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Equity Incentive Plans
 4 Months Ended
Apr. 30, 2025
Share-Based Payment Arrangement [Abstract]  
Equity Incentive Plans

Note 13 – Equity Incentive Plans

 

Directors Remuneration

 

During the four months ended April 30, 2025

 

On January 2, 2025, the Company issued RSU grants of 9,237 shares of common stock under the 2021 Equity Incentive Plan three of its independent directors. The RSUs were granted as an equity retention award pursuant to the Company’s compensation plan for independent directors. The RSUs vested upon grant.

 

During the year ended December 31, 2024

 

On December 17, 2024, the Company issued an RSU grant of 3,058 shares of common stock under the 2021 Equity Incentive Plan to newly elected independent director. The RSUs were granted as an equity retention award pursuant to the Company’s compensation plan for independent directors. The award was issued such that 50% of the RSUs vested upon grant and the remaining 50% vested on the one-year anniversary of the award. A total of 1,529 shares of the Company’s common stock were issued in settlement of the RSUs effective December 17, 2024, the date of the grant.

 

 

CEA Industries Inc.

Notes to Consolidated Financial Statements

April 30, 2025

(in US Dollars except share numbers)

 

During the four months ended April 30, 2024

 

On January 2, 2024, the Company issued RSU grants of 11,364 shares of common stock under the 2021 Equity Incentive Plan three of its independent directors. The RSUs were granted as an equity retention award pursuant to the Company’s compensation plan for independent directors. The RSUs vested upon grant.

 

On January 2, 2024, the Company issued an RSU grant of 3,788 shares of common stock under the 2021 Equity Incentive Plan to three of its four independent directors. Mr. Shipley declined to receive the RSUs which he was entitled to receive. The RSUs were granted as an equity retention award pursuant to the Company’s compensation plan for independent directors effective January 17, 2022 and vested immediately on the grant date. A total of 11,364 shares of the Company’s common stock were issued in settlement of the RSUs.

 

During the year ended December 31, 2023

 

On January 3, 2023, the Company issued an RSU grant of 2,480 shares of common stock under the 2021 Equity Incentive Plan to each of its four independent directors. The RSUs were granted as an equity retention award pursuant to the Company’s compensation plan for independent directors effective January 17, 2022 and vested immediately on the grant date. A total of 10,200 shares of the Company’s common stock were issued in settlement of the RSUs.

 

Revised Compensation Plan for Directors

 

On December 16, 2024, the Board of Directors revised the previously adopted compensation plan. This plan supersedes the plan adopted on January 17, 2022. The Plan is effective retroactively for the current independent directors and for independent directors elected or appointed after the Effective Date.

 

At the time of initial election or appointment, each independent director will receive an equity retention award in the form of restricted stock units (“RSUs”). The aggregate value of the RSUs at the time of grant will be $25,000, with the number of shares underlying the RSUs to be determined based on the closing price of the Company’s common stock on the trade date immediately prior to the date of grant. Vesting of the RSUs will be as follows: (i) 50% at the time of grant, and (ii) 50% on the first anniversary of the grant date.

 

In addition, on the first business day of January each year, each independent director who was not initially appointed or elected in the previous year will receive an equity retention award in the form of RSUs. The aggregate value of the RSUs at the time of grant will be $25,000, with the number of shares underlying the RSUs to be determined based on the closing price of the Company’s common stock on the trade date immediately prior to the date of grant. These RSUs will be fully vested at date of grant.

 

There is no additional compensation paid to members of any committee of the Board. Directors who are also executives of the Company, serving on the Board, do not receive compensation for their Board service.

 

All the independent directors, Messrs. Shipley, Etten, Mariathasan, and Tarallo are subject to the Plan.

 

Each independent director is responsible for the payment of any and all income taxes arising with respect to the issuance of any equity awarded under the plan, including the exercise of any non-qualified stock options.

 

 

CEA Industries Inc.

