BNB Standard Corp 10-Q/A for FY2026 Q2
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 October 31, 2025 (FY2026 Q2).
Headline figures
Quarter ended October 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $7.14M
- down 3.9% from $7.44M a year earlier
- Net income
- $283.64M
- Diluted EPS
- $5.15
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 | ||
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 December 12, 2025, 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 October 31, 2025
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 October 31, 2025 and the period from June 7, 2025 through October 31, 2025 (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 December 15, 2025 (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, 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 overstated both basic and diluted EPS for the three months ended October 31, 2025 and the Successor period from June 7 through October 31, 2025.
The error resulted in an understatement of basic and diluted weighted average number of shares outstanding, which in turn overstated basic and diluted EPS for the affected periods as follows:
Three months ended October 31, 2025:
| ● | Basic and diluted weighted average number of shares understated by 2,214,508 shares | |
| ● | Basic and diluted EPS overstated by $0.21 |
Successor period from June 7 through October 31, 2025:
| ● | Basic weighted average number of shares understated by 1,857,056 shares | |
| ● | Diluted weighted average number of shares understated by 857,057 shares | |
| ● | Basic and diluted EPS overstated by $0.45 |
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 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 and 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 October 31, 2025 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
| October 31, 2025 | April 30, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Digital asset receivable | ||||||||
| Accounts receivable, net | ||||||||
| Related party receivables, net | ||||||||
| Receivables, net | ||||||||
| Contract assets, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other | ||||||||
| Total Current Assets | ||||||||
| Noncurrent Assets | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Digital assets | ||||||||
| Intangible assets, (net of accumulated amortization of $ | ||||||||
| 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 | ||||||||
| Note payable | ||||||||
| Related party note payable, net of discount | ||||||||
| Note payable | ||||||||
| Income taxes payable | ||||||||
| Current portion of operating lease liability | ||||||||
| Royalty liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Noncurrent Liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Deferred tax liabilities | ||||||||
| Related party convertible note payable | ||||||||
| Related party note payable, net of discount | ||||||||
| Warrant Liabilities - Stapled Warrants | ||||||||
| Total Noncurrent 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 comprehensive Income (Loss) | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
| 2 |
CEA Industries Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Successor | Predecessor | Successor | Predecessor | |||||||||||||||||
| Three Months Ended October 31, 2025 | Three Months Ended October 31, 2024 | Period from June 7 through October 31, 2025 | Period from May 1 through June 6, 2025 | Six Months Ended October 31, 2024 | ||||||||||||||||
| As Restated | As Restated | |||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Gross profit | ||||||||||||||||||||
| Operating (income) expenses: | ||||||||||||||||||||
| Advertising and marketing expenses | ||||||||||||||||||||
| Product development costs | ||||||||||||||||||||
| Unrealized (gain)/loss on digital assets | ( | ) | ( | ) | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||
| Total operating (income) expenses | ( | ) | ( | ) | ||||||||||||||||
| Operating income (loss) | ||||||||||||||||||||
| Other income (expense), net | ||||||||||||||||||||
| Airdrop income | ||||||||||||||||||||
| Gain on change in fair value of warrant liability | ||||||||||||||||||||
| Interest expense/amortization of debt discount | ( | ) | ( | ) | ||||||||||||||||
| Other income (expense), net | ( | ) | ( | ) | ||||||||||||||||
| Total other income (expense) | ||||||||||||||||||||
| Income before provision for income taxes | ||||||||||||||||||||
| Provision for income taxes | ||||||||||||||||||||
| Net income (loss) | $ | $ | $ | $ | $ | |||||||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Other comprehensive income (loss), net of tax | $ | $ | $ | $ | $ | |||||||||||||||
| Net income per share of common stock attributable to common stockholders | ||||||||||||||||||||
Basic | $ | $ | $ | $ | $ | |||||||||||||||
| Diluted | $ | $ | $ | $ | $ | |||||||||||||||
| Weighted average number of common shares outstanding | - | |||||||||||||||||||
Basic | ||||||||||||||||||||
| Diluted | ||||||||||||||||||||
| 3 |
CEA Industries Inc.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
| Successor | ||||||||||||||||||||||||
| Common Stock | ||||||||||||||||||||||||
| Number of Shares | Amount | Additional Paid in Capital | Retained Earnings | Accumulated Comprehensive Income (Loss) | Total | |||||||||||||||||||
| Balance, July 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of common stocks and warrants in private offering, net of issuance costs of $ | ||||||||||||||||||||||||
| Issuance of common stocks via ATM, net of issuance costs | ||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Stock based compensation expenses for options | - | |||||||||||||||||||||||
| Common shares issued to directors on settlement of restricted stock units | ||||||||||||||||||||||||
| Foreign Currency Translations | - | ( | ) | ( | ) | |||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance, October 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Common Stock | ||||||||||||||||||||||||
| Number of Shares | Amount | Additional Paid in Capital | Retained Earnings | Accumulated Comprehensive Income (Loss) | Total | |||||||||||||||||||
| Successor | ||||||||||||||||||||||||
| Balance, June 7, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common shares issued on settlement on vesting of restricted stock units issued to directors | ||||||||||||||||||||||||
