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I can't help but reiterate that Surna laid out a plan well over a year ago and has been following it to the T. If you're surprised, then shame on you for not paying attention. I understand the general sentiment that R/S typically don't go well, and as long as it is coming from a place where you understand how the math works on a R/S and that no one is "taking" your shares, I think that's a valid perspective.
Look, this is a hail mary. And the stock needs it. This new management group came in and made a lot of changes. Frankly, they pretty much all look like the changes that needed to be made. Of course I wish they had been able to get to $2 organically but they have also been dropping some great news and the stock hasn't moved much. They're doing exactly what they said they would do. Want to keep watching the stock bleed towards zero while everything else about the company looks awesome? I sure don't. I welcome the intervention.
A friendly reminder that everyone making these decisions at Surna/CEAD has a legal and fiduciary responsibility to shareholders. If you think they've breached it call a lawyer. If not, and you're still unhappy, sell your shares to me and move on. Quit being so emotional about it, it's costing you stress and money.
You do understand that no one "took" your shares, right? Like you understand how a R/S works? Or is that the issue?
Also (lol) is it my imagination or did only about ~$4,600 worth of stock trade today?!?
Am I correct that we can expect earnings Thursday morning (since there is a call scheduled for later that day) and, as such, tomorrow would be the last day to trade these earnings?
See... here is where I have a problem. Potentially material information presented as known fact.
Much more relevant to me, is it possible that Tony has a sales team doing the thing you'd like him to be doing? Frankly, if a CEO is out drumming up sales I view that as a major red flag re: their ability to build, delegate, execute. I think the CEO should be highly focused on the things you're talking about given that their responsibility is, first and foremost, to maximize shareholder returns. You and I clearly disagree about the best way to do that or, rather, how much trust to put in management's ability to determine the best way to do that. But I don't think it is helpful or valid to say that the CEO should be working on sales and not the "random stuff" of executing on the plan he has literally been telling us about quarter after quarter.
Accumulate and hold.
goodgodyall, THANK YOU for this post.
I'm seeing some seriously crazy $h!t in these threads. And the very angry, very red, very confused warning on the intro is just flat wrong.
"The shareholder vote failed in June and they modified the share structure as to not need common share holders' votes."
As described in the filings then, there were not enough votes for certain items on the agenda - the RS vote did not fail. Since the company has incredibly high insider ownership it probably wasn't hard for management to identify one or a few large holders to reach out to and flip their votes and handle it that way. And if you think that's shady you're missing the point - there is high insider ownership. These insider owners have a vested interest in the stock going up. In fact, since Surna paid many (all?) of its employees in stock during the height of COVID, just about everyone in that building has that same vested interest in making you money despite your insistence that they're ruining your life somehow.
Hey, if you don't like it then sell. If you think this company is worth less than $13.5 million then sell. If you think management doesn't know what it's doing or is doing something shady then just sell. I will gladly take those shares.
If you are willing to look at some of the history that goodgodyall referenced and the corresponding SEC filings, you'll be reminded that the RS was always the plan. Restructuring the shares and getting rid of the preferred stock holder (I believe Morgan Paxhia?) was always the plan. Focusing on the right product mix was always the plan. This is happening and I'm all for it.
Let's please also remember fiduciary responsibility. If you aren't familiar with this term please Google it. This management team isn't going to risk going to jail to "ruin" a company, or whatever it is that you think they're doing. They are literally doing what they've said they were going to do and what they believe to be in the best interest of us, the ungrateful shareholders (new products, new partnerships, new markets, restructure, plan to uplist).
I voted for the RS and would do it again. Glad I don't have to.
Take down the intro in red. It reads like you don't understand how to read SEC filings. Apologies that I missed my opportunity to say so previously.
I could not agree with this more. I’ve been around long enough to see three or four cycles of management turnover and this is by far the most clarity, the most focus, and the most strategic vision I have seen from this company. I voted in alignment with management recommendations on every point. I’m excited for this next chapter and I would like management to have the authority to make these changes (and move quickly) if they deem necessary.
