Surna Inc. Reports Fourth Quarter and Year-end 2016 Financial Results

BOULDER, Colorado, March 31, 2017 /PRNewswire/ -- Surna Inc. (OTCQB: SRNA) reported its financial results for the three and twelve months ended December 31, 2016.

"In 2016, we began executing growth, cost reduction and capital market initiatives that have strengthened our operations and financial position," stated Surna's President and Chief Executive Officer Trent Doucet. "As a result, fourth quarter revenue grew 20% year-over-year and 72% compared to the third quarter. Full year improvements include gross margin reaching 30% and a reduction in our operating loss of 83% compared to 2015. Additionally, our recent debt conversion and equity financing fortified our balance sheet by more than $5.5 million, enabling us to pursue our sales team expansion more aggressively.

"Both the medicinal and recreational segments of the cannabis cultivation market are growing rapidly in the US and internationally. We also have been building our presence and recently signed our sixth deal in Canada. In 2017, we anticipate rolling out our next generation equipment as well as beta test of our control and automation platform.

"Overall, 2016 was a pivotal year for our market and for Surna specifically. We believe the positive trends are continuing in 2017, and we are very excited about our prospects," concluded Doucet.

Recent Highlights

• Converted $3.2 million in principal and interest, or 100% of the obligations related to the 10% convertible promissory notes, in a series of transactions beginning in the fourth quarter of 2016 through March 2017.
• Raised $2.7 million in the sale of equity in a series of closings in March 2017.
• Obtained a 6% short-term loan of approximately $500,000 in February 2017.
• Exhibited at several important cannabis trade shows including Marijuana Business Conference & Expo® in Las Vegas in November and CannaCon in Seattle in February.
• Signed a contract with Vancouver's Sante Veritas Therapeutic to design and provide equipment for the environmental control system in its first commercial cultivation facility. As announced in March 2017, Surna expects to ship product and recognize associated revenue of $835,000 in the third quarter of 2017.
• Appointed Timothy J. Keating, capital markets thought leader, as chairman of the board of directors in March 2017.

Results for Fourth Quarter: 2016 Compared to 2015

• Revenue was $2.0 million, compared to $1.7 million in the fourth quarter of 2015 and $1.2 million in the third quarter of 2016, reflecting increased sales of climate control equipment.
•  Cost of revenue was $1.5 million. This compared to $2.0 million, which included reclassifications in the fourth quarter of 2015.
• Gross margin was 23.9%, reflecting more efficient cost and supply chain management. 
• Operating expenses were $845,000, compared to $725,000 in the fourth quarter of 2015.
  • SG&A and marketing expenses were $675,000, compared to $566,000, reflecting efforts related to the 2016 Marijuana Business Conference & Expo.
  • Product development costs decreased to $78,000, compared to $174,000 as the Surna Reflector and the Hybrid Building transitioned to production.

Operating loss improved to $362,000, from $1.0 million in the fourth quarter of 2015.

Net loss was $886,000, compared to $1.6 million in the fourth quarter of 2015.

Balance Sheet Highlights

At December 31, 2016, cash was $320,000, compared to $235,000 at September 30, 2016 and $331,000 at December 31, 2015. Deferred revenue was to $1.4 million, equivalent to the level at September 30, 2016 and up from $986,000 at December 31, 2015.

Subsequent to quarter end, the company completed the conversion of its entire obligation related to its 10% convertible promissory notes, consisting of $3.2 million in principal and accrued interest, into approximately 19.6 million shares of newly issued common stock and cash payments of $314,000.  Also, the company raised $2.2 million, gross on March 7^th and another $465,000 was raised by the end of March.

Results for Twelve Months: 2016 Compared to 2015

• Revenue was $7.6 million, compared to $7.9 million.  The December 31, 2016 backlog ? sales amounts under contract but which were not yet completed and not included in revenue ? was $2.6 million, up substantially from $1.4 million at December 31, 2015.
• Gross margin, which included the negative impact of the $530,000 warranty charge, increased to 30%, compared to 12%, primarily due to product mix, the elimination of low margin installation services and lower cost of goods.
• Operating loss was narrowed to $532,000, from $3.1 million.
• Net loss was $3.3 million, or $0.02 per share, compared to $5.3 million, or $0.04 per share.

Conference Call

Management will review the results on a conference call today, March 31, 2017, at
9:00 a.m. MT/ 11:00 a.m. ET. To listen to the call, please dial 1-855-327-6837 if calling from the United States or Canada, or 631-891-4304 if calling internationally. The passcode is 10002636. To listen to the webcast or view the press release, please visit the Investor Relations section of the Surna website where a transcript of the call will also be provided shortly after it concludes. 

