BNB Standard Corp 10-Q/A for FY2026 Q3
BNB Standard Corp (BNC)
About this 10-Q/A
BNB Standard Corp filed this 10-Q/A on June 23, 2026, covering the quarter ended January 31, 2026 (FY2026 Q3).
Headline figures
Quarter ended January 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $7.33M
- Net loss
- $106.57M
- Diluted EPS
- -$1.92
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
FOR
THE QUARTERLY PERIOD ENDED
OR
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Preferred stock purchase rights | Nasdaq Capital Market |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ |
| ☒ | Smaller Reporting Company | ||
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO
As of March 13, 2026, the number of outstanding shares of common stock of the registrant was .
CEA Industries Inc.
Amendment No. 1 to Quarterly Report on Form 10-Q/A
For the Quarterly Period Ended January 31, 2026
In this Amendment No. 1 to Quarterly Report on Form 10-Q/A, unless otherwise indicated, the “Company”, “we”, “us” or “our” refer to CEA Industries Inc. and, where appropriate, its wholly owned subsidiaries.
Explanatory Note
This Amendment No. 1 on Form 10-Q/A (this “Amendment”) amends the Quarterly Report on Form 10-Q of the Company for the three months ended January 31, 2026 and the period from June 7, 2025 through January 31, 2026 (the “Successor period”) and the period from May 1, 2025 through June 6, 2025 (the “Predecessor period”), originally filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2026 (the “Original Filing”). On June 11, 2026, the Company’s management, with the concurrence of the Audit Committee of the Board of Directors, concluded that the previously issued condensed consolidated financial statements included in the Original Filing should no longer be relied upon due to an error in the calculation of the weighted-average number of shares outstanding used in determining basic and diluted earnings per share (“EPS”).
Impact of the Restatement
The error affects only the EPS denominator (weighted-average shares); it has no effect on net income (loss), total assets, total liabilities, stockholders’ equity, revenue, or cash flows, and net income (loss) available to common stockholders is unchanged in each affected period. The error resulted in an understatement of basic and diluted weighted-average shares outstanding, which in turn understated both basic and diluted EPS for the three months ended January 31, 2026 and overstated both basic and diluted EPS for the Successor period from June 7, 2025 through January 31, 2026.
The error resulted in an understatement of basic and diluted weighted average number of shares outstanding, which in turn understated or overstated basic and diluted EPS for the affected periods as follows:
Three months ended January 31, 2026:
| ● | Basic and diluted weighted average number of shares understated by 2,376,236 shares | |
| ● | Basic and diluted EPS understated by $0.08 |
Successor period from June 7, 2025 through January 31, 2026:
| ● | Basic weighted average number of shares understated by 21,806,662 shares | |
| ● | Diluted weighted average number of shares understated by 21,806,663 shares | |
| ● | Basic EPS overstated by $4.26 | |
| ● | Diluted EPS overstated by $4.21 |
Amended Items
In accordance with Rule 12b-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the following Items of the Original Filing have been partially amended and the complete text of those Items, as originally filed and as amended herein, is set out in this Amendment:
Part I – Item 1. Financial Statements (Unaudited), including the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and the Notes to Condensed Consolidated Financial Statements
Part II – Item 6. Exhibits
The error affected the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), the Earnings Per Share note within the Notes to Condensed Consolidated Financial Statements.
Restatement and Correction
The Company evaluated the error in accordance with SEC Staff Accounting Bulletin No. 99, Materiality, and concluded that the error is material to the previously issued condensed consolidated financial statements because it affects a separately presented, required primary metric central to investor valuation, is precisely measurable, overstated favorable per-share performance, and arose from a systemic methodology error. When previously issued condensed consolidated financial statements are determined to be materially misstated, they are corrected by restatement. Accordingly, the Company has revised the affected condensed consolidated financial statements and related disclosures to reflect the correction of basic and diluted weighted-average shares outstanding and basic and diluted EPS.
Internal Control Considerations
As disclosed in the Original Filing, management had previously concluded that the Company’s disclosure controls and procedures were not effective as of January 31, 2026 due to a material weakness in internal control over financial reporting. The error reported in this Amendment relates to the existing material weakness. Management is continuing to implement remediation measures.
Table of Contents
| i |
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CEA Industries Inc.
Condensed Consolidated Balance Sheets
| January 31, 2026 | April 30, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Related parties receivables, net | ||||||||
| Receivables, net | ||||||||
| Contract assets, net | ||||||||
| Digital assets, current | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other | ||||||||
| Income tax receivable | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Digital assets, net of current portion | ||||||||
| Goodwill | ||||||||
| Deposits | ||||||||
| Deferred tax assets | ||||||||
| Operating lease right-of-use asset | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Deferred revenue | ||||||||
| Related party note payable | ||||||||
| Income taxes payable | ||||||||
| Current portion of operating lease liability | ||||||||
Promissory note payable | ||||||||
| Royalty liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Deferred tax liabilities | ||||||||
| Convertible promissory note payable | ||||||||
| Warrant liabilities - stapled warrants | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Common stock $ par value; authorized; shares issued and outstanding | - | |||||||
| Common stock, authorized; shares issued and outstanding | - | |||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 2 |
CEA Industries Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
| Successor | Predecessor | Successor | Predecessor | |||||||||||||||||
Three Months Ended January 31, 2026 | Three Months Ended January 31, 2025 | Period from June 7, 2025 through January 31, 2026 | Period from May 1 through June 6, 2025 | Nine Months Ended January 31, 2025 | ||||||||||||||||
| As Restated | As Restated | |||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Gross profit | ||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Advertising and marketing expenses | ||||||||||||||||||||
| Unrealized loss on digital assets | ||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||||||
| Other income (expense), net | ||||||||||||||||||||
| Airdrop income | ||||||||||||||||||||
| Gain on change in fair value of warrant liability | ||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||||||
| Other income (expense), net | ( | ) | ||||||||||||||||||
| Total other income, net | ||||||||||||||||||||
| Income (loss) before income tax expense (benefit) | ( | ) | ||||||||||||||||||
| Income tax expense (benefit) | ( | ) | ( | ) | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||||
| Foreign currency translation adjustment | $ | ( | ) | ( | ) | |||||||||||||||
| Total comprehensive income (loss) | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
| Net income (loss) per share of common stock attributable to common stockholders | ||||||||||||||||||||
| Basic | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
| Diluted | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||||
| Basic | ||||||||||||||||||||
| Diluted | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 3 |
CEA Industries Inc.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
| Number of Shares | Amount | Paid in Capital | Retained Earnings | Comprehensive Income (Loss) | Total | |||||||||||||||||||
| Common Stock | Additional Paid in | Retained | Accumulated Other
Comprehensive | |||||||||||||||||||||
| Number of Shares | Amount | Capital | Earnings | Income (Loss) | Total | |||||||||||||||||||
| Balance, November 1, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Stock based compensation expense | ( | ) | ( | ) | ||||||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||
| Balance, January 31, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Common Stock | Additional Paid in | Retained | Accumulated Other Comprehensive | |||||||||||||||||||||
| Number of Shares | Amount | Capital | Earnings | Income (Loss) | Total | |||||||||||||||||||
| Successor | ||||||||||||||||||||||||
| Balance, June 7, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common shares issued to directors on settlement of restricted stock units | 4,189 | - | 49,379 | - | - | 49,379 | ||||||||||||||||||
| Stock based compensation expense | ||||||||||||||||||||||||
| Common shares issued on acquisition of Fat Panda | ||||||||||||||||||||||||
| Issuance of shares and warrants in private offering, net of issuance costs of $ | ||||||||||||||||||||||||
| Issuance of | ||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance, January 31, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Shares | Amount | Capital | Earnings | Income (Loss) | Total | |||||||||||||||||||
| Common Stock | Additional Paid in | Retained | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Income (Loss) | Total | |||||||||||||||||||
| Balance, May 1, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance, June 6, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Common Stock | Additional Paid in | Retained | Accumulative Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Income | Total | |||||||||||||||||||
| Balance, November 1, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance, January 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Common Stock | Additional Paid in | Retained | Accumulative Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Income | Total | |||||||||||||||||||
| Balance, May 1, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance, January 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 4 |
CEA Industries Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Successor | ||||||||||||
Period from June 7 through January 31, 2026 | Period from May 1 through Jun 6, 2025 | Period from May 1 through January 31, 2025 | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net income | $ | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash used in operating activities | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Share-based compensation | ||||||||||||
| Amortization of debt discount | ||||||||||||
| Non-cash income from airdrops | ( | ) | ||||||||||
| Non-cash fees paid in digital assets | ||||||||||||
| Unrealized loss on digital assets | ||||||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||||||
| Loss on disposal of assets | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ||||||||||||
| Income taxes payable | ( | ) | ||||||||||
| Inventory | ( | ) | ( | ) | ||||||||
| Prepaid expenses | ( | ) | ||||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||||||
| Lease liabilities | ||||||||||||
| Deferred revenue | ||||||||||||
| Royalty | ( | ) | ( | ) | ||||||||
| Related parties | ( | ) | ||||||||||
| Contract assets | ||||||||||||
| Deferred tax asset | ( | ) | ||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from investing activities | ||||||||||||
| Cash paid for acquisitions of Fat Panda | ( | ) | ||||||||||
| Purchase of digital assets | ( | ) | ||||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||||||
| Net cash used in investing activity | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds from notes payable | ||||||||||||
| Proceeds from issuance of common stock and warrants in PIPE offering | ||||||||||||
| Issuance cost of common stock and warrants in PIPE offering | ( | ) | ||||||||||
| Proceeds from issuance of common stock | ||||||||||||
| Warrants exercised | ||||||||||||
| Repurchase of shares | ( | ) | ||||||||||
| Repayments from notes payable | ( | ) | ||||||||||
| Net cash provided by financing activity | ||||||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||||||
| Cash and cash equivalents, beginning of period | ||||||||||||
| Cash and cash equivalents, end of period | $ | $ | $ | |||||||||
| Non-cash Investing and Financing Activities: | ||||||||||||
| Proceeds from issuance of common stock for Fat Panda acquisition | $ | ( | ) | $ | $ | |||||||
| Accrued share repurchase liability | $ | ( | ) | $ | $ | |||||||
| CRA indemnity note | $ | $ | $ | |||||||||
| Issuance of related party notes for Fat Panda acquisition | $ | $ | $ | |||||||||
| In-kind digital assets contribution received against issuance of equity and warrants in PIPE offerings | $ | $ | $ | |||||||||
| In-kind digital assets acquired from PIPE offerings proceeds | $ | ( | ) | $ | $ | |||||||
| Supplemental cash flow information | ||||||||||||
| Cash paid for interest | $ | $ | $ | |||||||||
| Cash paid for income taxes | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
| 5 |
CEA Industries Inc.