| Stock based compensation expenses for options | - | |||||||||||||||||||||||
| Fair value of restricted stock units issued to directors | - | |||||||||||||||||||||||
| Fair value of restricted stock units issued to employees | - | |||||||||||||||||||||||
| Common shares issued on acquisition of Fat Panda | ||||||||||||||||||||||||
| Issuance of common stocks and warrants in private offering, net of issuance costs of $ | ||||||||||||||||||||||||
| Issuance of shares via ATM, net of issuance costs | ||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||
| Repurchase of common stock | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Net profit (loss) | - | |||||||||||||||||||||||
| Balance, October 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Common Stock | ||||||||||||||||||||||||
| Shares | Amount | Additional Paid in Capital | Retained Earnings | Accumulated Comprehensive Income (Loss) | Total | |||||||||||||||||||
| Balance, May 1, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Foreign Currency Translations | - | |||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance, June 6, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Common Stock | ||||||||||||||||||||||||
| Shares | Amount | Additional Paid in Capital | Retained Earnings | Accumulative Comprehensive Income | Total | |||||||||||||||||||
| Balance, August 1, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Foreign Currency Translations | - | ( | ) | ( | ) | |||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance, October 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Common Stock | ||||||||||||||||||||||||
| Shares | Amount | Additional Paid in Capital | Retained Earnings | Accumulated Comprehensive Income (Loss) | Total | |||||||||||||||||||
| Balance, May 1, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Foreign Currency Translations | - | |||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Net income (loss) | - | |||||||||||||||||||||||
| Balance, October 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
CEA Industries Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Successor | ||||||||||||
| Consolidated | Fat Panda group | Fat Panda group | ||||||||||
| USD | USD | USD | ||||||||||
| Period from June 7 through October 31, 2025 | Period from May 1 through Jun 6, 2025 | Period from May 1 through October 31, 2024 | ||||||||||
| 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 | ( | ) | ||||||||||
| Unrealized gain on digital assets | ( | ) | ||||||||||
| Gain on change in fair value of warrant liability | ( | ) | ||||||||||
| Gain/Loss on disposal of assets | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Digital Assets-AR | ( | ) | ||||||||||
| Accounts receivable | ||||||||||||
| Income taxes payable | ( | ) | ( | ) | ||||||||
| Inventory | ( | ) | ( | ) | ||||||||
| Prepaid expenses | ( | ) | ||||||||||
| Accounts payable and accrued liabilities | ||||||||||||
| Lease Liabilities | ||||||||||||
| Deferred Revenue | ||||||||||||
| Royalty | ( | ) | ( | ) | ||||||||
| Contract Assets | ||||||||||||
| Deferred tax asset (liabilities) | ( | ) | ||||||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||||||
| Cash 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 from financing activities | ||||||||||||
| Proceeds from note payable | ||||||||||||
| Proceeds from issuance of common stock and warrants in private offering | ||||||||||||
| Issuance cost of common stock and warrants in private offering | ( | ) | ||||||||||
| Warrants exercised | ||||||||||||
| Proceeds from issuance of common stocks (ATM Sales) | ||||||||||||
| Repurchase of shares (Treasury shares) | ( | ) | ||||||||||
| Net cash used in financing activity | ||||||||||||
| Net change in cash | ( | ) | ||||||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||||||
| Cash, beginning of period | ||||||||||||
| Cash, end of period | $ | $ | $ | |||||||||
| Non-cash investing and financing activities: | ||||||||||||
| Issuance of common stock for Fat Panda acquisition | $ | |||||||||||
| 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 private offerings | ||||||||||||
| In-kind digital assets acquired from PIPE offering proceeds | ( | ) | ||||||||||
| Repurchase of shares outstanding payment to sales agent | ( | ) | ||||||||||
| 5 |
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 October 31, 2025 and 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, overstated basic and diluted EPS for the affected periods. 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 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 for the three months ended October 31, 2025 and the successor period from June 7, 2025 through October 31, 2025. The amounts presented represent the (overstatement)/understatement of the previously reported figures:
Schedule of Restatement
| Three Months | Period from June 7 | |||||||
| Ended | through | |||||||
| October 31, 2025 | October 31, 2025 | |||||||
| (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 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 for the three months ended October 31, 2025 and the successor period from June 7, 2025 through October 31, 2025, 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 October 31, 2025 | Period from June 7 through October 31, 2025 | |||||||||||||||||||||||
| 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 Binance Coin (“BNB”), the native token of the BNB Chain blockchain. Through its wholly owned subsidiary, BNC BNB Cayman, 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 include acquiring and holding BNB on its condensed consolidated balance sheet and generating income
through activities such as validation services, lending, and other DeFi protocols. This strategy commenced on August 5, 2025, following
the closing of a private placement that raised approximately $
To support this strategy, the Company established CEA BRS LLC, a Delaware limited liability company, as a special purpose entity to hold and manage certain cryptocurrency assets in accordance with the DAT strategy. Additionally, the Company formed BNC BNB Cayman, an exempted company organized under the laws of the Cayman Islands, to facilitate international operations and treasury management. These entities are wholly owned subsidiaries of the Company.