Notes to Consolidated Financial Statements

April 30, 2025

(in US Dollars except share numbers)

 

2017 Equity Incentive Plan

 

Under the Company’s 2017 Equity Incentive Plan, as may be modified and amended by the Company from time to time (the “2017 Equity Plan”), the Board of Directors (the “Board”) (or the compensation committee of the Board, if one is established) may award stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock unit awards (“RSUs”), shares granted as a bonus or in lieu of another award, and other stock-based performance awards. The 2017 Equity Plan allocates 27,778 shares of the Company’s common stock (“Plan Shares”) for issuance of equity awards under the 2017 Equity Plan. If any shares subject to an award are forfeited, expire, or otherwise terminate without issuance of such shares, the shares will, to the extent of such forfeiture, expiration, or termination, again be available for awards under the 2017 Equity Plan.

 

As of April 30, 2025, of the 27,778 shares authorized under the 2017 Equity Plan, 13,641 relate to restricted shares issued, 11,284 relate to outstanding non-qualified stock options and 2,853 shares remain available for future equity awards.

 

As of December 31, 2024, of the 27,778 shares authorized under the 2017 Equity Plan, 13,641 relate to restricted shares issued, 11,615 relate to outstanding non-qualified stock options and 2,522 shares remain available for future equity awards.

 

2021 Equity Incentive Plan

 

On March 22, 2021, the Board approved the 2021 Equity Incentive Plan (the “2021 Equity Plan”), which was approved by the stockholders on July 22, 2021. The 2021 Equity Plan permits the Board to grant awards of up to 55,556 shares of common stock. The 2021 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), non-qualified stock options, stock appreciation rights (“SARs”), restricted stock awards and restricted stock unit awards and other equity linked awards to our employees, consultants and directors. If an equity award (i) expires or otherwise terminates without having been exercised in full or (ii) is settled in cash (i.e., the holder of the award receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of common stock that may be issued pursuant to this Plan.

 

  Equity Incentive Plan Issuances During the four months ended April 30, 2025

 

-9,237 shares of its common stock were issued in settlement of restricted stock units issued to three of its independent directors under the 2021 Equity Incentive Plan, pursuant to the Director Compensation plan adopted on January 17, 2022.

 

-432 non-qualified stock options expired that had previously been issued under the 2021 Equity Incentive Plan.

 

-Equity Incentive Plan Issuances Forfeitures and Expirations During the Four Months Ended April 30, 2024

 

-Issued 11,364 shares of its common stock in settlement of restricted stock units issued to three of its independent directors under the 2021 Equity Incentive Plan, pursuant to the Director Compensation plan adopted on January 17, 2022.
-
-Equity Incentive Plan Issuances Forfeitures and Expirations During the Twelve Months Ended December 31, 2024

 

-Issued 1,529 shares of common stock in settlement of restricted stock units issued to a newly elected independent director. The grant was for a total of 3,058 shares, 50% of which vested immediately and the remaining units will vest in one year.

 

-Issued 11,364 shares of its common stock in settlement of restricted stock units issued to three of its independent directors under the 2021 Equity Incentive Plan, pursuant to the Director Compensation plan adopted on January 17, 2022.

 

-3,808 non-qualified stock options were forfeited that had previously been issued under the 2021 Equity Incentive Plan.

 

Share-based compensation costs (including expenses from the accrued compensation liabilities related to the annual incentive awards subsequently settled in non-qualified stock options) totaled $82,457 and $187,615 for the years ended December 31, 2024 and 2023, respectively. Such share-based compensation costs are classified in the Company’s consolidated financial statements in the same manner as if such compensation was paid in cash.

 

 

CEA Industries Inc.

Notes to Consolidated Financial Statements

April 30, 2025

(in US Dollars except share numbers)

 

The following is a summary of such share-based compensation costs included in the Company’s consolidated statements of operations for the four months ended April 30, 2025 and April 30, 2024 and the years ended December 31, 2024 and 2023:

  

   2025   2024   2024   2023 
   For the Four Months Ended April 30,   For the Years Ended December 31, 
   2025   2024   2024   2023 
Share-based compensation expense included in:                    
Cost of revenue  $-   $-   $-   $4,898 
Advertising and marketing expenses   -    -    -    1,113 
Product development costs   -    -    -    3,570 
Selling, general and administrative expenses   79,167    76,969    82,457    178,033 
Total share-based compensation expense included in consolidated statement of operations  $79,167   $76,969   $82,457   $187,615 

  

As of April 30, 2025, of the 55,556 shares authorized under the 2021 Equity Plan, 33,267 relate to restricted shares issued, 11,003 relate to outstanding non-qualified stock options, 3,401 relate to outstanding incentive stock options, 1,529 related to outstanding restrictive stock units, and 6,355 shares remain available for future equity awards.

