Surna, Inc. (OTCQB: SRNA)


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Surna, Inc. (OTCQB: SRNA) 





 Surna, Inc. (OTCQB: SRNA) develops innovative technologies and products that monitor, control or address the energy and resource intensive nature of indoor cannabis cultivation. Currently, the Company’s revenue stream is based on its main product offerings – supplying industrial technology and products to commercial indoor cannabis grow facilities.

Headquartered in Boulder, CO, Surna’s premiere management team draws on backgrounds from life sciences, energy, and software sectors. Surna’s diverse engineering team is tasked with creating novel energy and resource efficient solutions, including the Company’s signature water-cooled climate control platform.

Surna’s engineers continuously seek to create technology that solve the highly specific demands of the cannabis industry for temperature, humidity, light and process control. Surna’s goal is to provide intelligent solutions to improve the quality, the control and the overall yield and efficiency of indoor cannabis cultivation. The Company’s operations exclude the production or sale of marijuana.

Fueled by powerful trends of increasing states’ legislation favoring regulated medical and recreational marijuana markets, and its lucrative tax and jobs revenue, industry analysts conservatively project the highly fragmented $2.3 billion US legal cannabis industry will increase over four-fold to $10.2 billion by 2018. SRNA is acquisitive, and aims to dominate the infrastructure, growing and support side of the global cannabis industry by aggregating advanced technologies, IP and scalable operating companies to bring new technology to the cannabis marketplace and contribute to its dramatic growth. The Company acquired the intellectual property portfolio of Safari Resource Group, comprised of a patented “Airstream” reflector and right, title and interest to 14 intellectual property patents currently in development and expected to be ready for market soon. The Company believes the IP portfolio is disruptive with near term application for next-generation commercialization in a variety of cannabis indoor climate control and related systems.





















• Highly fragmented $2.3 billion US cannabis industry projected to increase over four-fold to $10.2 billion by 2018

• Led by CEO Tom Bollich, the visionary technologist who co-founded famed gaming company Zynga which ultimately rose to a $10 billion market valuation

• SRNA signed definitive agreement to acquire industry leader Hydro Innovations

• With rapidly growing revenue, Boulder, Colorado-based Hydro is a leading producer of proprietary, state-of-the-art indoor climate control systems for cannabis and other indoor agriculture markets

• IP Strategy: With robust R&D, Hydro is established producer of disruptive tech “Banks Chillers”

• Best-in-Class Management Team. SRNA is distinguished by its Board including Tae Darnell and Doug McKinnon

Acquiring Hydro
Subsequently, for its first operating company acquisition, on April 1, 2014 SRNA announced a definitive agreement to acquire Hydro Innovations (“Hydro”) in the second quarter of 2014 contingent upon a FY-13 audit and independent valuation opinion. Prior to Closing, the Company has exclusively licensed all of Hydro’s technology, IP and product lines, in perpetuity, for commercial sale and distribution for indoor gardening applications.

With a solid base of rapidly growing revenue, Boulder, Colorado-based Hydro is a leading designer, manufacturer and distributor of proprietary, state-of-the-art indoor climate control systems such as chillers, lights, reflectors and irrigation systems designed for cannabis and other indoor agriculture markets.

Founded in 2007, Hydro offers a complete line of indoor cannabis growing equipment and has become the pre-eminent provider of advanced, water-chilled cooling systems that provide specific cooling and humidity controls for personal and commercial level cannabis cultivation facilities.

With a robust R&D capability, Hydro is well established commercially as a producer of disruptive technologies with the successful introduction and sales of its “Banks Chillers.”

With cooling being as critical to growing marijuana as the seed itself, Hydro’s Chillers offer a breakthrough product line that:
•Can be installed and purchased for 20 to 40 percent less than the price of conventional HVAC and 65 percent cheaper than traditional water chilled solutions.

•Operates with 20 to 30 percent more energy efficiency than the most sophisticated commercial HVAC systems on the market.

SRNA is distinguished by its Board of Directors and management:

• Tom Bollich, Chairman & CEO, began his career as a Robotics Engineer, working with artificial intelligence. In 2007 he co-founded Zynga (NASDAQ: ZYNG), the online gaming company. Zynga created games such as FarmVille, Draw Something and Words with Friends. There, Tom served as a Studio Head and CTO.