In connection with this strategic shift, the Company changed its Nasdaq ticker symbol from “VAPE” to “BNC” on August 6, 2025, reflecting its new identity as the BNB Network Company while continuing its core business operations. The Company continues to operate its legacy business, and beginning in the second fiscal quarter ending October 31, 2025, its financial results also reflect the build-out of its digital asset treasury platform.
Additionally, on June 6, 2025, the Company completed the acquisition of Fat Panda Ltd. and related entities (“Fat Panda”), entering the Canadian nicotine vape industry. This acquisition aligns with the Company’s strategy to focus on high-growth, regulated consumer markets and provides 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 six months ended October 31, 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 June 6, 2025 (the “Acquisition Date”), CEA Industries Inc. completed its acquisition of the Fat Panda Group of Companies (“Fat Panda”) (the “Fat Panda Acquisition”). As described in Note 4 – Business Combination, CEA Industries Inc. 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 CEA Industries Inc. and is labelled as “Successor” since CEA Industries Inc.’s 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 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 consolidated financial statements.
| 7 |
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. 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 – Intangibles – Goodwill and Other. 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 a principal market based on 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 deposits certain digital assets with third-party exchanges to facilitate trading activities. Assets held on these exchanges are not maintained in segregated wallets under the Company’s exclusive control and are pooled with assets of other customers. Due to the lack of sufficient regulatory oversight and the Company’s inability to prevent the exchange from using these assets for purposes other than those directed by the Company, the Company has concluded it does not have complete control over the deposited assets. Accordingly, such amounts are 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 to hold these receivables for more than 12 months.
The Company holds BNB digital assets 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 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. Although the Company has not disposed of any digital assets 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 (through PIPE offerings) 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.
Cash
includes deposits held in financial institutions which are insured by the Canada Deposit Insurance Corporation (CDIC) which automatically
insures eligible deposits separately up to $
As
of October 31, 2025 (Successor), the Company had approximately $
The
Company maintains deposits in U.S. financial institutions that exceed the federally insured amount of $
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.
| 8 |
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.
All the Company’s BNB are held by BNC BNB Cayman, a wholly owned subsidiary organized under the laws of the Cayman Islands. The Company has designated a principal market for BNB based on the market that BNC BNB Cayman has access to and has the greatest volume and level of orderly transactions for BNB. 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. Because BNB trades continuously across global markets, the Company applies a consistent valuation cut-off at midnight UTC on the reporting date to determine fair value.
The Company’s digital assets are measured at fair value on a recurring basis using quoted prices in its principal market (Level 1 inputs) as of the reporting date.
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’
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 – Warrants.
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. 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.
Goodwill
Goodwill represents the excess of the purchase price for an acquisition over the fair value of the identifiable net assets acquired. Goodwill is not amortized but rather is reviewed annually for impairment, at the reporting unit level, or when there is evidence that events or changes in circumstances indicate that the Company’s carrying amount may not be recovered. When testing goodwill for impairment, the Company first performs an assessment of qualitative factors. If qualitative factors indicate that it is more likely than not that the fair value of the relevant reporting unit is less than its carrying amount, the Company tests goodwill for impairment at the reporting unit level using a two-step approach. In step one, the Company determines if the fair value of the reporting unit exceeds the unit’s carrying value. If step one indicates that the fair value of the reporting unit is less than its carrying value, the Company performs step two, determining the fair value of goodwill and, if the carrying value of goodwill exceeds its implied fair value, an impairment charge is recorded.
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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
Debt Discount and Debt Issuance costs
Debt issuance costs related to notes payables liability are directly deducted from the carrying amount of the notes payables. These costs, along with debt discounts, are deferred and amortized over the term of the debt using the effective interest method.
Revenue recognition
The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers. A performance obligation is a promise in a contract to transfer a distinct good or service. Most contracts include multiple performance obligations, such as engineering and technical services and delivery of climate control system equipment and components, which may span phases from facility design to equipment delivery and start-up. The Company does not provide construction or installation services. Certain contracts contain a single performance obligation, typically engineering-only services.