Notes to Condensed Consolidated Statements Financial Statements
(Unaudited)
Note 1 – Restatement of Previously Issued Financial Statements and Nature of Operations
Subsequent to the issuance of the Company’s previously filed unaudited condensed consolidated financial statements for the three months ended January 31, 2026 and the period from June 7, 2025 through January 31, 2026 (the “Successor” period), the Company identified an error in the calculation of the basic and diluted weighted-average number of shares outstanding used to determine basic and diluted EPS. The error understated the basic and diluted weighted-average number of shares outstanding and, as a result, understated basic and diluted EPS for the three months ended January 31, 2026 and overstated basic and diluted EPS for the period from June 7, 2025 through January 31, 2026. Management identified the error in connection with the preparation of the Company’s Annual Report on Form 10-K for the fiscal year ending April 30, 2026.
The restatement impacts only the basic and diluted weighted-average number of shares outstanding and basic and diluted EPS. The restatement had no impact on revenues, expenses, net income (loss), income (loss) before income taxes, total assets, total liabilities, stockholders’ equity, retained earnings or other components of equity, cash flows, or shares of common stock outstanding at period end. Net income (loss) available to common stockholders is unchanged for each affected period.
The following table summarizes the effect of the restatement on the per-share data and weighted-average shares outstanding in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended January 31, 2026 and the successor period from June 7, 2025 through January 31, 2026. The amounts presented represent the (overstatement)/understatement of the previously reported figures:
Schedule of Restatement
| Three Months | Period from June 7, 2025 | |||||||
| Ended | through | |||||||
| January 31, 2026 | January 31, 2026 | |||||||
| (Overstatement)/Understatement | ||||||||
| Basic Net Income per share | $ | $ | ( | ) | ||||
| Diluted Net Income per share | $ | $ | ( | ) | ||||
| Basic weighted average number of common shares outstanding | ||||||||
| Diluted weighted average number of common shares outstanding | ||||||||
The restatement impacted the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and the Earnings per Share note within the Notes to Condensed Consolidated Financial Statements. No other financial statement items were affected.
Accordingly, the Company has restated the previously issued financial statements for the periods presented to correct the errors described above. Management believes the restated financial statements present fairly, in all material respects, the Company’s financial position and results of operations for the periods presented.
The following table sets forth the impact of the restatement on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended January 31, 2026 and the successor period from June 7, 2025 through January 31, 2026, presented as a bridge from the amounts as previously reported to the restatement adjustment and the amounts as restated.
Condensed Consolidated Statement of Operations (Unaudited)
| Successor | ||||||||||||||||||||||||
| Three Months Ended January 31, 2026 | Period from June 7, 2025 through January 31, 2026 | |||||||||||||||||||||||
| As Previously Reported | Restatement Adjustments | As Restated | As Previously Reported | Restatement Adjustments | As Restated | |||||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||
| Net income per share of common stock attributable to common stockholders | ||||||||||||||||||||||||
| Basic | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||
| Diluted | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||
| 6 |
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. Historically, the Company operated a portfolio of consumer and commercial businesses, including climate control systems for controlled environment agriculture and retail operations in the vaping industry.
In August 2025, the Company initiated a strategic transformation by adopting a digital asset treasury strategy focused exclusively on BNB, the native token of the BNB Chain. Through its wholly owned subsidiary, CEA BRS LLC, a Delaware limited liability company and the sole stockholder of BNC BNB Cayman, a Cayman Islands exempt company, the Company seeks to build and manage the largest corporate treasury of BNB, providing institutional-grade exposure to blockchain infrastructure and decentralized finance (DeFi).
The Company’s treasury
operations currently include acquiring and holding BNB and the Company may generate income from airdrops received in connection with its BNB holdings. The Company may in the future generate returns
through additional digital asset-related activities such as validation services, lending, and other decentralized finance protocols,
though no BNB is currently staked or pledged. The Company’s BNB-focused Digital Asset Treasury (“DAT”) strategy
was on August 5, 2025, following the closing of a private placement that raised approximately $
In connection with this strategic shift, the Company changed its Nasdaq ticker symbol from “VAPE” to “BNC” on August 6, 2025, reflecting the Company’s strategic focus on BNB as its primary treasury asset while continuing its core business operations. While the Company continues to operate its legacy business and beginning in the second fiscal quarter ended October 31, 2025, its financial results also reflect the implementation of its DAT.
Additionally, on June 6, 2025 (the “Acquisition Date”), the Company completed the acquisition of Fat Panda Ltd. and its related entities (“Fat Panda”) (the “Fat Panda Acquisition”), entering the Canadian nicotine vape industry. This acquisition aligned with the Company’s strategy at that time to focus on high-growth, regulated consumer markets and provide a vertically integrated infrastructure to support retail expansion and e-commerce capabilities.
Note 2 – Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the successor period from June 7, 2025 to January 31, 2026 and the predecessor period from May 1, 2025 to June 6, 2025, are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2026.
The balance sheet information as of April 30, 2025, has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Transitional Annual Report on Form 10-KT for the four months ended April 30, 2025.
On the Acquisition Date, the Company completed the Fat Panda Acquisition. As described in Note 4 – Business Combination, the Company has been identified as the accounting acquirer (the “Successor”) and Fat Panda as the accounting predecessor (the “Predecessor”) in accordance with the acquisition method of accounting under ASC 805, Business Combinations. As a result of this designation, the financial statements reflect a change in reporting entity. Financial information for periods prior to the Acquisition Date represents the historical operations of Fat Panda and is labelled as “Predecessor.” Financial information for periods beginning on and after the Acquisition Date reflects the operations of the combined entity under the control of the Company and is labelled as “Successor” since the company operations prior to the acquisition were insignificant relative to those of Fat Panda. The merger was accounted for as a business combination using the acquisition method of accounting. The Successor financial statements reflect a new basis of accounting based on the fair value of the identifiable net assets acquired. Determining the fair value of certain assets and liabilities assumed involves significant judgment and the use of estimates and assumptions. See Business Combinations below for additional information on the fair values of assets and liabilities recorded in connection with the Fat Panda Acquisition.
As a result of applying the acquisition method of accounting as of the Acquisition Date, the accompanying condensed consolidated financial statements include a black line division to distinguish between the Predecessor and Successor reporting entities. These entities are presented on different bases and are therefore not comparable. The lack of comparability is primarily due to the impacts of the Fat Panda Acquisition, including the remeasurement of acquired assets and assumed liabilities at fair value in the Successor condensed consolidated financial statements.
| 7 |
Use of Estimates and Assumptions
The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements and the notes. Actual results may ultimately differ materially from those estimates.
