8-K - BNC - Equibles

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

8-K

Current

Report Pursuant to Section 13 or 15(d) of

the

Securities Exchange Act of 1934

Date

of Report (Date of earliest event reported):

March28, 2024

CEA

INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

Nevada	001-41266	27-3911608
(State<br> or other jurisdiction <br><br> of incorporation)	(Commission<br> <br><br> File Number)	(I.R.S.<br> Employer <br><br> Identification No.)

385South Pierce Avenue, Suite C

Louisville,Colorado 80027

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (303) 993-5271

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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
Common<br> Stock, $0.00001 par value	CEAD	Nasdaq<br> Capital Market
Warrants<br> to purchase Common Stock	CEADW	Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item7.01 Regulation FD Disclosure.

On March 28, 2024, CEA Industries Inc. (NASDAQ: CEAD, CEADW) (“CEA Industries” or the “Company”), reported results for the three and twelve months ended December 31, 2023. See the attached press release included herein as Exhibit 99.1 to this Current Report on Form 8-K.

Item9. Financial Statements and Exhibits.

(d)Exhibits

Exhibit 99.1	Press Release dated March 28, 2024 – CEA Industries Inc. Fourth Quarter and Full Year 2023 Results
104	Cover<br> Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:<br> March 28, 2024	CEA<br> INDUSTRIES INC.
	By	/s/ Anthony K. McDonald
		Anthony<br> K. McDonald
		President<br> and Chief Executive Officer

Exhibit99.1

CEAIndustries Inc. Reports Fourth Quarter and Full Year 2023 Results

Louisville,Colorado, March 28, 2024 – CEA Industries Inc. (NASDAQ: CEAD, CEADW) (“CEA Industries” or the “Company”), is reporting results for the three and twelve months ended December 31, 2023.

FourthQuarter 2023 Financial Summary (in $ thousands, excl. margin items):

	Q4 2023<br> <br>(unaudited)			Q3 2023<br> <br>(unaudited)			Q4 2022<br> <br>(unaudited)
Revenue	$	251		$	914		$	1,461
Gross Profit	$	(286	)	$	(104	)	$	151
Gross Margin		(113.8	)%		(11.4	)%		10.3	%
Operating Expenses	$	709		$	703		$	1,433
Net Income/(Loss)	$	(988	)	$	(799	)	$	(1,272	)

FullYear 2023 Financial Summary (in $ thousands, excl. margin items):

	FY<br> 2023			FY<br> 2022
Revenue	$	6,911		$	11,283
Gross Profit	$	542		$	1,145
Gross Margin		7.8	%		10.1	%
Operating Expenses	$	3,495		$	6,869
Net Income/(Loss)	$	(2,912	)	$	(5,497	)

“We continue to operate under the lean cost structure implemented during 2023, with a focus on expense reduction and capital preservation, as we manage through our remaining backlog,” said Tony McDonald, Chairman and CEO of CEA Industries. “Subsequent to year-end we enacted additional headcount reductions, which we anticipate will result in annualized cost savings of ~$230,000, in support of our ongoing efforts to optimize our operating expense profile.”

Mr. McDonald continued: “As previously announced on August 14, 2023, the Board of Directors remains steadfast in their examination of strategic alternatives, including a sale, merger, or other potential strategic or financial transaction. We will provide updates on any material developments that result from this process.”

FourthQuarter 2023 Financial Results

Revenue in the fourth quarter of 2023 was $0.3 million compared to $1.5 million for the same period in 2022. The decrease was primarily attributed to lower bookings over the last twelve months.

Net bookings in the fourth quarter of 2023 were $0.1 million compared to $0.2 million in the year-ago period. The Company’s quarter-end backlog was $0.4 million compared to $5.6 million for the same period in 2022. The decrease in the Company’s net bookings and backlog for the fourth quarter of 2023 was primarily driven by fewer capital expenditures by cannabis operators in the markets served by the Company, in addition to a reduced sales effort.

Gross profit in the fourth quarter of 2023 was $(0.3) million compared to $0.2 million for the same period in 2022. Gross margin was (113.8%) compared to 10.3% in the prior year period. The decrease in gross margin was primarily driven by lower revenue and fixed costs becoming a larger percentage of revenue. Fixed costs include the cost of services, engineering, manufacturing, and project management.

Operating expenses in the fourth quarter of 2023 decreased 51% to $0.7 million compared to $1.4 million for the same period in 2022. The decrease was primarily driven by reduced personnel and marketing costs and lower product development expenses.