 

 There was $7,854 in unrecognized compensation expense for unvested restricted stock units at April 30, 2025 which will be recognized over approximately 1 year.

 

Restricted Stock Awards

 

No shares of restricted stock were issued during the four months ended April 30, 2025 and 2024 or the years ended December 31, 2024 and 2023.

 

Stock Options

 

The Company uses the Black-Scholes Model to determine the fair value of options granted. Option-pricing models require the input of highly subjective assumptions, particularly for the expected stock price volatility and the expected term of options. Changes in the subjective input assumptions can materially affect the fair value estimate. The expected stock price volatility assumptions are based on the historical volatility of the Company’s common stock over periods that are similar to the expected terms of grants and other relevant factors. The Company derives the expected term based on an average of the contract term and the vesting period taking into consideration the vesting schedules and future employee behavior with regard to option exercise. The risk-free interest rate is based on U.S. Treasury yields for a maturity approximating the expected term calculated at the date of grant. The Company has never paid any cash dividends on its common stock and the Company has no intention to pay a dividend at this time; therefore, the Company assumes that no dividends will be paid over the expected terms of option awards.

 

The Company determines the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, the Company may use different assumptions for options granted throughout the year. No stock options were issued during the four months ended April 30, 2025 and 2024 or the year ended December 31, 2024. During the year ended December 31, 2023, the valuation assumptions used to determine the fair value of each option award on the date of grant were: expected stock price volatility 152.23%; expected term of 10 years and risk-free interest rate 3.48%.

 

 

CEA Industries Inc.

Notes to Consolidated Financial Statements

April 30, 2025

(in US Dollars except share numbers)

 

Employee and Consultant Options

 

A summary of the stock options granted to employees and consultants under the 2017 Equity Plan and the 2021 Equity Incentive Plan during the four months ended April 30, 2025 and the years ended December 31, 2024 and 2023 are presented in the table below:

 

   Number of Options   Weighted Average Exercise Price   Weighted Average Remaining Contractual Term   Aggregate Intrinsic Value 
Outstanding, December 31, 2022   16,006   $107.28    7.6   $- 
Granted   11,541   $10.80    6.9   $- 
Exercised   -   $-    -   $- 
Forfeited   (1,691)  $35.76    9.1   $- 
Expired   (687)  $10.68    -   $- 
Outstanding, December 31, 2023   25,169   $70.44    6.6   $- 
Granted   -   $-    -   $- 
Exercised   -   $-    -   $- 
Forfeited   (3,808)  $38.77    -   $- 
Expired   -   $-    -   $- 
Outstanding, December 31, 2024   21,361   $76.04    4.9   $- 
Granted   -   $-    -   $- 
Exercised   -   $-    -   $- 
Forfeited   -   $-    -   $- 
Expired   (432)  $141.47    -   $- 
Outstanding, April 30, 2025   20,929   $77.61    4.6   $- 
Exercisable, April 30, 2025   20,929   $77.61    4.6   $- 

 

A summary of non-vested stock options activity for employees and consultants under the 2017 Equity Plan and the 2021 Equity Plan for the four months ended April 30, 2025 and the years ended December 31, 2024 and 2023 are presented in the table below:

 

