CEA Industries Inc.

CEA Industries Inc.

Index to Consolidated Financial Statements

To the Board of Directors and Shareholders of CEA Industries Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CEA Industries Inc. (“the Company”) as of April 30, 2026 (Successor Company), and 2025 (Predecessor Company), the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity, and cash flows for each of the periods from June 7, 2025 through April 30, 2026 (Successor Company), and the period from May 1, 2025 through June 6, 2025, and the year ended April 30, 2025 (Predecessor Company), and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 30, 2026 (Successor Company) and 2025 (Predecessor Company), and the results of its operations and comprehensive income and its cash flows for each of the periods from June 7, 2025 through April 30, 2026 (Successor Company), and the period from May 1, 2025 through June 6, 2025, and the year ended April 30, 2025 (Predecessor Company), in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) related to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Business Combination

Critical Audit Matter Description

On June 6, 2025, the Company acquired Fat Panda, Ltd., for an aggregate purchase price of $12.7 million. The Company accounted for this acquisition as a business combination. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed at fair value as of the transaction date. The Company utilized a third-party valuation specialist to assist in determining the fair value of the consideration granted and intangible assets acquired. We identified the estimation of the fair value of the consideration granted, assets acquired, and liabilities assumed in this acquisition as a critical audit matter.

We identified the valuation of the consideration given, assets acquired, and liabilities assumed as a critical audit matter due to the significant estimates and assumptions management made in determining the fair value of certain of these elements. This required a high degree of auditor judgment and increased effort when performing audit procedures to evaluate the reasonableness of the valuation methodologies applied and the assumptions used. In addition, the audit effort involved professionals with specialized skills and knowledge.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the following:

●Obtaining an understanding of management’s processes used to determine the fair value of assets acquired and liabilities assumed, including obtaining the valuation report prepared by a valuation specialist engaged by management to assist in the purchase price allocation, including determination of fair values assigned to acquired intangible assets, and examining the valuation methods used and the qualifications of the specialist.

●Evaluating whether significant assumptions used by management and the valuation specialist were reasonable and whether such assumptions were consistent with evidence obtained in other areas of the audit.

●Examining the completeness and accuracy of the underlying data supporting the significant assumptions and estimates used in the valuation report, including historical and projected financial information.

●Evaluating the accuracy and completeness of the financial statement presentation and disclosure of the acquisition.

Additionally, the Firm utilized professionals with specialized skills and knowledge to assist in the performance of these procedures.

Valuation of Warrants

Critical Audit Matter Description

As described in Notes 2, 6, and 8 to the consolidated financial statements, the Company issued stapled warrants during the period that are classified as liabilities and are required to be measured at fair value at each reporting period. At issuance and as of April 30, 2026, the warrant liabilities had fair values of approximately $305 million and $22 million, respectively.

We identified the valuation of these warrants as a critical audit matter due to the significant estimates and assumptions management made in determining their fair value, including the appropriateness of the valuation models utilized and the respective weighting between various models as applicable, and the appropriateness of model inputs, including market pricing information for the underlying shares and warrant, when applicable, expected volatility, the risk-free interest rate, and the expected holding period (term). This required a high degree of auditor judgment and greater effort when performing audit procedures to evaluate the reasonableness of such estimates and assumptions. In addition, the audit effort involved professionals with specialized skills and knowledge.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the following:

●Obtaining an understanding of management’s process for developing the valuation model and assumptions applied, as well as the use of a third-party valuation expert.

●Evaluating the reasonableness of the significant assumptions used in the valuation model, including market pricing information for the underlying shares and warrants, as applicable, expected volatility, the risk-free interest rate, the expected holding period (term), and the volume-weighted average price exercise threshold.

●Independently recalculating the fair value of the warrants using the contractual terms and the assumptions we tested, and comparing the results to the Company’s estimate.

Additionally, the Firm utilized professionals with specialized skills and knowledge to assist in the performance of these procedures.

/s/Sadler, Gibb & Associates, LLC

We have served as the Company’s auditor since 2020.

Draper, UT

June 23, 2026

(dollars in thousands, except per share amounts)

Consolidated Statements of Operations and Comprehensive Income

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Consolidated Statements of Changes in Shareholders' Equity

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Note 1 — Nature of Operations

Description of Business

CEA Industries Inc. ("CEAI," or, together with its subsidiaries, the "Company" or "BNC") is a digital asset treasury ("DAT") focused exclusively on BNB, the native token of the BNB blockchain network ("BNB Chain"). Its primary business is to build and manage the largest corporate treasury of BNB to provide institutional-grade exposure to blockchain infrastructure and decentralized finance ("DeFi") and to generate income, such as new tokens or coins distributed by a project to a wide range of individuals in the crypto community ("Airdrops"), including to BNC in connection with its eligible BNB holdings, as well as continue its core retail nicotine vape operations. The Company may generate returns through additional digital asset-related activities such as validation services, lending, and other DeFi protocols in the future, though it has not staked any BNB thereto aside from BNB pledged for the Company's debt obligations (Note 5), through April 30, 2026.

As more fully described in "—Segment Reporting," the Company operates the followingtwo business segments:

●BNB Treasury Management — Operations directly related to the Company's DAT strategy, including the acquisition, disposition, and management of the Company's BNB holdings or other digital assets such as Airdrops.

●Retail and Industry — Fat Panda's retail and distribution operations along with revenue and operating costs related to designing, engineering, and selling industrial climate control systems for controlled environment agriculture.

Formation and Organization

CEAI was incorporated under the laws of the State of Nevada on October 14, 2009, and is headquartered in Louisville, Colorado. Historically, CEAI operated a portfolio of consumer and industrial businesses, including industrial climate control systems for controlled environment agriculture.

On June 6, 2025 (the "Acquisition Date"), CEAI completed the acquisition of Fat Panda Ltd., a Canadian corporation, and its related entities ("Fat Panda") (the "Fat Panda Acquisition"), entering the Canadian retail nicotine vape industry. The Fat Panda Acquisition, completed before the Company commenced its DAT strategy, aligned with the Company's then-current strategy to focus on high-growth, regulated consumer markets and provide a vertically integrated infrastructure to support retail expansion and e-commerce capabilities. The Company changed its Nasdaq ticker symbol from "CEAD" to "VAPE" on June 13, 2025 in connection with its acquisition of Fat Panda.

In August 2025, the Company initiated a strategic transformation to adopt the current BNB-focused DAT strategy that commenced on August 5, 2025, following the closing of a private placement that raised $500.0 million (the "PIPE Transaction"), with up to $750.0 million additional proceeds available through warrant exercises (Note 6), and execution of an Asset Management Agreement ("AMA") to provide asset management and related services with respect to the Company's DAT strategy with 10X Capital Partners LLC ("Asset Manager") (Note 10). In connection with this strategic shift, the Company changed its Nasdaq ticker symbol from "VAPE" to "BNC" on August 6, 2025, reflecting the Company's strategic focus on BNB as its primary treasury reserve asset held by BNC BNB Cayman, a Cayman Islands exempt company, indirectly owned through the Company's wholly owned subsidiary, CEA BRS LLC, a Delaware limited liability company and the sole stockholder of BNC BNB Cayman (Note 8).

See Note 12 regarding the Company's entry into litigation with its Asset Manager after April 30, 2026.

Segment Reporting

During the second fiscal quarter of 2026, the Company introduced a new business line focused on the Company's DAT strategy, 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 the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") ASC 280, Segment Reporting. As a result of this reassessment, the Company determined that it operatestwo reportable segments: BNB Treasury Management and Retail and Industry (see "—Description of Business"). Comparative periods have been recast to reflect this change in segment composition. The CODM evaluates the financial performance of the business and makes resource allocation decisions based on these two distinct sources of business activity.

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 within the Company.

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 taxes for each of the periods presented. Total segment assets provided to the CODM are also disclosed in the tables below for each period presented. Corporate activities are not considered an operating segment consisting primarily of corporate support functions that include capital and funding to support the business activities of the Company as well as costs and expenses not allocated to a line of business.

A. Includes other selling, general, and administrative expenses such as occupancy expenses, maintenance expenses, utilities, depreciation and amortization expenses. Starting in the second quarter of 2026, other segment items also include business combination expenses, PIPE Transaction costs, insurance fees, and advisory fees.

Note 2 — Basis of Presentation and Significant Accounting Policies

Basis of Presentation

On the Acquisition Date, the Company acquired Fat Panda, Central Canada's leading retailer and manufacturer of vaping products, holding a significant market share across Manitoba, Ontario, and Saskatchewan. With 34 retail locations and an e-commerce platform, Fat Panda offers a wide range of high-quality vape devices and e-liquids, including its own premium in-house line.

The Company has been identified as the accounting acquirer ("Successor") in the Fat Panda Acquisition, and Fat Panda as the accounting predecessor ("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 because CEAI's operations prior to the acquisition were insignificant relative to those of Fat Panda. Financial information for periods beginning on and after the Acquisition Date reflects the operations of the combined entities under the control of the Company. The merger was accounted for as a business combination using the acquisition method of accounting. The Successor's 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 at 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's consolidated financial statements.

The accompanying consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include the accounts of CEA Industries Inc. and its consolidated subsidiaries.

In the opinion of management, all adjustments considered necessary for a fair presentation of the Company's financial position, results of operations, and cash flows have been included and are of a normal and recurring nature. All intercompany balances and transactions have been eliminated.

Certain prior period amounts have been reclassified to conform to the current period's presentation. In particular, the Company has separated components of selling, general, and administrative expenses related to depreciation and amortization as well as management fees to affiliate.

Consolidation

The Company consolidates those entities over which it controls significant operating, financial, and investing decisions of the entity as well as those entities deemed to be variable interest entities ("VIEs") in which the Company is determined to be the primary beneficiary.

