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  • Surna Reports Q3 2020 Results and Recent Sales Contracts
    GlobeNewswire

    Surna Reports Q3 2020 Results and Recent Sales Contracts

    Announces $4.4 million in New Sales Contracts in Q3, among highest in Company history Boulder, Colorado, Nov. 12, 2020 (GLOBE NEWSWIRE) -- Surna Inc. (OTCQB: SRNA) announced today operating and financial results for the three and nine months ended September 30, 2020.Financial Highlights ●As of September 30, 2020, our cash was $2,072,000, compared to cash of $922,000 as of December 31, 2019. Our working capital deficit was $1,793,000 as of September 30, 2020, compared to a working capital deficit of $1,437,00 as of December 31, 2019. Our continued focus on disciplined cash management has helped us weather the financial uncertainties of the current pandemic.      ●Our Q3 2020 gross profit margin was 32.3% compared to 28.6% for Q3 2019, an increase of 3.6 percentage points.      ●Our Q3 2020 revenue was $1,635,000, which represents a 70% decrease compared to Q3 2019 revenue of $5,524,000.      ●For Q3 2020, our operating loss and net loss was $283,000 and $270,000, respectively. This compares to a Q3 2019 operating income and net income of $277,000 and $222,000, respectively.      ●Our Q3 2020 adjusted net loss was $186,000, compared to a Q3 2019 adjusted net income of $365,000. Previous Downsizing of Operations As we noted in our 2019 Annual Report on Form 10-K, filed in March of this year, recent events in the national and global economies have had an adverse impact on our operations and financial condition, including constraints on capital availability for us and our customers and prospects who have commenced, or are contemplating, new and expanded cannabis cultivation facilities. Most recently, the response to this coronavirus pandemic by federal, state and local governments in the U.S. has resulted in significant market and business disruptions across many industries and affecting businesses of all sizes. This pandemic has also further tightened capital access for most businesses. The full extent to which COVID-19 will impact our business and financial results will depend on future developments, which are uncertain and cannot be predicted at this time.Recent Sales Contracts and Stability of Operations During the third quarter of 2020, we entered into new sales contracts totaling approximately $4.4 million, including our largest-ever single contract for $2.8 million, most of which we expect to be realized as revenue in 2020. This level of contract booking is among the highest for the Company in the last several years. To meet this new demand, we have restored our hourly workforce to full-time status and recalled those previously on furlough.Despite this good news, the general economic conditions, government mandates about permitted work and working environments, and working capital constraints, all of which effect both our customers and us and our downsizing may have an adverse effect on our ability to effectively market our services, generate new customer orders, and contract implementation. If our customers or prospects are unable to continue operations or obtain project financing and we are unable to increase revenues or otherwise generate cash flows from operations, we will not be able to successfully execute on our various strategies and initiatives to grow our business. If these actions do not meet our expectations, or additional near-term capital is not available, we may not be able to continue our operations.Product Development InitiativesWe have a sales and marketing program that generates many prospective customer relationships. However, our limited range of higher cost products, mostly chilled water systems, reduces the number of customer prospects who can afford to buy from us. In 2018 we started an aggressive effort to broaden our product and service offerings to provide a wider range of HVAC technical solutions (see chart in our Form 10-Q filed November 12, 2020). In 2018 we began to offer stamped mechanical plan sets and our first 4-pipe chilled water systems. In 2019 we broadened our engineering services to include full MEP (Mechanical, Electrical, and Plumbing) design services. We also began to offer our SentryIQ™ Controls System. And in 2020 we added new products to include: split system DX (direct expansion) with integrated dehumidification, packaged DX systems with modulating hot gas reheat, heat recovery chiller/boiler for 4-pipe systems, and we recently added our StrataAir™ racking airflow solution to address customer needs for multi-level cultivation facilities. These various systems provide solutions to answer a broader range of technical and cost constraints and we will continue to develop and offer new solutions to our customers’ problems, so that a broader group of growers can take advantage of our engineering expertise and capabilities. We believe these new products and services will increase our addressable market and increase sales, further leveraging our investment in sales and marketing.The success of our product development initiative can be seen below, which documents the number of commercial-scale projects (over $100,000 sales) that have included one or more of our new products:YearPercent Using New Products 201835% 201976% 2020(through Q3): 100% Tony McDonald, CEO, commented: “The third quarter of this year has seen a dramatic turnaround in Surna’s new project bookings from the first half of the year. Our view has been that cultivation construction projects were delayed and not abandoned as a result of uncertainty around the economic impact of the pandemic. And while we did experience one large and several smaller project cancellations in the second and third quarters, we have been optimistic that project orders would rebound, especially given the continued growth of retail product sales. Fortunately, we saw just that in the third quarter.”About Surna Inc. Surna Inc. (www.surna.com) designs, engineers and sells cultivation technologies for controlled environment agriculture including: (i) liquid-based process cooling systems and other climate control systems, (ii) air handling equipment and systems, (iii) a full-service engineering package for designing and engineering commercial scale thermodynamic systems specific to cannabis cultivation facilities, and (iv) automation and control devices, systems and technologies used for environmental, lighting and climate control. Our customers include commercial, state- and provincial-regulated cannabis growers in the U.S. and Canada as well as other international locations, including those growers building new facilities and those expanding or retrofitting existing facilities. Currently, our revenue stream is derived primarily from supplying our products, services and technologies to commercial indoor and hybrid sealed greenhouse facilities ranging from several thousand to more than 100,000 square feet.Headquartered in Boulder, Colorado, we leverage our experience in this space to bring value-added climate control solutions to our customers that help improve their overall crop quality and yield, optimize energy and water efficiency, and satisfy the evolving state and local codes, permitting and regulatory requirements. Although our customers do, we neither produce nor sell cannabis.Forward Looking StatementsThis 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 MeasuresTo 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.Statement about Cannabis MarketsThe use, possession, cultivation, and distribution of marijuana is prohibited by U.S. federal law for medical and recreational purposes. Although certain states have legalized medical and recreational cannabis, companies and individuals involved in the sector are still at risk of being prosecuted by federal authorities. Further, the landscape in the cannabis industry changes rapidly. This means that at any time the city, county, or state where cannabis is permitted can change the current laws and/or the federal government can supersede those laws and take prosecutorial action. Given the uncertain legal nature of the cannabis industry, it is imperative that investors understand that investments in the cannabis industry should be considered very high risk. A change in the current laws or enforcement policy can negatively affect the status and operation of our business, require additional fees, stricter operational guidelines and unanticipated shut-downs. Surna Marketing  Jamie English  Managing Director of Marketing  jamie.english@surna.com  (303) 993-5271 Surna Inc. Consolidated Balance Sheets  September 30,  December 31,    2020  2019    (Unaudited)      ASSETS         Current Assets         Cash and cash equivalents $2,072,312  $922,177  Accounts receivable (net of allowance for doubtful accounts of $164,823 and $151,673, respectively)  97,257   138,357  Inventory, net  521,650   1,231,243  Prepaid expenses and other  757,498   269,491  Total Current Assets  3,448,717   2,561,268  Noncurrent Assets         Property and equipment, net  176,823   257,923  Goodwill  631,064   631,064  Intangible assets, net  7,371   11,930  Deposits  -   51,000  Operating lease right-of-use asset  392,263   534,133  Total Noncurrent Assets  1,207,521   1,486,050            TOTAL ASSETS $4,656,238  $4,047,318            LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)                   CURRENT LIABILITIES         Accounts payable and accrued liabilities $1,397,770  $1,832,959  Deferred revenue  3,489,302   1,444,472  Accrued equity compensation  101,472   503,466  Current portion of operating lease liability  253,392   217,843  Total Current Liabilities  5,241,936   3,998,740            NONCURRENT LIABILITIES         Note payable and accrued interest  556,444   -  Other liabilities  41,396   -  Operating lease liability, net of current portion  238,139   404,209  Total Noncurrent Liabilities  835,979   404,209            TOTAL LIABILITIES  6,077,915   4,402,949            Commitments and Contingencies (Note 7)  -   -            SHAREHOLDERS’ EQUITY (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; 236,526,638 and 228,216,638 shares issued and outstanding, respectively  2,366   2,283  Additional paid in capital  26,082,733   25,326,593  Accumulated deficit  (27,507,196)  (25,684,927) Total Shareholders’ Equity (Deficit)  (1,421,677)  (355,631)           TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) $4,656,238  $4,047,318   Surna Inc. Consolidated Statements of Operations (Unaudited)  For the Three Months Ended September 30,  For the Nine Months Ended September 30,    2020  2019  2020  2019  Revenue, net $1,634,669  $5,524,105  $5,127,018  $11,505,728                    Cost of revenue  1,108,758   3,943,758   3,869,758   7,987,516                    Gross profit  525,911   1,580,347   1,257,260   3,518,212                    Operating expenses:                 Advertising and marketing expenses  89,695   123,566   333,669   415,479  Product development costs  84,433   98,145   304,229   326,659  Selling, general and administrative expenses  634,447   1,081,294   2,453,976   3,284,485  Total operating expenses  808,575   1,303,005   3,091,874   4,026,623                    Operating income (loss)  (282,664)  277,342   (1,834,614)  (508,411)                   Other (expense) income:                 Other (expense) income, net  13,621   (55,319)  29,018   (30,146) Interest expense  (1,396)  -   (16,673)  -  Total other (expense) income  12,225   (55,319)  12,345   (30,146)                   Income (loss) before provision for income taxes  (270,439)  222,023   (1,822,269)  (538,557)                   Income taxes  -   -   -   -                    Net income (loss) $(270,439) $222,023  $(1,822,269) $(538,557)                   Income (loss) per common share – basic and dilutive $(0.00) $0.00  $(0.01) $(0.00)                   Weighted average number of common shares outstanding, basic  236,526,638   227,918,377   234,711,893   227,475,335                    Weighted average number of common shares outstanding, dilutive  236,526,638   237,028,377   234,711,893   227,475,335  Surna Inc. Consolidated Statements of Cash Flows (Unaudited)  For the Nine Months Ended September 30,    2020  2019  Cash Flows From Operating Activities:         Net loss $(1,822,269) $(538,557) Adjustments to reconcile net loss to net cash provided by (used in) operating activities:         Depreciation and intangible asset amortization expense  90,867   129,723  Share-based compensation  252,757   675,963  Provision for doubtful accounts  13,150   43,130  Provision for excess and obsolete inventory  (5,117)  (213,556) Loss on disposal of assets  4,124   115,359            Changes in operating assets and liabilities:         Accounts receivable  27,950   60,436  Inventory  714,709   213,271  Prepaid expenses and other  (488,007)  (568,031) Operating lease right-of-use asset  62,350   -  Accounts payable and accrued liabilities  (397,181)  213,044  Deferred revenue  2,044,830   1,633,195  Operating lease liability, net  -   (13,856) Accrued equity compensation  101,472   -  Net cash provided by operating activities  599,635   1,750,121            Cash Flows From Investing Activities         Purchases of property and equipment  (3,500)  (3,043) Net cash used in investing activities  (3,500)  (3,043)           Cash Flows From Financing Activities         Proceeds from issuance of note payable  554,000   -  Net cash provided by financing activities  554,000   -            Net increase in cash  1,150,135   1,747,078  Cash, beginning of period  922,177   253,387  Cash, end of period $2,072,312  $2,000,465            Non-cash investing and financing activities:         Interest paid $-  $-  Income taxes paid $-  $-

  • GlobeNewswire

    Surna Introduces Expanded Services and Technology Offerings

    Announces Full MEP Design Services with Expansion of HVAC TechnologiesBoulder, Colorado, Aug. 25, 2020 (GLOBE NEWSWIRE) -- Surna Inc. (OTCQB: SRNA) today announced an expansion of its portfolio of services and products.While Surna has been historically known for its expertise in 2 and 4-pipe chilled water solutions (also known as hydronic cooling and dehumidification), its new technology offerings include: * Direct expansion (DX) units with standalone dehumidification options, including split systems, mini-splits and packaged roof top units (RTUs).   * Complex DX system options with integrated dehumidification via hot gas reheat and wintertime economization.   * Desiccant solutions for low humidity applications.   * Racking solutions for optimal airflow designs in tiered layouts.Many clients have already benefited from Surna’s expanded MEP (mechanical, electrical, plumbing) engineering services incorporating the new technologies. Four recent contracts include the following designs: * Project in Missouri: Surna will provide engineering design services for cooling, dehumidification and wintertime economization using its new Complex DX RTU systems in a 33,000 square foot facility. Surna is also providing its new racking airflow design and technology in this tiered grow room design.   * Project in Iowa: Surna is providing its design services and DX split systems with hot gas reheat for a 5,000 square foot indoor drying facility for industrial hemp production.   * Project in Michigan: Surna provided engineering design services for cooling and dehumidification using its new DX split systems with hot gas reheat in a 1,200 square foot facility.   * Project in Pennsylvania Surna will provide engineering design services using its new Complex DX RTU systems with integrated dehumidification in a 52,000 square foot facility.The new technology offerings are driven by customer feedback and are evidence of Surna’s commitment to deliver innovative environmental control solutions to its customers, with the added convenience of obtaining products and MEP design services from a single source.“These new products and services demonstrate Surna’s evolution and deliver on promises we have made to our customers and shareholders,” said Tony McDonald, Surna’s Chairman and CEO. “With this broader range of design services and greatly expanded product portfolio, we are able to provide optimal environmental control solutions for virtually any size and sophistication of cultivation facilities.”About Surna Inc. Surna Inc. (www.surna.com) designs, engineers and sells cultivation technologies for controlled environment agriculture including: (i) liquid-based process cooling systems and other climate control systems, (ii) air handling equipment and systems, (iii) a full-service engineering package for designing and engineering commercial scale thermodynamic systems specific to cannabis cultivation facilities, and (iv) automation and control devices, systems and technologies used for environmental, lighting and climate control. Our customers include commercial, state- and provincial-regulated cannabis growers in the U.S. and Canada as well as other international locations, including those growers building new facilities and those expanding or retrofitting existing facilities. Currently, our revenue stream is derived primarily from supplying our products, services and technologies to commercial indoor and hybrid sealed greenhouse facilities ranging from several thousand to more than 100,000 square feet.Headquartered in Boulder, Colorado, we leverage our experience in this space to bring value-added climate control solutions to our customers that help improve their overall crop quality and yield, optimize energy and water efficiency, and satisfy the evolving state and local codes, permitting and regulatory requirements. Although our customers do, we neither produce nor sell cannabis.Statement about Cannabis MarketsThe use, possession, cultivation, and distribution of marijuana is prohibited by U.S. federal law for medical and recreational purposes. Although certain states have legalized medical and recreational cannabis, companies and individuals involved in the sector are still at risk of being prosecuted by federal authorities. Further, the landscape in the cannabis industry changes rapidly. This means that at any time the city, county, or state where cannabis is permitted can change the current laws and/or the federal government can supersede those laws and take prosecutorial action. Given the uncertain legal nature of the cannabis industry, it is imperative that investors understand that investments in the cannabis industry should be considered very high risk. A change in the current laws or enforcement policy can negatively affect the status and operation of our business, require additional fees, stricter operational guidelines and unanticipated shutdowns.Surna MarketingJamie English Managing Director of Marketing jamie.english@surna.com (303) 993-5271

  • GlobeNewswire

    Surna Reports Q2 2020 Results and Recent Sales Contracts

    Announces $3.1 million in New Sales Contracts in July Boulder, Colorado, Aug. 11, 2020 (GLOBE NEWSWIRE) -- Surna Inc. (OTCQB: SRNA) announced today operating and financial results for the three and six months ended June 30, 2020, as well as recent new sales contracts.Financial Highlights ●Our Q2 2020 revenue was $1,682,000, which represents a 60% decrease compared to Q2 2019 revenue of $4,210,000.      ●For Q2 2020, our operating loss and net loss was $606,000 and $614,000, respectively. This compares to a Q2 2019 operating income and net income of $136,000 and $140,000, respectively.      ●Our Q2 2020 adjusted net loss was $478,000, compared to a Q2 2019 adjusted net income of $394,000.      ●Our Q2 2020 gross profit margin was 16.3% compared to 34.4% for Q2 2019, a decrease of 18.1 percentage points.      ●As of June 30, 2020, our cash was $235,000, compared to cash of $922,000 as of December 31, 2019. Our working capital deficit was $1,599,000 as of June 30, 2020, compared to a working capital deficit of $1,437,00 as of December 31, 2019.      ●During the month of July 2020, we entered into several new sales contracts totaling approximately $3.1 million, including our largest-ever single contract for $2.8 million, most of which we expect to be realized as revenue in 2020. Extended Downsizing of Operations and New Sales ContractsAs we noted in our 2019 Annual Report on Form 10-K, filed in March of this year, recent events in the national and global economies have had an adverse impact on our operations and financial condition, including constraints on capital availability for us and our customers and prospects who have commenced, or are contemplating, new and expanded cannabis cultivation facilities. Most recently, the response to this coronavirus pandemic by federal, state and local governments in the U.S. has resulted in significant market and business