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Subsequent Events | 4 Months Ended
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Apr. 30, 2025
Subsequent Events [Abstract] |
Subsequent Events | Note 15 – Subsequent Events Settlement of Litigation Effective May 9, 2025, the Company entered into a settlement agreement whereby all Claims by Optima Consulting Services, LLC against the Company were settled in full upon the payment of $250,000 by the Company to Optima Consulting Services, LLC. This settlement payment was funded by the Company’s insurance coverage, except for $35,000 in deductibles which were paid by the Company itself. Acquisition of Fat Panda On June 6, 2025, 16728502 CANADA INC., a corporation incorporated under the laws of Canada (“AcquireCo”), and a wholly-owned subsidiary of CEA Industries Inc., a Nevada corporation (“CEA”), acquired by the purchase of all the equity of four operating companies, 7446285 MANITOBA LTD., a corporation incorporated under the laws of Manitoba, 10050200 MANITOBA LTD., a corporation incorporated under the laws of Manitoba, FAT PANDA LTD., a corporation incorporated under the laws of Manitoba, and FAT PANDA DIRECT LTD., a corporation incorporated under the laws of Manitoba (together “Fat Panda”). As a result of the acquisition, CEA acquired the business of Fat Panda and will continue the existing business operations as wholly-owned subsidiaries. Fat Panda is central Canada’s largest retailer and manufacturer of e-cigarettes, vape devices and e-liquids, with a market share exceeding 50% in the region. 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. The acquisition included all the assets of Fat Panda, including among other things, the leases for the retail outlets, intellectual property, inventory, government licenses and permits, franchise agreements, manufacturing facilities and supply agreements, which are necessary for the ongoing manufacturing and retail operations of Fat Panda. The acquisition will continue the employment of the current management and of the production and retail staff, for the uninterrupted, continuous operations of the business. The sellers will enter into non-competition agreements at closing. Certain of the senior management persons will enter into employment agreements for their continued employment after the closing of the acquisition. The purchase price was CAD $18.0 million (USD $12.6 million) comprised of approximately CAD $12.1 million in cash to the sellers, 39,000 shares of VAPE common stock with an agreed value of CAD $700,000, and seller notes totaling CAD $2.56 million. A portion of the purchase price was funded by a short-term loan from a United States based lender in the amount of USD $4.0 million, which is due in six months. In addition, CAD $2.6 million has been placed in escrow to support post-closing adjustments, indemnity obligations, and employee-related matters. Financing of Acquisition Interim Loan Facility On June 4, 2025, CEA entered into an interim loan facility with CEAD Panda Lender LLC, under which it borrowed USD$4,000,000. The loan due date is December 3, 2025, subject to the right of CEA to prepay any amount of the borrowed funds together with outstanding unpaid interest and a prepayment penalty. The loan is interest only, until the maturity date, payable monthly. The interest rate is 3% for the first three months and then 2% per month thereafter of the outstanding loan amount. The loan is secured by a first lien on all the assets of CEA, AcquireCo and Fat Panda, subject to certain exceptions and permitted liens and permitted dispositions. The vendor notes of the Fat Panda sellers are subordinate to the security interests granted under the security agreements related to the loan facility. The loan facility has typical representations and warranties of the borrower, default provisions, and various covenants, including the covenant to maintain at least $1,500,000 in cash and have a minimum of $4,000,000 in working capital (inclusive of any cash). Long Term Financing CEA and AcquireCo, intend to replace the interim credit facility with a long term credit facility with a money center Canadian bank or other institutional lender, in the amount of $7,000,000 or more, as may be negotiated. The facility will be used to repay the interim credit facility and to provide working capital for the Fat Panda business. There is no assurance that the enterprise will be able to enter into such a credit facility, in a timely manner, and the terms are to be negotiated. CEA Industries Inc. Notes to Consolidated Financial Statements April 30, 2025 (in US Dollars except share numbers) Equity Financing CEA intends to seek to enter into one or more equity financing arrangements, including an At-The-Market (“ATM”) facility with a money center brokerage firm. Such an ATM typically provides for the company to sell shares of common stock from time to time, in an amount to be determined by the company, within certain parameters and agreed by the brokerage firm. CEA does not currently have any such arrangements for any form of equity financing, and if it does negotiate an equity financing or an ATM arrangement, there is no assurance that any equity financing will be on terms acceptable to the Company. On June 11, 2025, the Board of Directors approved the issuance of 2,700 non-qualified stock options under the 2017 Equity Plan to certain employees. The options have a term of 10 year, will vest one year from the grant date and have an exercise price of $7.74 per share. Effective June 13, 2025, the Company changed its ticker symbol on the NASDAQ Capital Market from “CEAD” to “VAPE”.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 855 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/855/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 855 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147483399/855-10-50-2 + Details
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