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On What Factors Surna Inc (OTCMKTS:SRNA) Products And Services Demand Is Based On?

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Surna Inc

In its latest released report, Surna Inc (OTCMKTS:SRNA) had indicated that regulatory changes are main pointer for new facility construction. The demand for its services and products is mainly dependent on the new construction of cannabis grow facilities in Canada and the U.S.

Recent and projected regulatory changes comprising recreational and/or medicinal cannabis use in different jurisdictions, like California, tends to be a major indicator for getting approvals for new facility construction. For 2017, the company focus is on new facility setup in California, where recreational cannabis utilization was approved in 2016, and in Canada, where federal decriminalization legislation has been launched and recreational cannabis use seems to be gaining support.

The highlights

While Surna usual project sales deal is non-cancellable, there are many threats that the company may not realize the full deal value on time, or at all. Closure of a sales deal is grounded upon customers’ ability to obtain, license and establish their growing facility and take equipment possession.

In order to resolve these risks, the company can have three major milestones built into contracts. First, the company present consumer with engineering plans for which they need an upfront deposit before they commence their services. In many instances, the engineering stage is done as part of the building permit procedure or license application, represents on average almost 10% of the total deal value, and takes around 4 to 6 weeks to complete.

Previously, Surna needed a larger preliminary deposit that covered initial equipment and engineering items, however, starting in early 2017, they started offering their consumers a lower preliminary deposit for engineering only. The company’s plan is to lock in the sales deal and start the engineering part of the project earlier, which is vital for many reasons.

They can help their consumers with their design and engineering plans as part of licensing application procedure. Also, Surna is better positioned to lock in its technology for the assignment at an earlier stage. It is also able to help minimize the consumer’s time to market.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of journaltranscript.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure

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