Transaction prices are allocated to each performance obligation based on 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.
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. 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.
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.
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.
Concentrations
One
customer accounted for
| 10 |
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 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.
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” (“ASU 2025-05”), 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 ASU 2024-03 (as clarified by ASU 2025-01) on its unaudited condensed consolidated financial statements and related disclosures.
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 balance sheet as of October 31, 2025:
Schedule of Units Held Cost Basis And Fair Value of Digital Assets Held
| Digital Assets held: | Number of Tokens | Cost | Fair Value | |||||||||
| BNB | $ | $ | ||||||||||
| BTC | ||||||||||||
| USDC | ||||||||||||
| USDT | ||||||||||||
| Total | $ | $ | ||||||||||
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. Digital assets are measured at fair value on a recurring basis in accordance with ASC 820, Fair Value Measurement, using a quoted prices in active markets (Level 1 inputs). Fair value represents the quoted prices on a principal market at midnight UTC on the measurement date.
As of October 31, 2025, the Company holds BNB tokens
with a fair value of $
Digital asset receivables are not interest-bearing and are generally due on demand. The Company’s digital asset receivables are with only one counterparty.
| 11 |
The following table summarizes the Company’s digital asset holdings, as of:
Schedule of Digital Asset Holdings
| Fair Value on – May 1, 2025 | Balance | |||
| Additions | $ | |||
| Airdrop income | ||||
| Unrealized gain on BNB | ||||
| Unrealized loss on BTC | ( | ) | ||
| Ending balance – October 31, 2025 | $ | |||
| Fair Value | $ | |||
Note 4 - Business Combinations
On June 6, 2025 (the “Acquisition Date”), the Company acquired the Fat Panda Group of Companies, 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, the company 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 | ||||||||||
| 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 | $ | $ | ( | ) | $ | |||||||
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During the three and nine months ended October 31, 2025, 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, 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.
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. The purchase price allocation will be finalized within the measurement period of up to one year from the acquisition date.
The following table summarizes the acquired identifiable intangible assets, acquisition date estimated fair value and estimated useful lives:
The
Company’s buyer transaction costs to acquire the Fat Panda Group of Companies totalled approximately $
The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the six months ended October 31, 2025, and 2024, 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 CEA Industries Inc. 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 six month ended October 31, 2025 | For the six months ended October 31, 2024 | |||||||
| Revenue | $ | $ | ||||||
| Net Income/(loss) | $ | $ | ( | ) | ||||
| Proforma | Proforma | |||||||
| For the three months ended October 31, 2025 | For the three months ended October 31, 2024 | |||||||
| Revenue | $ | $ | ||||||
| Net Income/(loss) | $ | $ | ( | ) | ||||
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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 six months ended October 31, 2025 and 2024 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’s operating and finance right-of-use assets and lease liabilities are as follows:
Schedule of Lease Cost
| Successor | ||||||||
| October 31, | April 30, | |||||||
| 2025 | 2025 | |||||||
| Operating lease right-of-use asset | $ | $ | ||||||
| Operating lease liability, current | $ | $ | ||||||
| Operating lease liability, long-term | $ | $ | ||||||
| Successor | ||||||||||||
Period from June 7 through October 31, 2025 | Period from May 1 through June 6, 2025 | Six Months Ended October 31, 2024 | ||||||||||
| Cash paid for operating lease | $ | $ | $ | |||||||||
Future annual minimum lease payments under non-cancellable operating leases as of October 31, 2025, were as follows:
Schedule of Future Annual Minimum Lease Payments
| As of October 31, 2025 | Successor | |||
| October 31, | ||||
| Years ended April 30, | 2025 | |||
| 2026 (excluding the six months ended October 31, 2025) | $ | |||
| 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 | ||||||||
| October 31, | April 30, | |||||||
| 2025 | 2024 | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
| 14 |
Note 6 – Inventory
Inventory consisted of the following:
Schedule of Inventory
| Successor | ||||||||
| October 31, | April 30, | |||||||
| 2025 | 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 approximately $
Note 7 – Property and Equipment
Property and equipment consisted of the following:
Schedule of Property and Equipment
| Successor | ||||||||
| October 31, | April 30, | |||||||
| 2025 | 2024 | |||||||
| (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 October 31, 2025 (Successor) was $
Note 8 – Accounts Payable and Accrued Liabilities
Schedule of Accounts Payable and Accrued Liabilities
| October 31, | April 30, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll liabilities | ||||||||
| Product warranty accrual | ||||||||
| Sales tax payable | ||||||||
| Other accrued expenses | ||||||||
| Total | $ | $ | ||||||
| 15 |
Note 9- Revenue
The following table sets forth the Company’s revenue by source:
Schedule of Revenue by Source
| Successor | Successor | |||||||||||||||||||
| Three Months Ended October 31, | Three Months Ended October 31, | Period from June 7 through | Period from May 1 through | Six Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | 2025 | 2025 | 2024 | ||||||||||||||||
