Surna Inc (OTCMKTS:SRNA) shares were down 1% on Monday to $0.148 after hitting the nearby resistance and flat in after-hours trading. Share prices have been trading in a 52-week range of $0.05 to $0.29. The company has a market cap of $22.05 million at 145.90 million shares outstanding.
Surna Inc just reported its latest quarterly earnings figures. Revenue was $1.2 million, compared to $3.6 million in the same period last year, weighed down by delays in customer readiness to acceptance equipment. The company continues to expect fluctuations in quarterly sales due primarily to the timing of state legislation, procedural set up, licensing and general availability.
Cost of revenue was $754,000, compared to $3.1 million in the same period last year. This was due to lower sales and the more efficient cost and supply chain management. Meanwhile gross margin increased to 35.6%, compared to 14.0% in 2015. Operating expenses decreased to $654,000, compared to $1.0 million in the same period in 2015, due to lower marketing expenses and a reduction in product development costs. Net loss was $669,000 or $0.00 per share, compared to $1.3 million or $0.01 per share in the same period last year.
“We are gaining recognition with our energy-efficient solutions coupled with our expertise in climate conditions necessary for optimal product yield. As energy is one of the largest cultivation operating expenses, we believe our technology will provide a significant competitive advantage as the market continues to grow dramatically,” remarked surna inc ceo trent doucet.
He added that Surna Inc is in the process of establishing a regional sales organization and creating recurring revenue streams via service contracts. In line with this, the company is developing dynamic, proactive management systems to optimize energy usage, maximize equipment reliability, and leverage intelligent equipment that can be easily automated to reliably cultivate crops. He also mentioned that they expect to leverage their relationship with Surna-only Sterling Pharms to demonstrate their products and technology.
Doucet also highlighted the fact that eight states, including California, initiated legalization of cannabisor expanded their status to include adult recreational use, likely fueling growth for the CEA equipment market. To meet this pickup in demand, Surna Inc made improvements in infrastructure, customer service policies and project management procedures.
Cash on hand was $235,000 at September 30, 2016, compared to $331,000 at December 31, 2015. Deferred revenue increased to $1.4 million at September 30, 2016, from $986,000 at December 31, 2015. The company began private negotiations with certain holders of certain 10% convertible promissory notes and warrants with a view to converting the notes and amending the terms of the warrants, which would reduce outstanding indebtedness and make it more likely that holders would exercise the warrants.
Surna Inc is a company that develops, designs and distributes cultivation technologies for controlled environment agriculture. Its segment is designing, manufacturing, and distributing indoor climate control systems, including but not limited to chillers, lights, reflectors, and irrigation systems, for use in conjunction with the state-regulated cannabis and CEA industry.
In particular, its technologies include a line of optimized lighting, environmental control, air sanitation and cultivation facilities. It offers full mechanical, electrical, and plumbing services, including designing and engineering commercial scale thermodynamic systems specific to indoor grow facility conditions. Surna Inc products include Surna Chillers, Surna Reflectors, Hybrid Building and Air Sanitation while its customers include state-regulated cannabis cultivation facilities, as well as traditional indoor agricultural facilities, including organic herb and vegetable producers.