Digital Assets
In December 2023, the FASB issued ASU 2023-08, Digital Assets, which provides guidance on the recognition, measurement, presentation, and disclosure of digital assets through the creation of ASC 350-60, Intangibles – Goodwill and Other – Crypto Assets (“ASC 350-60”). ASU 2023-08 became effective for all entities for fiscal years beginning after December 15, 2024. The standard became effective for the Company on May 1, 2025, and no cumulative-effect adjustment was required. The Company accounts for its digital assets, including BNB tokens, in accordance with ASC 350-60. The Company has determined its digital assets meet the scoping criteria of ASC 350-60, which requires eligible crypto assets to be measured at fair value, with changes in fair value recognized in net income. Fair value is determined in accordance with ASC 820, Fair Value Measurement, using quoted prices in active markets. The Company has designated the Binance exchange as its principal market as it is the market that the Company has access to and has the greatest volume and level of activity of BNB for determining the fair value of BNB tokens.
The Company may deposit certain digital assets with certain third-party exchanges to facilitate digital asset treasury activities. Assets that would be held on these exchanges may not be maintained in segregated wallets under the Company’s exclusive control and could be pooled with assets of other customers. Due to the lack of sufficient regulatory oversight and the Company’s inability to prevent such an exchange from using such assets for purposes other than those directed by the Company, the Company has concluded it would not have complete control over the deposited assets. Accordingly, such amounts would be recorded as receivables from the exchange within current assets, rather than as digital assets on the condensed consolidated balance sheet, as the Company does not expect that it would hold these receivables for more than 12 months.
The Company holds its BNB digital assets with a non-U.S. Binance-ecosystem custodial provider and periodically receives airdrops from blockchain projects within the Binance ecosystem. Airdrops are distributed randomly without consideration or contractual agreement; therefore, they do not meet the criteria for revenue recognition under ASC 606. The Company records the fair value of airdrops upon receipt and classifies the income as non-operating, presented within other income in the condensed consolidated statements of operations.
The activity from remeasurement of digital assets at fair value is reflected in the condensed consolidated statements of operations within unrealized gain/loss on digital assets. Realized gains and losses from the derecognition of digital assets would be included in the realized gain/loss on digital assets in the condensed consolidated statements of operations. During the period, the Company has converted digital assets (such as airdrops) into stablecoins and BNB as part of its regular operations. The Company has not disposed of digital assets for fiat currency during the reporting period, in the event there are disposals in the future, the Company will use the specific identification method to calculate the realized gains/losses on digital assets.
Sales and purchases of digital assets are reflected as cash flows from investing activities in the condensed consolidated statements of cash flows. Contributions of digital assets received as part of the consideration received in a private placement (referred to as PIPE Transaction as discussed in Note 13 – Shareholders’ Equity) are presented within supplemental information for non-cash investing and financing activities in the condensed consolidated statements of cash flows.
Cash and Cash Equivalents
All highly liquid investments with original maturities of three months or less at the date of purchase are considered to be cash equivalents.
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As
of January 31, 2026 (Successor), the Company had approximately $
The Company periodically monitors the financial condition of its financial institutions and considers strategies to mitigate credit risk exposure related to uninsured balances. The Company has not experienced any losses to date on depository accounts. The Company maintains its cash accounts with high credit quality financial institutions and therefore believes that its loss exposure is minimal.
Fair Value Measurement
The Company accounts for fair value measurements in accordance with ASC 820, Fair Value Measurement, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company uses a three-level hierarchy to prioritize the inputs used in measuring fair value:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or other market-corroborated inputs.
Level 3 – Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability.
The Company has designated the Binance exchange as its principal market for its digital assets as it is the market to which its wholly owned subsidiary, BNC BNB Cayman, has access and that provides the greatest volume and level of orderly transactions. The Company reassesses its principal market when facts and circumstances change, including but not limited to when new markets become accessible, or the volume/activity in the current principal market declines. For digital assets that trade continuously across global markets, the Company applies a consistent valuation cut-off at midnight UTC on the reporting date to determine fair value. All digital assets are measured at fair value using quoted prices in their respective principal markets, which are classified as Level 1 inputs under ASC 820.
All of the Company’s digital assets, including BNB, BTC, USDT, and USDC, are held by BNC BNB Cayman, and the principal market for each asset is determined based on the market accessible to this subsidiary. The Company has elected the Fair Value Option for its USDC holdings to align with the treatment of its other digital assets. USDC is measured at fair value on a recurring basis using quoted prices in the Company’s principal market on the date of recognition.
The Company’s Stapled Warrants, issued in October 2025, are liability classified, and fair valued using a Monte-Carlo option model using Level 3 inputs. Information related to the Stapled Warrants is disclosed in Note 15 – Investor Warrants.
The Company’s financial assets and liabilities consist of cash, accounts receivable, accounts payable, accrued expenses and debt. The carrying value of cash, accounts receivable, accounts payable, and accrued expenses approximates fair value due to the short-term nature of those instruments. The carrying value of debt approximates fair value due to the variable rate nature of the debt.
The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share (“ASC 260”). Basic EPS is computed by dividing undistributed earnings attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The diluted impact from potential common stock instruments is calculated using the treasury stock method, and if-converted method as applicable, unless the effect would be anti-dilutive.
Business Combinations
For acquisitions meeting the definition of a business combination, the acquisition method of accounting is used. The consideration transferred for the acquired business is allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired is allocated to goodwill. Acquisition-related costs, such as professional fees, are excluded from the consideration transferred and are expensed as incurred. The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions, tax-related valuation allowances and pre-acquisition contingencies are initially recorded in connection with a business combination as of the acquisition date.
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Goodwill
Goodwill represents the excess of the purchase price for an acquisition over the fair value of the identifiable net assets acquired in a business combination. Goodwill recognized in connection with the acquisition is denominated in the functional currency of the acquired entity and was translated into U.S. dollars using the exchange rate as of the acquisition date. Goodwill is subsequently translated into U.S. dollars at each reporting date using the period-end exchange rate.
Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level, or more frequently if events or changes in circumstances indicate that the Company’s carrying amount may not be recovered. The Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of the relevant reporting unit is less than its carrying amount. If a quantitative assessment is required, the Company compares the estimated fair value of the reporting unit with its carrying value. If the carrying value exceeds the reporting unit’s fair value, the Company recognizes an impairment loss in an amount equal to that excess, limited to the carrying amount of goodwill.
During the quarter ended January 31, 2026, the Company evaluated events and circumstances in accordance with the qualitative assessment guidance in ASC 350-20 to determine whether it was more likely than not that the fair value of the Fat Panda reporting unit was less than its carrying amount. Based on this evaluation, management concluded that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount.
Intangible Assets
The Company has recognized two intangible assets: one with an indefinite useful life and one with a finite useful life. The indefinite-lived intangible asset, a trade name, is not subject to amortization. Instead, it is evaluated for impairment on an annual basis, or more frequently if events or changes in circumstances suggest that the asset may be impaired. The impairment assessment involves estimating the fair value of the trade name using discounted future cash flows and comparing it to its carrying amount. If the carrying amount exceeds the estimated fair value, an impairment charge is recorded for the difference.
The
finite-lived intangible asset, also a trade name, is recorded at historical cost less accumulated amortization. Amortization is recognized
on a straight-line basis over the asset’s estimated useful life of
Based
on the carrying value of intangible assets at January 31, 2026, estimated amortization expense for the subsequent five years is as follows:
remaining one quarter of 2026—$
Revenue Recognition
The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers, which requires revenue to be recognized as control of promised goods or services is transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled.
Fat Panda revenues consist primarily of retail sales, e-commerce and phone orders, factory-direct wholesale sales, and franchise arrangements. Retail sales represent a single performance obligation satisfied at the point of sale. Revenue is recognized upon payment and delivery, net of sales taxes. Based on historical data, no material liability for returns was recorded for the periods presented.
Revenue from e-commerce, phone orders, and factory-direct wholesale is recognized upon shipment (FOB shipping point). Shipping and handling are considered fulfilment costs. Historical return rates are minimal; no allowance for returns has been recorded.
Gift card sales are recorded as a liability at issuance and recognized upon redemption or when breakage becomes probable. Loyalty programs, such as “buy 10, get 1 free” punch cards, represent separate performance obligations; related liabilities were immaterial for all periods presented.
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Franchise royalty fees are variable consideration based on a percentage of franchisee sales and are recognized in the period sales occur. Initial franchise fees are recognized upon opening of the new franchise location.