| 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 October 31, 2025 (Successor), and April 30, 2025 (Predecessor), the allowance for doubtful accounts was $
As
of October 31, 2025 (Successor), the Company’s remaining performance obligations, or backlog, was approximately $
The remaining performance obligations expected to be recognized through fiscal year 2026 are as follows (Successor):
Schedule of Remaining Performance Obligations Expected to be Recognized
| Q3FY26 | ||||
| Remaining performance obligations related to partial equipment & engineering paid contracts | $ | |||
| Total remaining performance obligations | $ | |||
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
| Three Months Ended October 31, | Three Months Ended October 31, | Period from June 7 through October 31, | Period from May 1 through | Six Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | 2025 | 2025 | 2024 | ||||||||||||||||
| United States | $ | $ | $ | $ | $ | |||||||||||||||
| Canada | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| 16 |
Note 10 – Note Payable
In
connection with the Company’s acquisition of Fat Panda Inc. on June 6, 2025, effective June 4, 2025, the Company entered into an
interim loan facility with CEAD Panda Lender LLC, under which it borrowed $
Prepaid
interest and legal fees totalling $
During
the period August 1, 2025 – October 31, 2025, interest of $
Schedule of Promissory Note
| October 31, | April 31, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Promissory Note | $ | $ | ||||||
| Less: debt discount | ( | ) | ||||||
| Promissory Note, net of discount | $ | $ | ||||||
Note 11 – Related Party Note Payable and Related Party Convertible Note Payable
In connection with the Company’s acquisition of Fat Panda Inc. on June 6, 2025, the Company issued three notes payable to selling shareholders, one of whom is now an employee of the Company.
The
first note payable was issued in the principal amount of $
The second note payable was issued as a promissory note in the principal amount of $
During the period August 1, 2025 – October 31, 2025, interest of $
The table below represents the outstanding amount of promissory note:
Schedule of Promissory Note Related Party
| October 31, | April 30, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Promissory Note | $ | $ | ||||||
| Less: debt discount | ( | ) | ||||||
| Promissory Note, net of discount | $ | $ | ||||||
| 17 |
The
third note payable, also issued to the President of Fat Panda, is a convertible promissory note with a principal amount of $
During
the period August 1, 2025 – October 31, 2025 (Successor), interest of $
The table below represents the outstanding amount of convertible promissory note:
Schedule of Convertible Promissory Note-Related Party
| October 31, | April 30, | |||||||
| 2025 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Convertible Promissory Note | $ | $ | ||||||
| Less: debt discount | ( | ) | ||||||
| Convertible Promissory Note, net of discount | $ | $ | ||||||
Note 12 – Commitments and Contingencies
Litigation
On October 20, 2023, Sweet Cut Grow, LLC and Green Ice, LLC (collectively, “Claimant”) a client of the Company with which it had an equipment contract and engineering contract, filed a demand for arbitration asserting claims for breach of contract, breach of warranty, and unjust enrichment, and a demand for $1,049,280 in damages, plus interest (“Claims”). The Company denies all the Claims and has asserted a counterclaim. The Company believes Claimant is owed nothing as the Company fulfilled all its obligations under the contracts to Claimant, and further, that the negligence of a third-party supplier is the basis of the Claims. We are defending the Claims on the basis that we promptly addressed all problems, and that any issues with defective HVAC equipment are the responsibility of the third-party equipment manufacturer. The Company’s equipment contract with Claimant requires the parties to arbitrate their disputes under the rules of the American Arbitration Association (“AAA”). The arbitration will be heard in Denver, Colorado, with a conditional setting of January 19-22, 2026. The matter is in the discovery phase. The parties will pay their own legal fees and expenses. The Company intends to defend itself vigorously, believing there are no merits to the Claims as currently presented.
Given the current uncertainty around estimating the likelihood of success of claims and potential damages, we have not recorded an accrual for any potential loss related to these matters.
On
or about April 17, 2024, Optima Consulting Services, LLC (the “Claimant”), a client of the Company with which it had an equipment
contract and engineering contract, advised the Company of a potential claim related to work performed by the Company for Claimant and
demanded mediation under the parties’ contract. On or about October 28, 2024, Claimant informed the Company it was asserting claims
for negligent/defective design and breach of warranty, and alleges its damages exceeded $
Effective
May 9, 2025, the Company entered into a settlement agreement whereby all Claims by Optima Consulting Services, LLC against the Company
were settled in full upon the payment of $
From time to time, in the normal course of its operations, the Company is subject to litigation matters and claims. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a liability for contingent losses when it is both probable that a liability has been incurred, and the amount of the loss is known. An unfavourable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations.
| 18 |
Canadian Payroll Taxes
We
have estimated approximately $
As discussed in Note 11 – Related Party Notes Payable and Related Pary Convertible Note Payable above, the liability arising in respect of this issue will reduce the amount of the note repayment to the former owners of Fat Panda, dollar for dollar, by the amount of any tax liability assessed.
