Net Revenue Increases by 168% Year-over-Year & Adjusted Net Income Increases 174% Year-over-Year Driven by Continued Execution of Organic Growth Strategy
Boulder, Colorado, Aug. 10, 2021 (GLOBE NEWSWIRE) —
Surna Inc. (OTCQB: SRNA), operating as Surna Cultivation Technologies, announced today operating and financial results for the three months and year to date ended June 30, 2021.
We will be hosting an investor conference call to discuss our second quarter 2021 financial results and to provide updates on our recent business developments and progress on our strategic growth plan. The call will be held on Tuesday, August 17, 2021, at 4:00 p.m. Eastern Time.
To access the investor call via telephone
:
Dial-In Number: 1-973-528-0008
Access Code: 647802
To access the investor call via the Internet
:
Webcast URL:
https://www.webcaster4.com/Webcast/Page/2020/42061
Interested parties, with contact information supplied, may submit questions to the Company prior to the call to
[email protected]
. These questions, along with all live questions, will be answered in the time available. For those unable to participate in the investor conference call at that time, a replay will be available on the investor relations section of our website at
https://surna.com/investor-relations/
beginning on August 18, 2021, at 4:00 p.m. Eastern Time (and will remain available until August 30, 2021).
Three Months Ended June 30, 2021 Financial Results:
- Total revenue for the three months ended June 30, 2021 was $4.5 million compared to $1.7 million for the same period last year, or a 168% year over year increase.
- Total gross profit for the three months ended June 30, 2021 was $1.3 million compared to $0.3 million for the same period last year, or a 367% year over year increase.
- Operating income (loss) for the three months ended June 30, 2021 was $0.1 million compared to $(0.6) million for the same period last year or a 119% year over year increase.
-
Adjusted net income (loss)
1
for the three months ended June 30, 2021 was $0.4 million compared to $(0.5) million for the same period last year, or a 174% year over year increase.
[1]
Adjusted net income (loss), a Non-GAAP metric, is defined as GAAP net income (loss), after adjustment for non-cash equity compensation expense, other non-cash equity expense, and depreciation expense. The Company considers this a key financial metric as we focus on achieving breakeven or better operating cash flow. For the three months ended June 30, 2021 and 2020, adjusted net income is calculated as follows:
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Calculation of Adjusted Net Income at June 30: |
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( in thousands of US Dollars) |
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For the three months ended June 30: |
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|
|
|
2021 |
|
|
|
|
|
|
2020 |
|
||||||
|
GAAP Net Income (Loss): |
|
$ |
265 |
|
|
|
|
|
$ |
(614 |
) |
|||||
|
Non-Cash Add Backs: |
||||||||||||||||
|
Stock Based Compensation |
71 |
107 |
||||||||||||||
|
Depreciation & Amortization |
17 |
29 |
||||||||||||||
|
Total Non-Cash Add-Backs: |
88 |
136 |
||||||||||||||
|
Adjusted Net Income (Loss): |
|
$ |
353 |
|
|
|
|
|
$ |
(478 |
) |
|||||
Six Months Ended June 30,
2021
Financial Results:
- Total revenue for the six months ended June 30, 2021 was $6.9 million compared to $3.5 million for the same period last year, or a 97% year over year increase.
- Total gross profit for the six months ended June 30, 2021 was $1.6 million compared to $0.7 million for the same period last year, or a 123% year over year increase.
- Operating loss for the six months ended June 30, 2021 was $0.6 million compared to $1.6 million for the same period last year, or a 63% year over year decrease.
-
Adjusted net loss
2
for the six months ended June 30, 2021 was $0.3 million compared to $1.2 million for the same period last year, or a 75% year over year decrease. - As of June 30, 2021, our cash and cash equivalents were $1.6 million compared to $2.3 million as of December 31, 2020. We used $1.1 million in cash for our operating activities during the six months ended June 30, 2021. Our working capital deficit was $2.1 million as of June 30, 2021, compared to $2.2 million as of December 31, 2020.