disruptions across many industries and affecting businesses of all sizes. This pandemic has also further tightened capital access for most businesses. The full extent to which COVID-19 will impact our business and financial results will depend on future developments, which are uncertain and cannot be predicted at this time.In late March we implemented a downsizing of our operations, including workforce reductions, reductions of salaried employee compensation, and a reduction of hours worked to preserve cash resources, cut costs and focus our operations on customer-centric sales and project management activities. In April we were able to secure a potentially forgivable loan in the amount of $554,000, which allowed us to reinstate our employee base. In June we took further measures to reduce our operational expenses by furloughing several employees and reducing salaries for all employees with an eye towards meeting our customers’ requirements and continuing our operations while husbanding our resources. The duration and likelihood of success of this downsizing effort, workforce reduction and cost-cutting measures are uncertain.The general economic conditions, government mandates about permitted work and working environments, and working capital constraints, all of which effect both our customers and us and our downsizing may have an adverse effect on our ability to effectively market our services, generate new customer orders, and contract implementation. If our customers or prospects are unable to continue operations or obtain project financing and we are unable to increase revenues or otherwise generate cash flows from operations, we will not be able to successfully execute on our various strategies and initiatives to grow our business. If these actions do not meet our expectations, or additional near-term capital is not available, we may not be able to continue our operations.Recent Sales ContractsDuring the month of July 2020, we entered into several new sales contracts totaling approximately $3.1 million, including our largest-ever single contract for $2.8 million, most of which we expect to be realized as revenue in 2020.Tony McDonald, CEO, commented: “Despite a difficult second quarter, Surna has continued to market, sell, engineer manufacture and ship to deliver on our project commitments. And while we, and indeed the entire world economy, are weathering unpredictable and unprecedented times, we are very encouraged by the new sales contracts we have booked since the beginning of the third quarter. The $3.1 million in new sales contracts, coming in just the first month of the quarter, already marks the third quarter of 2020 as among the strongest in our Company’s recent history.”About Surna Inc. Surna Inc. (www.surna.com) designs, engineers and sells cultivation technologies for controlled environment agriculture including: (i) liquid-based process cooling systems and other climate control systems, (ii) air handling equipment and systems, (iii) a full-service engineering package for designing and engineering commercial scale thermodynamic systems specific to cannabis cultivation facilities, and (iv) automation and control devices, systems and technologies used for environmental, lighting and climate control. Our customers include commercial, state- and provincial-regulated cannabis growers in the U.S. and Canada as well as other international locations, including those growers building new facilities and those expanding or retrofitting existing facilities. Currently, our revenue stream is derived primarily from supplying our products, services and technologies to commercial indoor and hybrid sealed greenhouse facilities ranging from several thousand to more than 100,000 square feet.Headquartered in Boulder, Colorado, we leverage our experience in this space to bring value-added climate control solutions to our customers that help improve their overall crop quality and yield, optimize energy and water efficiency, and satisfy the evolving state and local codes, permitting and regulatory requirements. Although our customers do, we neither produce nor sell cannabis.Forward Looking StatementsThis 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 MeasuresTo 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.Statement about Cannabis MarketsThe use, possession, cultivation, and distribution of marijuana is prohibited by U.S. federal law for medical and recreational purposes. Although certain states have legalized medical and recreational cannabis, companies and individuals involved in the sector are still at risk of being prosecuted by federal authorities. Further, the landscape in the cannabis industry changes rapidly. This means that at any time the city, county, or state where cannabis is permitted can change the current laws and/or the federal government can supersede those laws and take prosecutorial action. Given the uncertain legal nature of the cannabis industry, it is imperative that investors understand that investments in the cannabis industry should be considered very high risk. A change in the current laws or enforcement policy can negatively affect the status and operation of our business, require additional fees, stricter