CEAD CEA Industries Inc

CEA Industries Inc. (NASDAQ: CEAD, CEADW) (“CEA Industries” or the “Company”), is reporting results for the three months ended September 30, 2024.

Third Quarter 2024 Financial Summary (in $ thousands, excl. margin items):

	Q3 2024(unaudited)			Q2 2024(unaudited)			Q3 2023(unaudited)
Revenue	$	391		$	1,761		$	914
Gross Profit (Loss)	$	(70	)	$	180		$	(104	)
Operating Expenses	$	677		$	657		$	703
Net Income/(Loss)	$	(740	)	$	(470	)	$	(799	)

“Throughout 2024, we have maintained a disciplined approach to cost management, prioritizing capital preservation as we work through our remaining project backlog,” said Tony McDonald, Chairman and CEO of CEA Industries. “In alignment with our commitment to shareholders, during the third quarter we made further reductions in headcount, paused product development, and scaled back business development efforts to maintain our strong balance sheet.

“As previously announced, the Board of Directors continues their examination of strategic alternatives, including a sale, merger, special dividend, or other potential strategic or financial transaction, including a dissolution of the Company whereby cash on the balance sheet would be returned to shareholders after adequate provision for outstanding corporate obligations. We will continue to prudently manage our capital in support of our ongoing strategic review process and look forward to providing an update in the coming months.”

Third Quarter 2024 Financial Results

Revenue in the third quarter of 2024 was $0.4 million compared to $0.9 million for the same period in 2023. The decrease was primarily attributed to lower bookings and a reduced backlog over the past 18 months.

Net bookings in the third quarter of 2024 increased to $0.5 million compared to $0.4 million in the year-ago period. The Company’s quarter-end backlog was $0.4 million compared to $0.5 million for the same period in 2023. The expected decrease in CEA Industries’ backlog 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 loss in the third quarter of 2024 improved to $70,000 compared to $104,000 for the same period in 2023. The improvement in gross profit was primarily driven by a reduction in variable costs as a percentage of revenue. Variable costs include the cost of equipment, outside engineering, shipping and handling, travel and warranty.

Operating expenses in the third quarter of 2024 remained flat at $0.7 million compared to the same period in 2023.

Net loss in the third quarter of 2024 improved to $0.7 million or $(0.94) per share, compared to a net loss of $0.8 million or $(1.19) per share for the same period in 2023.

Cash and cash equivalents were $10.3 million at September 30, 2024, compared to $12.5 million on December 31, 2023, while working capital decreased by $2.0 million during this period. At September 30, 2024, the Company remained debt free.

About CEA 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.

Forward Looking 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-GAAP Financial 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.

Investor Contact:

Sean Mansouri, CFAElevate IRinfo@ceaindustries.com (720) 330-2829

CEA Industries Inc.Condensed Consolidated Balance Sheets(in US Dollars except share numbers)

		September 30,				December 31,
		2024				2023
			(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	10,295,159			$	12,508,251
Accounts receivable, net			71,240				18,655
Contract assets, net			224,414				224,414
Inventory, net			24,680				296,404
Prepaid expenses and other			421,260				313,115
Total Current Assets			11,036,753				13,360,839
Noncurrent Assets
Property and equipment, net			9,605				38,558
Intangible assets, net			1,830				1,830
Deposits			14,747				14,747
Operating lease right-of-use asset			273,375				356,109
Total Noncurrent Assets			299,557				411,244
TOTAL ASSETS		$	11,336,310			$	13,772,083
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities		$	364,154			$	624,724
Deferred revenue			468,963				499,800
Current portion of operating lease liability			133,127				126,724
Total Current Liabilities			966,244				1,251,248
Noncurrent Liabilities
Operating lease liability, net of current portion			166,685				259,627
Total Noncurrent Liabilities			166,685				259,627
TOTAL LIABILITIES			1,132,929				1,510,875
Commitments and Contingencies (Note 6)			-				-
SHAREHOLDERS’ EQUITY
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; 0 shares issued and outstanding			-				-
Common stock, $0.00001 par value; 200,000,000 authorized; 791,580 and 673,090 shares issued and outstanding, respectively			8				7
Additional paid in capital			49,520,970				49,451,493
Accumulated deficit			(39,317,597	)			(37,190,292	)
Total Shareholders’ Equity			10,203,381				12,261,208
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	11,336,310			$	13,772,083

CEA Industries Inc.Condensed Consolidated Statements of Operations(in US Dollars except share numbers)(Unaudited)

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2024				2023				2024				2023
Revenue		$	390,817			$	913,571			$	2,386,023			$	6,659,858
Cost of revenue			460,970				1,017,634				2,430,751				5,831,953
Gross (loss) profit			(70,153	)			(104,063	)			(44,728	)			827,905
Operating expenses:
Advertising and marketing expenses			450				21,551				13,630				256,965
Product development costs			-				-				-				76,487
Selling, general and administrative expenses			676,069				681,448				2,089,328				2,452,305
Total operating expenses			676,519				702,999				2,102,958				2,785,757
Operating loss			(746,672	)			(807,062	)			(2,147,686	)			(1,957,852	)
Other income (expense):
Other income (expense), net			-				-				-				7,778
Interest income (expense), net			6,269				8,043				20,381				26,042
Total other income (expense)			6,269				8,043				20,381				33,820
Loss before provision for income taxes			(740,403	)			(799,019	)			(2,127,305	)			(1,924,032	)
Income taxes			-				-				-				-
Net loss		$	(740,403	)		$	(799,019	)		$	(2,127,305	)		$	(1,924,032	)
Loss per common share – basic and diluted		$	(0.94	)		$	(1.19	)		$	(2.92	)		$	(2.86	)
Weighted average number of common shares outstanding, basic and diluted			791,580				673,031				729,333				672,904

CEA Industries Inc.Condensed Consolidated Statements of Cash Flows (in US Dollars except share numbers)(Unaudited)

		For the Nine Months Ended September 30,
		2024				2023
Cash Flows From Operating Activities:
Net loss		$	(2,127,305	)		$	(1,924,032	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and intangible asset amortization expense			16,328				22,476
Share-based compensation			69,478				177,427
Provision for doubtful accounts (bad debt recovery)			(40,094	)			(2,056	)
Provision for excess and obsolete inventory			36,839				111,123
Loss on disposal of assets			12,625				100
Operating lease expense			82,734				79,705
Changes in operating assets and liabilities:
Accounts receivable			(12,490	)			(267,842	)
Inventory			234,885				(77,808	)
Prepaid expenses and other			(108,147	)			1,166,170
Accounts payable and accrued liabilities			(260,570	)			(635,373	)
Deferred revenue			(30,836	)			(3,863,683	)
Operating lease liability, net			(86,539	)			(80,716	)
Net cash used in operating activities			(2,213,092	)			(5,294,509	)
Cash Flows From Investing Activities
Proceeds from the sale of property and equipment			-				200
Net cash provided by investing activities			-				200
Cash Flows From Financing Activities
Net cash provided by financing activities			-				-
Net change in cash and cash equivalents			(2,213,092	)			(5,294,309	)
Cash and cash equivalents, beginning of period			12,508,251				18,637,114
Cash and cash equivalents, end of period		$	10,295,159			$	13,342,805
Supplemental cash flow information:
Interest paid		$	-			$	-
Income taxes paid		$	-			$	-
Non-cash investing and financing activities:
Options issued for accrued equity compensation liability		$	-			$	89,970