[2]
Adjusted net income (loss), a Non-GAAP metric, is defined as GAAP net income (loss), after adjustment for non-cash equity compensation expense, other non-cash equity expense, and depreciation expense. The Company considers this a key financial metric as we focus on achieving breakeven or better operating cash flow. For the six months ended June 30, 2021 and 2020, adjusted net income is calculated as follows:
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Calculation of Adjusted Net Income at June 30: |
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|
( in thousands of US Dollars) |
||||||||||||||||
|
For the six months ended June 30, 2021: |
||||||||||||||||
|
|
|
2021 |
|
|
|
2020 |
|
|||||||||
|
GAAP Net Income (Loss): |
|
$ |
(528 |
) |
|
$ |
(1,552 |
) |
||||||||
|
Non-Cash Add Backs: |
||||||||||||||||
|
Stock Based Compensation |
198 |
298 |
||||||||||||||
|
Depreciation & Amortization |
33 |
58 |
||||||||||||||
|
Total Non-Cash Add-Backs: |
231 |
356 |
||||||||||||||
|
Adjusted Net Income (Loss): |
|
$ |
(297 |
) |
|
$ |
(1,196 |
) |
||||||||
Recent Sales Contract and Backlog Information; Production and Vendor Delays
During the second quarter of 2021 we had net bookings totaling approximately $1 million. Our backlog reduced to $8 million. Despite strong revenue in the second quarter, we continue to be affected by production and shipping delays from certain suppliers. COVID-19 is disrupting shipping around the U.S. and globally. Shipping companies are operating with reduced personnel, and there are strict screening actions in U.S. ports causing a backup of imported parts deliveries.
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|
For the quarter ended |
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|
|
June 30, 2020 |
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September 30, 2020 |
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December 31, 2020 |
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March 31, 2021 |
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June 30, 2021 |
|
||||||
| Backlog, beginning balance | $ | 8,875,000 | $ | 5,592,000 | $ | 8,198,000 | $ | 8,448,000 | $ | 11,578,000 | ||||||||||
| Net bookings, current period | $ | (1,601,000 | ) | $ | 4,241,000 | $ | 3,637,000 | $ | 5,497,000 | $ | 919,000 | |||||||||
| Recognized revenue, current period | $ | 1,682,000 | $ | 1,635,000 | $ | 3,387,000 | $ | 2,367,000 | $ | 4,510,000 | ||||||||||
| Backlog, ending balance | $ | 5,592,000 | $ | 8,198,000 | $ | 8,448,000 | $ | 11,578,000 | $ | 7,987,000 | ||||||||||
Organic Growth Strategy Update
As we noted in our press release of May 4, 2021, we have updated our organic growth strategy to include addressing new markets, adding new products and services, and adopting a new trade name, Surna Cultivation Technologies. In the second quarter, we continued executing against this strategy with the addition of our EnviroPro air handler line and the introduction of our architectural design services in early Q3. We encourage readers to see the MD&A section of our Form 10-Q dated and filed today, for further explanation of this and our corporate strategy.
Tony McDonald, Chairman & CEO, commented: “In the second quarter we saw the second-best quarter in our history for revenue and adjusted net income. Unfortunately, our backlog reduced with lower than anticipated bookings due to several projects’ projected closing dates pushing into the second half of 2021. However, our future project pipeline is robust with our increased product offerings and we believe that the sales momentum that has been building over the last four quarters will accelerate as we continue to execute our growth strategy.”
Pandemic Impact and Recovery
In our response to the COVID-19 pandemic and the government and business pandemic measures, the Company took and continues to take measures to adjust its operations as necessary. In early 2020 the Company reduced expenses in light of decreased orders and preserved cash, many of which actions were reversed by the end of the year when orders picked up and the overall business climate improved. Because the pandemic continues in different parts of the world, and it and its effects are still affecting business in different ways in the United States, the Company continues to actively monitor its operations and sales efforts and will make adjustments to its operations as necessary.
About
Surna
Inc.
Surna Inc. (
www.surna.com
), operating as Surna Cultivation Technologies, is an industry leader in controlled environment agriculture (CEA) facility design and technologies. We provide full-service licensed architectural and mechanical, electrical, and plumbing (MEP) engineering services, carefully curated HVACD equipment, and proprietary controls systems. Our team of project managers, licensed professional architects and engineers, technology and horticulture specialists and systems integrations experts help our customers by precisely designing for their unique applications. Through our partnership with a certified service contractor network we provide installation and maintenance services to assist in a smooth build-out and optimal facility performance. We have been providing solutions to indoor growers for over 15 years and have served over 800 cultivators with over 200 of them being large, commercial projects.
Headquartered in Boulder, Colorado, we leverage our experience in this space to bring value-added solutions to our customers that help improve their overall crop quality and yield, optimize energy and water efficiency, and satisfy evolving state and local codes, permitting and regulatory requirements.
