                                                
|Nevada                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                        
|(State or other jurisdiction of incorporation or organization)                                                                                                                                                                                                                                                                                                                         |                                                                                        
|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                                                                                    
|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).
|                                                                                                                                                                                                                                                                                                                                                                                       | £                                                                                      
|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                                                                                                                                                                                                                                                                                                                                                                | £                                                                                      
|Non-accelerated filer                                                                                                                                                                                                                                                                                                                                                                  | £                                                                                      
|Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                       | £                                                                                      
|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.                                         
|                                                                                                                                                                                                                                                                                                                                                                                       | £                                                                                      
|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.                                                                                                                                                                                                                                                         
|1,767,210,683 as of July 31, 2012                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                        



1









PART I - FINANCIAL INFORMATION



Item 1. Financial Statements



The 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, 2012 are not necessarily
indicative of the results that may be expected for the full fiscal year.





2









SUNERGY, INC.
(An Exploration Stage Company)

CONDENSED CONSOLIDATED
BALANCE SHEETS





|                                                                                                                                                                                |  | June 30, |            | December 31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ---------- | ------------
|                                                                                                                                                                                |  | 2012     |            | 2011        
|                                                                                                                                                                                |  |          |            |             
|Assets                                                                                                                                                                          |  |          |            |             
|Current assets:                                                                                                                                                                 |  |          |            |             
|Cash and cash equivalents                                                                                                                                                       |  | $        | 15,561     |             
|Prepaid Expense                                                                                                                                                                 |  |          | 11,000     |             
|Total current assets                                                                                                                                                            |  |          | 26,561     |             
|                                                                                                                                                                                |  |          |            |             
|Long-term assets:                                                                                                                                                               |  |          |            |             
|Exploratory properties                                                                                                                                                          |  |          | 1,753,497  |             
|Property and equipment                                                                                                                                                          |  |          | 198,931    |             
|Total assets                                                                                                                                                                    |  | $        | 1,978,989  |             
|                                                                                                                                                                                |  |          |            |             
|Liabilities and stockholders' equity                                                                                                                                            |  |          |            |             
|Current liabilities:                                                                                                                                                            |  |          |            |             
|Accounts payable and accrued liabilities                                                                                                                                        |  | $        | 181,022    |             
|Accrued interest                                                                                                                                                                |  |          | 229,100    |             
|Accounts payable-related parties                                                                                                                                                |  |          | 113,830    |             
|Notes payable                                                                                                                                                                   |  |          | 65,585     |             
|Total current liabilities                                                                                                                                                       |  |          | 589,537    |             
|                                                                                                                                                                                |  |          |            |             
|Total liabilities                                                                                                                                                               |  |          | 589,537    |             
|                                                                                                                                                                                |  |          |            |             
|Stockholders' equity:                                                                                                                                                           |  |          |            |             
|Common Stock, authorized 3,750,000,000 shares, par value $0.001, issued and outstanding on June 30, 2012 and December 31, 2011 is  1,767,210,683 and 1,557,717,831 respectively |  |          | 1,767,211  |             
|Additional paid in capital                                                                                                                                                      |  |          | 4,288,929  |             
|Deficit accumulated during exploration  stage                                                                                                                                   |  |          | (4,666,688 | )           
|Total stockholders' equity                                                                                                                                                      |  |          | 1,389,452  |             
|                                                                                                                                                                                |  |          |            |             
|Total liabilities and stockholders' equity                                                                                                                                      |  | $        | 1,978,989  |             





The accompanying notes are an integral part of these statements.





3







SUNERGY, INC.
(An Exploration Stage Company)

CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS





|                                        |  | Three Months Ended |               | Six Months Ended |  | From Inception
January 28, 2003
|--------------------------------------- |  | ------------------ | ------------- | ---------------- |  | -------------------------------
|                                        |  | June 30,           |               | June 30,         |  | to June 30,                    
|                                        |  | 2012               |               | 2011             |  | 2012                           
|                                        |  |                    |               |                  |  |                                
|Income                                  |  | $                  | –             |                  |  | $                              
|                                        |  |                    |               |                  |  |                                
|Operating Expenses                      |  |                    |               |                  |  |                                
|General and administrative              |  |                    | 69,076        |                  |  |                                
|Management salary                       |  |                    | 46,000        |                  |  |                                
|Depreciation                            |  |                    | 13,038        |                  |  |                                
|Professional fees                       |  |                    | 121,404       |                  |  |                                
|Exploration costs                       |  |                    | 21,039        |                  |  |                                
|Total expenses                          |  |                    | 270,557       |                  |  |                                
|                                        |  |                    |               |                  |  |                                
|Net loss from operations                |  |                    | (270,557      | )                |  |                                
|                                        |  |                    |               |                  |  |                                
|Other expenses                          |  |                    |               |                  |  |                                
|Financing costs                         |  |                    | –             |                  |  |                                
|Interest expense                        |  |                    | (63,700       | )                |  |                                
|Total other expenses                    |  |                    | (63,700       | )                |  |                                
|                                        |  |                    |               |                  |  |                                
|Net loss                                |  | $                  | (334,257      | )                |  | $                              
|                                        |  |                    |               |                  |  |                                
|Loss per share-basic                    |  | $                  | (0.00         | )                |  | $                              
|                                        |  |                    |               |                  |  |                                
|Weighted average number of shares-basic |  |                    | 1,587,258,212 |                  |  |                                





The accompanying notes are an integral part of these statements.







4









SUNERGY, INC.
(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS





|                                                                        |  |                  |          |                  |  | From Inception
|----------------------------------------------------------------------- |  | ---------------- | -------- | ---------------- |  | --------------
|                                                                        |  | Six Months Ended |          | January 28, 2003
|                                                                        |  | June 30,         |          | to June 30      
|                                                                        |  | 2012             |          | 2011             |  | 2012          
|                                                                        |  |                  |          |                  |  |               
|Operations                                                              |  |                  |          |                  |  |               
|Net loss                                                                |  | $                | (840,511 | )                |  | $             
|Adjustments to reconcile net loss to cash used in operating activities: |  |                  |          |                  |  |               
|Depreciation                                                            |  |                  | 26,076   |                  |  |               
|Stock based compensation                                                |  |                  | 50,250   |                  |  |               
|Non cash interest expense                                               |  |                  | –        |                  |  |               
|Non cash financing costs                                                |  |                  | 160,281  |                  |  |               
|Changes in assets and liabilities                                       |  |                  |          |                  |  |               
|Change in prepaid expense                                               |  |                  | –        |                  |  |               
|Change in accounts payable and accruals                                 |  |                  | (24,067  | )                |  |               
|Change in accrued interest payable                                      |  |                  | 127,400  |                  |  |               
|Change in accounts payable-related party                                |  |                  | 277,628  |                  |  |               
|                                                                        |  |                  |          |                  |  |               
|Net cash used in operations                                             |  |                  | (222,943 | )                |  |               
|                                                                        |  |                  |          |                  |  |               
|Investing                                                               |  |                  |          |                  |  |               
|Acquisition of property and equipment                                   |  |                  | –        |                  |  |               
|Cash acquired through acquisition of subsidiary                         |  |                  | –        |                  |  |               
|                                                                        |  |                  |          |                  |  |               
|Net cash used in investing                                              |  |                  | –        |                  |  |               
|                                                                        |  |                  |          |                  |  |               
|Financing                                                               |  |                  |          |                  |  |               
|Proceeds from sale of common stock                                      |  |                  | 152,989  |                  |  |               
|Proceeds from notes payable                                             |  |                  | –        |                  |  |               
|Repayment of related party notes                                        |  |                  | –        |                  |  |               
|Contributed capital                                                     |  |                  | –        |                  |  |               
|                                                                        |  |                  |          |                  |  |               
|Net cash provided by financing                                          |  |                  | 152,989  |                  |  |               
|                                                                        |  |                  |          |                  |  |               
|Net change in cash and cash equivalents                                 |  |                  | (69,954  | )                |  |               
|Cash and cash equivalents, beginning of period                          |  |                  | 85,515   |                  |  |               
|                                                                        |  |                  |          |                  |  |               
|Cash and cash equivalents, end of period                                |  | $                | 15,561   |                  |  | $             
|                                                                        |  |                  |          |                  |  |               
|Supplemental disclosure of cash flows for:                              |  |                  |          |                  |  |               
|                                                                        |  |                  |          |                  |  |               
|Interest                                                                |  | $                | –        |                  |  | $             
|Income taxes                                                            |  | $                | –        |                  |  | $             
|                                                                        |  |                  |          |                  |  |               
|Supplemental disclosure of non-cash financing and investing:            |  |                  |          |                  |  |               
|Shares issued for prepaid expenses                                      |  | $                | 11,000   |                  |  | $             
|Shares issued to settle debt                                            |  | $                | 336,000  |                  |  | $             
|Debt issued to acquire assets                                           |  | $                | –        |                  |  | $             
|Stock issued to acquire assets                                          |  | $                | –        |                  |  | $             
|Assets acquired through acquisition of subsidiary                       |  | $                | –        |                  |  | $             
|Liabilities assumed through acquisition of subsidiary                   |  | $                | –        |                  |  | $             
|Shares issued to acquire subsidiary                                     |  | $                | –        |                  |  | $             
|Warrants issued to acquire subsidiary                                   |  | $                | –        |                  |  | $             





The accompanying notes are an integral part of these statements.





