Saturday, June 25, 2022

Penny Stock Update on Surna Inc (OTCMKTS:SRNA)

Surna Inc (OTCMKTS:SRNA) is a penny stock equipment supplier for new cultivators in the cannabis patch. It’s one of the most interesting new niches to develop and mature in a post-legalized context. Surna stock broke support to close the week last week, but came ripping back intraday, perhaps evidencing a stable and important bid, so we thought it was a good time to take another look at this stock.

The only recent clear catalyst is the company’s announcement last week that it has converted $2.76 million of its 10% convertible promissory notes, consisting of approximately $2.28 million in principal and $480,000 of accrued interest, into approximately 18 million shares of newly issued common stock and cash payments of less than $200,000. According to the company’s release, as a result, since September 30, 2016, Surna has decreased its liabilities by approximately $2.22 million after obtaining a short-term loan of approximately $500,000 for working capital.

Surna Inc (OTCMKTS:SRNA) promulgates itself as a company that designs, develops, manufactures, and distributes systems for controlled environment agriculture (CEA). It offers chillers, lights, reflectors, and irrigation systems; Hybrid Building that uses the sun as its primary light source; air sanitation technology for mold and mildew risk mitigation to cultivators; and mechanical, electrical, and plumbing services.

The company serves cannabis cultivation facilities; and other indoor agricultural facilities, including organic herb and vegetable producers. In short, Surna Inc develops innovative technologies and products that monitor, control and 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.

According to company materials, “Surna’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 controlled environment agriculture. Though its clients do, the company neither produces nor sells cannabis.”

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As noted above, the company just restructured its convertible debt. “Surna enters 2017 with great prospects,” said Surna CEO Trent Doucet. “Restructuring our convertible debt cleans up our balance sheet, substantially eliminates our indebtedness, and creates the flexibility for the company to access the capital markets on more favorable terms, if and when it is appropriate to do so. Our market is growing in magnitude as new legislation is being enacted. Our climate control products offer industry-leading innovations. And, with our debt conversion nearing completion, we are turning our focus to expanding our regional sales team to capture more opportunities to grow the business.”

As of February 2017, the company had approximately 163 million shares of common stock issued and outstanding.

The recent presser goes on to note that Surna is filing a Current Report on Form 8-K that describes the transactions in greater detail. The company will also conduct a conference call to discuss its fourth quarter and year-end results in conjunction with the filing of its annual report on Form 10-K in late March.

This last point may be the most important when it comes to noting the intraday bid that hit shares midday on Friday. Time will tell.

Recent action has seen -6% taken out of share prices over the past week. Furthermore, the listing has seen interest climb, with an increase in recent trading volume of 36% beyond what we have been seeing over the larger time frame. Since we last covered the name, the stock has moved -30.4% lower.

At this time, carrying a capital value in the market of $25.9M, SRNA has a stash ($235K) of cash on the books, which must be weighed relative to about $2.3M in total current liabilities. One should also note that debt has been growing over recent quarters. SRNA is pulling in trailing 12-month revenues of $7.2M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -67.8%. This may be a very interesting story and we will look forward to updating it again soon. For continuing coverage on shares of $SRNA stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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