• Doug McKinnon, Director, whose 30 years’ professional experience includes C-level positions in both private and public sectors, including Chairman and CEO of an American Stock Exchange traded company, Vice President of a $12 billion market cap NASDAQ-traded company for which management raised over $2.2 billion and CFO of several publicly held US, Canadian and Australian companies. Mr. McKinnon, currently engaged as the senior financial consultant to SRNA, is in discussions about joining the Company as CFO.

• Tae Darnell, Director and VP – General Counsel, is one of Colorado’s first full time Cannabis lawyers. His firm has represented over 500 dispensaries, cultivation premises and infused product manufacturing companies in addition to playing a pivotal role in Colorado’s rise from operating under a Constitutional Amendment to outright regulated legalization.

Under the guidance of the veteran SRNA management team, Hydro is now focused on expanding its product lines, developing and commercializing new intellectual property and diversifying into other sectors of the indoor agriculture & climate control industries.

By transitioning into a publicly traded company, Hydro will benefit from a dramatically lower cost of capital which is expected to enable it to fully finance its aggressive growth strategy. Under the guidance of the veteran SRNA management team, Hydro is now focused on expanding its product lines, developing and commercializing new intellectual property and diversifying into other sectors of the indoor agriculture & climate control industries.

By transitioning into a publicly traded company, Hydro will benefit from a dramatically lower cost of capital which is expected to enable it to fully finance its aggressive growth strategy. SRNA envisions the cannabis industry will expand horizontally and spin off advanced, related and conventionally regulated new sectors such as food products, nutraceuticals, pharmaceuticals, bio tech, remote agricultural monitoring technologies and much more to drive industry growth.

“Silicon Valley for Weed”
In Colorado, SRNA enjoys being at the epicenter of the marijuana industry, an important advantage that cannot be underestimated. As an intellectual property company, (utilizing a model similar to cellular IP giant Qualcomm), or as a holding company of next-generation equipment manufacturers, SRNA is not affected by any marijuana related regulations in Colorado or elsewhere.

Yet within the cannabis industry, Colorado is informally known as “Silicon Valley for Weed” for attracting the most educated and qualified experts, management, and capital. Colorado was the first US state to permit medical marijuana through a State Constitutional Amendment in 2000, and is the first to legalize substantial cannabis plant cultivation and recreational use.

Accordingly, the “Colorado Model” is routinely studied by states, federal regulators and international observers for adoption elsewhere in the global marijuana market. Existence in the epicenter of the industry gives SRNA the applied knowledge and experience to choose its acquisitions wisely and to give its customer base the benefit of the knowledge gained by being a true industry pioneer.

Colorado Catalyst:
The 1.6% Solution At 5.3 million people (July 1, 2013) Colorado has only 1.6 percent of the U.S. population. Though currently only about one quarter the (Cannabis) market size of California, the Colorado market is poised to double in 2014 and will equate to 60 percent of the California market. If medical and recreational marijuana laws are enacted in other and more populous states, as is strongly trending and many political analysts’ forecasts confirm, the market potential is extraordinary.

US and Global Market Trending Toward Legal Marijuana
While Colorado’s Jan. 1, 2014 implementation of regulated recreational use of cannabis is a catalyst for a major ramp up in industry growth, Hydro’s industry leading equipment has been shipped and installed at commercial gardens spanning the globe from South Africa and UK to Australia and Costa Rica.

Nationally and internationally, to lower cannabis law enforcement and incarceration costs as well as to generate substantial incremental tax revenue and jobs, industry analysts agree the national polls and trend strongly favor more states moving toward regulated medical or recreational cannabis use models. The global upside potential is many times greater than the US. Uruguay in December of 2013 enacted legislation for a fully regulated cannabis market.

Industry Leading R&D
Following six years of R&D, Hydro deploys advanced proprietary technologies into its growing line of lead products enjoying a clear competitive advantage. Hydro’s climate control “Bank Chillers” enjoy a strong technological lead, priced at 20 to 40 percent less than the competition (primarily conventional home and commercial building heating/ventilation/air conditioning (“HVAC”)) with energy efficiency reducing energy consumption by about 30%. SRNA and Hydro plan to increase R&D in new commercial gardening equipment product lines and anticipate adding to its existing patent application pending with near term plans to file many more.