Climate control revenues are derived from contracts that may include engineering and technical services and the sale of climate control system equipment and components. These contracts may span multiple phases, from facility design to equipment delivery and start-up. The Company does not provide construction or installation services. A performance obligation is a promise in a contract to transfer a distinct good or service. Most client control contracts include multiple performance obligations, while certain contracts consist of a single performance obligation, typically engineering-only services.
The transaction price is allocated to each performance obligation based on its standalone selling price. For engineering services, standalone selling price is estimated using project characteristics such as facility size and system complexity. For equipment sales, standalone selling price is determined by expected costs plus an appropriate margin. When prices are highly variable, the Company uses a combination of methods and observable inputs. Revenue is recognized when control transfers - generally upon shipment for goods and over time for engineering services based on percentage completion toward milestones.
The Company excludes taxes assessed by governmental authorities from transaction prices and recognizes revenue net of sales taxes. Freight revenue and related costs are recorded when control of goods passes to the customer. The Company offers assurance-type warranties only and maintains a warranty reserve based on historical costs.
Concentrations
One
customer accounted for
Foreign Currency Translation
The Company’s condensed consolidated financial statements are presented in U.S. dollar (“USD”). Financial statements of foreign subsidiaries are translated into U.S. dollars using period-end exchange rates for assets and liabilities and average exchange rates for revenues and expenses. Adjustments resulting from translating net assets are reported as a separate component of accumulated other comprehensive loss within condensed consolidated statements of common shareholders’ equity as currency translation adjustment. Monetary assets and liabilities that are denominated in foreign currencies are translated at the rate prevailing at each reporting date. The U.S. dollar effects that arise from translating the net assets of these companies are recorded in other comprehensive income.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements from equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgement, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations.
Correction of Error – RSU Compensation
In July 2025, prior to the closing of the PIPE Transaction, the Company erroneously recognized $ million of compensation expense prematurely. Accordingly, the Company reversed the previously recognized $ million of compensation expense in the current period. The Company evaluated the impact in accordance with SEC Staff Accounting Bulletins (“SAB”) 99 Topic 1.M, Materiality, and SAB 108 Topic 1.N, Accounting Changes and Error Corrections and concluded that the error and subsequent correction were not material to prior or current interim condensed consolidated financial statements.
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Recently Issued Accounting Pronouncements
In July 2025, the FASB issued Accounting Standards Update No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient (for all entities) and an accounting policy election for non-public entities when estimating expected credit losses for current receivables and contract assets under ASC 606. The standard is effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years, and early adoption is permitted. The amendments are applied prospectively, and eligible entities can choose to apply the practical expedient and accounting policy election, with required disclosures. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements and disclosures.
In January 2025, the FASB issued Accounting Standards Update No. 2025-01 to clarify the effective date of ASU 2024-03 (disaggregation of income statement expenses) for non-calendar year-end entities. The clarification ensures that initial adoption is required in an annual reporting period (rather than unintentionally in an interim period) for entities with non-calendar year ends. The amendments align with the effective dates stated in ASU 2024-03 (annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027) and early adoption is permitted. The Company is currently evaluating the potential impact of this guidance on its unaudited consolidated financial statements and related disclosures.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which enhances transparency by requiring additional disaggregation in the rate reconciliation and expanded disclosures of income taxes paid by jurisdiction. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, for public business entities. As the Company’s fiscal year ending April 30, 2026 begins after that date, the Company will adopt this standard in its annual Form 10-K for the fiscal year ending April 30, 2026. The Company does not expect ASU 2023-09 to affect its interim disclosures for the current fiscal year.
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosure.
Note 3 - Digital Assets
The following table sets forth the units held, cost basis, and fair value of digital assets held, as shown on the condensed consolidated balance sheet as of January 31, 2026:
Schedule of Units Held Cost Basis And Fair Value of Digital Assets Held
| Crypto Assets held: | Number of Tokens | Cost | Fair Value | |||||||||
| BNB | $ | $ | ||||||||||
| BTC | ||||||||||||
| USDC | ||||||||||||
| USDT | ||||||||||||
| Total | $ | $ | ||||||||||
BTC, USDC, and USDT are classified within current digital assets, as they are held primarily for operating liquidity and are expected to be available for use within the next twelve months. As of January 31, 2026, the Company has no digital assets held with third party exchanges, accordingly, has no digital assets receivable.
Cost basis is equal to the cost of the digital asset, net of any transaction fees, if any, at the time of purchase or upon receipt.
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The following table summarizes the Company’s digital asset holdings, as of:
Schedule of Digital Asset Holdings
| Balance | ||||
| Balance as of June 7, 2025 | $ | |||
| Fair value of digital assets held, beginning | $ | |||
| Purchases | ||||
| Airdrop income | ||||
| Commission expense | ( | ) | ||
| Unrealized loss on BNB | ( | ) | ||
| Unrealized loss on BTC | ( | ) | ||
| Balance as of January 31, 2026 | $ | |||
| Fair value of digital assets held, ending | $ | |||
Note 4 - Business Combinations
On the Acquisition Date, the Company acquired Fat Panda, Central Canada’s leading retailer and manufacturer of vaping products, holding a significant market share across Manitoba, Ontario, and Saskatchewan. With 33 retail locations and a thriving e-commerce platform, Fat Panda offers a wide range of high-quality vape devices and e- liquids, including its own premium in-house line.
The
purchase price was $
The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their preliminary estimated fair values as of the Acquisition Date. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The goodwill is primarily attributable to the assembled workforce, synergies expected from combining operations, and future growth opportunities.
The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date and is based on the best estimate of management, which is subject to change within the measurement period.
Schedule of the Preliminary Fair Value of Assets Acquired and Liabilities Assumed
| As Initially Reported | Adjustment Increase (Decrease) | Revised Amount | ||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||||
| Accounts receivable | ( | ) | ||||||||||
| Related party receivables | ||||||||||||
| Inventory | ( | ) | ||||||||||
| Prepaid expenses | ( | ) | ||||||||||
| Fixed assets | ||||||||||||
| Right-of-use asset | ( | ) | ||||||||||
| Deposits | ||||||||||||
| Intangibles – trade name | ||||||||||||
| Goodwill | ( | ) | ||||||||||
| Accounts payable and accrued liability | ( | ) | ( | ) | ||||||||
| Income taxes payable | ( | ) | ( | ) | ||||||||
| Deferred tax liability | ( | ) | ( | ) | ||||||||
| Lease liabilities - short-term | ( | ) | ( | ) | ||||||||
| Current portion of royalty liabilities | ( | ) | ||||||||||
| Lease liabilities - long-term | ( | ) | ( | ) | ||||||||
| Total net assets acquired | $ | $ | ( | ) | $ | |||||||
During the period from June 7, 2025 to January 31, 2026, the Company recorded measurement period adjustments resulting from new information about facts and circumstances that existed as of the Acquisition Date. These adjustments primarily related to updated valuations of working capital accounts, including accounts receivable. inventory, prepaid expenses, right-of-use asset, and accrued liabilities, as well as the fair value of the notes issued to the seller as part of the purchase consideration. In accordance with ASC 805, the Company retrospectively adjusted the provisional amounts recognized at the Acquisition Date to reflect these new measurements. The adjustments resulted in changes to certain current assets and liabilities and the fair value of notes issued as consideration. The cumulative impact of these adjustments was recorded as a decrease to goodwill, and prior-period comparative information has been revised as if the adjustments had been recognized at the Acquisition Date.
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As part of the purchase price allocation, the Company determined the identifiable intangible assets were a trade name. The fair value of the intangible assets was estimated using variations of the income approach. Specifically, the relief from royalty method was utilized to estimate the fair value of the trade name. The valuation of intangible assets incorporates significant unobservable inputs (Level 3 inputs) and requires significant judgment and estimates, including the amount and timing of future cash flows and discount rates. The cash flows were based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.
Due to the timing of the completion of the acquisition, the purchase price and related allocations are preliminary and could be revised as a result of adjustments made to the purchase price and additional information obtained regarding assets acquired and liabilities assumed. Such adjustments may include, but are not limited to, changes in the estimated fair values of identifiable intangible assets, assumed liabilities, and deferred taxes. The purchase price allocation will be finalized during the measurement period, which may extend up to one year from the acquisition date.
The
Company’s buyer transaction costs to acquire Fat Panda totaled approximately $
The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the nine months ended January 31, 2026, and 2025, as if the Fat Panda Acquisition and related financing had occurred on May 1, 2024.