A replay of the call will be available until April 13, 2017, which can be accessed by dialing
844-512-2921 if calling from the United States or Canada, or 412-317-6671 if calling internationally. Please use passcode 10002636 to access the replay

About Surna

Surna Inc. (www.surna.com) develops innovative technologies and products that monitor, control and or address the energy and resource intensive nature of indoor cannabis cultivation. Currently, the company's revenue stream is based on its main product offerings ? supplying industrial technology and products to commercial indoor cannabis grow facilities.

Headquartered in Boulder, CO, Surna's diverse engineering team is tasked with creating novel energy and resource efficient solutions, including the company's signature water-cooled climate control platform. The company's engineers continuously seek to create technology that solves the highly specific demands of the cannabis industry for temperature, humidity, light and process control.

Surna's goal is to provide intelligent solutions to improve the quality, the control and the overall yield and efficiency of CEA. Though its clients do, the company neither produces nor sells cannabis.

Forward Looking Statements

This press release contains forward-looking statements regarding the Company's future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including Surna's ability to monetize service components, Surna's support of premium prices for existing products, commercialization of research and development efforts and continued expansion of legal cannabis markets. Other risks and uncertainties include, among others, risks related to new products, services, and technologies, government regulation and taxation, and fraud. In addition, the current global economic climate amplifies many of these risks. More information about factors that potentially could affect Surna's financial results is included in Surna's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and subsequent filings. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Statement About Cannabis Markets

The use, possession, cultivation, and distribution of cannabis is prohibited by federal law.  This includes medical and recreational cannabis.  Although certain states have legalized medical and recreational cannabis, companies and individuals involved in the sector are still at risk of being prosecuted by federal authorities. Further, the landscape in the cannabis industry changes rapidly.  What was the law last week is not the law today and what is the law today may not be the law next week.  This means that at any time the city, county, or state where cannabis is permitted can change the current laws and/or the federal government can supersede those laws and take prosecutorial action. Given the uncertain legal nature of the cannabis industry, it is imperative that investors understand that the cannabis industry is a high-risk investment. A change in the current laws or enforcement policy can negatively affect the status and operation of our business, require additional fees, stricter operational guidelines and unanticipated shut-downs.

 







Surna Marketing	Investor Relations
Jamie English	Kirsten Chapman/ Becky Herrick
Marketing Manager	LHA Investor Relations
[email protected]	[email protected]
+1-(303)-993-5271	+1-(415) 433-3777




 

Surna Inc.
Consolidated Balance Sheets
		December 31,
		2016				2015
ASSETS
Current Assets
Cash		$	319,546			$	330,557
Accounts receivable (net of allowance for doubtful accounts of $90,839 and $40,873, respectively)			47,166				299,194
Note receivable			157,218				207,218
Inventory			747,905				1,261,802
Prepaid expenses			84,976				193,969
Total Current Assets			1,356,811				2,292,740
Noncurrent Assets
Property and equipment, net			93,565				162,530
Intangible assets, net			667,445				647,464
Total Noncurrent Assets			761,010				809,994
TOTAL ASSETS		$	2,117,821			$	3,102,734
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities		$	1,337,853			$	2,066,803
Deferred revenue			1,421,344				986,445
Current portion of long term debt			-				1,551
Amounts due to shareholders			57,398				216,995
Convertible promissory notes, net			761,440				1,227,761
Convertible accrued interest			161,031				201,257
Derivative liability on conversion feature			-				472,967
Derivative liability on warrants			477,814				139,192
Total Current Liabilities			4,216,880				5,312,971
NONCURRENT LIABILITIES
Convertible promissory notes, net			-				523,822
Convertible accrued interest			-				80,674
Other accrued interest			-				-
Promissory note due shareholders			11,985				-
Vehicle loan			-				32,564
Total Noncurrent Liabilities			11,985				637,060
TOTAL LIABILITIES			4,228,865				5,950,031
SHAREHOLDERS' DEFICIT
Preferred stock, $0.00001 par value; 150,000,000 shares authorized; 77,220,000 shares issued and outstanding			772				772
Common stock, $0.00001 par value; 350,000,000 shares authorized; 125,839,862 and 113,511,250 shares issued and outstanding, respectively			1,607				1,259
Paid in capital			12,222,789				8,214,271
Accumulated deficit			(14,336,212)				(11,063,599)
Total Shareholders' Deficit			(2,111,044)				(2,847,297)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT		$	2,117,821			$	3,102,734

 


 

 