5









SUNERGY, INC.

(An Exploration Stage Company)

Notes to the Condensed Financial Statements

June 30, 2012





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.



Since inception, through the date of this
report, the Company has not generated any revenue and is considered an exploration stage entity as defined by accounting principles
generally accepted in the United States (“US GAAP”).





NOTE 2.	CONDENSED FINANCIAL STATEMENTS



The accompanying 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, 2012,
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, 2011 audited financial statements.  The results of operations for the period ended June 30, 2012 are not
necessarily indicative of the operating results for the full year.



The consolidated financial statements include
the accounts of Sunergy, Inc and its subsidiaries, Mikite Gold Resources Limited, a Ghanaian company, 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 financial statements.  All material 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.





6









Cash and Cash Equivalents



Cash and cash equivalents include cash
in banks and financial instruments which mature within three months of the date of purchase.



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 611,931,378
shares 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.



Recent Accounting Guidance Not Yet Adopted



The Company has reviewed recently issued accounting pronouncements
and does not expect any to have a material impact on our financial position, results of operations, or cash flows.



NOTE 3.	GOING CONCERN



The accompanying 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. However, the Company has accumulated a loss of $4,666,688 during its
exploration stage. This raises substantial doubt about the Company’s ability to continue as a going concern. These 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.





7







Our ability to raise capital since we received the Caveat Emptor
status on December 13, 2010 has been restricted. While we have been successful in raising enough capital to buy and pay for the
dredge equipment and the 2011 exploration operations and to pay for audit and accounting fees to file our delinquent financial
statements, we have not had the ability to raise any significant additional capital to advance our exploration and mining operations.



The Caveat Emptor status was removed with the filing of the
March 31, 2012 Quarterly report. Upon removal of the Caveat Emptor status, it is anticipated that the increased liquidity potential
for our investors will have a positive impact on our ability to raise additional capital from private placements and future warrant
exercises, however, there can be no guarantee that this will be so as we currently do not have any outstanding firm commitments
to purchase our equity and equity linked instruments.





NOTE 4.	PROPERTY, PLANT AND EQUIPMENT



Property, Plant and Equipment consisted
of the following at June 30, 2012 and December 31, 2011:



|                               |  | June 30, |         | December 31,
|------------------------------ |  | -------- | ------- | ------------
|                               |  | 2012     |         | 2011        
|Exploration equipment          |  | $        | 247,259 |             
|Rolling stock                  |  |          | 13,500  |             
|Office furniture and equipment |  |          | 2,254   |             
|Subtotal                       |  | $        | 263,013 |             
|Less accumulated depreciation  |  |          | (64,082 | )           
|Property, and equipment - net  |  | $        | 198,931 |             





NOTE 5.	NOTES PAYABLE



During the period ended June 30, 2012 we
accrued $127,400 of interest expense on the outstanding principal balance of our notes payable in default totaling $65,585 as of
June 30, 2012 and December 31, 2011. The individual notes carry daily interest penalties between $100 and $500.





NOTE 6.	STOCKHOLDERS’ EQUITY



Common Stock



The following provides additional information for certain stock
transactions that occurred since January 1, 2012. 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, 2011
and filed with the Securities Exchange Commission on July 2, 2012.



A summary of shares issued follows:



| | · | During the quarter ended March 31, 2012, the Company issued 14,992,854 shares of common stock for
total cash of $51,275.
| | - | ------------------------------------------------------------------------------------------------------------------------



| | · | During the quarter ended March 31, 2012, the Company issued 6,000,000 equity units at $0.0025 per
unit for prepaid consulting services with each unit consisting of one common share of stock and one 12 month share purchase warrant
exercisable at $0.005 per share.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | During the second quarter of 2012, the Company issued 13,714,284 equity units for cash of $46,000
at $0.0035 per unit with each unit consisting of one common share and one 12 month share purchase warrant exercisable at $0.007
per share.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | During the second quarter of 2012, the Company issued 21,600,000 equity units for cash of $54,000
at $0.0025 per unit with each unit consisting of one common share and one 12 month share purchase warrant exercisable at $0.005
per share.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | During the second quarter of 2012, the Company issued 285,714 shares for cash of $1,714 for the
exercise of warrants at $0.006 per share.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | · | During the second quarter of 2012, the Company issued 152,900,000 equity units to settle $336,000
of accounts payable and or related party payables and $46,250 in services at $0.0025 per unit with each unit consisting of one
common share and one 12 month share purchase warrant exercisable at $0.005 per share.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





8









Outstanding Warrants



On January 23, 2012 the Company extended the expiration date
of all outstanding warrants as of December 31, 2011 for six months. In accordance with the modification, the Company recognized
the estimated excess value of the modified award over the fair value of the original award immediately
before its terms were modified, based on the pertinent factors on the modification date. The excess value totaling $160,281 was
estimated by using a Black-Scholes pricing model, and comparison of the unregistered and restricted shares underlying the warrants
to those that are currently freely trading. The Company used a historically derived volatility rate of 151%; the remaining contractual
terms for each award between one month and one year; a risk free rate of 0.52%; and an estimated forfeiture rate of 55% for its
Black-Scholes model assumptions.



On June 30, 2012 the Company had warrants
outstanding summarized in the table below:



| |       | Warrants    |  | Exercise |             | Expiration
| | ----- | ----------- |  | -------- | ----------- | ----------
| |       | Outstanding |  | Price    |             | Date      
| |       |             |  |          | 71,900,000  |           
| |       |             |  |          | 100,000,000 |           
| |       |             |  |          | 157,819,960 |           
| |       |             |  |          | 20,200,000  |           
| |       |             |  |          | 31,357,138  |           
| |       |             |  |          | 100,000,000 |           
| |       |             |  |          | 1,200,000   |           
| |       |             |  |          | 10,357,142  |           
| |       |             |  |          | 6,450,000   |           
| |       |             |  |          | 3,857,141   |           
| |       |             |  |          | 7,142,857   |           
| |       |             |  |          | 21,000,000  |           
| |       |             |  |          | 16,571,428  |           
| |       |             |  |          | 215,071,428 |           
| |       |             |  |          | 5,999,998   |           
| |       |             |  |          | 14,642,855  |           
| | Total |             |  |          | 783,569,947 |           





9









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, 2011 |  |           | 592,319,951 |            |  |         
|                                                |  |           |             |            |  |         
|Plus:  Warrants Issued                          |  |           | 250,935,710 |            |  |         
|Less:  Warrants Exercised                       |  |           | (59,685,714 | )          |  |         
|Less: Warrants Expired                          |  |           | –           |            |  |         
|Total Warrants outstanding at June 30, 2011     |  |           | 783,569,947 |            |  |         





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. Unpaid officer and director
fees are also classified as related party accounts payable.





NOTE 8.	SUBSEQUENT EVENTS



On July 16, 2012 a warrant holder exercised
1,250,000 warrants at $0.005 per share for $6,250 cash.



On July 16, 2012, the Company received
and accepted notification and deposits from various warrant holders to exercise 34,262,500 warrants at $0.0025 per share and 49,000,000
warrants at $0.005 per share that would have expired on July 16, 2012. Warrant holders made deposits with the balances due by August
31, 2012. The Company has recorded the deposits as a contingent liability until balances have been received or the agreements expire
and will issue shares at the exercise price for the total payments received.



On July 27, 2012 the Company received
$30,000 for 10,000,000 units of shares and warrants at $0.003 and $0.006 respectfully.







10









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 and Allied Mining and Supply LLC, a Nevada
limited liability, 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.



Nyinahin Concession, Ghana:



Nyinahin Concession, Ghana:



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 AtwimaMponua 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.





11









We have commenced the exploration stage
of our operations on Nyinahin but can provide no assurance that we will discover economic mineralization on the property, or if
such minerals are discovered, that we will enter into commercial production. This year’s exploration is designed to confirm
initial discoveries of gold on our concession contained in a report that accompanied the purchase of the property. A budget of
$50,000 was committed to initiate this sampling program. The program commenced in the third quarter beginning July 2011 and ended
in November 2011 with a Technical Report filed in December with the Minerals Commission in Ghana. The results indicate further
exploration involving geochemical and geophysical work which, if successful, should set the stage for drilling in the bedrock that
is a direct extension of the Keegan Esaase-Jeni Project.



