SEC Filing Summary: Surna Inc. (Form 10-K)
Business Context and Reporting Period
Company: Surna Inc. (Note: Input metadata referenced "CEA Industries Inc.", but the filing text identifies the registrant as Surna Inc.)
Reporting Period: Fiscal year ended November 30, 2010.
Status: Development stage company incorporated in Nevada on October 15, 2009.
Business Model: The company intends to develop software products and services focused on "Geospatial Complex Event Processing" (GCEP). It plans to enhance open-source applications via surna.org and develop commercial applications via surna.com. As of the filing date, the company has not generated any revenues and has not commenced commercial operations.
Key Financial Metrics
| Metric | Value (Nov 30, 2010) |
|---|---|
| Revenue | $0 |
| Net Loss (Year Ended) | $(24,726) |
| Net Loss (Since Inception) | $(39,726) |
| Total Assets | $76,525 |
| Cash and Cash Equivalents | $73,314 |
| Total Liabilities | $17,751 |
| Shareholders' Equity | $58,774 |
| Common Shares Outstanding | 15,835,000 |
Capital Structure: The company raised $83,500 in a public offering in November 2010 (835,000 shares at $0.10). Additionally, it received a $17,700 non-interest-bearing advance from a related party (7bridge Capital Management Limited).
Material Changes vs. Prior Period
- Operations: The company remains in the development stage with no revenue. Operations are limited to business planning, website development, and preliminary software coding.
- Capitalization: Significant increase in cash from $0 in 2009 to $73,314 in 2010 due to the completion of a public offering and related party advances.
- Expenses: Total expenses for the year ended Nov 30, 2010 were $24,726, primarily driven by professional fees ($16,345) and software development expenses ($4,664).
Outlook, Risks, and Management Commentary
Going Concern: The auditors (MaloneBailey, LLP) have issued a "going concern" opinion, stating there is substantial doubt about the company's ability to continue as an ongoing business for the next twelve months without additional capital. The company has no revenues and relies on future financing.
Plan of Operation: Management intends to use raised capital to finalize website development ($5,000–$10,000), establish an office ($10,000), and fund marketing ($15,000–$35,000). They anticipate a 270-day setup period before generating revenue.
Risks and Contingencies:
- Liquidity Risk: If the company cannot generate revenue or secure additional financing, it may be forced to suspend or cease operations.
- Internal Controls: Management identified a material weakness in internal controls due to a lack of segregation of duties and the absence of a formalized accounting manual.
- Intellectual Property: The company holds no patents, copyrights, or trademarks; software is protected only by secrecy.
- Insurance: The company maintains no insurance coverage, exposing it to potential liability judgments that could cease operations.
Investor Verification Checklist
- Capital Sufficiency: Verify if the $73,314 cash balance is sufficient to cover the estimated $30,000–$75,000 in planned setup and marketing costs, or if immediate additional financing is required.
- Related Party Dependence: Confirm the terms of the $17,700 related party loan and the extent of control held by the majority shareholders (Richard Clarke and Cherry Ping-Wai Lim own ~94.72% of shares).
- Product Viability: Assess the status of the "GCEP Engine" open-source release and whether any third-party adoption or commercial contracts have been secured.
- Internal Controls: Review the company's plan to remediate the material weakness in internal controls regarding financial reporting.
- Market Liquidity: Note that there is currently no public trading market for the common stock, and shares are subject to Rule 144 restrictions.