Surna posts $1.4M loss for Q2 despite increased bookings

BOULDER — Surna Inc. (OTCQB: SNRA), a Boulder-based manufacturer of equipment for cannabis and traditional indoor agricultural growing operations, reported a loss of $1.4 million for its second quarter that ended June 30.

For the quarter, Surna posted revenue of $2 million, a 15 percent increase compared with the same quarter a year ago.

In the quarterly report, Surna said bookings have been trending favorably, and its backlog grew during 2018, but that revenue continues to be impacted by long project life-cycles caused by delays faced by customers in the construction of new cultivation facilities.   

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Quarterly operating expenses increased by 21 percent to $1,941,000 compared with $1,610,000 for the three months a year ago. The increase was attributed to an increase in selling, general and administrative expenses of $356,000, and an increase in advertising and marketing expenses of $14,000, offset by a decrease in product development expense of $39,000.

Surna said there are eight factors slowing its realization of revenue. They are:

• The large number of first-time participants interested in the indoor cannabis cultivation business;
• The complexities and uncertainties involved in obtaining state and local licensure and permitting;
• Local and state government delays in approving licenses and permits due to lack of staff or the large number of pending applications, especially in states where there is no cap on the number of cultivators;
• The customer’s need to obtain cultivation facility financing;
• The time needed, and coordination required, for customers to acquire real estate and properly design and build the facility (to the stage when climate control systems can be installed);
• The large price tag and technical complexities of the climate control and air sanitation system;
• The availability of power;
• Delays that are typical in completing any construction project.