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Preferred and Common Stock
 12 Months Ended
Dec. 31, 2022
Equity [Abstract]  
Preferred and Common Stock

Note 12 – Preferred and Common Stock

 

Preferred Stock

 

As of December 31, 2022, and December 31, 2021, the Company had 25,000,000 and 150,000,000 shares of Preferred Stock authorized, respectively, at a $0.00001 par value.

 

Effective January 17, 2022, the Board of Directors approved a reduction in the number of authorized shares of preferred stock from 150,000,000 to 25,000,000 shares of preferred stock.

 

No shares of preferred stock were issued or outstanding as of December 31, 2022 and 3,300 shares of Series B Preferred Stock was issued and outstanding at December 31, 2021.

 

Series A Preferred Stock

 

As of December 31, 2022, and December 31, 2021, the Company has 0 shares of Series A Preferred Stock issued and outstanding, respectively.

 

Effective November 4, 2021, the Company redeemed all 42,030,331 shares of Series A Preferred Stock issued and outstanding for the issuance of 2,802 shares of common stock.

 

The $20,595 excess in the fair value of the 2,802 shares of common stock ($21,015) issued over the book value of the 42,030,331 shares of Series A Preferred Stock ($420) redeemed has been accounted for as a deemed dividend to Series A Preferred shareholders.

 

Series B Preferred Stock

 

As of December 31, 2022, and December 31, 2021, the Company has 0 and 3,300 shares of Series B Preferred Stock issued and outstanding, respectively.

 

As further described in Note 9 – Temporary Equity above, on September 28, 2021, the Company entered into a Securities Purchase Agreement (“Purchase Agreement”) with an institutional investor (the “Investor”), pursuant to which the Investor purchased from the Company 3,300 shares of Series B Preferred Stock with a stated value of $1,000 per share, or $3,300,000 of stated value in the aggregate (“Series B Preferred Stock”), and a warrant to purchase up to 192,982 shares of common stock of the Company (“Investor Warrant”), for an aggregate purchase price of $3,000,000 (“Consideration”).

 

On February 16, 2022, the Company redeemed 1,650 shares of its Series B Preferred Stock for payment of $2.016 million in cash, which included both principal of $1.98 million and accrued dividends of approximately $36,000.

 

On February 16, 2022, the remaining 1,650 shares of the Company’s Series B Preferred Stock were converted into 362,306 shares of common stock and 703,069 warrants; 170,382 of the warrants vested immediately, had an indefinite term and an exercise price of $0.01 (“pre-funded conversion warrants”), the balance of 532,688 warrants also vested immediately, have a term of 5 years and have an exercise price of $5.00.

 

Consequently, as of December 31, 2022, no shares of Series B Preferred Stock were issued and outstanding.

 

Common Stock

 

Authorized Common Stock

 

As of December 31, 2022, and December 31, 2021, the Company was authorized to issue 200,000,000 and 850,000,000 shares of common stock, respectively, with a par value of $0.00001 per share.

 

Effective November 3, 2021, the Company increased the number of authorized shares of common stock from 350,000,000 to 850,000,000.

 

Effective January 17, 2022, the Company’s Board of Directors approved a reduction in the number of authorized shares of common stock from 850,000,000 to 200,000,000 shares of common stock.

 

 

CEA Industries Inc.

Notes to Consolidated Financial Statements

December 31, 2022

(in US Dollars except share numbers)

 

Reverse Split

 

On January 17, 2022, the Company’s Board of Directors approved a reverse stock split at a ratio of one-for-one hundred and fifty. Such reverse stock split was implemented effective January 27, 2022. The par value for the Common Stock was not affected.

 

As a result of this reverse stock split, the number of the Company’s shares of common stock issued and outstanding as of December 31, 2021, was reduced from 240,125,224 to 1,600,835.

 

All Common Stock, warrants, options and per share amounts set forth herein are presented to give retroactive effect to the Reverse Split for all periods presented.

 

Issued Common Stock

 

As of December 31, 2022, and December 31, 2021, the Company has 7,953,974 and 1,600,835 shares of common stock issued and outstanding, respectively.

 

During the year ended December 31, 2022, the Company issued shares of its common stock as follows:

 

  ● On January 17, 2022, the Company issued 3,367 shares of common stock in settlement of restricted stock units issued to newly appointed directors.
     
  ● Effective January 27, 2022, the Company issued 6,798 shares of common stock to round up partial shares resulting from the reverse share split described above
     
  ● On February 15, 2022, the Company issued 5,811,138 shares of common stock and 6,572,808 warrants, each warrant to purchase one share of common stock for five years, exercisable immediately, at an exercise price of $5.00, for net proceeds of approximately $22 million.
     
  ●

On February 16, 2022, the Company issued 362,306 shares of common stock and 703,069 warrants; 170,382 of the warrants vested immediately, had an indefinite term and an exercise price of $0.01 (“pre-funded conversion warrants”), the balance of 532,688 warrants also vested immediately, have a term of 5 years and have an exercise price of $5.00, on conversion of 1,650 shares of the Company’s Series B Preferred Stock.

     
  ● On June 21, 2022, the Company issued 169,530 shares on common stock on the cashless exercise 170,382 pre-funded conversion warrants.

 

Consequently, effective December 31, 2022, 7,953,974 shares of common stock were issued and outstanding.

 

During the year ended December 31, 2021, the Company issued shares of its common stock as follows:

 

  ● On April 8, 2021, the Company issued 6,667 shares of common stock, valued at $67,000 as part of a legal settlements as further described in Note 11 – Commitments and Contingencies – Litigation above.
     
  ● On November 4, 2021, the Company issued 2,802 shares of common stock, valued at $21,015 to redeem 42,303,331 shares of Series A Preferred Stock as further described in Note 12 – Preferred and Common Stock – Series A Preferred Stock above.
     
  ● On November 24, 2021, the Company issued 6,803 shares of its common stock, valued at $50,000, to the CEO, pursuant to a new Executive Employment Agreement, under the 2021 Equity Incentive Plan as further described in Note 14 Equity Incentive Plans below.
     
  ● On December 30, 2021, the Company issued 7,719 shares of its common stock, valued at $39,368 in settlement of $67,448 dividends that had accrued on the Series A Preferred Stock. The $28,080 gain on settlement of this related party liability has been recognized in additional paid in capital

 

Consequently, effective December 31, 2021, 1,600,835 shares of common stock were issued and outstanding.

 

As further discussed in Note 16. Subsequent Events below:

 

Effective January 3, 2023, the Company issued 119,032 shares of common stock in settlement of restricted stock units issued to directors that vested immediately.

 

Effective January 17, 2023, the Company issued 3,366 shares of common stock in settlement of restricted stock units issued to newly appointed directors in 2022 that vested one year after issuance.

 

Consequently, as of the date of the issuance of these financial statements 8,076,372 shares of our common stock are issued and outstanding.

 

 

CEA Industries Inc.

Notes to Consolidated Financial Statements

December 31, 2022

(in US Dollars except share numbers)