8-K
CEA Industries Inc. (BNC)
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):
January17, 2022
CEA
INDUSTRIES INC.
(Formerlyknown as Surna Inc.)(Exact name of registrant as specified in its charter)
| Nevada | 000-54286 | 27-3911608 |
|---|---|---|
| (State<br> or other jurisdiction <br><br> of incorporation) | (Commission<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 Act:
| Title<br> of Each Class | Trading<br> Symbol(s) | Name<br> of Each Exchange on Which Registered |
|---|---|---|
| None | n/a | n/a |
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. ☐
Item3.03. Material Modification to Rights of Security Holders.
On January 17, 2022, the Board of Directors (“Board”) of CEA Industries Inc. (“Company”) modified the by-laws of the Company to expand the Board to five persons, thereby creating two vacancies.
Item5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements ofCertain Officers.
On January 17, 2022 the Board modified the by-laws of the Company to expand the Board to five persons, thereby creating two vacancies, which the Board then filled by appointment of Messrs. Troy Reisner and Marion Mariathasan as directors, to take effect immediately.
Troy Reisner, 55, is the CFO of Keystone Tower Systems, Inc., a technology innovation and manufacturing company that is disrupting the commercial wind tower industry by bringing automated manufacturing technology that will produce towers 10x faster than current factories with technology that can be deployed on-site. At Keystone, he leads the finance and accounting functions, including capital raising and corporate governance matters, and serves as an executive team member. Prior to joining Keystone, Mr. Reisner was a partner with Deloitte from which he retired. He spent over 30 years advising public companies on audit, accounting, M&A and SEC reporting matters in the St. Louis, Missouri, New York, New York, and Denver, Colorado practices. Mr. Reisner brings significant cumulative knowledge and expertise in accounting and auditing, including PCAOB auditing standards, M&A transactions, financial due diligence, financial reporting, including expertise in SEC rules, regulations & reporting, internal controls over financial reporting, and capital market and corporate governance experience and expertise.
Marion Mariathasan, 47, is the CEO and Co-Founder of Simplifya, the cannabis industry’s leading regulatory and operational compliance software platform. The company’s suite of products takes the guesswork out of confusing and continually changing state and local regulations. Featuring SOPs, badge tracking, document storage, tailored reporting and employee accountability features, the company’s Custom Audit software reduces the time clients spend on compliance by up to 45 percent. Marion is also a serial entrepreneur who has founded or advised numerous startups. He is currently an investor in 22 domestic and international companies that range from cannabis companies to dating apps - four of which he serves as a board member. Marion studied Architecture and Computer Science at the University of Kansas and Computer Information Systems with a minor in Business Management from Emporia State University. Marion is a regular guest speaker at events such as Denver Start-Up Week, Colorado University’s program on social entrepreneurship, various universities on the topic of entrepreneurship and the United Nations Global Accelerator Initiative.
In connection with the appointment of Messrs. Reisner and Mariathasan, the Board formed three committees, an audit committee, nominations committee and a compensation committee.
Mr. Reisner was appointed to the audit committee, as the committee chair, along with Messrs. Shipley and Etten.
Mr. Etten was appointed to the nominations committee, as the committee chair, along with Mr. Mariathasan.
Mr. Shipley was appointed to the compensation committee, as the committee chair, along with Mr. Reisner.
The Board determined that for regulatory compliance requirements, Mr. Reisner to be financially literate and all of Messrs. Reisner, Etten, Shipley and Mariathasan were independent directors.
Messrs. Reisner and Mariathasan were each granted restricted stock units of 252,525 shares of common stock to vest on the grant date and 252,525 shares of common stock to vest on January 17, 2023, if the recipient remains in service as an independent director of the Company on that date. Currently, the Company will pay a cash fee of $15,000 per year and additional compensation for acting as a committee chair. (See the 2022 director compensation plan).
The Board also adopted a revised director compensation plan, which is attached hereto as Exhibit 99.1.
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> January 20, 2022 | CEA<br> INDUSTRIES INC. | |
|---|---|---|
| By | /s/ Anthony K. McDonald | |
| Anthony<br> K. McDonald | ||
| President<br> and Chief Executive Officer |
EXHIBIT
INDEX
| EXHIBIT NO. | DESCRIPTION |
|---|---|
| 99.1 | January 2022 Director Compensation Plan |
| 104 | Cover<br>Page Interactive Data File (embedded within the Inline XBRL document) |
Exhibit99.1
CEAIndustries Inc.