I’ve always been of the mind that, because Surna does not actually touch the product, banks could work with Surna if they wanted to but I don’t know this for certain
Of course, if those restrictions are lifted and suddenly anybody with a marijuana license can access banking and be as well capitalized as the big boys then there would likely be a surge in demand for surna‘s products and that could work out the capital issues from the other side.
There seems to be an undertone of “management is screwing us with this reverse split“ and I just don’t understand it.
Remember that the folks asking us to vote for this have a fiduciary responsibility to shareholders. I certainly don’t love the concept of a R/S but I also haven’t loved watching the stock do what it has done since 2015. This iteration of Surna and this management team is working. If they think having the authorization to execute a reverse split (in tandem with other critical measures) will enable them to create more value for us than any other options, I’d like them to have that authority.
If I had to vote today that’s how I would vote. Of course, I do not need to vote until well after Q1 earnings and hopefully a lot more commentary from management about why these steps are necessary.
The issue, I think, is access to capital. If the company had cash to attract and retain talent then the options that you’re referring to would not have been necessary. And we might have ended up with somebody like Tony McDonald much sooner.
Pardon my French but what the actual **** are people doing voting their shares already? This meeting is not going to be held for another month and eight days. You will have two weeks from when we get a full Q1 earnings report to decide how to vote your shares. Why would you vote now with incomplete information?
I haven't been able to get Seeking Alpha to post my content about Surna recently. They wouldn't publish my Q&A with Tony McDonald because they say they don't do that, even though I showed them several examples. (I did publish that one on my "Instablog" but it isn't a compensated article and it isn't indexed for search/syndication)
They wouldn't publish my last one when the company was at ~$18M market cap because they have a rule about sub-$20M market cap companies, even though I showed them examples of them publishing articles on stocks with a lower market cap. Feels more like every time I attempt to publish an article on Surna they've made up a new reason not to post it.
Looking for an alternate place to publish if anyone has ideas. TIA.
https://seekingalpha.com/author/mountain-analytic#regular_articles
I think you mean forward sales/forward revenue but yes, it is completely ridiculous that more people haven't noticed this.
How many stocks can one buy with a price-to-sales ratio less than 1? Even Exxon Mobil, as beaten up as it is, trades at a PS ratio of 1.35.
Sorry, perhaps I'm dense, but I am just completely failing to understand what this means. Not trying to single you out, others have said it. Can someone walk me through the logic?
"'Reverse Split only' accomplishes nothing, except screwing everybody who currently holds the stock."
I don't understand how anyone gets screwed in a reverse split. I understand the argument that it creates a bad perception, but I don't think that's what is being suggested here.
As I understand it... if you hold only 99 shares and the reverse split is 100-to-1 then yes, your 99 shares would be liquidated and you'd receive the proceeds. Or if you hold 1,099 shares in that same 100-to-1 example then you'd end up with 10 shares post-split and your 99-share remainder would be liquidated.
But I wouldn't call that "getting screwed," you're just having a small part of your position liquidated. Plus, we're talking pennies here. In the example above the proceeds you'd get from that liquidation is (assuming 7 cents per share) $6.93, which I'm guessing is actually less than the commissions some of us pay to trade SRNA.
Perhaps it has been said but I don't see it - I'd much rather see a debt raise than a secondary offering or acquisition paid with stock.
Stock is currency, except this currency remains (in my opinion) dramatically undervalued. So using the currency at this value to purchase either cash in a secondary offering or other companies via acquisition seems less than ideal.
I suspect the company would rather take on new debt (currently has none except forgivable PPP loan) but Surna also isn't the most attractive borrower right now, so Management is exploring other avenues for raising the cash it needs to execute on its strategic vision. It makes sense to me, but I'd like to know that other options (specifically raising debt to raise cash) have been ruled out.
I think this question implies that shares could be created without any other change on the balance sheet, which is not the case.
I agree with the comment that shares are currency. Company doesn't get to just create shares out of thin air with nothing coming in against them. Also, a quick reminder that all of the people making these decisions have a legal exposure because of their fiduciary responsibility. This management team has given us no reason to think they are doing anything other than executing on the strategy laid out in the shareholder letter not too long ago.
But, here's how I'd answer your question with a couple of scenarios.
Dilution via Secondary
Let's say we're at 10 cents now and 250M shares outstanding and $25M market cap.
