Surna Inc (OTCMKTS:SRNA) Returns To Crashing
On Tuesday the stock of Surna Inc (OTCMKTS:SRNA) managed to bounce reclaiming 21% of its value and closing at 17 cents per share. Whatever positive momentum had formed though vanished completely and on the very next day the ticker dropped 2% in the red. Yesterday the company accelerated its slide wiping nearly 10% and closing at $0.15. Compared to its high of $0.25 just 8 sessions ago the ticker is currently down by exactly 40%.
SRNA began its decline on the day it issued a PR about its financial results for the second quarter of the year. Although the report for the period was filed a few days before that it seems that the press release caught the attention of the market. It is true that SRNA’s sales have continued to grow and for the quarter the company generated revenue of $1.67 million, twice the amount for the first three months of 2015 and 4.8 times the revenue for the same period last year. This encouraging achievement however was overshadowed by the deterioration of the rest of the balance sheet.
As of June 30 SRNA had limited cash reserves of $145 thousand, working capital deficit of $1.2 million and a net loss for the first half of the year of $2.4 million. Investors should also take into account the fact that SRNA has $1.26 million in convertible promissory notes and $345 thousand in convertible accrued interest. While the Series 2 convertible notes can be turned into common shares after 360 days from the issuance date the same cannot be said about the Series 1 notes – during the six months ended June 30 a total of 8,973,614 shares were issued through conversions at $0.067. The subsequent events section of the report states that the company has received notices for the issuance of another 10,944,256 shares of its common stock to various holders of its outstanding series 1 convertible notes.
SRNA will need to raise additional capital in the near future in order to move forward with its operations. The potential dilution should not be underestimated and any trades involving the stock should be attempted only after doing extensive research.