CompensationPlan for Independent Directors
January17, 2022
The Board of Directors (the “Board’) of CEA Industries Inc. (the “Company”, formerly Surna Inc.) previously adopted a compensation plan for the independent directors of the Company on August 20, 2021 consisting of a combination of cash and equity-based compensation (the “Prior Plan”). The Company plans to uplist its common stock from the OTC exchange to the Nasdaq exchange (the “Uplist”) in the future.
The Board desires to revise the Prior Plan and has adopted on January 17, 2022 (the “Effective Date”) a revised compensation plan for independent directors as set forth below (the “Plan”). The Plan is effective for the election or appointment of independent directors on and after the Effective Date. The Plan is effective for the current independent directors and for independent directors elected or appointed after the Effective Date.
The plan is divided into two phases: from the Effective Date until the day prior to the Uplist (“Pre-uplist”) and from the Uplist date forward (“Post-uplist”).
Pre-uplist phase: The Company pays its independent directors an annual cash fee of $15,000, payable quarterly in advance on the first business day of each quarter, and which is consideration for their participation in: (i) any regular or special meetings of the Board or any committee thereof attended in person, (ii) any telephonic meeting of the Board or any committee thereof in which the director is a member, (iii) any non-meeting consultations with the Company’s management, and (iv) any other services provided by them in their capacities as directors (other than services as the Chairman of the Board, the Chairman of the Company’s Audit Committee, and the Committee Chairman).
At the time of initial election or appointment, each independent director will receive an equity retention award in the form of restricted stock units (“RSUs”). The aggregate value of the RSUs at the time of grant will be $25,000, with the number of shares underlying the RSUs to be determined based on the closing price of the Company’s common stock on the date immediately prior to the date of grant. Vesting of the RSUs will be as follows: (i) 50% at the time of grant, and (ii) 50% on the first anniversary of the grant date.
In addition, on the first business day of January each year, each independent director will also receive an equity retention award in the form of RSUs. The aggregate value of the RSUs at the time of grant will be $25,000, with the number of shares underlying the RSUs to be determined based on the closing price of the Company’s common stock on the date immediately prior to the date of grant. These RSUs will be fully vested at date of grant.
The Company pays the Audit Committee Chairman an additional annual fee of $10,000, payable quarterly in advance, for services as the Audit Committee Chairman.
The Company pays the Chairmen of any other committees of the Board an additional annual fee of $5,000, payable quarterly in advance, for services as a Committee Chairman.
There is no additional compensation paid to members of any committee of the Board. Interested (i.e. Executive directors) serving on the Board do not receive compensation for their Board service.
Post-uplist phase: The Company will pay its independent directors an annual cash fee of $25,000, payable quarterly in advance on the first business day of each quarter. All other terms remain the same.
Each director is responsible for the payment of any and all income taxes arising with respect to the issuance of common stock and the vesting and settlement of RSUs.
The Company also reimburses directors for out-of-pocket expenses incurred in attending Board and committee meetings and undertaking certain matters on the Company’s behalf.
Under the Nevada Revised Statutes and pursuant to our charter and bylaws, as currently in effect, the Company may indemnify the Company’s officers and directors for various expenses and damages resulting from their acting in these capacities. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our officers and directors pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act, and is therefore unenforceable.
The Company has entered into indemnification agreements with its directors and executive officers. The indemnification agreements are intended to provide the Company’s directors the maximum indemnification permitted under the Nevada Revised Statutes, unless otherwise limited by the Company’s charter and bylaws. Each indemnification agreement provides that the Company shall indemnify the director or executive officer who is a party to the agreement (an “Indemnitee”), including the advancement of legal expenses, if, by reason of his corporate status, the Indemnitee is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed proceeding. Each indemnification agreement further provides that the applicable provisions of the Company’s charter and bylaws regarding indemnification shall control in the event of any conflict with any provisions of such indemnification agreements.
The Company may secure insurance on behalf of any person who is or was or has agreed to become a director or officer of the Company for any liability arising out of his actions, regardless of whether the Nevada Revised Statues would permit indemnification. The Company has obtained liability insurance for its officers and directors.