Surna posts $1M loss in Q1; tells SEC it might need to downsize operations

BOULDER — Surna Inc. (OTC: SRNA), a Boulder-based manufacturer of climate-controlled systems for the indoor cannabis-cultivation industry, on Monday, reported a loss of $1 million, or 1 cent per share, for its first quarter that ended March 31.

The loss was 34 percent greater than its loss of $746,214 it reported during the same period a year ago. The company’s revenue declined 36 percent from the comparable quarter of last year, from $2.5 million to $1.6 million.

In a filing with the Securities and Exchange Commission, the company said it likely will have to reduce the size and scope of its operations if it can’t generate sufficient cash flow from operations, make adjustments to payment arrangements or raise sufficient additional capital through future debt and equity financings or strategic and collaborative ventures with potential partners, adding that there are no assurances those things will occur.

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The company said the decline in revenue primarily was due to the restructuring of policies to secure sales contracts at an earlier stage, which was not in place during the first quarter of last year, and the “heightened uncertainty of the cannabis industry following the recent U.S. presidential election.”

As of March 31, the company said it had a backlog of contracts valued at about $3.8 million, of which approximately $2.3 million was attributed to contracts entered into during the most recent quarter.

For 2017, the company said it is focusing on new-facility construction in California, where recreational cannabis use was approved in November 2016, and in Canada, where federal legalization legislation has been introduced and recreational cannabis use appears to be gaining support.

Surna’s stock was trading over the counter mid-day Tuesday at 12 cents per share. Its 52-week range has been from 7 cents to 25 cents per share.