Growth Strategies In addition to its strong competitive advantages, and barriers to entry, the Company’s outlook for outsized industry growth and profitability is supported by its aggressive growth strategy and powerful industry tailwinds:

Exponentially Growing US Marketplace
Cannabis industry research firm ArcView conservatively projects the highly fragmented $2.3 billion US cannabis industry will increase 700 percent from 2013’s $1.43 billion to $10.2 billion by 2018; a more than four-fold increase from 2014’s estimated $2.34 billion.

New Marketing Campaigns
To date, Hydro has done little to no advertising or marketing, relying instead upon growing word of mouth and a social media buzz surrounding its best of class products. The marketing plan calls for stepped up advertising online and in print, reinforced marketing channels such as its ‘affiliate’ reseller program in addition to the blogosphere, video, industry conferences & trade shows and media relations whose appetite for marijuana industry stories seems insatiable.

Penetrate Ancillary & Adjacent Markets
SRNA’s business plan envisions penetrating adjacent markets with its next generation, disruptively lower-cost and more energy-efficient climate control equipment.

These markets include:

• Indoor and greenhouse agriculture (organic and/or hydroponic fruits and vegetables) — a natural extension.

• Cloud: Server farms and data centers, experiencing explosive growth worldwide as software and storage migrates to the Cloud. Industry research firm Market Monitor predicts 36 percent compound annual growth in cloud computing from $5.7 billion in 2012 to $20 billion by the end of 2016.

• Conventional HVAC for residential and commercial buildings. This initiative, planned for 2015, offers an enormous opportunity and may include capturing niche markets or a capital efficient JV or licensing/royalty model.

HVAC: Wall Street investment banking and research firm Raymond James (Sept. 5, 2013) reports: “America’s 4.8 million commercial buildings and 350,000 industrial facilities account for approximately 51% of the nation’s primary energy consumption, according to the Energy Information Administration (EIA), as compared to 28% for transportation and 21% for residential consumption. In the enterprise sector of the economy, annual energy costs (mainly power and heat) total approximately $200 billion. Looking at this by category, the single biggest line item (31%) is heating, ventilation, and air conditioning (HVAC), followed by lighting at 25%. What’s particularly striking is the EIA’s estimate that 30% of this energy is used “inefficiently or unnecessarily.”

Vast, Fast-Growth Marketplace

Accelerating US trend toward increasing legalization of marijuana 

ArcView Market Research (AMR) conservatively assesses the 2013 US national legal marijuana market to be valued at $1.43 billion. The projected national value for 2014 is $2.38 billion, an annual increase of 64%. This increase represents the fastest growth rate of any U.S. industry AMR could find. Primary growth drivers include new Adult Use markets in Colorado and Washington State, as well as the addition of four new Medical Use states coming online (Massachusetts, Illinois, Connecticut and Vermont) – collectively projected to add $61 million in market value in 2014.

On a five-year horizon, AMR sees the national annual market value potential at $10.2 billion by 2018. In the US, this long-term outlook assumes the following key growth factors:

• 14 new state Adult Use markets

• Organic growth in current legal marijuana states as a result of growing populations

• Continued migration of illicit market purchases to legal market purchases

The national legal marijuana market is comparatively small, compared with markets for beer, wine and vodka. However at a projected 64% annual growth rate, legal marijuana is growing over 30 times more quickly than the mature beer, market, which domestically is increasing at around two percent.

Some estimates of the illicit marijuana markets have been in the $18 billion to $30 billion range. In terms of the value of national legalization of marijuana, Bloomberg Industries estimate the US market potential at $35 billion to $45 billion, which would eclipse the US market for wine. More than one in three Americans live in a state that has legalized some form of marijuana consumption. In addition to Washington D.C., there are presently 20 states with legal marijuana regulation. Not all of the states, however have active markets, which AMR defines as those state markets in which marijuana can be legally purchased at a storefront location (i.e. Medical Use dispensary or Adult Use retailer).




Current Price: $0.20

Shares Outstanding:

100.38 million

Market Cap: $20 million

52 Week Trading Range:

52-Week Low: $0.175

52-Week High: $8.73

Corporate Offices:

1780 55th Street, Suite A
Boulder, CO 80301

Phone: (303) 993-5271


Investors: 866-692-6847