The analysis as to whether to consolidate an entity is subject to a significant amount of judgment. Some of the criteria considered are the determination as to the degree of control over an entity by its various equity holders, the design of the entity, how closely related the entity is to each of its equity holders, the relation of the equity holders to each other and a determination of the primary beneficiary in entities in which the Company has a variable interest. These analyses involve estimates, based on the assumptions of management, as well as judgments regarding significance and the design of entities.

VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated by its primary beneficiary, and only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company monitors investments in VIEs and analyzes the potential need to consolidate the related entities pursuant to the VIE consolidation requirements. These analyses require considerable judgment in determining whether an entity is a VIE and determining the primary beneficiary of a VIE since they involve subjective determinations of significance with respect to both power and economics. The result could be the consolidation of an entity that otherwise would not have been consolidated or the deconsolidation of an entity that otherwise would have been consolidated. See Note 7 for more information regarding the VIEs in which the Company holds an interest.

Segments

The Company operates throughtwo operating and reportable segments, which reflects how the CODM allocates resources and assesses performance. (Note 1)

Risks and Uncertainties

In the normal course of business, the Company is subject to risks and uncertainties common to companies in its industries, including, but not limited to, changes in general economic conditions, customer demand, supplier relationships, regulatory developments, competition, liquidity, and access to capital. The Company’s operating results and financial condition may also be affected by volatility in digital asset markets, including changes in the fair value and liquidity of its BNB holdings and other digital assets held by the Company, as well as evolving laws, regulations, custody practices, exchange practices, and accounting guidance applicable to digital assets. These factors could materially affect the Company’s future results of operations, cash flows, liquidity, and financial position.

Concentrations

BNB Holdings

The Company’s digital asset holdings were substantially concentrated in its BNB holdings, which is its primary treasury reserve asset. Since a significant portion of the Company’s assets consists of BNB, adverse changes in the market price, liquidity, custody environment, regulatory treatment, or broader adoption of BNB or the BNB ecosystem could have a material adverse effect on the Company’s financial condition, results of operations, cash flows, and liquidity.

All of the Company's BNB holdings not pledged as collateral are held in custody through the Company’s sole custodian, Ceffu, a non-U.S. institutional digital asset custody platform operating within the Binance ecosystem. Ceffu utilizes a multi-party computation wallet infrastructure and maintains segregated account structures designed for institutional holders. While Ceffu operates as a separate entity from the Binance exchange, the Company's custody arrangement creates concentration exposure to the broader Binance ecosystem. Disruptions to Ceffu's operations, changes in its regulatory status, or adverse developments affecting the Binance ecosystem could materially impact the Company's ability to access, transfer, or liquidate its BNB holdings.

Fat Panda Suppliers

Fat Panda sources inventory, including raw materials and finished goods, from multiple suppliers. However, two suppliers accounted for 42.0% and 37.0% for the period June 7, 2025 through April 30, 2026,42.0% and 37.0% for the period May 1, 2025 through June 6, 2025, and 42.0% and 39.0% during the year ended April 30, 2025, respectively, of inventory purchases. Loss of one, or both, suppliers could have a material adverse effect on the Company’s financial condition, results of operations, cash flows, and liquidity.

Foreign Currency Translation

The Company's consolidated financial statements are presented in U.S. dollars ("USD"). Financial statements of foreign subsidiaries are translated into USD 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 income (loss) within the consolidated financial statements. The Company's functional currency is USD, except for Fat Panda that uses Canadian dollars ("CAD").

Use of Estimates and Assumptions

The preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes subjective estimates of project installations, warranty claims, product returns, promotional programs, and other variable consideration that significantly impacts revenue; inventory obsolescence, cost allocation, and impairment that significantly impacts costs of revenue; determinations of fair value of digital assets, including the value of tokens received from Airdrops that impact realized and unrealized digital asset gains or losses; volatility of the Company's stock that significantly impacts the fair value of warrants accounted as liabilities as well as warrants and other forms of compensatory equity awards that impacts such compensation expense or changes in liability fair value; the fair value of acquired tangible and intangible assets and liabilities assumed that significantly impacts goodwill and amortization of definite-lived intangible assets; estimates regarding trade accounts receivable that impact impairment and allowances for related losses; the useful lives of tangible and intangible assets; estimates of future taxable income and deductibility of compensatory warrants that impact current and deferred tax assets and liabilities and related tax provisions; and the outcome of litigation that may impact losses, expenses, or other items, including transactions with the Company's Asset Manager. Actual results may ultimately differ materially from those estimates.

Accounting Changes

Change in Accounting Principle for Payment Stablecoins

In April 2026, the Company voluntarily elected to change its method of accounting for certain payment stablecoins that (a) provide holders with enforceable rights to, or claims on, underlying cash and cash equivalents, (b) are readily convertible into known amounts of cash, and (c) present insignificant risk of changes in value because of changes in interest rates. Specifically, the Company now classifies such payment stablecoins as cash equivalents instead of crypto assets.

USD Coin ("USDC") is a digital dollar fully reserved by highly liquid cash and cash-equivalent assets as a covered stablecoin, as defined by the U.S. Securities and Exchange Commission ("SEC"), and is thus readily redeemable for USD on a 1:1 basis. Circle, a blockchain-based treasury and payments financial technology provider reserved the majority of USDC in the Circle Reserve Fund (USDXX), a SEC-registered 2a-7 government money market fund, and the Company primarily transacts USDC on Circle Mint.

The Company believes the reclassification of USDC to cash equivalents is preferable because it better reflects its economic substance, risks, and liquidity characteristics of cash equivalents and has applied this change in accounting principle retrospectively to all periods presented, including in the Consolidated Statements of Cash Flows; however, all such changes occurred within the period from June 7, 2025 through April 30, 2026. This reclassification had no effect on previously reported total assets, total liabilities, equity, net income, or earnings per share for any period presented.

Significant Accounting Policies

Fair Value Measurement

U.S. GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy, based on the transparency of inputs to the valuation to estimate 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 follows this hierarchy for the fair value measurement of applicable assets and liabilities, with classifications based on the lowest level of input that is significant to the fair value measurement. The following summarizes the Company's asset and liability fair value hierarchy at April 30, 2026:

Valuation Process — On a quarterly basis, with assistance from an independent valuation firm, management estimates the fair value of the Company's Level 3 financial instruments. The Company's determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are management’s best estimates after consideration of a variety of internal and external factors. When an independent valuation firm expresses an opinion on the fair value of assets or liabilities in the form of a range, management selects a value within the range provided by the independent valuation firm to assess the reasonableness of management’s estimated fair value for that asset or liability. At April 30, 2026, the Company's valuation process for Level 3 measurements, as described below, was conducted internally or by an independent valuation firm and reviewed by management.

Valuation of Digital Assets — The Company has designated the Binance exchanges as its principal markets for its digital assets as the markets to which it has access and that provides the greatest volume and level of orderly transactions for its respective digital assets. 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. For digital assets that trade continuously across global markets, the Company applies a consistent valuation cut-off at midnight Coordinated Universal Time ("UTC") on the reporting date to determine fair value. All of the Company's digital assets are held by BNC BNB Cayman, and the principal market for each asset is determined based on the markets accessible to this subsidiary.

Valuation of Warrant Liabilities — Management considers the Stapled Warrants (Note 6) issued together with shares in connection with the PIPE Transaction and redeemable for the Company's equity as Level 3 liabilities in the fair value hierarchy as liquid markets exist for such liabilities, but the instruments do not actively trade. On a quarterly basis, management engages an independent valuation firm to estimate the fair value of the Company's warrants, which includes a Monte-Carlo model using estimates of volatility, contractual terms, discount rates, dividend rates, expiration dates, and risk-free rates. Management estimates fair value of warrants on an equal-weighted basis between the observed market trades and model outputs.

Valuation of Cash Incentive Award — Management considers the Cash Incentive Award issued under the Transition Agreement (Note 10) as Level 3 liability in the fair value hierarchy as no market exists for the agreement and management uses a model with unobservable inputs to estimate the award value. On a quarterly basis, management engages an independent valuation firm to estimate the fair value of the Cash Incentive Award, which includes a Monte-Carlo model using estimates of volatility, contractual terms, discount rates, dividend rates, expiration dates, and risk-free rates.

Valuation of Intangibles and Goodwill — The Company carries intangible assets, excluding applicable digital assets, and goodwill at the lower of their carrying value or fair value. Significant assumptions and estimates used in the valuation of intangible assets and goodwill includes future expected cash flows, including projected revenues and expenses, and applicable discount rates. These assumptions and estimates were Level 3 inputs and based on assumptions that the Company believes to be reasonable.

Other Valuation Matters — For Level 3 assets acquired and liabilities assumed during the calendar month immediately preceding a quarter end that were conducted in an orderly transaction with an unrelated party, management generally believes that the transaction price provides the most observable indication of fair value given the illiquid nature of these financial instruments, unless management is aware of any circumstances that may cause a material change in the fair value through the remainder of the reporting period. For instance, significant changes in a counterparty’s intent or ability to make payments on a financial asset may cause material changes in the fair value of that financial asset.

The Company's financial assets and liabilities consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and debt. The carrying value of cash and cash equivalents; accounts receivable, net of allowances for doubtful accounts; accounts payable; accrued expenses; and current debt approximates fair value due to the short-term nature of those instruments.

See Note 8 for additional information regarding the valuation of the Company's assets and liabilities.

Leases

The Company recognizes right-of-use assets and lease liabilities at the commencement date of the lease based on the present value of remaining fixed and determinable lease payments over the lease term. The Company calculates the present value of future payments by using an estimated incremental borrowing rate, which approximates the rate at which the Company would borrow on a secured basis and over a similar term, and recognizes lease expense for operating leases on a straight-line basis over the lease term. Right-of-use assets represent the Company's right to control the use of an identified asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The Company uses the incremental borrowing rate on the commencement date in determining the present value of the lease payments. See Note 11 for additional information regarding the Company's leases.