This information gives effect to certain purchase accounting and financing adjustments and is based on the historical financial statements of the Company. It is presented for illustrative purposes only and is not necessarily indicative of the Company’s actual operating results had the Fat Panda Acquisition and related financing occurred on May 1, 2024, nor is it indicative of future results.
Schedule of Certain Purchase Accounting and Financing Adjustments
| Proforma | Proforma | |||||||
For the nine months ended January 31, 2026 | For the nine months ended January 31, 2025 | |||||||
| Revenue | $ | $ | ||||||
| Net income/(loss) | $ | $ | ( | ) | ||||
| Proforma | Proforma | |||||||
For the three months ended January 31, 2026 | For the three months ended January 31, 2025 | |||||||
| Revenue | $ | $ | ||||||
| Net income/(loss) | $ | ( | ) | $ | ( | ) | ||
Pro
forma financial information is presented as if the operations of Fat Panda had been included in the consolidated results of the Company
since May 1, 2024, and reflects transactions that are directly attributable to the Fat Panda Acquisition and related financing. Pro forma
adjustments to the nine months ended January 31, 2026 and 2025 include adjustments for amortization of preliminary marketing-related
intangible assets, elimination of non-recurring transaction costs incurred related to the acquisition, debt discount amortization and
interest expense on the $
Note 5 – Leases
The
Company recorded operating lease costs for the period from June 7, 2025 through January 31, 2026 (Successor) of $
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The Company’s operating and finance right-of-use assets and lease liabilities are as follows:
Schedule of Lease Cost
| Successor | ||||||||
| January 31, | April 30, | |||||||
| 2026 | 2025 | |||||||
| Operating lease right-of-use asset | $ | $ | ||||||
| Operating lease liability, current | $ | $ | ||||||
| Operating lease liability, long-term | $ | $ | ||||||
| Successor | ||||||||||||
| Period from June 7 through January 31, 2026 | Period from May 1 through June 6, 2025 | Nine Months Ended January 31,2025 | ||||||||||
| Cash paid for operating lease | $ | $ | $ | |||||||||
Future annual minimum lease payments under non-cancellable operating leases as of January 31, 2026, were as follows:
Schedule of Future Annual Minimum Lease Payments
| Successor | ||||
| January 31, | ||||
| Years ending April 30, | 2026 | |||
| 2026 (excluding the nine months ended January 31, 2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total minimum lease payments | ||||
| Less imputed interest | ( | ) | ||
| Present value of minimum lease payments | $ | |||
Other information related to leases were as follows:
Schedule of Other Information Related to Leases
| Successor | ||||||||
| January 31, | April 30, | |||||||
| 2026 | 2025 | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
Note 6 – Inventory
Inventory consisted of the following:
Schedule of Inventory
| Successor | ||||||||
| January 31, | April 30, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Finished goods | $ | $ | ||||||
| Raw materials | ||||||||
| Allowance for excess & obsolete inventory | ( | ) | ( | ) | ||||
| Inventory, net | $ | $ | ||||||
Labor
and overhead expenses of $
Advance
payments on inventory purchases are recorded in prepaid expenses until title for such inventory passes to the Company. Prepaid expenses
included $
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Note 7 – Property and Equipment
Property and Equipment consisted of the following:
Schedule of Property and Equipment
| Successor | ||||||||
| January 31, | April 30, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Vehicles | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Computer equipment | ||||||||
| Machinery and equipment | ||||||||
| Furniture and fixtures | ||||||||
| Signs | ||||||||
| Computer software | ||||||||
| Property and equipment at cost | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense for the period from June 7, 2025 through January 31, 2026 (Successor) was $
Note 8 – Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following:
Schedule of Accounts Payable and Accrued Liabilities
| January 31, | April 30, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll liabilities | ||||||||
| Sales tax payable | ||||||||
| Other accrued expenses | ||||||||
| Total | $ | $ | ||||||
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Note 9- Revenue
The following table sets forth the Company’s revenue by source:
Schedule of Revenue by Source
| Successor | Successor | |||||||||||||||||||
| Three Months Ended January 31, 2026 | Three Months Ended January 31, 2025 | Period from June 7, 2025 through January 31, 2026 | Period from May 1 through June 6, 2025 | Nine Months Ended January 31, 2025 | ||||||||||||||||
| CEA equipment and systems sales | $ | $ | $ | $ | $ | |||||||||||||||
| CEA engineering and other services | ||||||||||||||||||||
| CEA other sales | ||||||||||||||||||||
| Retail Vape sales | ||||||||||||||||||||
| E-commerce Vape sales | ||||||||||||||||||||
| Factory direct wholesale Vape sales | ||||||||||||||||||||
| Franchise fee Vape sales | ||||||||||||||||||||
| Other Vape sales | ||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | |||||||||||||||
As
of January 31, 2026 (Successor), the Company’s remaining performance obligations, or backlog, was approximately $
Geographic Information
The Company classifies sales by customers’ locations in two geographic regions: the United States and Canada.
Schedule of Sales by Customers Locations in Geographic Regions
| Successor | Predecessor | Successor | Predecessor | Predecessor | ||||||||||||||||
| Three
Months Ended January 31, 2026 | Three Months Ended January 31, 2025 | Period from June 7 through January 31, 2026 | Period
from May 1 through June 6, 2025 | Nine Months Ended January 31, 2025 | ||||||||||||||||
| United States | $ | $ | $ | $ | $ | |||||||||||||||
| Canada | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
Note 10 – Note Payable
In
connection with the Company’s acquisition of Fat Panda, the Company entered into an interim loan facility with CEAD Panda Lender
LLC, under which it borrowed $
The
loan facility included customary borrower representations and warranties, event of default, and various covenants, including requirements
to maintain at least $
Note 11 – Related Party Note Payable and Related Party Convertible Note Payable
In connection with the Fat Panda Acquisition on the Acquisition Date, the Company issued three notes payable to selling shareholders, one of whom is the President of Fat Panda, a current employee of the Company.
The
first note payable was issued in the principal amount of $
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The
second note payable was issued as a promissory note in the principal amount of $
The
third note payable, also issued to the President of Fat Panda, is a convertible promissory note with a principal amount of $
The table below represents the outstanding amount of promissory note and convertible promissory note as of January 31, 2026:
Schedule of Promissory Note and Convertible Promissory Note
| Related Party Note | Related Party Promissory Note | Related Party Convertible Promissory Note | ||||||||||
| Principal | $ | $ | $ | |||||||||
| Less: discount | ( | ) | ( | ) | ||||||||
| Carrying value | $ | $ | $ | |||||||||
Note 12 – Commitments and Contingencies
Litigation
From time to time, in the normal course of business, the Company is subject to claims and legal proceedings. Ligation is inherently unpredictable, and the Company’s assessments may change as matters progress. The Company expenses legal fees as incurred and records a liability for contingent losses when it is both probable that a loss has been incurred and the amount can be reasonable estimated. An unfavorable outcome to any matter, if material, could adversely affect the Company’s financial condition, liquidity or results of operations.
Abraham Gomez Matter
On
February 24, 2026, Abraham Gomez, an individual, filed a civil complaint in the Superior Court of the State of California, County of
Tulare, captioned Abraham Gomez v. CEA Industries, Inc., et al., (Case No. VCU331863), against the Company and Hans Thomas, a director
of the Company. The complaint asserts various claims against the defendants, including claims for fraud, promissory estoppel, quantum
meruit and unjust enrichment, arising from alleged investment-related discussions and alleged services purportedly performed for the
benefit of the Company. The plaintiff seeks damages, including compensatory damages according to proof (which the complaint alleges exceed
approximately $
Optima Consulting Services, LLC Matter
On
or about April 17, 2024, Optima Consulting Services, LLC (the “Claimant”), a client of the Company under an equipment and
engineering contract, notified the Company of a potential claim and demanded mediation. On or about October 28, 2024, Claimant asserted
claims for negligent/defective design and breach of warranty, alleging damages exceeding $
Sweet Cut Grow, LLC and Green Ice, LLC Matter
On
October 20, 2023, Sweet Cut Grow, LLC and Green Ice, LLC (collectively, “Claimant”), clients of the Company under an equipment
contract and engineering contract, filed a demand for arbitration asserting claims for breach of contract, breach of warranty, and unjust
enrichment, and seeking $
The
parties are required to arbitrate under the rules of the American Arbitration Association (“AAA”). The arbitration is expected
to be heard in Denver, Colorado, in 2026 unless resolved earlier. The matter is currently in the discovery phase, and the parties are
engaged in active settlement discussions. Legal fees will be borne by each party. In light of ongoing negotiations and the likelihood
of settlement, the Company has accrued an estimate of $
| 18 |
Canadian Payroll Taxes
We
have estimated approximately $
As discussed in Note 11 – Related Party Notes Payable and Related Party Convertible Note Payable above, any tax liability assessed in connection with this matter will reduce the repayment amount of the related vendor note to the former owners of Fat Panda on a dollar for dollar basis.