operational guidelines and unanticipated shut-downs. Surna Marketing     Jamie English  Managing Director of Marketing  jamie.english@surna.com  (303) 993-5271 Surna Inc. Consolidated Balance Sheets  June 30,  December 31,    2020  2019     (Unaudited)      ASSETS         Current Assets         Cash and cash equivalents $235,438  $922,177  Accounts receivable (net of allowance for doubtful accounts of $154,823 and $151,673, respectively)  83,321   138,357  Inventory, net  804,600   1,231,243  Prepaid expenses and other  196,680   269,491  Total Current Assets  1,320,039   2,561,268  Noncurrent Assets         Property and equipment, net  208,232   257,923  Goodwill  631,064   631,064  Intangible assets, net  7,516   11,930  Deposits  -   51,000  Operating lease right-of-use asset  440,138   534,133  Total Noncurrent Assets  1,286,950   1,486,050            TOTAL ASSETS $2,606,989  $4,047,318            LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY                   CURRENT LIABILITIES         Accounts payable and accrued liabilities $1,753,786  $1,832,959  Deferred revenue  867,989   1,444,472  Accrued equity compensation  69,900   503,466  Current portion of operating lease liability  227,008   217,843  Total Current Liabilities  2,918,683   3,998,740            NONCURRENT LIABILITIES         Note payable and accrued interest  555,047   -  Other liabilities  20,241   -  Operating lease liability, net of current portion  288,682   404,209  Total Noncurrent Liabilities  863,970   404,209            TOTAL LIABILITIES  3,782,653   4,402,949            Commitments and Contingencies (Note 7)  -   -            SHAREHOLDERS’ (DEFICIT) EQUITY         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; 236,526,638 and 228,216,638 shares issued and outstanding, respectively  2,366   2,283  Additional paid in capital  26,058,307   25,326,593  Accumulated deficit  (27,236,757)  (25,684,927) Total Shareholders’ (Deficit) Equity  (1,175,664)  (355,631)           TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY $2,606,989  $4,047,318  Surna Inc. Consolidated Statements of Operations (Unaudited)  For the Three Months Ended June 30,  For the Six Months Ended June 30,    2020  2019  2020  2019  Revenue, net $1,682,424  $4,210,393  $3,492,349  $5,981,623                    Cost of revenue  1,407,599   2,762,601   2,761,000   4,043,758                    Gross profit  274,825   1,447,792   731,349   1,937,865                    Operating expenses:                 Advertising and marketing expenses  95,053   167,287   243,974   291,913  Product development costs  74,848   111,581   219,796   228,514  Selling, general and administrative expenses  710,536   1,032,605   1,819,529   2,203,191  Total operating expenses  880,437   1,311,473   2,283,299   2,723,618                    Operating income (loss)  (605,612)  136,319   (1,551,950)  (785,753)                   Other (expense) income:                 Other (expense) income, net  1,077   3,296   15,397   25,173  Interest expense  (8,982)  -   (15,277)  -  Total other (expense) income  (7,905)  3,296   120   25,173                    Income (loss) before provision for income taxes  (613,517)  139,615   (1,551,830)  (760,580)                   Income taxes  -   -   -   -                    Net income (loss) $(613,517) $139,615  $(1,551,830) $(760,580)                   Income (loss) per common share – basic and dilutive $(0.00) $0.00  $(0.01) $(0.00)                   Weighted average number of common shares outstanding, basic and dilutive  236,526,638   227,635,539   233,794,550   227,250,142  Surna Inc. Consolidated Statements of Cash Flows (Unaudited)  For the Six Months Ended June 30,    2020  2019  Cash Flows From Operating Activities:         Net loss $(1,551,830) $(760,580) Adjustments to reconcile net loss to net cash provided by (used in) operating activities:         Depreciation and intangible asset amortization expense  60,987   97,503  Compensation paid in equity  731,797   563,010  Provision for doubtful accounts  3,150   10,384  Provision for excess and obsolete inventory  191,446   (181,986) Loss on disposal of assets  4,124   58,024  Lease deposit  51,000   -            Changes in operating assets and liabilities:         Accounts receivable  51,886   (191,309) Inventory  235,197   507,037  Prepaid expenses and other  72,811   (779,794) Accounts payable and accrued liabilities  (90,178)  394,782  Deferred revenue  (576,483)  1,964,068  Accrued interest  1,047   -  Deferred Social Security Taxes  20,241   -  Lease liability, net  (12,368)  (8,846) Accrued equity compensation  (433,566)  -  Net cash provided by (used in) operating activities  (1,240,739)  1,672,293            Cash Flows From Investing Activities         Net cash used in investing activities  -   -            Cash Flows From Financing Activities         Proceeds from issuance of note payable  554,000   -  Net cash provided by financing activities  554,000   -            Net increase (decrease) in cash  (686,739)  1,672,293  Cash, beginning of period  922,177   253,387  Cash, end of period $235,438  $1,925,680            Non-cash investing and financing activities:         Interest paid $-  $-  Income taxes paid $-  $-