Balance Sheet Measurement

Cash and Cash Equivalents

Cash and cash equivalents consist of bank checking accounts and USDC. The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Substantially all amounts on deposit with major financial institutions exceed insured limits. The Company reported cash and cash equivalents in the following line items of its Consolidated Balance Sheets, which totals the aggregate amount presented in the Company's Consolidated Statements of Cash Flows:

See "—Accounting Changes" for changes in the Company's accounting for payment stablecoins included as cash equivalents.

The Company holds digital assets, primarily BNB as part of its DAT strategy, including stablecoins, digital assets received from Airdrops, and other digital assets. Digital assets that meet the scope criteria in ASC 350-60, Intangibles—Goodwill and Other—Crypto Assets, are accounted for as crypto intangible assets. The Company initially recognizes these digital assets, whether restricted or not, at cost or at fair value when received in a non-cash transaction, and subsequently remeasures such digital assets at fair value at each reporting date, with changes in fair value recognized in the Consolidated Statements of Operations and Comprehensive Income within "Unrealized loss on digital assets." The Company classifies digital assets, or receivables thereon, that it does not expect to hold for more than twelve months as current assets. Generally, the Company expects to hold BNB holdings longer than twelve months and classifies such digital assets as non-current assets.

Digital Assets Held by Third Parties

The Company may deposit certain digital assets with certain third-parties (e.g. exchanges or custodians) to facilitate digital asset treasury activities. Digital assets held by these third parties may not be maintained in segregated wallets under the Company's exclusive control and may be pooled with assets of other customers. The Company evaluates such arrangements to determine whether it has ownership of, and control over, the underlying digital assets.

●Digital assets held under arrangements for which the Company retains ownership and unrestricted control are presented as digital assets in the Consolidated Balance Sheets.

●If the Company retains ownership of digital assets held under such arrangements, but the Company may not freely control those assets, the Company reports restricted digital assets (Note 4). See Note 5 for more information regarding the Company's pledge of BNB under its debt facility.

●If, due to the lack of sufficient regulatory oversight or the Company's inability to prevent a third party from using digital assets for purposes other than those directed by the Company, the Company concludes that it would not retain sufficient control over the deposited assets, the Company derecognizes the digital assets and records a receivable from the third party in the Consolidated Balance Sheets. The Company did not record any digital asset receivables at April 30, 2026.

Digital Asset Purchases and Sales

The Company recognizes any realized gains and losses from the sale, exchange, conversion, or other derecognition of digital assets in the Consolidated Statements of Operations and Comprehensive Income within "Realized loss on digital assets." The Company uses 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 Consolidated Statements of Cash Flows whereas contributions of digital assets received as part of the consideration received in the PIPE Transaction (Note 6) are presented within supplemental information for non-cash investing and financing activities.

See Note 4 for additional information regarding the Company's digital assets.

Inventory

The Company accounts for inventory at the lower of cost or net realizable value on a first-in, first-out basis. Lower of cost or net realizable value is evaluated by considering obsolescence, excessive levels of inventory, deterioration and other factors. Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolescence, or impaired inventory and presented in "Cost of revenue" in the Consolidated Statements of Operations and Comprehensive Income. Inventory consisted of the following:

A. Includes labor and overhead expenses of $0.4 million and $0.6 million at April 30, 2026 and April 30, 2025, respectively. The Predecessor measured inventory on a standard cost basis until acquired by the Company.

Goodwill represents the excess of the purchase price over the estimated fair values of the net tangible and intangible assets of entities acquired in a business combination. The Company does not amortize goodwill, but it tests goodwill for impairment at the reporting unit level during the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that impairment may have occurred. Triggering events that may indicate a potential impairment include, but are not limited to, significant adverse changes in customer demand or business climate and related competitive considerations. The Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of the relevant reporting unit is less than its carrying amount. If, based on this assessment, the Company concludes that it is more likely than not that the fair value is less than the carrying amount, a quantitative goodwill impairment test is performed. Under a quantitative test, the Company compares the estimated fair value of the reporting unit to its carrying amount, and recognizes an impairment loss for any excess of carrying value over fair value, limited to the carrying amount of goodwill. If the estimated fair value exceeds the carrying amount, the Company does not recognize any impairment.

The Company recorded goodwill in connection with the Fat Panda Acquisition. Goodwill recognized in connection with the acquisition is denominated in the functional currency of the acquired entity, Fat Panda, and translated into USD using the exchange rate at the acquisition date as well as at each reporting date using the period-end exchange rate, with changes recognized in the Consolidated Statements of Operations and Comprehensive Income within "Foreign currency translation adjustment."

During the quarter ended April 30, 2026, the Company conducted its annual goodwill impairment test and compared its estimated fair value of the Fat Panda reporting unit to its carrying value. Based on this evaluation, management concluded that the estimated fair value was greater than its carrying value. Therefore, the Company did not record any goodwill impairment.

The carrying value of the Company's goodwill changed by the following amounts:

Intangible Assets

The Company amortizes intangible assets on a straight-line basis over the assets' estimated useful life, based on the expected economic benefit and use of the asset, and evaluates intangible assets for impairment on an quarterly basis, or more frequently if events or changes in circumstances suggest that the asset may be impaired. The evaluation compares the carrying value to the estimated future undiscounted cash flows expected to be generated by the asset. If the carrying value exceeds those cash flows, the asset is considered impaired, and the impairment loss is measured as the excess of the carrying amount over its fair value. The Company's identified intangible assets include:

A. Trade name acquired as part of the Fat Panda Acquisition ("—Business Combinations—Fat Panda Acquisition"), and valued using a relief-from-royalty method.

B. Includes amortization expense of $0.5 million for the period from June 7, 2025 through April 30, 2026.

C. At April 30, 2026, the approximate aggregate annual amortization expense for definite-lived intangible assets is as follows:

The Company's debt obligations consist of short-term notes payable to the selling shareholders of Fat Panda ("Selling Fat Panda Shareholders"), including related parties, and a long-term convertible notes payable to a related party, each of which is denominated in CAD. The Company initially recognizes debt obligations at the fair value of consideration received, net of debt-issuance costs and any original issue discount, and subsequently measured at amortized cost using the effective-interest method, unless the Company has elected the fair value option and carries the debt obligation at its estimated fair value, with changes in fair value recorded in its Consolidated Statements of Operations and Comprehensive Income. At April 30, 2026, The Company has not elected the fair value option for any of its outstanding debt instruments.

Current debt obligations represent borrowings with contractual maturities of twelve months or less from the balance sheet date or when the Company does not have the unconditional right to defer settlement for at least twelve months. Debt obligations under which an uncured or unwaived default existed at the balance sheet date that would permit the lender to demand repayment within twelve months are also classified as current. All other debt obligations are classified as non-current liabilities.

The Company capitalizes and amortizes deferred debt facility costs incurred when entering into financing agreements on a straight-line basis over the expected debt term, when such recognition does not materially differ from the effective interest method, with amortization of deferred debt issuance costs, write-offs of unamortized deferred costs upon early extinguishment, contractual interest and fees, and foreign exchange remeasurement gains and losses on debt denominated in currency other than USD included within "Interest expense", or "Interest expense to affiliate" for debt obligations to related parties, in its Consolidated Statements of Operations and Comprehensive Income.

Interest payable on debt of $— million at April 30, 2026 is recorded as a component of "Other current liabilities" in the Consolidated Balance Sheets.

See Note 5 for additional information regarding the Company's debt obligations.

The Company accounts for its warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms. The assessment considers whether the warrants are freestanding financial instruments, meet the definition of a liability, and whether the warrants meet all of the requirements for equity classification, including whether the warrants are indexed to the Company's shares of common stock, among other conditions for equity classification. This assessment, which requires significant judgment, is conducted at the time of warrant issuance and at each quarterly reporting date thereafter while the warrants are outstanding. For warrants classified as equity, the Company records an increase to additional paid-in capital at the time of issuance based on the warrant's fair value. 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 at each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss within "Gain on change in fair value of warrant liability" in the Company's Consolidated Statements of Operations and Comprehensive Income. Upon exercise of warrants classified as liabilities, the Company reclassifies the fair value of the warrant immediately prior to exercise as additional paid-in capital, together with any cash exercise price received, while the Company recognizes a gain upon expiry of warrants classified as liabilities that expire unexercised.

The Company issued the Pre-funded Warrants, Stapled Warrants, Strategic Advisor Warrants, and Asset Manager Warrants together with shares of its common stock in the PIPE Transaction (Note 6). Therefore, the Company allocated the $500.0 million gross proceeds from the PIPE Transaction to each component of the transaction, including the aforementioned warrants. First, the Company allocated $305.0 million to the Stapled Warrants, classified as liabilities as the Company does not control certain warrant settlement conditions, at their issuance-date fair value. The Company then allocated remaining proceeds to the other instruments issued in the transaction, including the Pre-funded Warrants, classified as equity, based on the relative fair value of all equity-classified instruments issued in the PIPE Transaction, including shares of the Company's common stock issued but excluding Strategic Advisor Warrants, and Asset Manager Warrants treated as equity-based compensation expensed at their grant-date fair values. Direct and incremental transaction costs are allocated between instruments classified as liabilities and equity on the same proportionate basis as the gross proceeds. The Company expensed issuance costs allocated to Stapled Warrants within "PIPE Transaction costs" in the Consolidated Statements of Operations and Comprehensive Income upon issuance while the Company reduced additional paid-in capital for transaction costs allocated to instruments classified as equity; such issuance costs include the grant-date fair value of both the Strategic Advisor Warrants and Asset Manager Warrants accounted for as equity-based compensation awards that were fully vested upon issuance as there were no service conditions.

See Note 6 for additional information regarding warrants issued by the Company.