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 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
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 a private investment in public equity (“PIPE”) transaction, which was settled through
a combination of cash and digital assets. The Company received an aggregate $
At-The-Market Offering
On
September 22, 2025, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) 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 October 31, 2025, 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 Fitzerald & 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
shares of its common stock during the quarter ended October
31, 2025, for a total purchase price of approximately $
The repurchase was funded through available cash on hand. The transaction was accounted for as a reduction of stockholders’ equity.
Predecessor
As of April 30, 2025, the Company was authorized to issue shares of common stock, all of which were issued and outstanding as of that date. No shares of common stock were issued by the Company during the period from May 1, 2025, through June 6, 2025 or during the six months ended October 31, 2024.
| 19 |
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 award stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock unit awards (“RSUs”), shares granted as a bonus or in lieu of another award, and other stock-based performance awards. The 2017 Equity Plan allocates shares of the Company’s common stock (“Plan Shares”) for issuance of equity awards under the 2017 Equity Plan. If any shares subject to an award are forfeited, expire, or otherwise terminate without issuance of such shares, the shares will, to the extent of such forfeiture, expiration, or termination, again be available for awards under the 2017 Equity Plan.
During the period June 7, 2025 to October 31, 2025, non-qualifying stock options previously issued to certain directors expired, unexercised, new non qualifying stock options were issued to new employees under the 2017 Equity Plan and 600 non-qualifying stock were issued to new employees under the 2017 Equity Plan options has been expired and forfeited.
As of October 31, 2025, 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.
2021 Equity Incentive Plan
On March 22, 2021, the Board approved the 2021 Equity Incentive Plan (the “2021 Equity Plan”), which was approved by the stockholders on July 22, 2021. The 2021 Equity Plan permits the Board to grant awards of up to shares of common stock. The 2021 Equity Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), non-qualified stock options, stock appreciation rights (“SARs”), restricted stock awards and restricted stock unit awards and other equity linked awards to our employees, consultants, and directors. If an equity award (i) expires or otherwise terminates without having been exercised in full or (ii) is settled in cash (i.e., the holder of the award receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of common stock that may be issued pursuant to this Plan.
During
the period June 7, 2025, to October 31, 2025, restricted stock units were issued under the 2021 Equity Plan. During the period October
31, 2025,
As of October 31, 2025, 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, remaining outstanding, and shares remain available for future equity awards.
2025 Equity Incentive Plan
On July 25, 2025, the Company adopted the 2025 Equity Incentive Plan (the “2025 Equity Plan”). The 2025 Equity Plan permits 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 of the Internal Revenue Code of 1986, as amended (the “Code”), non-qualified stock options, stock appreciation rights (“SARs”), restricted stock awards and restricted stock unit awards and other equity linked awards to our employees, consultants, and directors. If an equity award (i) expires or otherwise terminates without having been exercised in full or (ii) is settled in cash (i.e., the holder of the award receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of common stock that may be issued pursuant to this Plan.
During the period June 7, 2025 to October 31, 2025, restricted stock units were issued to directors and employees under the 2025 Equity Plan.
| 20 |
Warrants
On
August 5, 2025, the Company entered into a Strategic Advisor Agreements with 10X BNB Cayman Sponsor and YZi Management Labs 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 $
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 six months ended October 31, 2025:
Schedule of Warrant Activity
| Number of Warrants | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||
| Outstanding as of July 30, 2025 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Forfeited | ||||||||||||
| Expired | ||||||||||||
| Outstanding as of October 30, 2025 | $ | $ | ||||||||||
| Exercisable as of October 30, 2025 | $ | $ | ||||||||||
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 | ||||
| 21 |
Non-Qualified and Incentive Stock Options
Schedule of Stock Option Activity
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding as of June 7, 2025 | $ | |||||||||||||||
| Granted | $ | - | ||||||||||||||
| Exercised | $ | - | - | |||||||||||||
| Forfeited | ( | ) | $ | - | - | |||||||||||
| Expired | ( | ) | $ | - | - | |||||||||||
| Outstanding as of October 31, 2025 | $ | |||||||||||||||
| Exercisable as of October 31, 2025 | $ | |||||||||||||||
The aggregate intrinsic value for the stock options outstanding and exercisable as of October 31, 2025, was zero because these options were out of money on October 31, 2025.
During the period from June 7, 2025 through October 31, 2025, stock options were issued to employees with an exercise price of $, a -year contract term and a one- year vesting period.
