Surna Inc. Reports Full Year 2015 Financial Results

13 Apr, 2016, 08:30 ET from Surna Inc.

BOULDER, Colorado, April 13, 2016 /PRNewswire/ --

Reports significant year-over-year revenue growth

To hold investor conference call with its first quarter 2016 financial results in early May 

Surna Inc. (OTCQB: SRNA) ("Surna" or the "Company"), a technology company that engineers state-of-the art equipment for controlled environment agriculture ("CEA") with special expertise in cannabis cultivation, reported its financial results for the year ended December 31, 2015.

"2015 was a transformational year for Surna as we built a stronger foundation on which to grow the business," said Stephen Keen, Surna's CEO. "Focused on establishing Surna as the leading supplier for cannabis cultivation equipment in the U.S., we continue to introduce ground-breaking technology such as the Surna Reflector and our hybrid building design. In 2016, we intend to expand our product commercialization efforts."

"As part of our mission to position the Company for profitable growth, we installed a new management team in 2015. Now, we are focusing on the monetization of service components, supporting premium pricing for our existing products and commercializing our research and development efforts. In addition, we are taking measures to reduce our cost of capital to accelerate our path to profitability and, ultimately, increase shareholder value."

Results for Fiscal Year 2015 Compared to Fiscal Year 2014 

  • Revenue grew 328% to $7.9 million, compared to $1.8 million, reflecting focused investments in sales and marketing, new product introductions, increased engineering services and greater demand for products as the number of state-legal cannabis markets continues to grow.
  • Operating expenses were $4.1 million, compared to $3.5 million. Although operating expenses increased 16% year over year, such costs declined as percentage of revenue to 52% in 2015 from 190% in 2014.
    • Advertising and marketing expenses increased to $310,000, compared to $241,000. Now that more states have legal cannabis, Surna is covering a wider geographic area with marketing events and conferences.
    • Product development costs were $708,000, compared to $319,000 as Surna increases investments in its hybrid building and lighting technologies.
    • SG&A expenses increased 3% to $3.0 million, compared to $2.9 million.
  • Net loss was $5.3 million, or $0.04 per share, compared to $3.0 million, or $0.03 per share.
  • Cash, accounts receivable, inventory and prepaid assets at December 31, 2015 were $2.1 million.
  • Deferred revenue was $986,000, up from $408,000. Deferred revenue represents contracts that are in progress, as the Company does not recognize revenue until the equipment is shipped or services are performed

Investor Conference Call for the First Quarter 2016 Results 

Surna management intends to host an investor conference call in combination with its first quarter 2016 financial results anticipated to take place in mid-May 2016. The Company will provide the date and access instructions for the call in the coming weeks.

About Surna 

Surna Inc. (http://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 solve 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.

Consolidated Balance Sheets as of December 31, 2015 and 2014  


   
                                         December 31,
                               2015                      2014
    ASSETS
    Current
    Assets
    Cash                   $ 330,557                   $ 689,963
    Accounts receivable
    (net of allowance for
    doubtful accounts of
    $40,873 and $10,000,
    respectively)            299,194                     394,830
    Note receivable          207,218                     100,000
    Inventory              1,261,802                     264,031
    Prepaid expenses         193,969                      57,089
    Total Current Assets   2,292,740                   1,505,913
    Noncurrent Assets
    Property and
    equipment, net           162,530                     163,815
    Intangible
    assets, net              647,464                     651,564
    Total Noncurrent
    Assets                   809,994                     815,379

    TOTAL ASSETS         $ 3,102,734                 $ 2,321,292

    LIABILITIES AND
    SHAREHOLDERS' DEFICIT

    CURRENT LIABILITIES
    Accounts payable and
    accrued liabilities  $ 2,066,803                   $ 411,828
    Deferred revenue         986,445                     408,199
    Current portion of
    long term debt             1,551                       9,731
    Amounts due to
    shareholders             216,995                     303,672
    Convertible
    promissory
    notes, net             1,227,761                           -
    Convertible
    accrued interest         201,257                           -
    Derivative
    liability on
    conversion feature       472,967                     847,438
    Derivative liability
    on warrants              139,192                     304,432
    Total Current
    Liabilities            5,312,971                   2,285,300

    NONCURRENT LIABILITIES
    Convertible
    promissory notes, net    523,822                     488,544
    Convertible accrued
    interest                  80,674                      89,311
    Other accrued
    interest                       -                     112,812
    Promissory note due
    shareholders                   -                     195,759
    Vehicle loan              32,564                      33,318
    Total Noncurrent
    Liabilities              637,060                     919,744

    TOTAL LIABILITIES      5,950,031                   3,205,044

    Commitments
    and
    Contingencies                  -                           -

    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               1,259                       1,135
    Paid in capital        8,214,271                   4,881,918
    Accumulated other
    comprehensive income           -                           -
    Accumulated deficit  (11,063,599)                 (5,767,577)
    Total Shareholders'
    Deficit               (2,847,297)                   (883,752)

    TOTAL LIABILITIES
    AND SHAREHOLDERS'
    DEFICIT              $ 3,102,734                 $ 2,321,292


Consolidated Statements of Operations and Comprehensive Loss  


   
                                       2015                  2014
    Revenue                       $ 7,865,243           $ 1,838,912


    Cost of revenue                 6,924,402             1,534,918
    Gross margin                      940,841               303,994
    Operating expenses:
    Advertising and
    marketing expenses                309,620               240,784
    Product development costs         707,517               319,430
    Selling, general and
    administrative expenses         3,037,547             2,936,244
    Total operating expenses        4,054,684             3,496,458

    Operating loss                 (3,113,843)           (3,192,464)

    Other income (expense):
    Interest and other
    income (expense),  net             24,547                     -
    Interest expense                 (873,207)             (357,579)
    Amortization of debt discount
    on convertible
    promissory notes               (2,220,115)             (476,044)
    Loss on extinguishment of
    debt                              (78,155)
    Gain on change in
    derivative liabilities            964,751             1,051,889
    Total other income
    (expense)                      (2,182,179)              218,266

    Loss from continuing
    operations before
    provision for
    income taxes                   (5,296,022)           (2,974,198)

    Provision for
    income taxes                            -                     -

    Loss from continuing
    operations                     (5,296,022)           (2,974,198)

    Loss from discontinued
    operations                              -               (17,771)

    Net loss                       (5,296,022)           (2,991,969)

    Comprehensive loss                      -                     -

    Comprehensive loss           $ (5,296,022)         $ (2,991,969)

    Loss per common share
    from continuing
    operations - basic                $ (0.04)              $ (0.03)

    Loss per common share
    from discontinued
    operations - basic                $ (0.00)              $ (0.00)

    Loss per common
    share - basic                     $ (0.04)              $ (0.03)

    Weighted average number
    of common shares
    outstanding, basic            119,967,118           100,687,113

At the Company
Katie O'Block
VP of Marketing
Katie@surna.com
+1-303-993-5271 ext. 101

Investor Relations

Becky Herrick/Kirsten Chapman
LHA Investor Relations
+1(415)-433-3777
bherrick@lhai.com

SOURCE Surna Inc.