Other Assets and Liabilities

At April 30, 2026 and April 30, 2025, accounts payable and accrued expenses, other assets, and other liabilities included:

A. Net of $0.3 million, $— million, and $0.8 million depreciation and amortization for the period from June 7, 2025 through April 30, 2026, the period from May 1, 2025 through June 6, 2025, and the year ended April 30, 2025, respectively.

B. The Company estimates the fair value of this variable consideration cash award based on the trading price of shares of its common stock on a quarterly basis, with changes in fair value presented within "Other affiliate operating expenses" in the Consolidated Statements of Operations and Comprehensive Income. See Note 8 and Note 10 for more information regarding the Cash Incentive Award.

The Company paid $0.3 million during the period from June 7, 2025 through April 30, 2026 to resolve litigation matters related to Sweet Cut Grow, LLC and Green Ice, LLC and Optima Consulting Services, LLC.

Income Statement Measurement

Revenue Recognition

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers, which requires the Company to recognize revenue as control of promised goods or services is transferred to customers in an amount that reflects the expected consideration that the Company earns in satisfaction of its performance obligations.

Fat Panda revenues consist primarily of retail and e-commerce sales, with other revenues earned from factory-direct wholesale vape sales and franchise arrangements. Control generally transfers to customers upon shipment under FOB shipping terms or at point of sale for retail sales, except franchise royalty fees represent variable consideration based on a percentage of franchisee sales and are recognized over the period in which sales occur. Initial franchise fees are recognized upon opening of the new franchise location, though the Company does not have any franchisees at April 30, 2026.

Generally, the Company's delivery of vape products at time of control transfer represents its single performance obligation aside from separate performance obligations for product return guarantees and loyalty programs, including Fat Panda's "Buy 10, Get 1 Free" program; however, the Company has not recorded liabilities for such returns and loyalty program redemptions as they have not been material. The Company records revenue at the sales price, gross of transaction processing costs such as credit card fees, if any, and net of any discounts and sales taxes. The Company considers shipping and handling costs as fulfillment costs, and expenses such amounts as cost of revenue.

Fat Panda also sells gift cards, for which the Company records a liability at time of sale and recognizes revenues upon redemption or when the Company determines redemption is remote.

Other Industry Activities

Climate control revenues are derived from contracts that may include engineering and technical services and the sale of industrial climate control system equipment and components. These contracts may span multiple phases, from facility design to equipment delivery and start-up. The Company does not provide construction or installation services. A performance obligation is a promise in a contract to transfer a distinct good or service. Most climate control contracts include multiple performance obligations, while certain contracts consist of a single performance obligation, typically engineering-only services.

The transaction price is allocated to each performance obligation based on its 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.

Airdrops

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 as non-operating income, presented within "Airdrop income" in its Consolidated Statements of Operations and Comprehensive Income.

See Note 3 and Note 4 for additional information regarding the Company's revenues and Airdrops, respectively.

Cost of revenue consists of all costs incurred to acquire, manufacture, transport and deliver the products sold in the operations of the Company's Retail and Industry segment, comprising Fat Panda vape sales and industrial climate control systems. The Company recognizes cost of revenue concurrently with the recognition of the related revenue. Costs incurred prior to the recognition of the related revenue are deferred in inventory or in prepaid expenses, as applicable, and recognized in cost of revenue when the related revenue is recognized. The principal components of cost of revenue include:

Inventory cost — The cost of inventory sold during the period, including the purchase price of finished goods and raw materials, allowances for excess or obsolete inventory, and other costs incurred such as capitalized direct labor and manufacturing overhead applicable to the Company's in-house production of vape products and industrial climate control systems.

Shipping and handling costs — Shipping and handling costs incurred to deliver goods to customers that represent activities to fulfill sales orders.

Excise taxes — Products sold by Fat Panda are subject to federal and provincial excise taxes included as direct costs of revenue.

Compensation and Benefits

The Company expenses salaries, benefits, and equity-based compensation as services are provided, which it presents within "Selling, general and administrative expenses" in its Consolidated Statements of Operations and Comprehensive Income when not otherwise included in the Company's cost of revenues.

Equity-Based Compensation

The Company grants equity-based awards to employees and members of the Company's Board of Directors ("Board") under its equity plans, which entitle the holder to receive shares of the Company's common stock on various future dates if the recipient meets applicable service conditions, if any. The Company expenses the grant-date fair value of awards on a straight-line basis over the requisite service period, and records actual forfeitures as they occur since the Company does not estimate forfeitures. In addition, the Company issued compensatory warrants to its Strategic Advisors that did not contain any service conditions and the Company expensed the grant-date fair value upon issuance.

See Note 6 for information regarding the Company's equity-based compensation awards.

Other Operating Expenses

Selling, general, and administrative expenses and other operating expenses include professional accounting, consulting, audit, and legal fees, excluding such costs unrelated to the Company's recurring operations and presented separately in the Consolidated Statements of Operations and Comprehensive Income; compensation, including equity-based compensation, and benefits paid or accrued to employees, consultants, officers, and members of the Board; advertising and marketing expenses; lease, utilities, and other facility costs; insurance premiums; depreciation and amortization; and other general and administrative costs.

See Note 10 for information regarding management fees paid to the Asset Manager and Note 4 for realized and unrealized gains (losses) on digital assets, respectively.

Income Taxes

The Company computes current income tax expense or benefit as the estimated tax payable to, or refundable from, federal, state, foreign and other taxing authorities in respect of taxable income or loss for the year, determined based on the enacted tax laws of each taxing jurisdiction. The Company classifies all deferred tax assets and liabilities as non-current, and accounts for those income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the consolidated financial statement carrying amounts and tax bases of assets and liabilities and operating loss and tax credit carryforwards and are measured using the enacted tax rates that are expected to be in effect when the differences reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Operations and Comprehensive Income in the period that includes the enactment date. Valuation allowances are established considering all available positive and negative evidence, including the existence and reversal pattern of taxable temporary differences, the Company's history of taxable income and losses, projections of future taxable income exclusive of reversing temporary differences and the carryforward periods and limitations applicable to net operating losses and tax credits. A valuation allowance is recorded against deferred tax assets when, based on the weight of all such evidence, the Company concludes that it is more likely than not that all or a portion of those deferred tax assets will not be realized.

The Company accounts for uncertain tax positions by reporting a liability for unrecognizable tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return, and recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The Company regularly evaluates the adequacy of its provisions for income tax contingencies in accordance with the applicable authoritative guidance.

The Company applies a two-step process to the recognition and measurement of uncertain tax positions: (i) determining whether a tax position is more likely than not to be sustained on the basis of the technical merits of the position and (ii) measuring the amount of benefit to recognize, if any, as the largest amount that is more likely than not to be realized upon ultimate settlement with the relevant taxing authority.

See Note 9 for additional information regarding the Company's income taxes.

Business Combinations

The Company evaluates its acquisition of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the test is met, the transaction is accounted for as an asset acquisition. If the test is not met, further determination is required as to whether or not the Company acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the test to determine whether an acquisition is a business combination or an acquisition of assets.

For acquisitions meeting the definition of a business combination, the Company uses the acquisition method of accounting. Under the acquisition method, the Company's financial statements reflect the operations of an acquired business starting from the completion of the acquisition. The assets acquired, including identifiable intangible assets, and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition. Any excess of the consideration transferred for the acquired business, or purchase price, 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.

Determining estimated fair value requires a significant amount of judgment and estimates. 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, the Company initially records any uncertain tax positions, tax-related valuation allowances, and pre-acquisition contingencies in connection with a business combination on the acquisition date. The Company recognizes measurement-period adjustments in the reporting period in which the adjustment amounts are determined. Income statement effects of these adjustments are calculated as if the accounting had been completed at the acquisition date.

The Company accounted for the Fat Panda Acquisition as a business combination under ASC 805. The acquisition of Fat Panda constitutes the acquisition of a business for purposes of ASC 805, and has been accounted for using the acquisition method resulting from a change of control with CEAI as the legal and accounting acquirer and Fat Panda as the accounting acquiree based on evaluation of the following primary factors:

●CEAI acquired 100% of the voting interests in Fat Panda having full and complete authority over all the affairs of Fat Panda and

●The Selling Fat Panda Shareholders do not have a controlling interest in CEAI after the Fat Panda Acquisition.

The $12.7 million purchase price paid by CEAI to the Selling Fat Panda Shareholders in the Fat Panda Acquisition consisted of: (a) $10.6 million cash, of which $4.0 million consisted of proceeds from the Fat Panda Bridge Loan, net of a $0.1 million original issue discount, and $1.9 million was placed in escrow to support post-closing adjustments, indemnity obligations, and employee-related matters ("Escrow Deposit"); (b)39,000 shares of the Company's common stock with an agreed-upon value of $0.3 million; (c) a $0.4 million note payable upon resolution of uncertain tax obligations in connection with the Fat Panda Acquisition ("Tax Indemnification Note"); and (d) two promissory notes payable to the President of Fat Panda, one of the Selling Fat Panda Shareholders and current employee of the Company, totaling $1.4 million ("Fat Panda Promissory Notes"). The Fat Panda Promissory Notes are comprised of a $0.8 million promissory note payable in cash ("Promissory Note") and a $0.8 million promissory note payable in cash or convertible into the Company's common stock ("Convertible Promissory Note"). Each of the Tax Indemnification Note and Fat Panda Promissory Notes is payable in CAD and reported in USD.

The Company incurred $1.0 million of expenses directly related to the Fat Panda Acquisition during the period from June 7, 2025 through April 30, 2026 and included in "Business combination expenses" in the Consolidated Statements of Operations and Comprehensive Income.

See Note 5 and Note 10 for additional information regarding the Fat Panda Bridge Loan, Tax Indemnification Note, and Fat Panda Promissory Notes.

Purchase Price Allocation

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 at the Acquisition Date. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill, 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.