For the period from June 7, 2025 through October 31, 2025, the Company recorded $ as compensation expense related to stock options issued to employees and consultants.
Schedule of Non Qualified Stock Option
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, June 7, 2025 | $ | |||||||||||||||
| Granted | $ | - | - | |||||||||||||
| Exercised | $ | - | - | |||||||||||||
| Forfeited | $ | - | - | |||||||||||||
| Expired | ( | ) | $ | - | - | |||||||||||
| Outstanding, October 31, 2025 | $ | |||||||||||||||
| Exercisable, October 31, 2025 | $ | |||||||||||||||
The aggregate intrinsic value for the stock options outstanding and exercisable as of October 31, 2025 was zero because these options were out of money on October 31, 2025.
During the period from June 7, 2025 through October 31, 2025, the Company did not incur any compensation expense related to options issued to directors.
| 22 |
Restricted Stock Units
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. In addition, the Company granted restricted stock units to directors and employees under the 2025 Equity Plan and restricted stock units under the 2021 Equity Plan.
During the period June 7, 2025 through October 31, 2025, the Company recorded $
| Number of Units | Weighted Average Grant-Date Fair Value | Aggregate Intrinsic Value | ||||||||||
| Outstanding, June 7, 2025 | $ | $ | ||||||||||
| Granted | $ | |||||||||||
| Vested and settled with share issuance | ( | ) | $ | ( | ) | |||||||
| Forfeited/cancelled | $ | |||||||||||
| Outstanding, October 31, 2025 | $ | $ | ||||||||||
Predecessor
The Predecessor did not issue any share-based compensation awards or incur any compensation expenses related to share-based compensation awards.
Note 15 - Warrants
Pre-Funded Warrants
During
the three months ended October 31, 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 nomination consideration of $
Stapled Warrants
During
the three months ended October 31, 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 October 31, 2025 | $ | |||
| 23 |
The Company used the Monte-Carlo option model to compute the fair value (level 3) of the Stapled Warrants. The following table summarizes the inputs used in the valuation of the Stapled Warrants:
| August 5, 2025 | October 31, 2025 | |||||||
| Stock price | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Simulated Trading Days | ||||||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | ||||||||
| Holding period (years) | ||||||||
During the period June 7, 2025, to October 31, 2025, 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 at October 31, 2025:
Schedule of Warrant Outstanding
Warrants Outstanding at October 31, 2025 | Exercise price | |||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
There were no outstanding warrants during the predecessor period from May 1, 2025 through June 6, 2025.
The following table sets forth the computation of basic and diluted earnings per share:
| Successor | Predecessor | Successor | Predecessor | |||||||||||||||||
| Three months ended October 31, | Three months ended October 31, | Period from June 7 through October 31, | Period from May 1 through June 6, | Six months ended October 31, | ||||||||||||||||
| 2025 | 2024 | 2025 | 2025 | 2024 | ||||||||||||||||
| As Restated | As Restated | |||||||||||||||||||
| Basic earnings per share: | ||||||||||||||||||||
| Numerator: | ||||||||||||||||||||
| Net income 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 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 | $ | $ | $ | $ | $ | |||||||||||||||
| 24 |
The following table summarizes the securities that were not included in the computation of diluted income per common share as they are anti-dilutive:
| Successor | ||||||||
Period from August 1 through October 31, 2025 | Period from June 7 through October 31, 2025 | |||||||
| Unvested RSUs | ||||||||
Note 17 – Income Taxes
For the period from June 7, 2025 to October 31, 2025 (Successor), the period from May 1, 2025 to June 6, 2025 (Predecessor) and the six months ended October 31, 2024 (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 October 31, | Period from May 1 through June 6, 2025 | Six Months Ended October 31, | Three Months Ended October 31, | Three Months Ended October 31, | ||||||||||||||||
| 2025 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||
| Profit/(loss) before income taxes | $ | $ | $ | $ | $ | |||||||||||||||
| Income tax expense (benefit) | ||||||||||||||||||||
| Effective income tax rate | % | % | % | % | % | |||||||||||||||
| 25 |
The change in the effective tax rate for the period June 7, 2025 to October 31, 31, 2025 (Successor), compared to the predecessor period for May 1, 2025 to June 6, 2025 (Predecessor), and the three months ended July 31, 2024 (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.
