XML 19 R8.htm IDEA: XBRL DOCUMENT

Nature of Operations

3 Months Ended

Jul. 31, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Note 1 – Nature of Operations

Description of Business

CEA Industries Inc. (the “Company”) was incorporated under the laws of the State of Nevada on October 14, 2009, and is headquartered in Louisville, Colorado. The Company has historically operated a portfolio of consumer and commercial businesses and recently undertook a significant strategic shift by adopting a digital asset treasury strategy focused on accumulation of the native cryptocurrency of the BNB Chain blockchain commonly referred to as “BNB” as its primary treasury asset.

The Company’s treasury business consists of acquiring BNB, holding BNB on its balance sheet, and engaging in income producing activities from the BNB held in the treasury, including, but not limited to, validation services, lending or other decentralized finance services. The Company initiated its BNB treasury operations on August 5, 2025, when the Company closed the private placement offering (or the “PIPE”) pursuant to the Securities Purchase Agreement, dated July 28, 2025, between the Company and the Purchasers thereto which provided for approximately $500,000,000 in gross proceeds plus up to an additional $750,000,000 of gross proceeds which may be received from the exercise of warrants exercisable for shares of Common Stock of the Company at a price of $15.15 per share. The intended use of net proceeds from the offering is to acquire BNB.

The Company’s operating businesses consist of selling environmental control and other technologies to the Controlled Environment Agriculture (“CEA”) industry and manufacturing and retailing e-cigarettes, vape devices and e-liquids.

In service of the CEA industry, through its subsidiary Surna Cultivation Technologies LLC, the Company provides climate control systems and air handling equipment to commercial indoor crop cultivation facilities. The Company’s customers include commercial, state- and provincial-regulated CEA growers in the U.S. and Canada, with facilities ranging from several thousand to more than 100,000 square feet. Customers typically engage the Company to assist with building new facilities or expanding or retrofitting existing facilities. The Company leverages its experience in the CEA space to bring value-added climate control solutions that help improve its customers’ overall crop quality and yield, optimize energy and water efficiency, and satisfy the evolving state and local codes, permitting and regulatory requirements.

The Company, through its subsidiary, Fat Panda Limited, is also one of central Canada’s largest retailers and manufacturers of e-cigarettes, vape devices and e-liquids, with a market share exceeding 50% in the region. The Company entered this business through the acquisition of Fat Panda Limited (“Fat Panda”), which closed June 6, 2025. The Company operates 33 retail locations, including 29 Fat Panda stores and four Electric Fog vape outlets, in the provinces of Manitoba, Ontario and Saskatchewan. Fat Panda also serves a wide range of customers through its online e-commerce platform. Its retail footprint is complemented by a comprehensive portfolio of products, including its own line of premium e-liquids manufactured in-house, along with a robust portfolio of trademarks and intellectual property.

Being the earliest entrant in the Central Canadian market in 2013, Fat Panda was able to establish itself as the only dedicated retailer of vaping products at the time. As a result, the brand became synonymous with vaping goods in the region, paving the way for future success and recognition as Fat Panda expanded geographically outwards from Winnipeg.

CEA Industries Inc.

Notes to Condensed Consolidated Financial Statements

July 31, 2025

(in US Dollars except share numbers)

(Unaudited)

Fat Panda Group of Companies incorporated and commenced active operations on June 1, 2014, and its principal business activities include the manufacture, distribution and sale of vaping products and accessories. The Companies own and operate retail locations in Manitoba, Saskatchewan and Ontario. These locations have the following retail stores.

	●	Saskatchewan: in 2024, 7 locations, and 5 in 2025,
	●	Manitoba: 20 in both years, and
	●	Ontario: 8 in 2024, 9 in 2025.

Changes to United States tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations

The United States has recently enacted and proposed to enact significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, financial condition and results of operations. As the Peoples Republic of China (“PRC”) is a particular focus of the tariffs and trade policies, and the Company uses products from the PRC in its product offerings, we expect that there will be disruption in that aspect of our business. We are in the process of searching for alternative suppliers, but there is no assurance that we will be able to find other suppliers at a price that will be reasonable.

Per the US-CAN tariffs, we have yet to be majorly affected by this. The only potential effect could be from raw material sourcing where many of our flavorings, the empty bottles, and nicotine are sourced from the United States. That being said, we have purchased large amounts of these materials in the past that we should not be affected for over a year. From what we understand, the only items that are manufactured in the US are the flavorings, whereas the nicotine and bottles are sourced from other countries and simply wholesaled/distributed by American Companies.

Impact of Ukrainian and Israeli Conflicts

We believe that the conflicts involving Ukraine and Israel do not have any direct impact on our operations, financial condition, or financial reporting. We believe the conflicts will have only a general impact on our operations in the same manner as it is having a general impact on all businesses that have their operations limited to North America resulting from international sanction and embargo regulations, possible shortages of goods and goods incorporating parts that may be supplied from countries involved in the conflicts, supply chain challenges, and the international, US domestic, and Canadian domestic inflation resulting from the conflict and government spending in relation to the conflicts. As our operations are not within or related to these regions of the world, nor within defense related industries, we do not believe we will be specifically targeted for cyber-attacks related to the conflicts. We have no operations in the countries directly involved in the conflict or are specifically impacted by any of the sanctions and embargoes specifically related to those conflicts, as we principally operate in the United States and Canada. We do not believe that the conflicts will have any impact on our internal control over financial reporting. Other than general securities market trends, we do not have reason to believe that investors will evaluate the company as having special risks or exposures related to the conflicts.

Inflation

Our operations are being influenced by the level of inflation in the larger economy and in the industries related to building renovations, retrofitting and new build CEA facilities in which we operate. We believe that we will continue to face inflationary increases in the cost of products and our operations, which will adversely affect our margins and financial results and the pricing of our service and product supply contracts. Inflation is reflected in higher wages, increased pricing of equipment, delivery and transportation costs, and general operational expenses. As we move forward, we plan to continuously monitor our various contract terms and may decide to add clauses that will permit us to adjust pricing if inflation and price increase pressures on us will impact our ability to perform our contracts and maintain our margins.

CEA Industries Inc.

Notes to Condensed Consolidated Financial Statements

July 31, 2025

(in US Dollars except share numbers)

(Unaudited)