A. During the period from June 7, 2025 to April 30, 2026, 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, right-of-use asset, and accrued liabilities, as well as the fair value of the Fat Panda Promissory Notes as part of the purchase 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. At April 30, 2026, the release of amounts within the $1.9 million Escrow Deposit remains uncertain and may require further purchase price adjustments.

B. Represents the estimated fair value of Fat Panda's trade names, valued using a relief-from-royalty method, with an estimated useful life of 10 years.

Unaudited Pro Forma Operating Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the twelve months ended April 30, 2026, and 2025, as if the Fat Panda Acquisition transactions, including related financing, on June 6, 2025 had occurred on May 1, 2024. The unaudited pro forma results gives effect to certain purchase accounting and financing adjustments based on the historical financial statements of the Company, but neither necessarily reflect actual results of operations that would have been achieved nor are they necessarily indicative of future results of operations.

Pro forma adjustments include adjustments for amortization of intangible assets, elimination of non-recurring transaction costs incurred related to the acquisition, debt discount amortization and interest expense on the Fat Panda Bridge Loan and Fat Panda Promissory Notes.

Recently Issued Accounting Pronouncements

The FASB has issued the following Accounting Standards Updates ("ASUs") that may materially impact the Company's financial position and results of operations, or may impact the preparation of, but not materially affect, the Company's consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, 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 evaluated the potential impact of adopting this guidance on its consolidated financial statements and disclosures and does not expect such adoption to be material.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires disaggregated disclosure of income statement expenses for public entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This ASU is effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the effect this guidance will have on its 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.

Accounting Pronouncements Recently Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which enhances transparency by requiring additional disaggregation in the rate reconciliation and expanded disclosures of income taxes paid by jurisdiction. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024 for public business entities. The Company adopted ASU 2023-09 to incorporate the expanded disclosure in Note 9, which the Company adopted on a prospective basis for the fiscal year ended April 30, 2026, including disclosures of required disaggregation categories in its effective income tax rate reconciliation; disaggregation of income taxes paid by significant jurisdiction; and tax years open to audit by taxing authorities.

Note 3 — Revenue

U.S. GAAP does not recognize the income that the Company generates from its digital assets (Note 4), which comprise approximately 94.6% of its total assets, as revenue. However, the Company recognizes revenue from (a) Canadian retail vape sales from its Fat Panda operations at time of sale and (b) industrial climate control system sales in the United States over a period of time between system delivery and completion of its performance obligations, if any, in connection with the installation of delivered systems. The Company's contracts include the following groups of similar services, which do not include any significant financing components:

A. Since Fat Panda is the accounting predecessor, the Company omits its revenues earned prior to the Acquisition Date.

B. At April 30, 2026, the Company had yet to deliver, or provide installation services for, equipment totaling $— million, which represents its remaining performance obligations under such contracts, and for which the Company has not recognized revenue; the the timing and realized amount of such potential revenue is uncertain and depends, in part, on the performance of third parties.

C. The Company presents revenues net of variable consideration, including sales taxes, commissions, and promotional discounts.

Note 4 — Digital Assets

The Company holds its unrestricted BNB with Ceffu and periodically receives Airdrops from blockchain projects within the Binance ecosystem whereas restricted BNB held by lenders as collateral (Note 5) is not eligible to receive Airdrops. The Company may hold other digital assets at Ceffu and Circle. Digital assets to which the Company is entitled, but does not control, are presented as receivables in the Consolidated Balance Sheets; however, the Company did not have any digital asset receivables at April 30, 2026.

The following table sets forth the units held, cost basis, and fair value of digital assets held as shown in the Consolidated Balance Sheets at April 30, 2026:

A. Gains and losses presented within "Unrealized loss on digital assets" of the Consolidated Statements of Operations and Comprehensive Income. Excludes USDC presented as "Cash and cash equivalents" in the Consolidated Balance Sheets.

B. Rounded to the nearest whole token.

C. 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. The Company uses specific identification to determine its cost basis for computing gains and losses.

D. Current digital assets are held primarily for operating liquidity and are expected to be available for use within the next twelve months, presented within "Other current assets" in the Consolidated Balance Sheets.

The following table summarizes changes in the Company's digital asset holdings:

A. Includes USDT, BTC, and digital assets temporarily held from Airdrops. Excludes USDC presented as "Cash and cash equivalents" in the Consolidated Balance Sheets.

B. Includes BNB 436,313 and USDT 49,980 purchased.

C. The Company received BTC 55, and USDT 59,829,438 then valued at $6.5 million, and $59.8 million, respectively, in connection with the PIPE Transaction.

D. The Company received 49,497,601 of digital asset tokens from Airdrops totaling $7.9 million, of which the Company exchanged for BNB 4,932 valued at $5.8 million at time of exchange.

E. Certain counterparties that hold or transact in the Company's digital assets collect fees in certain digital assets. Typically, these fees are paid in cash, BNB, USDC, or USDT.

F. Includes the exchange of various digital assets received from Airdrops and the PIPE Transaction into BNB 79,261.

Note 5 — Debt Obligations

The Company's debt obligations consisted of the following:

A. The $0.4 million note with the Selling Fat Panda Shareholders does not bear interest and does not have a fixed maturity date. The Company must repay the note in full within 15 days following the date that Canada Revenue Agency issues a letter confirming a certain tax liability does not exist in connection with the Fat Panda Acquisition. Conversely, the note payable is reduced in the amount of any tax liability assessed.

B. The $0.8 million interest-only note with the President of Fat Panda bears interest at 7.0% per annum, payable monthly.

C. During the period from June 7, 2025 through April 30, 2026, the Company amortized a total of $0.1 million of deferred financing costs for both the Related Party Notes Payable above as well as the Fat Panda Bridge Loan, which the Company repaid in full.

D. The $0.8 million convertible note with the President of Fat Panda bears interest at 7.0% per annum. The President of Fat Panda may elect to convert the note into shares of the Company's common stock at a conversion price of $19.00 per share until June 1, 2027. If no election occurs by that date, the Company must pay the entire principal plus interest in cash. At April 30, 2026, the Company accrued $— million of unpaid interest in "Other non-current liabilities" in the Consolidated Balance Sheets.

Maturities

Contractual maturities of the Company's debt obligations at April 30, 2026, are as follows:

A. All debt obligations are recourse to the Company. Excludes the Tax Indemnification Note, which does not have a stated maturity.

Covenants

The Company's debt obligations contain customary representations and warranties, financial and non-financial covenants, and event of default provisions. The Company complied with all of its debt covenants at April 30, 2026.

Debt Activities

Other Debt Activities

In connection with the Fat Panda Acquisition, the Company entered into a nine-month loan facility on June 4, 2025 with CEAD Panda Lender LLC, a United States based lender, under which it borrowed $4.0 million ("Fat Panda Bridge Loan"). The Company fully repaid borrowings on December 4, 2025 and incurred total interest expense of $0.7 million in connection with the facility.

See Note 11 for information regarding a master loan facility into which the Company entered on April 30, 2026 and under which it received proceeds on May 1, 2026.

Note 6 — Equity and Earnings Per Share

The Company's articles of incorporation dated October 2009 authorize the Company's Board to issue preferred stock as well as subordinated common stock, which the Company listed its common stock on The Nasdaq Stock Market ("Nasdaq") using the ticker symbol "CEAD" in February 2022 in connection with its initial public offering, subsequently changed to "BNC" (Note 1), as well as public warrants ("Public Warrants") using ticker symbol "CEADW", subsequently changed to "BNCWW". The Company also issued warrants in connection with the PIPE Transaction ("PIPE Warrants"), including certain warrants ("Stapled Warrants") traded on Nasdaq using the ticker symbol "BNCWZ" beginning April 15, 2026. The Company's equity at April 30, 2026 included:

A. Excludes shares issuable upon conversion of the Convertible Promissory Note (Note 5).

B. Includes unexercised Public Warrants and PIPE Warrants.

C. Represents Series C Junior Participating Preferred Stock Rights, subject to the terms of the Stockholder Rights Agreement described below.

D. Restricted stock units ("RSUs") represent the right to receive, upon vesting and lapse of restrictions, one share of the Company's common stock for each unit granted.

E. Stock options provide optionholders the opportunity to purchase shares of the Company's common stock in the future at the exercise price of the option

F. Par value of $0.00001 per share. Each shareholder of common stock is entitled to one vote per share held, and shareholders of Series C Junior Participating Preferred Stock is entitled to voting, dividend, and other rights equivalent to 1,000 shares of common stock for each share of Series C Junior Participating Preferred Stock held. Shareholders of common stock are entitled to ratable dividends, when declared by the Board, and liquidation preferences subordinate to preferred stock.

G. Represents up to 200,000 shares of Series C Junior Participating Preferred Stock with a par value of $0.00001 per share. After the first issuance of a share, or fraction of a share, of Series C Junior Participating Preferred Stock, shareholders of Series C Junior Participating Preferred Stock are entitled to quarterly dividends in an amount per share equal to the greater of (i) $1,000 and (ii) 1,000 times the aggregate per share amount of all cash dividends, plus 1,000 times the aggregate per share amount of all non-cash dividends or other distributions other than a dividend payable in shares of common stock, paid in-kind. At April 30, 2026, no Series C Junior Participating Preferred Stock Rights were exercised and the Company hadnot issued any shares of Series C Junior Participating Preferred Stock.

H. The Board is authorized, subject to the laws of the state of Nevada or other applicable law and without further stockholder action, to designate one or more series of preferred stock and to fix the number of shares, designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock, including, but not limited to, dividend, conversion, and voting rights as well as redemption terms and liquidation preferences. In the event of the Company's liquidation, holders of preferred stock are entitled to a distribution per share in the amount of the liquidation preference, if any, fixed or determined in accordance with the terms of such preferred stock plus, if applicable, an amount per share equal to accumulated and unpaid dividends in respect of such preferred stock, whether or not earned or declared, to the date of such distribution before any payment or distribution on the common stock or any other class of stock junior to the preferred stock upon liquidation. Neither the sale, lease or exchange of all or substantially all of the property and assets of the Company, nor any consolidation or merger of the Company, is deemed to be a liquidation for the purposes of preferred stock liquidation preferences.