Leases
The
Company has 36 agreements to lease retail space, office and manufacturing space in Manitoba, Saskatchewan, and Ontario, Canada. The total
square footage of these facilities is approximately
The
Company also has a lease agreement for its manufacturing and office space in Louisville, CO. The total square footage of the facility
is
Other Commitments
In the ordinary course of business, the Company enters into commitments to purchase inventory and may also provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers and employees that will require the Company to, among other things, indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and certain of its officers and employees, and former officers, directors, and employees of acquired companies, in certain circumstances.
Note 13 – Shareholders’ Equity
Stockholder Rights Agreement
On December 26, 2025, the Board of Directors (the “Board”) of the Company adopted a limited duration shareholder rights agreement (the “Rights Agreement”). This agreement is designed to reduce the probability that any person, entity, or group can gain control of the Company through open-market accumulation without providing all shareholders with an appropriate control premium or affording the Board sufficient time to make well-informed decisions in the best interests of all shareholders. In accordance with the Rights Agreement, the Company issued, as a dividend, one right (a “Right”) for each share of the Company’s common stock held as of January 8, 2026, and for each share of certain outstanding common stock warrants. Each Right allows its holder to purchase 1/1000th of a share of Series C Junior Participating Preferred Stock at an exercise price of $ per Right. Each share of Series C Junior Participating Preferred Stock is equivalent to shares of the Company’s common stock. The Rights have a limited term and will expire on December 26, 2026, or earlier, as specified in the Rights Agreement.
The adoption of the Rights Agreement had no effect on the Company’s condensed consolidated financial statements, including basic and diluted earnings per share.
| 19 |
PIPE Financing
In August 2025, the Company entered into securities purchase agreements with a group of institutional and accredited investors pursuant to which it issued and sold shares of common stock and various classes of warrants (the “PIPE Warrants”) in a private placement (the “PIPE Transaction”):
| ● | shares of common stock at a purchase price of $ per share; | |
| ● | pre-funded warrants, each exercisable for one share
of common stock at an exercise price of $ | |
| ● | stapled warrants (warrants issued together with
shares), each exercisable at $ |
On
August 5, 2025, the Company closed the PIPE Transaction, which was settled through a combination of cash and digital assets. The
Company received aggregate proceeds of $
At-The-Market Offering
On
August 25, 2025, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement “or “ATM Program”)
with Cantor Fitzgerald & Co. (the “Agent”), pursuant to which the Company may offer and sell shares of its common stock
having an aggregate offering price of up to $
During
the period ended January 31, 2026, the Company sold shares under the ATM Program for net proceeds of $
Share Repurchase Program
On
September 22, 2025, the Company entered into a Stock Repurchase Agreement with Cantor Fitzgerald & Co. pursuant to which the Company
agreed to repurchase shares of its common stock. Under the terms of the agreement, the Company repurchased an aggregate of
and shares of its common stock during the quarter ended January 31, 2026 and the period from June 7, 2025 through January 31, 2026, for aggregate
purchase prices of $
The repurchases were funded through available cash on hand. The transaction was accounted for as a reduction of stockholders’ equity.
Successor
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 grant equity-based awards, including 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 authorized shares of the Company’s common stock (“Plan Shares”) for issuance of equity awards under the 2017 Equity Plan. Any shares subject to an award that are forfeited, expire, or otherwise terminate without issuance are again available for grant under the 2017 Equity Plan.
As of January 31, 2026, of the shares authorized under the 2017 Plan for equity awards, shares have been issued, awards relating to options remain outstanding, and shares remain available for future equity awards.
| 20 |
2021 Equity Incentive Plan
The 2021 Equity Incentive Plan (the “2021 Equity Plan”) was approved by the Board on March 22, 2021 and by the Company’s stockholders on July 22, 2021. The 2021 Equity Plan authorizes the Board to grant awards of up to shares of common stock. The 2021 Equity Plan provides for the grant of incentive stock options intended to qualify under Section 422 Code, non-qualified stock options, SARs, RSAs, RSUs 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.
As of January 31, 2026, of the shares authorized under the 2021 Equity Plan, shares have been issued in settlement of restricted stock units, awards relating to non-qualified stock options, incentive stock options and restricted stock units remain outstanding. shares remain available for future equity awards.
2025 Equity Incentive Plan
The Company adopted the 2025 Equity Incentive Plan (the “2025 Equity Plan”) on July 25, 2025. The 2025 Equity Plan authorizes the Board to grant awards of up to shares of common stock. The 2025 Equity Plan provides for the grant of incentive stock options intended to qualify under Section 422 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.
As of January 31, 2026, of the shares authorized under the 2025 Equity Plan, restricted stock units remain outstanding and one share remains available for future equity awards.
Non-Qualified and Incentive Stock Options granted to employees and consultants
Schedule of Stock Option Activity
| Number of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term ( in years) | Aggregate
Intrinsic Value | |||||||||||||
| Outstanding as of June 7, 2025 | $ | $ | ||||||||||||||
| Granted | - | |||||||||||||||
| Exercised | - | - | ||||||||||||||
| Forfeited | ( | ) | - | - | ||||||||||||
| Expired | ( | ) | - | - | ||||||||||||
| Outstanding as of January 31, 2026 | $ | $ | ||||||||||||||
| Exercisable as of January 31, 2026 | $ | $ | ||||||||||||||
The aggregate intrinsic value for the stock options outstanding and exercisable as of January 31, 2026, was zero because these options were out of money on January 31, 2026.
The Company has issued options with a -year contractual term and a vesting period ranging from one month to thirty-two months.
For the period from June 7, 2025 through January 31, 2026, the Company recorded $ thousand as compensation expense related to stock options issued to employees and consultants. As of January 31, 2026, total unrecognized compensation expense for the non-qualified options issued to employees and consultants is $ thousand which will be recognized over a weighted average period of years.
| 21 |
Non-Qualified Stock Options granted to directors
Schedule of Non Qualified Stock Option
Number of Options | Weighted Average Exercise Price | Weighted
Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, June 7, 2025 | $ | $ | ||||||||||||||
| Granted | - | - | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Forfeited | - | - | ||||||||||||||
| Expired | ( | ) | - | - | ||||||||||||
| Outstanding, January 31, 2026 | $ | $ | ||||||||||||||
| Exercisable, January 31, 2026 | $ | $ | ||||||||||||||
The aggregate intrinsic value for the stock options outstanding and exercisable as of January 31, 2026 was zero because these options were out of money on January 31, 2026.
During the period from June 7, 2025 through January 31, 2026, the Company did not incur any compensation expense related to options issued to directors.
Restricted Stock Units granted to employees and directors
Effective July 27, 2025, the Company accelerated the vesting of restricted stock units issued to a director and settled these units by the issuance of shares of common stock.
During the period June 7, 2025 through January 31, 2026, the Company recorded $ thousand as compensation expense related to RSUs issued to directors and employees. Aggregate fair value of restricted stock units vested during the period June 7, 2025, to January 31, 2026 is $ thousand.
Number of Units | Weighted Average Grant-Date Fair Value | |||||||
| Unvested, June 7, 2025 | $ | |||||||
| Granted | ||||||||
| Vested and settled with share issuance | ( | ) | ||||||
| Forfeited/cancelled | ( | ) | ||||||
| Unvested, January 31, 2026 | $ | |||||||
Stock-based compensation warrants
On
August 5, 2025, the Company entered into a Strategic Advisor Agreements with 10X BNB Cayman Sponsor and YZi Labs Management Ltd
(the “Strategic Advisors”) pursuant to which the Company engaged the Strategic Advisors to provide strategic advice and
guidance relating to the Company’s business, operations, growth initiatives and industry trends in the digital asset
technology sector. As compensation for services rendered by the Strategic Advisor under the Strategic Advisor Agreement, the Company
issued to the Strategic Advisor warrants to purchase
shares of the Company’s Common Stock (the “Strategic Advisor Warrants”) at an exercise price of $
| 22 |
On
August 5, 2025, the Company also entered into an asset management agreement (the “Asset Management Agreement”) with 10X Capital
Partners LLC (the “Asset Manager”). Under the Asset Management Agreement, the Company issued warrants to purchase
shares of the Company’s Common Stock (“Asset Manager
Warrants”) at an exercise price of $
Strategic Advisor warrants and Asset Manager warrants are accounted for as equity classified share-based compensation award in accordance with ASC 718. Following is a summary of the activities of warrants for the period ended January 31, 2026:
Schedule of Warrant Activity
Number of Warrants | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||
| Outstanding as of June 7, 2025 | $ | $ | ||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Forfeited | - | |||||||||||
| Expired | - | |||||||||||
| Outstanding as of January 31, 2026 | $ | $ | ||||||||||
| Exercisable as of January 31, 2026 | $ | $ | ||||||||||
The measurement of fair value of the Strategic Advisor Warrants was determined based on the fair value of the underlying Common Stock on the issuance date given the nominal exercise price.
