Surna retools operations following lack of cash flow in 2018

BOULDER — Surna Inc. (OTC: SRNA), a manufacturer of environmental-control and air-sanitation systems for indoor cannabis-cultivation facilities, posted a net loss of $4.7 million in 2018, or a loss of 2 cents per share

It’s a bit of an improvement on 2017, when the company had a net loss of $4.9 million, or 3 cents per share. Total shares grew from 183 million in 2017 to 219 million in 2018.

Surna had a Q4 2018 net loss of $816,000, a significant improvement over the same period the year prior, when it lost $1.4 million.

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The Boulder-based company also grew revenue — from $7.2 million in 2017 to nearly $9.6 million in 2018.

Fourth-quarter revenue was nearly $2.2 million, down $114,000 — or 5 percent — from Q4 2017.

The less-than-stellar results have triggered a major overhaul for the company.

“As previously configured, Surna was not operating profitably or generating positive cash flow,” CEO Tony McDonald said in a prepared statement. “We are re-focusing the business, and re-calibrating what we do and how we do it. Quite simply, it’s a top-to-bottom reset, and the details of our plan have been articulated in our recent letter to shareholders…. As with any undertaking of this nature, the turnaround will take time and we will experience setbacks along the way. Nonetheless, we are confident that future results will be reflective of Surna’s changed approach.”

The company’s new business model will seek to reduce reliance on new-build facility projects, which generate inconsistent revenue and cash flow, the company said. The plan is to establish revenue from “lifecycle” operational and facility management offerings instead. Surna will also operate with a more disciplined expense, cash and working capital management and become financially self-sustaining by achieving an operating profit and raising capital for strategic initiatives when there is a justified return on investment.

Surna added that it plans to expand its business with customers by offering a broader range of products and services and addressing a wider range of customer needs. It expects to implement the plan over two years.

Those wider offerings will include pre-build services such as engineering, vendor management and rebate incentive consulting. The goal is to support customers from before construction to 20 years after.