Predecessor Equity

For periods prior to the Acquisition Date, the Company presents the equity of Fat Panda as the accounting predecessor, which consisted of 1,410 shares of unlimited authorized common stock withno par value, which are different than the Company's equity and therefore incomparable. While the Company eliminates the equity it holds in Fat Panda as a wholly-owned subsidiary, the Company issued 39,000 shares of its common stock to the Selling Fat Panda Shareholders as part of the consideration paid in the Fat Panda Acquisition (Note 2).

Stockholder Rights Agreement

On December 26, 2025, the Board adopted a limited duration shareholder rights agreement ("Stockholder Rights Agreement"). This agreement is designed to reduce the probability that any person, entity, or group can gain control of the Company through open-market accumulation without providing all shareholders with an appropriate control premium or affording the Board sufficient time to make well-informed decisions in the best interests of all shareholders. In accordance with the Stockholder Rights Agreement, the Company issued, as a dividend, one right ("Series C Junior Participating Preferred Stock Right") for each share of the Company's common stock held at January 8, 2026, and for each share of certain outstanding common stock warrants. Each Series C Junior Participating Preferred Stock Right allows its holder to purchase 1/1000th of a share of Series C Junior Participating Preferred Stock at an exercise price of $33.50 per Series C Junior Participating Preferred Stock Right. Each share of Series C Junior Participating Preferred Stock is equivalent to 1,000 shares of the Company's common stock. The Series C Junior Participating Preferred Stock Rights have a limited term and will expire on December 26, 2026, or earlier, as specified in the Stockholder Rights Agreement.

Under the terms of the Stockholder Rights Agreement, if any person or group obtains beneficial ownership of 15.0% or more of the Company's outstanding common stock ("Acquiring Party"), subject to certain exceptions, including an exception for current holders exceeding this percentage who do not acquire additional shares, the Series C Junior Participating Preferred Stock Rights become exercisable. All holders of Series C Junior Participating Preferred Stock Rights, excluding those held by the Acquiring Party that will become void and non-exercisable, are entitled to purchase shares of the Company's common stock at a 50.0% discount to the prevailing market price, at an exchange ratio of one share of common stock, or one one-thousandth of a share of Series C Junior Participating Preferred Stock (or of another class or series of preferred stock with equivalent rights, preferences, and privileges), per outstanding Series C Junior Participating Preferred Stock Right, subject to adjustment.

Equity Activities

Share Repurchase Program

In September 2025, the Board approved a share repurchase program to repurchase up to $250.0 million outstanding shares of the Company's common stock through open market purchases, privately-negotiated transactions, accelerated share repurchases, or otherwise in accordance with applicable federal securities laws, based on available capital resources and other financial and operational performance metrics, market conditions, securities law limitations, and other factors. There is no minimum number of shares required to be repurchased under the share repurchase program, and the share repurchase program may be suspended or discontinued at any time. The Company repurchased and retired 3,242,210 shares, at a weighted-average price of $5.36, for a total of $17.4 million, excluding $0.1 million transaction costs, during the period from June 7, 2025 through April 30, 2026, presented as a reduction of stockholders' equity. See Note 12 regarding the Company's repurchases of its common stock after April 30, 2026.

ATM Program

In August 2025, the Company entered into an at-the-market offering agreement ("ATM Program") with Cantor Fitzgerald & Co. ("ATM Agent"), pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $50.0 million from time to time through the ATM Agent, acting as the Company's sales agent or principal. Sales under the ATM Program, if any, will be made by means of ordinary brokers' transactions on Nasdaq or otherwise at market prices prevailing at the time of sale, or at prices related to prevailing market prices. Under the ATM Program, the Company has provided the ATM Agent with customary indemnification rights, and the ATM Agent will be entitled to a commission of up to 3.0% of the gross proceeds from each sale of shares made through, or to, the ATM Agent. The Company sold and issued 856,275 shares for $13.1 million in cash, gross of $0.2 million transaction costs, during the period from June 7, 2025 through April 30, 2026.

PIPE Transaction

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 its common stock and the PIPE Warrants in a private placement:

●41,754,478 shares of common stock at a purchase price of $10.10 per share;

●7,750,510 pre-funded warrants, each immediately exercisable at an exercise price of $0.00001 per share ("Pre-funded Warrants"); and

●49,504,988 Stapled Warrants, each exercisable at $15.15 per share.

Additionally, the Company issued the following fully-vested compensatory warrants to 10X BNB Cayman Sponsor, an affiliate of the Asset Manager, and YZi Labs Management Ltd ("Strategic Advisors"):

●5,940,598 warrants issued to the Strategic Advisors, valued at $105.6 million, to provide strategic advice and guidance relating to the Company's business, operations, growth initiatives and industry trends in the digital asset technology sector ("Strategic Advisor Warrants").

●990,099 warrants issued to the Asset Manager, valued at $15.0 million, under the AMA ("Asset Manager Warrants").

On August 5, 2025, the Company closed the PIPE Transaction, which was settled through a combination of cash, cash equivalents, and digital assets. The Company received $409.9 million in cash and cash equivalent proceeds, net of $23.9 million of issuance costs, and $66.3 million in digital assets, consisting of USDT and BTC. The Company allocated $305.0 million in proceeds to warrant liability based on the fair value of the Stapled Warrants with the remaining gross proceeds of $195.1 million recorded in additional paid-in capital, net of $9.3 million allocated issuance costs. To allocate total issuance costs of $23.9 million, the Company valued Pre-funded Warrants and Strategic Advisor Warrants at the fair value of its common stock given the nominal exercise price. Issuance costs of $14.6 million were allocated to the Stapled Warrants and recorded as an expense in "PIPE Transaction costs" in the Consolidated Statements of Operations and Comprehensive Income.

The Company has issued the following outstanding warrants at April 30, 2026:

A. Each warrantholder may exercise their warrant forone share of the Company's common stock, except for the Public Warrants and 2022 Underwriter Warrants that are exercisable for 1/12th and 1/12th common shares per warrant, respectively.

B. The Company holds a mandatory exercise right to force exercise of the Stapled Warrants if the volume-weighted average price of its common stock exceeds $20.20 for 20 out of 30 consecutive trading days.

C. Pre-funded Warrants have an exercise price of $0.00001 per share and do not have an expiration date.

D. The Strategic Advisor Warrants have an exercise price of $0.00001 per share.

E. Includes 761,670 and 269,492 warrants with exercise prices of $60.00 and $61.95 held by underwriters and their employees, respectively.

A. Weighted by the common share equivalents.

B. Includes issuances or grants of the following warrants:

C. Includes the cashless exercise of the following warrants:

At April 30, 2026, outstanding and exercisable warrants had the following characteristics:

Equity-Based Compensation

The Compensation Committee of the Board, which must approve all grants and is composed entirely of independent members of the Board, has granted stock options and RSUs to its employees, consultants, officers, and members of the Company's Board under the following equity incentive plans at April 30, 2026:

A. Excludes the 2025 Equity Incentive Plan adopted by the Board, but not approved by shareholders at April 30, 2026. The Predecessor did not adopt any equity incentive plans or otherwise issue equity-based compensation.

B. The Company issued options with a 10-year contractual term and a vesting period ranging fromone month tothirty-two months. Options outstanding include:

C. In April 2026, the Board approved the 2026 Inducement Plan, which permits the Compensation Committee to grant equity-based awards, including stock options, stock appreciation rights ("SARs"), restricted stock awards ("RSAs"), and RSUs.

D. The 2021 Equity Incentive Plan permits the Board to grant incentive stock options ("ISOs"), non-qualified stock options ("NQSOs"), SARs, RSAs, RSUs, and other equity linked awards. If an equity award expires, or otherwise terminates without having been exercised in full, or settled in cash instead of the issuance of shares, then shares subject to such awards are again available for grant under the 2021 Equity Incentive Plan.

E. The Company may modify or amend the 2017 Equity Incentive Plan without shareholder approval, which permits the Compensation Committee to grant equity-based awards, including stock options, SARs, RSAs, RSUs, shares granted as a bonus or in lieu of another award, and other stock-based performance awards. Any shares subject to forfeited, expired, or otherwise terminated awards without issuance are again available for grant under the 2017 Equity Incentive Plan.

Activities

The Company presents equity-based compensation within the following line items in the Consolidated Statements of Operations and Comprehensive Income:

The following tables summarize the change in equity-based compensation awards to employees and members of the Company's Board.

Employees

Board Members

A. Includes accelerated vesting of 1,529 RSUs in July 2025.

Unrecognized Compensation Expense

At April 30, 2026, the Company has not yet recognized compensation expense for the following awards:

Basic and Diluted Earnings (Loss) per Share

The Company computes earnings per share ("EPS") in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing undistributed earnings attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The 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.

The following table sets forth the computation of basic and diluted earnings per share:

A. Includes fully-vested, pre-funded warrants issued for nominal exercise prices.

The following table summarizes the outstanding securities that were not included in the computation of diluted income per common share as they are anti-dilutive:

The following table summarizes the Company's weighted-average shares of all the potential equity (both dilutive and antidilutive) on a fully diluted basis:

A. Includes warrants that are out-of-the-money. Amounts shown represent common stock equivalents assuming warrant exercise on a cash basis.

B. Assumes note conversion at the [weighted average] foreign exchange rate for each period.

The following table summarizes the Company's common shares outstanding as well as potential shares at each period-end:

A. Includes warrants that are out-of-the-money. Amounts shown represent common stock equivalents assuming warrant exercise on a cash basis.

