CEA Industries Inc. — First Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Reported a net loss of $11.4 million, or $(0.22) per basic and diluted share.
• The net loss was primarily driven by a $15.3 million unrealized loss on digital assets ($15.0 million related to BNB), partially offset by a $10.0 million non-cash gain on the change in fair value of warrant liabilities.
• Revenue from the Retail and Industry segment was $7.2 million, a 4.6% decrease from $7.5 million in the prior-year quarter, driven by the discontinuance of a product line at Fat Panda.
• Gross profit was $2.0 million, down from $2.3 million in the corresponding prior-year period.
• Total operating expenses were $23.2 million, including $15.3 million in unrealized digital asset losses, $1.4 million in shareholder advisory expenses related to a resolved activism campaign, and $1.1 million in management fees under the Asset Management Agreement.
• Ended the quarter with $7.1 million in cash and cash equivalents, up from $3.1 million at April 30, 2026.
• Total assets were $327.2 million and total shareholders' equity was $289.4 million.
• Total debt outstanding was $16.8 million, with the Company in compliance with all debt covenants.

Guidance and Future Outlook

• The Company remains committed to its disciplined BNB digital asset treasury strategy and intends to maintain its position as the world's largest corporate BNB treasury.
• Future plans include potentially adding to BNB holdings when capital allows and evaluating additional treasury management opportunities within the BNB ecosystem.
• Near-term priorities are focused on driving operational and strategic execution and resolving pending Asset Management Agreement litigation.
• The Company does not expect to incur material additional shareholder advisory costs related to the resolved activism campaign.
• The Company plans to continue maintaining a disciplined approach to liquidity, risk management, and shareholder value creation.

Business Segments and Product Lines

• The Retail and Industry segment includes Fat Panda, which operated 34 retail locations across Central Canada (30 branded stores and 4 Electric Fog outlets) alongside an e-commerce platform and in-house premium e-liquid manufacturing.
• Revenue decline in the Retail and Industry segment was attributed to the discontinuance of a product line at Fat Panda.
• The Company generated $0.3 million of Airdrop income within the Binance ecosystem, reflecting a moderation in Airdrop, Launchpool, and HODLer program activity.

Market and Competitive Landscape

• Digital assets represented 93.1% of total assets, with a total fair value of $304.5 million including BTC and USDT positions.
• The Company held 515,544 BNB tokens with a fair value of approximately $302.3 million, unchanged in token count from the prior quarter.
• Of the BNB holdings, 471,346 tokens were unrestricted and 44,198 were pledged as loan collateral.

Risks and Challenges

• Risks include volatility in the market price of BNB and other digital assets, and concentration of holdings within the Binance ecosystem.
• The Company faces risks related to collateral maintenance and repayment obligations under its master loan facility.
• Pending litigation regarding the Asset Management Agreement (AMA) remains a challenge, with the Company seeking to void the agreement or declare its liquidated damages provision unenforceable.
• The Company must address the previously disclosed material weakness in internal control over financial reporting.
• Risks include the outcome of the CEO and director searches, and the ability to appoint a permanent CEO and additional independent director within deadlines set by the Cooperation Agreement.
• The Company faces risks regarding evolving laws, regulations, and accounting guidance applicable to digital assets.

Management Commentary and Tone

• Carly E. Howard serves as Chair of the Board.
• Alex Odagiu serves as Interim President, reporting directly to the Board.
• William B. Miller serves as Interim Principal Executive Officer and Chief Financial Officer following the conclusion of David Namdar's service as CEO on July 22, 2026.
• A chief executive officer search committee was formed on June 29, 2026, and the search is ongoing.
• The Board increased to six directors with the appointments of Ling "Ella" Zhang, Alex Odagiu, and Matthew Roszak; a seventh mutually agreeable director appointment remains pending.

Other Key Points

• The Company entered into a Cooperation Agreement with YZILabs on June 23, 2026, resolving the consent solicitation and activism campaign commenced in November 2025.
• YZILabs terminated its consent solicitation, withdrew demands, and is subject to standstill, voting, and mutual non-disparagement covenants.
• The Company regained compliance with Nasdaq Listing Rule 5620(a) on August 5, 2026.
• The Company repurchased and cancelled 1,434,112 shares of common stock for $3.8 million at an average price of $2.63 per share under its $250 million share repurchase program.
• The Company drew $15.0 million of USDC under its master loan facility, secured by 44,198 BNB valued at $25.9 million, without liquidating core treasury assets.
• Shares of common stock outstanding decreased to 41,173,850 from 42,607,962 at April 30, 2026, due to share repurchases.