Net loss in the fourth quarter of 2023 improved to $1.0 million or $(0.12) per share, compared to a net loss of $1.3 million or $(0.18) per share for the same period in 2022.

Cash and cash equivalents were $12.5 million at December 31, 2023, compared to $18.6 million on December 31, 2022, while working capital decreased by $2.6 million during this period. At December 31, 2023, the Company remained debt free.

AboutCEA Industries Inc.

CEA Industries Inc. (www.ceaindustries.com) provides a suite of complementary and adjacent offerings to the controlled environment agriculture industry. The Company’s comprehensive solutions, when aligned with industry operators’ product and sales initiatives, support the development of the global ecosystem for indoor cultivation.

ForwardLooking Statements

This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect our current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release, including the factors set forth in “Risk Factors” set forth in our annual and quarterly reports filed with the Securities and Exchange Commission (“SEC”), and subsequent filings with the SEC. Please refer to our SEC filings for a more detailed discussion of the risks and uncertainties associated with our business, including but not limited to the risks and uncertainties associated with our business prospects and the prospects of our existing and prospective customers; the inherent uncertainty of product development; regulatory, legislative and judicial developments, especially those related to changes in, and the enforcement of, cannabis laws; increasing competitive pressures in our industry; and relationships with our customers and suppliers. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. The reference to CEA’s website has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release.

Non-GAAPFinancial Measures

To supplement our financial results on U.S. generally accepted accounting principles (“GAAP”) basis, we use non-GAAP measures including net bookings and backlog, as well as other significant non-cash expenses such as stock-based compensation and depreciation expenses. We believe these non-GAAP measures are helpful in understanding our past performance and are intended to aid in evaluating our potential future results. The presentation of these non-GAAP measures should be considered in addition to our GAAP results and are not intended to be considered in isolation or as a substitute for financial information prepared or presented in accordance with GAAP. We believe these non-GAAP financial measures reflect an additional way to view aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.

InvestorContact:

Sean Mansouri, CFA

Elevate IR

info@ceaindustries.com

(720) 330-2829

CEAIndustries Inc.

CondensedConsolidated Balance Sheets

(inUS Dollars except share numbers)

			December<br> 31,
			2022
ASSETS
Current<br> Assets
Cash<br> and cash equivalents	12,508,251		$	18,637,114
Accounts<br> receivable, net	18,655			2,649
Contract<br> assets, net	224,414			-
Inventory,<br> net	296,404			348,411
Prepaid<br> expenses and other	313,115			1,489,921
Total<br> Current Assets	13,360,839			20,478,095
Noncurrent<br> Assets
Property<br> and equipment, net	38,558			68,513
Intangible<br> assets, net	1,830			1,830
Deposits	14,747			14,747
Operating<br> lease right-of-use asset	356,109			462,874
Total<br> Noncurrent Assets	411,244			547,964
TOTAL<br> ASSETS	13,772,083		$	21,026,059
LIABILITIES<br> AND SHAREHOLDERS’ EQUITY
LIABILITIES
Current<br> Liabilities
Accounts<br> payable and accrued liabilities	624,724		$	1,207,258
Deferred<br> revenue	499,800			4,338,570
Accrued<br> equity compensation	-			89,970
Current<br> portion of operating lease liability	126,724			118,235
Total<br> Current Liabilities	1,251,248			5,754,033
Noncurrent<br> Liabilities
Operating<br> lease liability, net of current portion	259,627			376,851
Total<br> Noncurrent Liabilities	259,627			376,851
TOTAL<br> LIABILITIES	1,510,875			6,130,884
Commitments<br> and Contingencies (Note 10)	-			-
SHAREHOLDERS’<br> EQUITY
Preferred<br> stock, 0.00001 par value; 25,000,000 shares authorized; 0 shares issued and outstanding	-			-
Common<br> stock, 0.00001 par value; 200,000,000 authorized; 8,076,372 and 7,953,974 shares issued and outstanding, respectively	81			80
Additional<br> paid in capital	49,451,419			49,173,836
Accumulated<br> deficit	(37,190,292	)		(34,278,741	)
Total<br> Shareholders’ Equity	12,261,208			14,895,175
TOTAL<br> LIABILITIES AND SHAREHOLDERS’ EQUITY	13,772,083		$	21,026,059

All values are in US Dollars.

CEAIndustries Inc.