  Number of Options   Weighted Average Grant-Date Fair Value   Aggregate Intrinsic Value   Grant-Date Fair Value 
Nonvested, December 31, 2022   2,396   $60.36   $-   $144,643 
Granted   11,541   $10.56   $-   $121,870 
Vested   (13,076)  $11.04   $-   $(144,359)
Forfeited   (28)  $80.04   $-   $(2,223)
Expired   -    -   $-   $- 
Nonvested, December 31, 2023   833   $80.04   $(21,344)  $21,800 
Granted   -   $-   $-   $- 
Vested   (417)  $26.16   $10,672   $(10,900)
Forfeited   (417)  $26.16   $10,672   $(10,900)
Expired   -    -   $-   $- 
Nonvested, December 31, 2024   -   $-   $-   $- 
Granted   -   $-   $-   $- 
Vested   -   $-   $-   $- 
Forfeited   -   $-   $-   $- 
Expired   -   $-   $-   $- 
Nonvested, April 30, 2025   -    -   $-   $- 

  

For the four months ended April 30, 2025 and 2024 and the years ended December 31, 2024 and 2023, the Company recorded $0, $2,272, $(5,522) and $86,298 as compensation expense related to vested options issued to employees and consultants, net of forfeitures, respectively. As of April 30, 2025, there was no unrecognized share-based compensation related to unvested options.

 

 

CEA Industries Inc.

Notes to Consolidated Financial Statements

April 30, 2025

(in US Dollars except share numbers)

 

Director Options

 

A summary of the non-qualified stock options granted to directors under the 2017 Equity Plan and 2021 Equity Plan during the four months ended April 30, 2025 and the years ended December 31, 2024 and 2023 are presented in the table below:

 

   Number of Options   Weighted Average Exercise Price   Weighted Average Remaining Contractual Term   Aggregate Intrinsic Value ($000) 
Outstanding, December 31, 2022   4,760   $113.34    6.0   $- 
Granted   -   $-    -   $- 
Exercised   -   $-    -   $- 
Forfeited/Cancelled   -   $-    -   $- 
Expired   -   $-    -   $- 
Outstanding, December 31, 2023   4,760   $113.34    5.0   $- 
Granted   -   $-    -   $- 
Exercised   -   $-    -   $- 
Forfeited/Cancelled   -   $-    -   $- 
Expired   -   $-    -   $- 
Outstanding, December 31, 2024   4,760   $113.34    4.0   $- 
Granted   -   $-    -   $- 
Exercised   -   $-    -   $- 
Forfeited/Cancelled   -   $-    -   $- 
Expired   -   $-    -   $- 
Outstanding, April 30, 2025   4,760   $113.34    3.6   $- 
Exercisable, April 30, 2025   4,760   $113.34    3.6   $- 

 

There was no non-vested non-qualified stock option activity for directors for the four months ended April 30, 2025, the four months ended April 30, 2024 or the years ended December 31, 2024 and December 31, 2023.

 

 Restricted Stock Units

 

A summary of the RSUs awarded to employees, directors and consultants under the 2021 Equity Plan during the four months ended April 30, 2025 and the years ended December 31, 2024 and 2023 are presented in the table below:

 

 

CEA Industries Inc.

Notes to Consolidated Financial Statements

April 30, 2025

(in US Dollars except share numbers)

 

  Number of Units   Weighted Average Grant-Date Fair Value   Aggregate Intrinsic Value 
            
Outstanding, December 31, 2022   81   $89.04   $- 
Granted   9,919   $10.08   $- 
Vested and settled with share issuance   (10,200)  $12.24   $- 
Forfeited/canceled   -   $-   $- 
Outstanding, December 31, 2023   -   $8.18   $- 
Granted   14,422   $6.93   $17,104 
Vested and settled with share issuance   (12,893)  $6.79   $(17,189)
Forfeited/canceled   -   $-   $- 
Outstanding, December 31, 2024   1,529   $8.18   $- 
Granted   9,237   $8.12   $- 
Vested and settled with share issuance   (9,237)  $8.12   $- 
Forfeited/canceled   -   $-   $- 
Outstanding, April 30, 2025   1,529   $8.18   $- 

 

For the four months ended April 30, 2025 and April 30, 2024 and the years ended December 31, 2024 and 2023, the Company recorded $79,167, $75,000, $87,980 and $101,316, respectively, as compensation expense related to vested RSUs issued to employees, directors and consultants. As of April 30, 2025, there was $7,854 in unrecognized share-based compensation related to unvested RSUs.