Alluvial mining operations for gold have
sprung up along the Offin River which runs through the eastern portion of our concession, and surround this area of our concession.
Immediately adjacent on the east to the Nyinahin concession are the Esaase-Jeni (Gyeni) properties, held by Keegan Resources of
Canada. Prior to Keegan's acquisition of the Bonte (now called Esaase) and the Jeni (Gyeni) concessions, they were mined for alluvial
gold by Bonte Gold Mines, a subsidiary of Akrokeri-Ashanti Gold Mines of Canada. This recent alluvial activity suggests the strong
viability of the alluvial opportunity on our concession and alluvial Joint Venture partners are being sought at this time.



PampanaRiverConcession, Sierra Leone:



The Pampana River concession is an alluvial
mining concession consisting of Exploration License No. EXPL 5/2009 which was issued to Allied Mining and Supply Ltd. (AMS) on
August 12, 2009. The license is located in the KholifaRowalla, KafeSimiria and Tane Chiefdoms in the Tonkolili District of the
Northern Province of Sierra Leone covering an area of 141.3 km2. The concession is situated on the western fringes of the southern
Sula Mountains greenstone belt and for most of the northern and central part it straddles the Pampana River. On the west of the
southern part, the concession runs along the Pampana River. The property is south of the Sula Mountains in the Greenstone belt,
around 120 miles east of the capital, Freetown.



We commenced our initial dredging April
16, 2011which was well into the mining season that generally ends with the beginning of rainy season in July. The dredging took
place in the Masanga Area that is believed to have limited overburden and good river accessibility.
Shortly after deployment the two Allied dredges were producing daily quantities of heavy mineral sands (HMS). This effort validated
our early extraction estimate of 400 to 500 pounds of HMS per dredge per 10 hour day. The process involved regular performance
evaluation resulting in modifications and adjustments of the dredges and support equipment in order to maximize the efficiency
of the advanced exploration.



Multiple
areas along the river were sampled involving considerable de-staging, repositioning and deployment in order to generate target
appraisals and gauge future recovery potential. Operations were suspended in July 2011 during the rainy season. Due to our limited
exploration budget, our 2012 exploration activities consist of investigation of additional areas of our Pampana River concession
and other potential areas where we have been looking for gold, diamonds, REE’s and coltan minerals. Our activities have been
designed to make ready for renewed aggressive exploration activity now that we are current in our filings with the SEC and trading
on the OTCQB and may have greater ability to attract exploration and development capital.



Due
to the complex nature and broad range of apparent minerals of the Pampana sands, additional mineralogy is required in order toprove their full mineralogical and elemental content, and to accurately describethe
economical value and overall potential of the Allied EXPL. We have already learned that in addition to the free gold contained
in the sands, the is an additional amount of precious metals including gold contained in the sands themselves that will require
special separation equipment to recover. Once these additional mineralogical studies are
completed by Hazen Research Labs of Denver, Colo. and the separation equipment and process is defined, we are committed to establishing
our processing facility and conducting operations designed to both produce cash flow and to develop resources and reserves immediately
We expect to receive the results of these studies in the next few weeks and results will be published.





12









Results of Operations



The following discussion should be
read in conjunction with our unaudited financial statements and the related notes contained in this report for the period
ended June 30, 2012. 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.



Of major significance during the first
quarter of 2012 we extended all of the outstanding warrants for six months. The assumption was made when these warrants were purchased
that the caveat emptor would be removed shortly resulting in a significant influx of capital. The board of directors felt that
since the company had not been able to of catch up with its government filings at that point, it would be fair and prudent to extend
the warrant date.





Interest and financing expenses were
increased by $223,295 with 72% of the total amount recognized through June 30, resulting from the non–recurring
incremental cost associated with the modification of the warrant expiration date. The remaining increase is the result of
interest and penalty expenses for unsettled notes payable expected to be settled with equity instruments during the third
quarter.



Total operating expenses for the six months
ended June 30, 2012, increased by approximately 1% as compared to the comparative period in 2011 primarily as a result of an increase
in administrative expense. Exploration and development costs are expected to go up substantially over the next year as we ramp
up pilot and small scale production operations. With over 40 KM of river on our concession, future exploration designed to develop
resources and reserves will be undertaken limited only by our future financial capabilities.





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.