B. Assumes note conversion based upon foreign exchange in effect at April 30, 2026.

Note 7 — Variable Interest Entities

Consolidated VIEs

The Company consolidates VIEs in which the Company is deemed to have both the power to direct the most significant activities of the entities and the right to receive benefits, or the obligation to absorb losses, that could potentially be significant to the entities. The Company did not identify any VIEs that it does not consolidate.

The table below presents the carrying value and classification of the assets and liabilities of VIEs consolidated within the Consolidated Balance Sheets, after elimination of intercompany balances:

CEA BRS LLC and BNC BNB Cayman

CEA BRS LLC, a wholly-owned subsidiary of CEA Industries Inc., and its subsidiary, BNC BNB Cayman, hold the Company's unrestricted digital assets (Note 4), but do not otherwise conduct activities sufficient to finance their activities without additional subordinated financial support. Therefore, the Company considers each entity as a VIE. CEA Industries Inc. consolidates both entities as it has the power to direct the activities that most significantly impact each entities economic performance, which, subject to the terms of the AMA, include the management of the digital assets held by each entity.

Note 8 — Fair Value Measurement

The carrying values and fair values of the Company's assets or liabilities recorded at fair value on a recurring or non-recurring basis, as well as other financial instruments for which fair value is disclosed, at April 30, 2026 and April 30, 2025 were as follows:

Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value and such changes could result in a significant increase or decrease in the fair value.

The Company's liabilities measured at fair value on a recurring basis using Level 3 inputs changed as follows:

A. See Note 10 for information regarding this affiliate agreement.

B. Transfers are assumed to occur at the beginning of the respective period.

C. Increases in the fair value of liabilities represent losses included in net income.

Liabilities Carried at Fair Value on a Recurring Basis

Stapled Warrants

The Company equally weights observed market pricing data of publicly-traded Stapled Warrants with a Monte-Carlo option pricing model to estimate their fair value, using the following inputs:

Cash Incentive Award

The Company values the Cash Incentive Award with a Monte-Carlo option pricing model to estimate their fair value, using the following inputs:

Assets and Liabilities Carried at Fair Value on a Non-Recurring Basis

Identified Intangibles

In connection with the Company's tradename impairment assessment (Note 2), the Company estimates the cash flows that it doesn't need to pay to use a tradename to generate revenues using an estimated, market-based percentage of expected revenues. If the carrying amount of the intangible asset is higher than those aggregate, undiscounted cash flows, the Company impairs the intangible asset to its estimated fair value equal to those discounted cash flows.

The Company initially records identified intangibles at fair value at initial measurement and on the date of impairment, if any, else the Company reports finite-lived identified intangibles at its amortized cost basis, which may be different from its estimated fair value at a reporting date.

In connection with the Company's goodwill impairment assessment (Note 2), the Company valued its Fat Panda reporting unit using a weighted valuation methodology, which incorporated (a) an income approach using a discounted cash flow analysis and (b) a market approach using publicly-traded companies similar to the Company. The Company records goodwill at its fair value at initial measurement and on the date of impairment, if any, else the Company reports goodwill at its lowest, last known fair value, which may be different from its estimated fair value at a reporting date.

Assets and Liabilities for which Fair Value Only Disclosed

The Company determined the carrying value of current notes payable approximates fair value given the short-term nature of the borrowings. Further, Company estimates that the fair value of the Convertible Promissory Note materially approximates its carrying amount.

Equity-based Compensation

Options

The fair value of each option grant is estimated as of the grant date using the Black-Scholes option-pricing model. The following table summarizes the assumptions used to estimate the grant‑date fair value of options issued during the period from June 7, 2025 through April 30, 2026:

While the Company valued the Strategic Advisor Warrants based on the fair value of the underlying shares of its common stock given a nominal exercise price, it valued the Asset Manager Warrants with a Black-Scholes option-pricing model using the following inputs:

A. Expected term equals the contractual term since the warrant holders are nonemployees and expected to hold the warrants to expiration to maximize their value.

B. The Company estimates volatility based on the historical volatility of the guideline public companies over a period approximately equal to the expected term.

RSUs

The Company values RSU awards at the fair value of the underlying shares of the Company's common stock as such awards are entitled to dividends and are only subject to time-based vesting.

Note 9 — Taxes

The Company is subject to taxation in the United States (federal and various state jurisdictions), Canada (federal and provincial), and the Cayman Islands. The Cayman Islands does not impose corporate income tax, and, accordingly, the statutory income tax rate for the Company's Cayman Islands subsidiary is zero percent. The U.S. federal statutory rate is 21.0%, and the Canadian combined federal and provincial statutory rate is approximately 27.0% (Manitoba).

Components of (Loss) Income Before Income Taxes

The components of (loss) income before income taxes, disaggregated between domestic and foreign operations, are as follows:

Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) consist of the following:

Effective Income Tax Rate Reconciliation

A reconciliation of the U.S. federal statutory income tax rate to the Company's effective income tax rate is presented below:

The Company's effective tax rate differs from the U.S. federal statutory rate of 21.0% primarily due to (i) the impact of foreign earnings, including earnings of the Company's Canadian subsidiary that are taxed at the Canadian combined federal and provincial statutory rate (which is higher than the U.S. statutory rate) and earnings of the Company's Cayman Islands subsidiary that are not subject to income tax, (ii) changes in the valuation of warrants treated as liabilities under U.S. GAAP, (iii) non-deductible transaction costs incurred in connection with the Fat Panda Acquisition and other strategic transactions, (iv) U.S. tax inclusions on foreign income, and (v) changes in valuation allowances on deferred tax assets, principally those associated with the legacy U.S. operations of CEAI.

Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and deferred tax liabilities are as follows:

Net Operating Loss Carryforwards

At April 30, 2026, the Company had approximately $71.0 million of U.S. federal and state net operating loss ("NOL") carryforwards related to its legacy U.S. operations. Approximately $11.2 million of these NOL carryforwards will expire, if not utilized, in calendar years 2034 through 2037. NOLs generated in tax years beginning after December 31, 2017 do not expire but may be used to offset no more than 80.0% of taxable income in any given year. State NOL carryforwards have varying expiration periods that range from 5 to 20 years, depending on the jurisdiction.

The Company's Canadian subsidiary had no material NOL carryforwards at April 30, 2026. The Company's Cayman Islands subsidiary is not subject to income tax and accordingly does not have NOL carryforwards.

Section 382 Considerations

Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, and applicable state law, the Company's ability to utilize its NOL carryforwards may be limited if the Company experiences an "ownership change," generally defined as a greater than 50.0% cumulative change in equity ownership by value over a rolling three-year period. The securities offerings completed in September 2021 and February 2022, the August 2025 private placement, and other equity transactions completed during the fiscal year must be evaluated to determine whether one or more ownership changes have occurred. The Company has not yet completed a formal Section 382 analysis at April 30, 2026. If an ownership change is determined to have occurred, the Company's ability to utilize its NOL carryforwards may be materially limited, which could adversely affect the Company's future tax obligations. The amount of NOL carryforwards reflected as deferred tax assets in the table above does not reflect any potential limitation that may result from such an analysis; however, any such limitation would not result in a charge to income tax expense given the full valuation allowance recorded against the related deferred tax assets.

Valuation Allowance

The Company assesses, on a quarterly basis, whether it is more likely than not that its deferred tax assets will be realized. In making this determination, the Company considers all available positive and negative evidence, including its history of cumulative losses, projected future taxable income, the period over which deferred tax assets are expected to reverse, and the availability of tax-planning strategies. The weight given to each piece of evidence is commensurate with the extent to which it can be objectively verified.

At April 30, 2026, based primarily on the existence of cumulative losses in recent years and the inherent uncertainty of forecasting future taxable income for the legacy U.S. operations, the Company concluded that it is more likely than not that its U.S. federal and state deferred tax assets will not be realized. Accordingly, the Company has recorded a full valuation allowance against its U.S. net deferred tax assets. The Company intends to maintain the valuation allowance until sufficient positive evidence exists to support its reversal. No valuation allowance has been recorded against the deferred tax assets of the Company's Canadian subsidiary, as the Company has determined it is more likely than not that those deferred tax assets will be realized.

Fat Panda is taxed as a Canadian corporation. For Canadian federal and provincial income tax purposes, the transaction was treated as a stock acquisition with no step-up in tax basis. As a result, the goodwill and identifiable intangible assets recorded for financial reporting purposes are not deductible for tax purposes, giving rise to a deferred tax liability of approximately $1.4 million on the Acquisition Date, which the Company includes in its consolidated net deferred tax liability. The Company has not asserted indefinite reinvestment of Fat Panda's undistributed earnings; however, no additional U.S. or Canadian income tax has been provided on such undistributed earnings as the Company believes any incremental tax cost upon repatriation would not be material.

Income Taxes Paid

Income taxes paid by the Company, net of refunds received, disaggregated by federal (national), state, and foreign jurisdiction, are as follows:

A. The Company did not pay any income taxes as its Cayman Islands subsidiary is not subject to income taxes.

Uncertain Tax Positions

At April 30, 2026 and April 30, 2025, the Company hadno unrecognized tax benefits, and has recorded a $0.2 million reserve for Canadian excise taxes. The Company does not anticipate any significant change in its uncertain tax benefit balance during the twelve months following April 30, 2026.

The Company's policy is to recognize interest and penalties related to income tax matters in income tax expense. The Company has not accrued any interest or penalties related to uncertain tax positions at April 30, 2026.

Open Tax Years

The Company files income tax returns in U.S. federal, various U.S. state, and Canadian federal and provincial jurisdictions. The following tax years remain subject to examination by the relevant taxing authorities:

A. Includes both federal and provincial tax years.

B. No income taxes assessed in jurisdiction.

Tax Legislation

One Big Beautiful Bill Act

On July 4, 2025, the President signed H.R. 1, the One Big Beautiful Bill Act ("OBBB Act"), into law. The OBBB Act includes several changes to U.S. federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic research and experimental expenditures, reinstatement of 100.0% bonus depreciation, and more favorable rules for determining the limitation on business interest expense.