Forward Looking Statements
This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect our current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release, including the factors set forth in “Risk Factors” set forth in our annual and quarterly reports filed with the Securities and Exchange Commission (“SEC”), and subsequent filings with the SEC. Please refer to our SEC filings for a more detailed discussion of the risks and uncertainties associated with our business, including but not limited to the risks and uncertainties associated with our business prospects and the prospects of our existing and prospective customers; the inherent uncertainty of product development; regulatory, legislative and judicial developments, especially those related to changes in, and the enforcement of, cannabis laws; increasing competitive pressures in our industry; and relationships with our customers and suppliers. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. The reference to
Surna’s
website has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release.
Non-GAAP Financial Measures
To supplement our financial results on U.S. generally accepted accounting principles (“GAAP”) basis, we use non-GAAP measures including net bookings and backlog, as well as other significant non-cash expenses such as stock-based compensation and depreciation expenses. We believe these non-GAAP measures are helpful in understanding our past performance and are intended to aid in evaluating our potential future results. The presentation of these non-GAAP measures should be considered in addition to our GAAP results and are not intended to be considered in isolation or as a substitute for financial information prepared or presented in accordance with GAAP. We believe these non-GAAP financial measures reflect an additional way to view aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.
|
Surna Marketing |
|
| Jamie English | |
| Vice President, Marketing Communications | |
|
[email protected] |
|
| (303) 993-5271 |
Surna
Inc.
Condensed Consolidated Balance Sheets
(in US Dollars except share
numbers
)
|
|
June 30, |
|
|
December 31, |
|
|||
|
|
2021 |
|
|
2020 |
|
|||
|
|
|
(Unaudited) |
|
|||||
|
ASSETS |
||||||||
|
Current Assets |
||||||||
| Cash and cash equivalents | $ | 1,643,463 | $ | 2,284,881 | ||||
| Accounts receivable (net of allowance for doubtful accounts of $188,311 and $165,098, respectively) | 234,450 | 33,480 | ||||||
| Inventory, net | 444,352 | 327,109 | ||||||
| Prepaid expenses and other | 1,986,977 | 1,037,823 | ||||||
| Total Current Assets | 4,309,242 | 3,683,293 | ||||||
|
Noncurrent Assets |
||||||||
| Property and equipment, net | 116,615 | 147,732 | ||||||
| Goodwill | 631,064 | 631,064 | ||||||
| Intangible assets, net | 6,937 | 7,227 | ||||||
| Deposits | 16,122 | – | ||||||
| Operating lease right-of-use asset | 245,037 | 343,950 | ||||||
| Total Noncurrent Assets | 1,015,775 | 1,129,973 | ||||||
|
TOTAL ASSETS |
$ | 5,325,017 | $ | 4,813,266 | ||||
|
LIABILITIES AND SHAREHOLDERS’ DEFICIT |
||||||||
|
CURRENT LIABILITIES |
||||||||
| Accounts payable and accrued liabilities | $ | 1,909,544 | $ | 1,784,961 | ||||
| Deferred revenue | 4,055,774 | 3,724,189 | ||||||
| Accrued equity compensation | 108,945 | 128,434 | ||||||
| Other liabilities | 37,078 | – | ||||||
| Current portion of operating lease liability | 261,187 | 266,105 | ||||||
| Total Current Liabilities | 6,372,528 | 5,903,689 | ||||||
|
NONCURRENT LIABILITIES |
||||||||
| Note payable and accrued interest | 516,172 | – | ||||||
| Other liabilities | 37,078 | 74,156 | ||||||
| Operating lease liability, net of current portion | 43,881 | 169,119 | ||||||
| Total Noncurrent Liabilities | 597,131 | 243,275 | ||||||
|
TOTAL LIABILITIES |
6,969,659 | 6,146,964 | ||||||
|
SHAREHOLDERS’ DEFICIT |
||||||||
| Preferred stock, $0.00001 par value; 150,000,000 shares authorized; 42,030,331 shares issued and outstanding | 420 | 420 | ||||||
| Common stock, $0.00001 par value; 350,000,000 shares authorized; 237,526,638 and 236,526,638 shares issued and outstanding, respectively | 2,376 | 2,366 | ||||||
| Additional paid in capital | 26,324,331 | 26,107,159 | ||||||
| Accumulated deficit | (27,971,769 | ) | (27,443,643 | ) | ||||
| Total Shareholders’ Deficit | (1,644,642 | ) | (1,333,698 | ) | ||||
|
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT |
$ | 5,325,017 | $ | 4,813,266 | ||||
Surna
Inc.