The
Company completed the acquisition of Fat Panda Ltd. and related entities, taxed as Canadian corporations, during the quarter. For Canadian
federal income tax purposes, the transaction was treated as a stock acquisition with no step-up in tax basis. As a result, the goodwill
and intangible assets recorded for financial reporting purposes are not deductible for tax purposes. This created a deferred tax liability
of $
As
of October 31, 2025, the Company has U.S. federal and state net operating losses (“NOLs”) related to the legacy CEA
Industries, Inc. United States operations of approximately $
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. The Company recorded a full valuation allowance related to CEA Industries Inc. United States operations as of October 31, 2025. Based on the available evidence, the Company believes it is more likely than not that it will not be able to utilize its net deferred tax assets in the foreseeable future related to its United States operations. The Company intends to maintain valuation allowances until sufficient evidence exists to support the reversal of such valuation allowances. The Company makes estimates and judgments about its future taxable income that are based on assumptions that are consistent with the Company’s plans. Should the actual amounts differ from the Company’s estimates, the carrying value of the Company’s deferred tax assets could be materially impacted.
The
Company regularly assesses the adequacy of its provisions for income tax contingencies in accordance with the applicable authoritative
guidance on accounting for income taxes. The Company records uncertain tax positions on the basis of a two-step process in which: (i)
the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits
of the position, and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the
largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with the related tax authority. The
Company currently has recorded a $
On
July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes
to federal tax law that generally allow for more favourable 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 One Big Beautiful Bill but does not expect the passing of this legislation will have a material impact on the tax provision.
Note 18 – Related Party Transactions
Agreements and Transaction with a Company Director and previous director
The Company entered into a manufacturer representative agreement with RSX Enterprises (“RSX”) in March 2021 to become a non-exclusive representative for the Company to assist in marketing and soliciting orders. James R. Shipley, one of our former independent directors, has a significant ownership interest in RSX.
| 26 |
Under
the manufacturer representative agreement, RSX will act as a non-exclusive representative for the Company within the United States, Canada
and Mexico and may receive a commission for qualified customer leads. The agreement had an initial term through December 31, 2021 with
automatic one-year renewal terms unless notice is given 90 days prior to each annual expiration.
On
June 19, 2024, the Company engaged Nicholas J. Etten, a director of the Company, to provide services covering transaction sourcing and
evaluation, in the Company’s effort to arrange for a merger, acquisition, combination or other strategic transaction. Mr. Etten
has a background in corporate development and investment banking in multiple industries. Mr. Etten will be paid a weekly fee of $
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. During the quarter ended October 31, 2025, the Company’s accrued asset management fees payable
to the Asset Manager were $
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 Binance 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 tale 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.
| 27 |
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 (in thousands) for each of the periods presented. Total segment assets (in thousands) 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 October 31, 2025 | ||||||||||||||||
Retail and Industry Segment (Successor) | BNB Treasury Management Segment | Corporate | Total Consolidated | |||||||||||||
| Total Revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ||||||||||||
| Unrealized gain 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) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of warrant liabilities | ||||||||||||||||
| Interest expense and other income, net | ( | ) | ( | ) | ||||||||||||
| Income (loss) from operations before provision for income tax | $ | ( | ) | $ | $ | $ | ||||||||||
| Total Assets | ||||||||||||||||
| CEA Industry Segment ( | BNB Treasury Management Segment | Corporate | Total Consolidated | |||||||||||||
| Three Months Ended October 31, 2024 | ||||||||||||||||
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 | $ | $ | $ | $ | ||||||||||||
| 28 |
| CEA Industry Segment (Successor) | BNB Treasury Management Segment | Corporate | Total Consolidated | CEA Industry Segment ( | ||||||||||||||||
| Period from June 7, 2025 to October 31, 2025 | 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 gain 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) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| 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 | |||||||||||||
| Six Months Ended October 31, 2024 | ||||||||||||||||
| 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) | ||
| (2) | As noted in Note 1, Nature of Operations, On June 6, 2025 (the “Closing Date”), CEA industries Inc. completed the acquisition of the Fat Panda Group of Companies (“Fat Panda”) (the “Fat Panda Acquisition”). CEA Industries Inc. has been designated as the accounting acquirer (“Successor”), and Fat Panda as the accounting predecessor (“Predecessor”). Successor refers to CEA operations post-acquisition while predecessor refers to CEA operations pre-acquisition date consistent with the Consolidated Statements of Operations. |
Note 20 – Subsequent Events
On December 3, 2025, the Company repaid in full the $
During November 2025, subsequent to the Company’s fiscal quarter ended October 31, 2025, the Company repurchased million shares
of its common stock at a weighted-average price of $ per share. The aggregate purchase price for these shares was approximately $
In accordance with ASC 855, Subsequent Events, the Company has evaluated all subsequent events through the date of issuance of these financial statements issued. Other than the repayment noted above, no material subsequent events occurred after October 31, 2025.
| 29 |
PART II — OTHER INFORMATION
Item 6. Exhibits
EXHIBIT INDEX
| * | Filed herewith. |
| ** | Furnished herewith. |
| 30 |
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) | ||
| 31 |
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 October 31, 2025;
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 October 31, 2025;
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 October 31, 2025 (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 October 31, 2025 (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 | |
| Acting Principal 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.