The Company estimated the fair value of Asset Manager warrants using the Black-Scholes option-pricing model, which requires assumptions, including volatility, the expected term of the warrants, the risk-free interest rate for a period that approximates the expected term of the warrants, and expected dividend yield. Volatility is estimated based on the historical volatility of the guideline public companies over a period approximately equal to the expected term. The contractual term of the warrants is used as the expected term since the warrant holders are nonemployees and expected to hold the warrants to expiration to maximize the value of the warrants.
Schedule of Key Assumption Inputs
Asset Manager Warrants | ||||
| Stock price | $ | |||
| Exercise price | $ | |||
| Expected term (in years) | ||||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Expected dividend yield | % | |||
Note 15 - Investor Warrants
Pre-Funded Warrants
On
August 5, 2025, the Company issued Pre-Funded Warrants exercisable for shares of Common Stock in conjunction with the PIPE
Transaction. The Pre-Funded Warrants are exercisable for a nominal consideration of $
| 23 |
Stapled Warrants
On
August 5, 2025, the Company issued Stapled Warrants exercisable for shares of Common Stock in conjunction with the PIPE Transaction.
The Stapled Warrants are exercisable immediately and may be exercised at any time until three years from issuance for an exercise price
of $
Schedule of Warrant Liability
| Amount | ||||
| Fair value at issuance | $ | |||
| Change in fair value during the period | ( | ) | ||
| Fair value as of January 31, 2026 | $ | |||
Schedule of Inputs Used in Valuation Warrants
August 5, 2025 | January 31, 2026 | |||||||
| Stock price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Simulated trading days | ||||||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | ||||||||
| Holding period (years) | ||||||||
During the period from June 7, 2025 to January 31, 2026, a total of warrants were exercised on a cashless basis resulting in the issuance of shares of common stock.
The following table summarizes information about warrants outstanding as of January 31, 2026:
Schedule of Warrant Outstanding
| Grant date | Warrants outstanding | Exercise price | ||||||||
| Stapled warrants | $ | |||||||||
| Pre-funded warrants | $ | |||||||||
| Investor warrants | $ | |||||||||
| 2022 Underwriter warrants | $ | |||||||||
| 24 |
Schedule of Computation of Basic and Diluted Earnings Per Share
| 2026 | 2025 | 2026 | 2025 | 2025 | ||||||||||||||||
| Successor | Predecessor | Successor | Predecessor | |||||||||||||||||
| Three months ended January 31, | Three months ended January 31, | Period from, 2025 June 7 through January 31, | Period from May 1 through June 6, | Nine months ended January 31, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2025 | ||||||||||||||||
| As Restated | As Restated | |||||||||||||||||||
| Basic earnings per share: | ||||||||||||||||||||
| Numerator: | ||||||||||||||||||||
| Net income/(loss) available to common shareholders - basic | $ | ( | ) | $ | $ | |||||||||||||||
| Denominator: | ||||||||||||||||||||
| Weighted-average number of common shares outstanding – basic | ||||||||||||||||||||
| Basic earnings per common share | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
| Diluted earnings per share: | - | - | ||||||||||||||||||
| Numerator: | ||||||||||||||||||||
| Net income/(loss) available to common shareholders - basic | $ | ( | ) | $ | $ | $ | ||||||||||||||
| Add: Interest and discount amortization on convertible notes | ||||||||||||||||||||
| Net income available to common shareholders - dilutive | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
| Denominator: | ||||||||||||||||||||
| Weighted-average number of common shares outstanding – basic | ||||||||||||||||||||
| Add: dilutive securities | ||||||||||||||||||||
| Warrants | ||||||||||||||||||||
| Stock options | ||||||||||||||||||||
| RSUs | ||||||||||||||||||||
| Convertible note | ||||||||||||||||||||
| Weighted-average number of common shares outstanding - diluted | ||||||||||||||||||||
| Diluted earnings per common share | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
Schedule of Computation Diluted Income Per Common Share
Period from November 1, 2025 through January 31, 2026 | Period from June 7 through January 31, 2026 | |||||||
| Successor | ||||||||
Period from November 1, 2025 through January 31, 2026 | Period from June 7 through January 31, 2026 | |||||||
| Unvested RSUs | ||||||||
Note 17 – Income Taxes
For the period from June 7, 2025 to January 31, 2026 (Successor), the period from May 1, 2025 to June 6, 2025 (Predecessor) and the nine months ended January 31, 2025 (Predecessor), the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:
Schedule of Earnings Before Income Taxes, Income Tax Expense and Effective Income Tax Rate
| Successor | Successor | |||||||||||||||||||
| Period from June 7 through January 31, | Period from May 1 through June 6, | Nine
months January 31, | Three
months January 31, | Three
months January 31, | ||||||||||||||||
| 2026 | 2025 | 2025 | 2026 | 2025 | ||||||||||||||||
| Income (loss) before income taxes | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Income tax expense (benefits) | ( | ) | ( | ) | ||||||||||||||||
| Effective income tax rate | - | % | % | % | % | % | ||||||||||||||
The change in the effective tax rate for the period June 7, 2025 to January, 31, 2026 (Successor), compared to the predecessor period for May 1, 2025 to June 6, 2025 (Predecessor), and the three months ended January 31, 2026 (Successor) compared to January 31, 2025 (Predecessor), was primarily due to the impact of foreign statutory rates that are lower than the U.S. statutory tax rate, non-deductible transaction costs, U.S. inclusions on foreign income, and changes to valuation allowances on the legacy business of CEA Industries Inc.’s United States operations.
During
the first quarter, the Company completed the acquisition of Fat Panda, which is taxed as a Canadian corporation. For Canadian
federal income tax purposes, the transaction was treated as a stock acquisition with no step-up basis in tax. As a result, the
goodwill and intangible assets recorded for financial reporting purposes are not deductible for tax purposes, giving rise to $
| 25 |
As
of January 31, 2026, the Company had $
Pursuant
to Section 382 of the Internal Revenue Code of 1986, as amended, and applicable state law, the Company’s ability to utilize its
NOL carry forwards may be limited if the Company experiences an “ownership change”, generally defined as a greater than
The Company must assess the likelihood that its net deferred tax assets will be recovered from future taxable income, and to the extent the Company believes that recovery is not likely, the Company establishes a valuation allowance. Management’s judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against the net deferred tax assets.
As of January 31, 2026, the Company recorded a full valuation allowance against the deferred tax assets related to its U.S operations. Based on the available evidence, the Company believes it is more likely than not that these deferred tax assets will be realized in the foreseeable future. The Company intends to maintain valuation allowances until sufficient evidence exists to support the reversal. Estimates of future taxable income are based on assumptions consistent with the Company’s operating plans. However, if actual results differ from these estimates, the carrying value of deferred tax assets could be materially impacted.
The
Company also regularly evaluates the adequacy of its provisions for income tax contingencies in accordance with the applicable authoritative
guidance. Uncertain tax positions are recorded using a two-step process; (i) the determining whether a tax position is more likely than
not to be sustained on the basis of the technical merits, and (ii) measuring the amount of benefit to recognize as the largest amount
that is more likely than not to be realized upon ultimate settlement. The Company currently has recorded a $
On
July 4, 2025, the President signed H.R. 1, the One Big Beautiful Bill Act (the “Act”) into law. The Act includes several
changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including
the restoration of immediate expense of domestic R&D expenditures, reinstatement of
The Act also includes certain changes to the US taxation of foreign activity, including changes to foreign tax credits, GILTI, FDII, and BEAT, amongst other changes. These changes are generally effective for tax years beginning after Dec. 31, 2025.
The Company is currently assessing the impact of the Act but does not expect have a material impact on the tax provision.
Note 18 – Related Party Transactions
Agreements and Transaction with a Company Director
Mr. Nicholas J. Etten, a member of the Company’s Board of Directors, was previously party to two consulting agreements, one dated July 28, 2025 (the “2025 Agreement”) and a prior agreement dated June 19, 2024 which was replaced by the 2025 Agreement. These agreements contemplated that Mr. Etten would provide advisory services related to acquisition sourcing, strategic consulting, and investor coordination, and would be compensated at a rate of $ thousand per week, subject to downward adjustment based on hours worked.
