Surna Inc (OTCMKTS:SRNA) Making Big Moves

Surna Inc (OTCMKTS:SRNA) is one name that should be on every penny stock investor's radar. The company is making big moves and delivering for its shareholders. Its first quarter results proved that and now shares are close to breaking out to the upside.Surna develops innovative technologies and products that monitor, control and 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.In the first quarter, revenue grew over 200% to $2.5 million, compared to $819,000, reflecting sales momentum and greater demand as more states legalized cannabis. Gross margin improved to 43.6% from 10.8%, reflecting favorable product mix and the benefit of a new pricing schedule. Operating expenses were $724,000, compared to $968,000. Operating income improved to $365,000, from an operating loss of $880,000.As of March 31, 2016, cash was $1.1 million, compared to $331,000 at December 31, 2015. Deferred revenue was $1.4 million, up from $986,000. Deferred revenue represents contracts in progress, as the company recognizes revenue as products are shipped or services are performed.The company made considerable progress in Q1. Surna secured a contract for approximately $725,000 with Las Vegas cultivator Cloud 9 Wholesale for a facility that covers 30,000 square feet, which will require approximately 550 tons of cooling equipment for cultivation climate control. SRNA also received four design patents from the United States Patent and Trademark Office for its Surna Reflector products that deliver more direct light to the canopy while providing unique thermodynamic characteristics that improve heat transfer from the cultivation area. Surna now has eight pending patent applications and four issued patents. The company said:

"Throughout 2015 and 2016, we believe we have furthered our transformation to become one of the leading technology companies with cannabis expertise, energy-optimized products and turnkey cultivation solutions. First quarter 2016 results reflect our team's tremendous efforts as we nearly tripled revenue compared to the prior year's quarter and delivered operating income for the first time in the company's history."

Surna also shook up the corner suite. Trent Doucet was promoted from COO to CEO on May 16. Founder Stephen Keen became director of technology and will focus on innovation and product development. Both executives will remain on the board of directors. Trent Doucet started advising Surna in April 2015 and was named COO in November 2015. We like what both executives had to say about this transition as it looks like this is a real partnership between the two. Stephen Keen said:

"When I became CEO, it was my intention to get the company back on course and identify the best person to commercialize our products. We advanced our proprietary technology and products as well as strengthened our infrastructure, evidenced by financial results reported today. In the first quarter 2016, revenue nearly tripled compared to the same quarter a year ago, and we delivered operating income for the first time in the company's history. Now, I will concentrate on my forte, furthering our technological edge, and Trent, who has built very successful companies, will lead our business. I am excited about our future."

While Doucet added:

"Having spent over a year with Surna, first as a consultant and then COO, I am ready to lead this talented and dedicated team. We have greatly improved operations and are on the path toward consistent operational profitability. Focused on execution and continued improvement, our 2016 strategic priorities are expanding sales, demonstrating our hybrid building, capitalizing on the positive market, and, ultimately, creating shareholder value."

Currently trading with a market cap of $14.5 million, SRNA is one of the most undervalued pot stocks trading on the OTC markets. Shares remain well off their 52 week highs of $.29 per share. As more pot stock investors look for undervalued and underfollowed pot stocks, SRNA will be at the top of their radar screens. We will be updating Insider Financial as soon as we know more. For continuing coverage on SRNA, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in SRNA and have not been compensated for this article.