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



Working Capital



|                          |  | At      
|------------------------- |  | --------
|                          |  | June 30,
|                          |  | 2012    
|Current Assets            |  | $       
|Current Liabilities       |  |         
|Working Capital (deficit) |  | $       





13









Cash Flows

|                                                  |  | Six Months Ended
|------------------------------------------------- |  | ----------------
|                                                  |  | June 30,        
|                                                  |  | 2012            
|Net Cash (used) in Operating Activities           |  | $               
|Net Cash (used) in Investing Activities           |  |                 
|Net Cash Provided by Financing Activities         |  |                 
|                                                  |  |                 
|Increase/(decrease)
    in Cash During the Period |  | $               



Now that we are current in our required
filings with the SEC and our shares are quoted for trading on the OTCQB exchange, our capital raising efforts are designed to raise
adequate new capital to stage our Pampana River operation with processing plant which will provide cash flow and will also begin
the development of resources and reserves.



It is anticipated that this increased liquidity
potential for our investors will have a positive impact on our ability to raise additional capital from private placements and
future exercise of warrants, however, there can be no guarantee that this will be so as we currently do not have any outstanding
firm commitments to purchase our equity and equity linked instruments.



We have experienced an increase in the
exercise of warrants including notification and deposits from several warrant holders of their intent to exercise 34,262,500 warrants
at $0.0025 per share and 49,000,000 warrants at $0.005 per share for warrants that would have expired on July 16, 2012. While we
believe we will receive all of the applicable funding associated with these commitments, there can be no guarantee and we are committed
to issuing only fully paid shares of common stock.



During the last six months the company
has been successful in eliminating over $382,250 of its trade and related party accounts payable, as well as 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.



On July 27, 2012 the Company received $30,000
for 10,000,000 units of shares and warrants at $0.003 and $0.006 respectfully.





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.





14









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.



Of major
significance during the six month period ended June 30, 2012 is the extension of all of the warrants for six months. The
assumption was made when these warrants were purchased that theCaveat Emptor would be
removed shortly. The filings took longer to complete than was expected. The board of directors felt that since the company
was had not been able to at that point catch up with its government filings, it would be fair and prudent to extend the
warrant date. Now that we are current in our filings we have experienced an increase in the exercising of outstanding
warrants.



In accordance with ASC 718, a
modification of the terms of an equity instrument for financial reporting purposes is treated as an exchange of the original
award for a new award. We recognized, as financing costs, the excess value of the modified award over the fair value of the
original award immediately before its terms were modified, based on the pertinent factors on the modification date, We
estimated the excess value by using a Black-Scholes pricing model, and comparison of the unregistered and restricted shares
underlying the warrants to those that are currently freely trading.



In addition to assuming a volatility rate
of approximately 151% (historically derived), we estimated a forfeiture rate of approximately 55% based on prior exercise history
and our prior experience with several of the warrant holders. Increases in the volatility rate assumption along with decreases
in the forfeiture would result in the recognition of additional excess value.



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.





15









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, 2011 filed on July 2, 2012.



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



On July 16, 2012 a warrant holder
exercised 1,250,000 warrants at $0.005 per share for $6,250 cash. These securities were issued pursuant to an exemption from
registration relying on Regulation D of the Securities Act of 1933.



Item 3. Defaults Upon Senior Securities



The Company has outstanding loans,
$35,000 collateralized by 14,000,000 shares of common stock and 14,000,000 one year share purchase warrants exercisable at
$0.005 per share. In the event of default, the note holders are able to convert the outstanding balance owed to the common
share collateral. As of June 30, 2012, the notes are in default however, neither of the note holders has converted any of the
14,000,000 collateralized equity units nor have they made any demand for settlement. The Company expects to fully settle with
the issue of equity units during the third quarter.



Item 4. [Removed and Reserved]



None.





Item 5. Other Information



None.







16













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 ourcompany 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 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE | XBRL Instance Document
        XBRL Taxonomy Extension Schema Document
        XBRL Taxonomy Extension Calculation Linkbase
        Document
        XBRL Taxonomy Extension Definition Linkbase
        Document
        XBRL Taxonomy Extension Label Linkbase
        Document
        XBRL Taxonomy Extension Presentation Linkbase
        Document



| | *  | Filed herewith                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ** | Pursuant to Rule 405(a)(2)
                                                                  of Regulation S-T, the Company will furnish the XBRL Interactive
                                                                  Data Files with detailed footnote tagging as Exhibit 101 in
                                                                  an amendment to this Form 10-Q within the permitted 30-day grace
                                                                  period granted for the first quarterly period in which detailed
                                                                  footnote tagging is required.







17









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 13, 2012 | By:          
|      |                 | Name:        
|      |                 | Title:       
|Date: | August 13, 2012 | By:          
|      |                 | Name:        
|      |                 | Title:       







18