Condensed Consolidated Statements of Operations
(in US Dollars except share
numbers
)
(Unaudited)
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
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|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|||||
| Revenue, net | $ | 4,509,505 | $ | 1,682,424 | $ | 6,876,034 | $ | 3,492,349 | ||||||||
| Cost of revenue | 3,227,181 | 1,407,599 | 5,249,104 | 2,761,000 | ||||||||||||
| Gross profit | 1,282,324 | 274,825 | 1,626,930 | 731,349 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Advertising and marketing expenses | 168,042 | 95,053 | 345,187 | 243,974 | ||||||||||||
| Product development costs | 111,546 | 74,848 | 224,184 | 219,796 | ||||||||||||
| Selling, general and administrative expenses | 886,758 | 710,536 | 1,627,231 | 1,819,529 | ||||||||||||
| Total operating expenses | 1,166,346 | 880,437 | 2,196,602 | 2,283,299 | ||||||||||||
| Operating income/(loss) | 115,978 | (605,612 | ) | (569,672 | ) | (1,551,950 | ) | |||||||||
| Other income (expense): | ||||||||||||||||
| Other income (expense), net | 150,518 | 1,077 | 43,518 | 15,397 | ||||||||||||
| Interest expense | (1,254 | ) | (8,982 | ) | (1,972 | ) | (15,277 | ) | ||||||||
| Total other income (expense) | 149,264 | (7,905 | ) | 41,546 | 120 | |||||||||||
| Income/(loss) before provision for income taxes | 265,242 | (613,517 | ) | (528,126 | ) | (1,551,830 | ) | |||||||||
| Income taxes |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Net income/(loss) | $ | 265,242 | $ | (613,517 | ) | $ | (528,126 | ) | $ | (1,551,830 | ) | |||||
| Income/(loss) per common share – basic | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | |||||
| Income/(loss) per common share – diluted | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | |||||
| Weighted average number of common shares outstanding, basic | 237,449,715 | 236,526,638 | 236,990,726 | 233,794,550 | ||||||||||||
| Weighted average number of common shares outstanding, diluted | 240,828,867 | 236,526,638 | 236,990,726 | 233,794,550 | ||||||||||||
Surna
Inc.
Condensed Consolidated Statements of Cash Flows
(in US Dollars except share
numbers
)
(Unaudited)
|
|
For the Six Months Ended June 30, |
|
||||||
|
|
2021 |
|
|
2020 |
|
|||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (528,126 | ) | $ | (1,551,830 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and intangible asset amortization expense | 37,180 | 60,987 | ||||||
| Share-based compensation | 21,748 | 731,797 | ||||||
| Common stock issued for other expense | 67,000 | – | ||||||
| Provision for doubtful accounts | 23,213 | 3,150 | ||||||
| Provision for excess and obsolete inventory | (10,945 | ) | 191,446 | |||||
| Loss on disposal of assets | 8,042 | 4,124 | ||||||
| Amortization of ROU asset | 98,913 | 93,996 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (224,183 | ) | 51,886 | |||||
| Inventory | (106,299 | ) | 235,197 | |||||
| Prepaid expenses and other | (949,152 | ) | 72,811 | |||||
| Accounts payable and accrued liabilities | 124,583 | (90,178 | ) | |||||
| Deferred revenue | 331,585 | (576,483 | ) | |||||
| Accrued interest | 1,972 | 1,047 | ||||||
| Other liabilities | – | 20,241 | ||||||
| Lease deposit | (16,122 | ) | 51,000 | |||||
| Operating lease liability, net | (130,156 | ) | (106,363 | ) | ||||
| Accrued equity compensation | 108,945 | (433,566 | ) | |||||
| Net cash used in operating activities | (1,141,802 | ) | (1,240,739 | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Purchases of property and equipment | (15,316 | ) | – | |||||
| Proceeds from the sale of property equipment | 1,500 | – | ||||||
| Net cash used in investing activities | (13,816 | ) | – | |||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds from issuance of note payable | 514,200 | 554,000 | ||||||
| Net cash provided by financing activities | 514,200 | 554,000 | ||||||
| Net change in cash and cash equivalents | (641,418 | ) | (686,739 | ) | ||||
| Cash and cash equivalents, beginning of period | 2,284,881 | 922,177 | ||||||
| Cash and cash equivalents, end of period | $ | 1,643,463 | $ | 235,438 | ||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | – | $ | – | ||||
| Income taxes paid | $ | – | $ | – | ||||