Surna raises an additional $25 million in cash through a secondary offering at 10 cents per share. Yes you've been diluted by half, but since the share price remains unchanged at 10 cents and the market cap has doubled to $50M, your position has lost zero value and now the company has $25M in new cash on the balance sheet to use for growing revenue, acquisitions, whatever.
Dilution via Acquisition
Let's say we're at 10 cents now and 250M shares outstanding and $25M market cap.
Surna buys 1 company for $25 million and pays in newly issued stock at 10 cents per share. Same numbers as above: you've been diluted by half but your share price remains unchanged at $0.10 even though the market cap has now doubled to $50M. Your position has lost zero value.
Reverse Split only
Let's say the company wants to get the share price above $1 to attract a certain type of investor and will execute a 10-to-1 reverse split.
You have 10,000 shares at 10 cents, market cap of $25M and 250M shares outstanding.
After the split you have 1,000 shares worth $1 dollar or 100 cents. The market cap is unchanged at $25M and there are now only 25M shares outstanding post-split.
These scenarios are a little ridiculous and are meant to be simple illustrations, but these same principles apply to either form of dilution or splitting.
As long as there is appetite for a secondary offering or that Management is able to acquire/partner at intelligent prices that are consistent with their fiduciary responsibility to create value to shareholders, nobody gets screwed.
I'd argue that we would screw ourselves by handcuffing management and preventing them from doing the very things they have identified for taking the company to the next level. In fact, If I was Tony McDonald and spent a lot of time and energy mapping out what it would take to get listed on Nasdaq and remain sustainably profitable and which companies Surna would need to acquire or revenue lines to build out to get there... and then shareholders who don't understand how dilution works voted to prevent me from doing so?? I would step down and take my talent elsewhere.
I'd like to hear what TM/management has to say about all of this. I certainly want to dig in and do the DD to make sure the pieces fit together and numbers make sense... but I would be shocked if this doesn't end up being something I support enthusiastically.
My 2 cents.
I've been here since September 2014 or so and I'm no Avlnco but I do hold a little over 370,000 shares.
Even when I bought shares around $0.30 in 2015 the company was talking about uplisting to Nasdaq and it was (I hope) obvious to everyone that a reverse split would be needed as part of this process.
Do you know of any Nasdaq stocks that trade for a few cents? It doesn't happen. Simply put, ETFs and exchanges and hedge funds and other institutions all have rules about the price of stocks they will deal in.
Of course we've all been hoping for (and seeing, especially recently) organic growth. And of course it has been frustrating to watch the market completely miss what's happening here with Surna while WSB dumps money into a cryptocurrency that was literally started as a joke (Doge). But if we're willing to live in reality a bit, a reverse split was always going to be part of how Surna got onto Nasdaq and made it into ETF inclusion or more institutional investment.
If you recall, Citi and AIG both did reverse splits after the financial crisis because their share prices had gotten to levels where they didn't meet the rules for various institutional investors and sector ETFs.
https://www.wsj.com/articles/SB10001424052748704681904576313581047141782
https://www.citigroup.com/citi/news/2011/110321a.htm
In the case of a potential reverse split for Surna, I'd like to hear management/TC explain to us what the broader vision is and why executing a reverse split will help Surna get its nominal share price (regardless of market cap) to a place that will be palatable for Nasdaq, sector ETFs and other places we want to see Surna. Like Robinhood.
TBH I don't hate anything that's happening here. My biggest recent regret was not buying more shares of Surna at $0.0215 in September and I wouldn't mind the opportunity to load up some more. Of course, chart looks good and we're 48 days or so away from Q1 earnings where we get to see how much of the recent sales booking success Surna has been able to convert to revenue.
Regarding the upcoming quarterly release...
Yes, we should see it around the middle of November (45 days from the end of Q3). AKA likely late next week.
Yes, we should see revenue from the company's largest contract reflected in this quarter. Backlog was pretty low coming into this quarter so I imagine Surna has been able to start working on this contract right away. In the original announcement the company noted that it expects to recognize all of that contract's revenue in 2020.
Especially with the momentum of the past few days I think even a half-decent earnings report will highlight how absurdly cheap this stock trades (on a price-to-sales basis). But the year-over-year comparison will be to one of Surna's two profitable quarters and the headline YoY comparisons could overshadow the bigger story.
SHOULD BE INTERESTING!
Here's a thought exercise... I think that the federal prohibition of marijuana is a good thing for Surna at this stage of its development.
Like others here have suggested, I agree that if GOP was actually interested in legalizing marijuana it would have done so in the first two years of Trump admin. But it didn't, and Trump installing Jeff Sessions (who we know HATES marijuana) as Attorney General tells you everything you need to know about his desire to change that.
Similarly, like others here have suggested, I think that a blue sweep would have been good for marijuana legalization.
I don't necessarily agree that nationwide legalization would be good for Surna at this particular moment. Since the whole industry still has a "wild west" feel to it and the federal banking prohibition remains, multinational players in HVAC have avoided this space. This is why Surna's niche is essentially only served by Surna. State-by-state has helped names you've heard of (like Carrier, Rheem, and Trane) stay out of this space entirely.
My general sentiment is that the continuation of a state-by-state approach is a good thing for Surna while it is this small and my hope is that by the time we do see national legalization Surna is has scaled up or is ready to scale up and compete with these players. Or, that it'll be established enough by then that they'd rather acquire Surna vs compete against it.
Thoughts?
What?!
About $3k in trading volume is what knocked it down to $0.02 and then down to $0.015. I never imagined I would need to have a standing order to buy at anything close to those levels but the last few sessions have thrown out some interesting opportunities to accumulate. Starting to feel like something is brewing, thoughts?
I imagine it would be really easy to acquire Surna right now...
Foreshadowing... a merger? Acquisition? What are you thinking?
Market cap under $5M now with $12.7M in TTM rev.
Definitely a spike on volume right now but for context (at $.098 per share and a little under 1.7m shares) we're still only talking about $166k moving around.
Folks, don't forget that the call is on Tuesday. If you have questions or topics you want them to cover, submit to IR through the link on Surna's website now. It's always a shame when the call finishes and it's crickets on the line.
This looks like an poorly-formatted version of Surna's own press release however it is nice to see this story getting picked up by the larger wires. Haven't been active in a while but I just submitted an article to SeekingAlpha with my thoughts on the news. Hope it is out soon!
For what it's worth... I once e-mailed these guys and set up time to ask them a few questions and see the facility. There were a lot of questions that they couldn't answer (or at least answer in much depth) because the information wasn't yet public. But laying eyes on the operation was really nice and getting to ask clarifying questions (how/when they move deferred revenue to realized revenue, etc) face to face gave me a lot of confidence in the company. Met Brandy Keen, chief business officer at the time (Traylor) and the chief financial officer at the time (McKinnon).
I'm sure they're a little bigger/busier these days but if you're that curious you should just reach out and ask to schedule some time.
I have been following Surna since November 2014 when a volunteering gig for a local business expo in Boulder, Colorado introduced me to the company. Though I generally consider this chance encounter to be a positive thing, this began the tumultuous, generally stressful, but (thus far) profitable relationship with Surna.
The past couple weeks have definitely been interesting, and like many here I keep waiting for the market to figure out what's actually going on here and for the stock to take off. But in the meantime, I have bought and sold at various levels (and with various levels of good/bad timing) and sold a quarter of my position yesterday. I generally agree with the longs - this is a real company with real products and real customers in an industry filled with mediocrity and speculation.
I've written a few Seeking Alpha articles (some of which have been shared here) and follow this thread almost daily - this is my first post.
I don't know if this latest round of financing is the spark that will light the rocket - I've thought that about prior rounds of financing. I don't know if the recent write-up about the large grow facility in NV using Surna equipment will be that spark either - I've thought that before as well. No idea if management's subscribing to 18% of this latest round of financing will change anything - there's always been huge insider ownership and I've long thought that was a positive thing.
But it does generally feel like the company is beginning to develop a track record for stable (and timely) financials, and is ultimately on the right side of the right industry at the right time. Just patiently waiting, while trying to sell well and re-buy well to ensure my small pot of money turns into the largest possible stake when this thing finally takes off. GLTA.