The Company paid Mr. Etten $
Mr. Etten terminated the 2025 Agreement on February 2, 2026 with effect from January 1, 2026. As of January 31, 2026, there were no amounts payable to Mr. Etten under the 2025 Agreement.
| 26 |
Promissory notes to former owner/current employee
In connection with the Company’s acquisition of Fat Panda Ltd. on June 6, 2025, the Company issued the following promissory notes to related parties:
| ● | A
promissory note with a principal amount of $ |
| ● | A
convertible promissory note with a principal amount of $ |
| ● | A
promissory note with a principal amount of $ |
See Note 11, Related Party Note Payable and Related Party Convertible Note Payable, for additional details.
Asset Management Agreement & Accrued Fee with a Company Director
The
Asset Manager is an entity that is majority-owned and controlled by Hans Thomas, a current member of the Company’s Board of Directors.
In connection with the PIPE Transaction, the Company entered into the Asset Management Agreement with the Asset Manager, pursuant to
which the Company engaged the Asset Manager to provide asset management and related services with respect to the Company’s digital
assets strategy in exchange for the applicable management fees. The Company recorded management fees of $
Note 19 – Segment Reporting
During
the second quarter of 2026, the Company introduced a new business line focused on BNB Treasury Management and appointed a new Chief Executive
Officer, who serves as the Chief Operating Decision Maker (“CODM”). These changes triggered a reassessment of the Company’s
operating segments under ASC 280, Segment Reporting. As a result of this reassessment, the Company determined that it now operates
The CODM evaluates the financial performance of the business and makes resource allocation decisions based on these two distinct sources of business activity:
| ● | BNB Treasury Management – This segment includes income from digital asset activities, costs and expenses related to building and executing the Company’s digital asset strategy, and fair value changes (unrealized gains or losses) on digital assets associated with the Company’s BNB holdings. |
| ● | Retail and Industry Segment – This segment includes Fat Panda’s retail and distribution operations along with revenue and operating costs related to designing, engineering, and selling environmental control and other technologies for the Controlled Environment Agriculture industry. |
The “Corporate” category presented in the following table is not considered an operating segment. It consists primarily of corporate support functions including capital and funding to support the business activities of the company and includes costs and expenses not allocated to a line of business.
The CODM uses income (loss) from operations before provision for income taxes as the primary measure to assess segment performance. This measure is reviewed regularly by examining period-over-period trends, benchmarking against competitors, and monitoring budget versus actual results. The CODM also considers this metric when evaluating income generated from segment assets to determine whether to reinvest profits within the segment or allocate resources elsewhere in the entity.
The following tables present (for each segment and consolidated total) the Company’s revenues and significant expenses regularly provided to the CODM, reconciled to income (loss) from operations before provision for income tax for each of the periods presented. Total segment assets provided to the CODM are also disclosed in the tables below for each period presented.
Schedule of Segment Reporting Information
| CEA Industry Segment (Successor) | BNB Treasury Management Segment | Corporate | Total Consolidated | |||||||||||||
| Three Months Ended January 31, 2026 | ||||||||||||||||
| Retail and
Industry Segment (Successor) | BNB Treasury Management | Corporate | Total Consolidated | |||||||||||||
| Total revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ||||||||||||
| Unrealized loss on digital asset | ( | ) | ( | ) | ||||||||||||
| Other income from airdrop | ||||||||||||||||
| Advertising and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Compensation expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Asset management fees | ( | ) | ( | ) | ||||||||||||
| Professional and contractor fees | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Stock-based compensation | ||||||||||||||||
| Other segment expenses (1) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain from change in fair value of warrant liabilities | ||||||||||||||||
| Interest expense and other income, net | ||||||||||||||||
| Income (loss) from operations before provision for income tax | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Total Assets | ||||||||||||||||
| 27 |
| CEA Industry Segment ( | BNB Treasury Management Segment | Corporate | Total Consolidated | |||||||||||||
| Three Months Ended January 31, 2025 | ||||||||||||||||
| Retail and Industry Segment (Predecessor) | BNB Treasury Management Segment | Corporate | Total Consolidated | |||||||||||||
| Total revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ||||||||||||
| Advertising and marketing expenses | ( | ) | ( | ) | ||||||||||||
| Compensation expenses | ||||||||||||||||
| Professional and contractor fees | ( | ) | ( | ) | ||||||||||||
| Other segment expenses (1) | (566,949 | ) | - | - | (566,949 | ) | ||||||||||
| Income (loss) from operations before provision for income tax | $ | $ | $ | $ | ||||||||||||
| Total Assets | ||||||||||||||||
| CEA Industry Segment (Successor) | BNB Treasury Management Segment | Corporate | Total Consolidated | CEA Industry Segment | ||||||||||||||||
| Period from June 7, 2025 to January 31, 2026 | Period from May 1, 2025 to June 6, 2025 | |||||||||||||||||||
| Retail and Industry Segment (Successor) | BNB Treasury Management Segment | Corporate | Total Consolidated | CEA Industry Segment(Predecessor) | ||||||||||||||||
| Total revenue, net | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Unrealized loss on digital asset | ( | ) | ( | ) | ||||||||||||||||
| Other income from airdrop | ||||||||||||||||||||
| Advertising and marketing expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Compensation expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Asset management fees | ( | ) | ( | ) | ||||||||||||||||
| Professional and contractor fees | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Stock-based compensation | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Other segment expenses (1) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain from change in fair value of warrant liabilities | ||||||||||||||||||||
| Interest expense and other income, net | ( | ) | ( | ) | ||||||||||||||||
| Income (loss) from operations before provision for income tax | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||
| CEA
Industry Segment ( | BNB Treasury Management Segment | Corporate | Total Consolidated | |||||||||||||
| Nine Months Ended January 31, 2025 | ||||||||||||||||
| Retail and Industry Segment (Predecessor) | BNB Treasury Management Segment | Corporate | Total Consolidated | |||||||||||||
| Total revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ||||||||||||
| Advertising and marketing expenses | ( | ) | ( | ) | ||||||||||||
| Compensation expenses | ( | ) | ( | ) | ||||||||||||
| Professional and contractor fees | ( | ) | ( | ) | ||||||||||||
| Other segment expenses (1) | ( | ) | ( | ) | ||||||||||||
| Income (loss) from operations before provision for income tax | $ | $ | $ | $ | ||||||||||||
| (1) |
Note 20 – Subsequent Events
In accordance with ASC 855, Subsequent Events, the Company has evaluated all subsequent events through the date of issuance of these financial statements issued. No material subsequent events occurred after January 31, 2026.
| 28 |
PART II — OTHER INFORMATION
Item 6. Exhibits
EXHIBIT INDEX
| * | Filed herewith. |
| ** | Furnished herewith. |
| 29 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CEA INDUSTRIES INC. | ||
| (the “Registrant”) | ||
| Dated: June 23, 2026 | By: | /s/ David Namdar |
| David Namdar | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| 30 |
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) and 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, David Namdar, the Chief Executive Officer of CEA Industries Inc., certify that:
1. I have reviewed this Amendment No. 1 to the Quarterly Report on Form 10-Q/A of CEA Industries Inc. for the quarterly period ended January 31, 2026;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: June 23, 2026.
| By: | /s/ David Namdar | |
| David Namdar | ||
| Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) and 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, William B. Miller, the Chief Financial Officer of CEA Industries Inc. certify that:
1. I have reviewed this Amendment No. 1 to the Quarterly Report on Form 10-Q/A of CEA Industries Inc. for the quarterly period ended January 31, 2026;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: June 23, 2026.
| By: | /s/ William B. Miller | |
| William B. Miller | ||
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Amendment No. 1 to the Quarterly Report on Form 10-Q/A for the quarter ended January 31, 2026 (the “Report”), of CEA Industries Inc. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, David Namdar, the Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
| /s/ David Namdar | ||
| Name: | David Namdar | |
| Chief Executive Officer | ||
| Date: | June 23, 2026 |
This certification accompanies this Amendment No. 1 to the Quarterly Report on Form 10-Q/A pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
Exhibit 32.2
CERTIFICATION PURSUANT TO SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Amendment No. 1 to the Quarterly Report on Form 10-Q/A for the quarter ended January 31, 2026 (the “Report”), of CEA Industries Inc. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, William B. Miller, the Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
| /s/ William B. Miller | ||
| Name: | William B. Miller | |
| Chief Financial Officer | ||
| Date: | June 23, 2026 |
This certification accompanies this Amendment No. 1 to the Quarterly Report on Form 10-Q/A pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.