CondensedConsolidated Statements of Operations

(inUS Dollars except share numbers)

	For<br> the Three Months Ended December 31,						For<br> the Years Ended December 31,
	2023			2022			2023			2022
	(Unaudited)			(Unaudited)
Revenue	$	251,093		$	1,460,798		$	6,910,951		$	11,283,189
Cost of revenue		536,919			1,309,796			6,368,872			10,138,249
Gross profit		(285,826	)		151,002			542,079			1,144,940
Operating expenses:
Advertising and marketing<br> expenses		16,445			292,566			273,409			1,157,871
Product development costs		-			65,514			76,487			319,987
Selling, general and administrative<br> expenses		693,023			1,075,248			3,145,328			4,759,865
Goodwill<br> impairment charges		-			-			-			631,064
Total operating expenses		709,467			1,433,328			3,495,224			6,868,787
Operating loss		(995,293	)		(1,282,326	)		(2,953,145	)		(5,723,847	)
Other income (expense):
Other income (expense),<br> net		-			-			7,778			191,358
Interest<br> income (expense), net		7,774			10,729			33,816			35,314
Total other income (expense)		7,774			10,729			41,594			226,672
Loss before provision for income taxes		(987,519	)		(1,271,597	)		(2,911,551	)		(5,497,175	)
Income taxes		-			-			-			-
Net loss	$	(987,519	)	$	(1,271,597	)	$	(2,911,551	)	$	(5,497,175	)
Convertible preferred series<br> B stock dividends		-			-			-			(35,984	)
Deemed<br> dividend on convertible preferred series B stock on down round		-			-			-			(439,999	)
Net loss available to<br> common shareholders	$	(987,519	)	$	(1,271,597	)	$	(2,911,551	)	$	(5,973,158	)
Loss per common share<br> – basic and diluted	$	(0.12	)	$	(0.18	)	$	(0.36	)	$	(0.84	)
Weighted average number<br> of common shares outstanding, basic and diluted		8,076,372			7,094,410			8,075,228			7,094,410

CEAIndustries Inc.

CondensedConsolidated Statements of Cash Flows

(inUS Dollars except share numbers)

	For the Years Ended<br> <br>December 31,
	2023			2022
Cash Flows From Operating Activities:
Net loss	$	(2,911,551	)	$	(5,497,175	)
Adjustments to reconcile net loss to net cash<br> used in operating activities:
Depreciation and intangible<br> asset amortization expense		29,655			32,442
Share-based compensation		187,615			307,736
Provision for doubtful<br> accounts		(2,056	)		(54,708	)
Provision for excess and<br> obsolete inventory		121,791			(20,472	)
Loss on disposal of assets		100			4,489
Operating lease expense		106,765			103,003
Goodwill impairment charges		-			631,064
Changes in operating assets and liabilities:
Accounts receivable		(13,950	)		231,504
Contract assets		(224,414	)		-
Inventory		(69,784	)		50,387
Prepaid expenses and other		1,176,806			(216,202	)
Accounts payable and accrued<br> liabilities		(582,534	)		(175,409	)
Deferred revenue		(3,838,771	)		1,498,732
Operating lease liability,<br> net		(108,735	)		(91,279	)
Accrued<br> equity compensation		-			6,345
Net cash used in operating<br> activities		(6,129,063	)		(3,189,543	)
Cash Flows From Investing Activities
Purchases of property and<br> equipment		-			(30,348	)
Proceeds<br> from the sale of property and equipment		200			2,250
Net cash provided by<br> (used in) investing activities		200			(28,098	)
Cash Flows From Financing Activities
Payment of dividends on<br> series B preferred stock		-			(35,984	)
Redemption of series B<br> preferred stock		-			(1,980,000	)
Net<br> cash proceeds on sale of common stock and warrants, net of expenses		-			21,711,131
Net cash provided by<br> financing activities		-			19,695,147
Net change in cash and cash equivalents		(6,128,863	)		16,477,506
Cash and cash equivalents,<br> beginning of period		18,637,114			2,159,608
Cash and cash equivalents,<br> end of period	$	12,508,251		$	18,637,114
Supplemental cash flow information:
Interest<br> paid	$	-		$	-
Income<br> taxes paid	$	-		$	-
Non-cash investing and financing activities:
Conversion<br> of series B preferred stock		-		$	1,980,000
Deemed<br> dividend on series B preferred stock arising on down round		-		$	439,999
Cashless exercise<br> of prefunded warrants				$	2
Options<br> issued for accrued equity compensation liability	$	89,970		$	-