Surna Inc.
Consolidated Statements of Operations and Comprehensive Loss
For the three months ended December 31,
		2016				2015
Revenue		$	2,019,026			$	1,682,307
Cost of revenue			1,535,480				1,960,227)
Gross margin			483,546				(277,920))
Operating expenses:
Advertising and marketing expenses			93,006				(14,490)
Product development costs			76,652				173,709
Selling, general and administrative expenses			675,709				565,979
Total operating expenses			845,367				725,198
Operating loss			(361,821)				(1,003,118))
Other income (expense):
Interest and other income (expense), net			21,097				24,547
Interest expense			(91,031)				(505,710))
Amortization of debt discount on convertible promissory notes			(193,790)				(492,989))
Loss on extinguishment of debt			(338,241)				(78,155))
Loss (gain) on change in derivative liabilities			(190,408))				489,878
Total other income (expense)			(792,373)				(562,429)
Loss from continuing operations before provision for income taxes			(1,154,194)				(1,565,547))
Provision for income taxes			-				-
Net loss			(1,154,194)				(1,565,547))
Comprehensive loss		$	(1,154,194)			$	(1,565,547))




 


 

 

Surna Inc.
Consolidated Statements of Operations and Comprehensive Loss
For the years ended December 31,
		2016				2015
Revenue		$	7,579,863			$	7,865,243
Cost of revenue			5,275,968				6,924,402
Gross margin			2,303,895				940,841
Operating expenses:
Advertising and marketing expenses			149,858				309,620
Product development costs			349,062				707,517
Selling, general and administrative expenses			2,337,892				3,037,547
Total operating expenses			2,836,812				4,054,684
Operating loss			(532,917)				(3,113,843))
Other income (expense):
Interest and other income (expense), net			40,157				24,547
Interest expense			(373,688)				(873,207))
Amortization of debt discount on convertible promissory notes			(1,529,219)				(2,220,115))
Loss on extinguishment of debt			(338,241)				(78,155))
Loss (gain) on change in derivative liabilities			(538,705))				964,751
Total other income (expense)			(2,739,696)				(2,182,179)
Loss from continuing operations before provision for income taxes			(3,272,613)				(5,296,022))
Provision for income taxes			-				-
Net loss			(3,272,613)				(5,296,022))
Comprehensive loss		$	(3,272,613)			$	(5,296,022))
Loss per common share ? basic and dilutive		$	(0.02)			$	(0.04))
Weighted average number of common shares outstanding, basic and dilutive			140,604,764				119,967,118

 

 

SOURCE Surna Inc.




These press releases may also interest you at 11:18 Inside information: Alan Donze has been appointed as Bioretec's new CEO Bioretec Ltd is pleased to announce that Mr. Alan Donze has been appointed CEO of Bioretec as of today, 20 May 2024. He will start in this position immediately. With a distinguished career spanning the banking and medical device industries, Mr. Donze... at 11:16 POSITIVE DATA FROM IN VIVO STUDY SHOWS SIGNIFICANT ANTIMICROBIAL ACTIVITY OF OCMtm AGAINST METHICILLIN-RESISTANT STAPHYLOCOCCUS AUREUS (MRSA) AND PSEUDOMONAS AERUGINOSA (PA) IN PORCINE WOUND MODEL Omeza®, a regenerative skincare company that develops marine-based therapies for the treatment of chronic wounds, recently presented in vivo data showing that OCMtm wound matrix alone... at 11:10 BayCare Expands Graduate Medical Education to Include Surgery Residency Program As part of its plan to bring more doctors to West Central Florida, the region's top health care system today announced that it will soon launch BayCare Health System's first surgery residency program. The Accreditation Council for Graduate Medical... at 11:01 Life Science Equipment Market to be Worth $97.96 Billion by 2031 - Exclusive Report by Meticulous Research® According to a new market research report titled, 'Life Science Equipment Market Size, Share, Forecast, & Trends Analysis By Technology (Spectroscopy, Microscopy, Chromatography (HPLC, GC, TLC), PCR, Immunoassay, Sequencing, Flow Cytometry,... at 11:00 HealthWell Foundation Announces Sponsorship of Family Reach Clinical Trial Access Fund The HealthWell Foundation®, an independent non-profit charitable organization that provides financial assistance for underinsured Americans, as part of its ongoing commitment to The White House Cancer Moonshot, is honored to announce its sponsorship... at 11:00 Balance Point Announces its Investment in SG Homecare Balance Point Capital Advisors, LLC ("Balance Point"), in conjunction with its affiliated funds, Balance Point Capital Partners V, L.P. and Balance Point Capital Partners VI, L.P., is pleased to announce its investment in SG Homecare ("SG", or the... More news about Health...


News published on 31 march 2017 at 07:05 and distributed by: