At a nickel a share, it darn well should be a takeover target for someone. But who?
I am still very confused by Surna's relative abandonment of its cannabis focus/branding a while back. It seems to be refocusing there now, but it would have been a no-brainer for an established national HVAC company to pick up Surna as its cannabis focused sub on the forefront of federal legalization.
Another potential buyer would be a big ag company. They don't talk about it much anymore, but if their equipment does what it says (and I'm not at all sure that it does... but that's a different story), then the applications for crop cultivation in challenging climates presents potential long-term revenues, and potential assets for a big ag company. At a nickel a share, the patents alone could be worth more than the company.
Of course, it's not clear that the Company would accept an offer even at a premium to the current share price
. The insider reports show that they have been buying shares at $0.10 and under. That's definitely a good sign, but not if your hoping for an exit by acquisition.
Anyone see other potential acquirers?
Even if the company would sell, I'm not sure Surna is that attractive to either types of buyer right now anyway. It had the premier name in cannabis for a couple of years (the Bollich days), but by about a year after he left, they seemed to struggle to stay on brand and acquire customers. Then, as Doucet came on, they seemed to abandon Cannabis entirely and focus on--who knows what exactly? Also took a couple of clients to court over failed systems/installation, which turned off a lot of potential customers. No wonder they got rid of Doucet, but Bechtel seemed to double down on Doucet's errors--even signing off on a sweet exit deal for Doucet, continuing to pursue an aggressive stance towards customers, and failing to market to the cannabis industry. McDonald seems to be moving away from custom installs and towards retail sales of equipment. That might make it a bit more attractive to larger competitors since it's a business they know, but it's also a low-margin, presumably low-growth strategy. I've given up on this thing ever taking off, so I think it's probably wise to take the more conservative approach at this point and cut some of the fat, show some assets with positive ROI, even if it's not much. But they also need to get their brand back in good standing and deliver value.
I noticed in the 10-K/A that they mentioned being in a lawsuit against Doucet. Anyone know details? Was it for not paying taxes on the sweet exit deal he got? How is the company able to sue for that? Sounds like an incomplete explanation to me. If they are able to recover the balance of the shares they gave him to leave, that would be great, but if all he has to do is pay the withholding taxes, that seems like a waste of money.
Stock awards represent restricted stock units awarded in 2017, which vested in 2018 but have not been settled due to the failure of Mr. Doucet to pay the required withholding taxes. The Company has commenced litigation against Mr. Doucet to have these restricted stock units canceled. Other compensation for 2017 includes a moving allowance paid in connection with his relocation to California ($28,000), a car allowance ($5,095) and employer-paid portion of insurance benefits ($6,000). Other compensation for 2018 includes a car allowance ($3,323) and the gross-up on certain withholding taxes paid by the Company related to equity awards ($31,208).