Welcome to Technical420! Today, we are fortunate to have Tony McDonald, CEO of Surna Inc. (OTCQB: SRNA), join us to discuss the Surna platform and how they are capitalizing on current cannabis sector trends. Surna is one of the premier names in controlled environment agriculture and are a legacy operator in the cannabis space with 15 years’ experience.
- Can you walk us through the thought process behind the company’s recent name change to Surna Cultivation Technologies?
Surna has come a long way from its early days of being a hydronic cooling provider for the cannabis industry. Not only do we have one of the strongest licensed MEP offerings as an equipment provider in the cannabis industry, we’ve also added a wide and ever-growing portfolio of new products and services. These new products and services are not only relevant to the cannabis industry, but to the overall controlled environment agriculture industry (CEA) as well.
Other companies will try to sell cultivators, whether they are cultivating for cannabis or other indoor food products, on a design that fits the limited equipment they offer. We’re different. Our designs and equipment offerings span a wide variety of technologies, and we didn’t feel that Surna Inc. alone, got that message across, hence the name change to Surna Cultivation Technologies.
- Do you have plans to enter verticals outside of the cannabis sector? If so, what is the company’s strategy to enter those markets?
Yes, we are adding resources to make our products and services more visible to the CEA market. While we haven’t aggressively pursued this market in the past, we’re actually already there. We’ve completed a couple of projects in the past, and more recently signed a contract with a large commercial CEA company. Over the last couple of years we’ve been adding products to our portfolio that not only provide us more opportunities in the cannabis industry that we’ve historically served, but also bring us strong opportunities in the CEA market. We also are continuing to add more products as well as services to compliment both of these markets.
To ensure this new market knows about us, we are expanding the focus of our sales teams as well as adding marketing resources.
- Indoor cannabis grows have come under fire as of recent in regard to energy consumption and carbon footprint. How is Surna working with clients to reduce their energy expenditure as well as making progress to eventually become carbon neutral?
I wouldn’t really say this is anything recent. It’s no secret that the cannabis industry has been criticized for a long time for the amount of energy it uses. But improving energy efficiency in controlled environment cultivation was one of our founding principles. We understand that energy use is in the top 3 recurring monthly expenses for most cultivators, so the fact is, improving energy efficiencies in cultivation is one of the most important things we can do for our customers.
To help, Surna provides some very tangible services when designing the facility to optimize energy use. The first is that our mechanical engineers understand the unique requirements of these facilities and how they use energy. They are able to clearly articulate to our customers the way the various systems work and their pros and cons as they relate to energy efficiency in their specific facility. Secondly, our engineering team understands how the various lighting technologies affect energy efficiencies. Understanding lighting means understanding how much of the light produced is actually useful to the plant and how much is wasted, and the impact radiant heat has on vapor pressure deficit.
Surna has also been a great source of education. We can share ways a cultivator can help themselves as well and speak at conventions and webinars on this subject. Several areas we tell cultivators to concentrate efforts on to help with energy costs is to be diligent with their maintenance programs, to work with their utility companies for rebates and understand peak energy use, to focus on higher yields and to use test rooms whenever possible to try out new technologies.
- We have seen several headlines surrounding Surna’s “record backlog”. Can you elaborate on what that means and how it will translate into future revenue?
Yes, during the first quarter of this year our backlog grew to $11.6 million, which is the second highest in our history. This was the culmination of a couple of banner booking quarters that also bumped up against some supplier shipping delays that most companies experienced due to Covid-19. As a supplier issues are resolved over the next couple quarters, we will be able to fulfill our backlogged orders which will convert into revenue.
- How does the company currently look from a capitalization perspective and have you considered up listing to a major exchange such as the Nasdaq?
Our market cap continues to grow. At the end of 2020 it was $8.24 million, grew to $15.89 million at the end of Q1 2021 and was at $17.22 million on May 17th of this year. However, we recognize that to continue to grow we require revenue and margin growth that in turn requires capital. As I stated in our 10-K in March, uplisting to a national exchange will enhance our stock as a currency for both potential investors and for potential acquisition targets, as well as enhancing our credibility in the eyes of potential customers.
- What do you see as some major catalysts for Surna’s core business on a go forward basis?
We’ve publicly put forward the three pillars of our corporate strategy and will continue driving these efforts. This strategy includes 1. Pursue aggressive organic growth, 2. Seek strategic relationships, mergers, and acquisitions to add to our existing business, and 3. Pursue an uplisting to a national exchange and seek additional growth capital.
Our organic growth strategy includes increasing our addressable markets, from primarily cannabis to the broader CEA market, continuing to add new products and services that provide more opportunities in both markets, and our new trade name, that captures our new capabilities and markets and makes us easier to find.
Pursuant to an agreement between StoneBridge Partners LLC and Surna Inc. (SRNA) we have been hired for a period of 180 days beginning April 12, 2021 and ending October 12, 2021 to publicly disseminate information about (SRNA) including on the Website and other media including Facebook and Twitter. We are being paid $7,000 per month (SRNA) for or were paid “0” shares of restricted common shares. We own zero shares of (SRNA), which we purchased in the open market. We plan to sell the “ZERO” shares of (SRNA) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (SRNA) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.