The OBBB Act also includes certain changes to the U.S. taxation of foreign activity, including changes to foreign tax credits, the global intangible low-taxed income ("GILTI") regime, the foreign-derived intangible income ("FDII") regime, and the base erosion and anti-abuse tax ("BEAT"), among other changes. These foreign-related changes are generally effective for tax years beginning after December 31, 2025.

The Company has accounted for the impact of the OBBB Act, where required, in the period of enactment. The OBBB Act did not have a material impact on the Company's consolidated financial statements for the fiscal year ended April 30, 2026, and the Company does not currently expect the OBBB Act to have a material impact on its consolidated income tax provision in future periods.

Note 10 — Transactions with Affiliates and Affiliated Entities

CEO Transition Agreement

On March 16, 2026, the Company, Mr. David Namdar, its current Chief Executive Officer, and Abound LLC, a Puerto Rico limited liability company pursuant to which Mr. Namdar performs services for the Company, entered into an agreement ("Transition Agreement"), approved by the Board, that awarded Mr. Namdar (a) a $0.4 million consulting fee for services Mr. Namdar performed for the Company since August 5, 2025, but for which the Company had not provided compensation, (b) a $50,000 monthly consulting fee as compensation for services provided until his separation from the Company, and (c) a lump sum cash payment ("Cash Incentive Award"), in lieu of an equity incentive award, equal in amount to the product of 132,000 shares of the Company's common stock multiplied by the greater of the 30-trading day average stock price of the Company's common stock on (x) March 16, 2026 or (y) the date of separation, which is the earlier of (a) the Company's next annual meeting of stockholders, (b) the appointment by the Board of a new or interim chief executive officer of the Company, or (c) August 31, 2026. In addition, the Company will pay Mr. Namdar $0.9 million at the date of separation in exchange for restrictive conditions, including confidentiality, non-compete, non-solicitation, non-disparagement and non-assistance to litigants restrictions.

The Company recorded compensation expense of $1.4 million within "Selling, general and administrative expenses" in the Consolidated Statements of Operations and Comprehensive Income and paid $0.5 million in cash to Mr. Namdar through Abound LLC. In addition, the Company recognized a $0.6 million liability for the Cash Incentive Award, presented within "Other current related party liabilities, at fair value" in the Consolidated Balance Sheets.

AMA Controlled by a Former Board Member

Mr. Hans Thomas, a member of the Board until March 2026, owns the majority of the Asset Manager. Under the AMA (Note 1), the Company incurred management fees of $5.0 million during the period from June 7, 2025 through April 30, 2026, presented as "Management fees to affiliate" in the Consolidated Statements of Operations and Comprehensive Income, of which the Company paid $4.6 million. At April 30, 2026, the Company accrued unpaid asset management fees of $0.4 million within "Other current related party liabilities" in the Consolidated Balance Sheets, and the Asset Manager and its affiliates hold all of the Asset Manager Warrants and exercised all of the 2,376,236 Strategic Advisor Warrants issued to them during the period from June 7, 2025 through April 30, 2026 in a cashless exercise.

See Note 12 for recent activities related to the AMA and the Company's Asset Manager.

Seller Note Payable to Employee

The Company issued the Tax Indemnification Note to, and created the Escrow Deposit for the potential benefit of, the Selling Fat Panda Shareholders, one of whom is the President of Fat Panda, a current employee of the Company. In addition, the Company issued the Fat Panda Promissory Notes to the President of Fat Panda (Note 2). During the period from June 7, 2025 through April 30, 2026, the Company incurred interest expense totaling $0.1 million, presented as "Interest expense to affiliate" in the Consolidated Statements of Operations and Comprehensive Income, of which the Company paid $0.1 million. See Note 5 for additional detail regarding these notes payable, which the Company presents as "Related party note payable" in the Consolidated Balance Sheets. The Company does not reflect the Escrow Deposit in these Consolidated Financial Statements as a third-party administrator controls those funds; however, the release of the Escrow Deposit, which depends upon finalization of working capital adjustments at the Acquisition Date, may impact the purchase price the Company paid for Fat Panda in the Fat Panda Acquisition (Note 2).

Agreements and Transaction with a Board Member

On June 19, 2024, Mr. Nicholas J. Etten, a member of the Board, and the Company entered into a consulting agreement, replaced on July 28, 2025 with a new consulting agreement (the "2025 Agreement"), whereby Mr. Etten would provide advisory services related to acquisition sourcing, strategic consulting, and investor coordination, and would be compensated at a rate of $2,500 per week, subject to downward adjustment based on hours worked. During the period from June 7, 2025 through January 1, 2026, the Company paid $0.1 million to Mr. Etten for consulting services under these agreements. In April 2026, the Company identified excess payments totaling $6,300 to Mr. Etten that Mr. Etten returned to the Company.

Mr. Etten terminated the 2025 Agreement on February 2, 2026 with effect from January 1, 2026. At April 30, 2026, there were no amounts payable to Mr. Etten under the 2025 Agreement.

See Note 12 for information regarding Mr. Etten's resignation as a member of the Board.

Note 11 — Commitments and Contingencies

The Company was subject to the following commitments and contingencies at April 30, 2026:

Indemnifications

In the normal course of business, the Company enters into contracts that contain a variety of representations and warranties and that provide general indemnifications, including indemnifications 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. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company that have not yet occurred. However, based on the Company's experience, the Company expects the risk of material loss to be remote.

Litigation

From time to time, in the normal course of business, the Company is subject to claims and legal proceedings. Litigation is inherently unpredictable, and the Company's assessments may change as matters progress. The Company expenses legal fees as incurred and records a liability for contingent losses when it is both probable that a loss has been incurred and the amount can be reasonable estimated. An unfavorable outcome to any matter, if material, could adversely affect the Company's financial condition, liquidity, or results of operations.

On May 22, 2026, the Company filed a complaint against the Asset Manager, in the United States District Court for the District of Delaware, regarding the AMA. The complaint seeks a declaration that the AMA is void from inception as unconscionable and orders all fees paid by the Company to its Asset Manager under the AMA since inception be returned to the Company. Alternatively, the complaint seeks a declaration that a liquidated damages clause in the AMA, which would accelerate nearly 20 years of future fees upon termination, is an unenforceable penalty.

Abraham Gomez Matter

In February 2026, Abraham Gomez, an individual, filed a civil complaint in the Superior Court of the State of California, County of Tulare, Abraham Gomez v. CEA Industries, Inc., et al. (Case No. VCU331863), against the Company and Mr. Hans Thomas, a former member of the Board. The complaint asserts various claims against the defendants, including claims for fraud, promissory estoppel, quantum meruit and unjust enrichment, arising from alleged investment-related discussions and alleged services purportedly performed for the benefit of the Company. The plaintiff seeks damages, including compensatory damages according to proof (which the complaint alleges exceed approximately $2.8 million), together with interest, attorneys' fees, costs and other relief.

On March 27, 2026, the Company filed a Notice of Removal to the United States District Court for the Eastern District of California. On April 3, 2026, the Company filed a motion to dismiss the complaint for lack of personal jurisdiction and failure to state a claim upon which relief can be granted. The Company's motion to dismiss is fully briefed before the court and scheduled for oral argument on June 24, 2026. The Company intends to defend the action vigorously. At this preliminary stage of the matter, the Company cannot reasonably estimate the possible loss or range of loss, if any, that may result from the proceeding.

Debt Facility

On April 30, 2026, the Company and BitGo Prime, LLC ("Lender 1") entered into an uncommitted master loan facility ("Facility 1"), pursuant to which the Company may borrow digital assets or cash from Lender 1 from time to time. Each loan is documented in a separate loan agreement by the parties setting forth the specific terms, including principal amount, fees, collateral requirements, and the date on which the loan is to commence and mature. Each loan may have a fixed term, or may include a call option held by Lender 1 or prepayment option held by the Company, as specified in each loan agreement. Borrowings under the master loan agreement are secured by collateral in favor of Lender 1. Collateral may include BNB, cash, or other forms agreed upon by the parties. The collateral’s required value is typically higher than the borrowed amount, subject to margin calls as set forth in the master loan agreement. If the value of posted collateral falls below the margin call threshold, the Company must promptly post additional collateral. Failure to maintain sufficient collateral can result in an event of default and remedies available to Lender 1, including the right to liquidate pledged collateral. Lender 1 holds BNB collateral owned by the Company in a segregated custody account in the Company's name, and Lender 1 is not permitted to use such BNB to secure any other loan or account.

On April 30, 2026, the Company and Lender 1 entered into a loan agreement whereby the Company received $10.0 million of USDC on May 1, 2026, and for which the Company pledged $17.0 million of BNB reported as restricted digital assets.

Customer Rewards Program

Fat Panda offers a "Buy 10, Get 1 Free" card redemption program that it started in the year ended 2022. Customers at Fat Panda's retail stores may collect redemption cards, which do not expire, upon purchase and redeem the card for a complimentary product after purchasing ten items. While the Company does not believe accumulated redemptions to be material, it cannot estimate its potential economic exposure and has not accrued a liability for such redemptions.

The Company has not recorded any assets or liabilities in connection with the Escrow Deposit, which the Company and Selling Fat Panda Shareholders have not mutually released, (Note 2) or the Tax Indemnification Note (Note 5).

Industrial Climate Control System Installation Contracts

The Company has not yet completed the delivery and installation of certain industrial climate control systems, for which the Company holds non-refundable deposit assets of $0.1 million, net of reserves. The Company does not have any material exposure to customers in excess of deposit assets held.

Leases

At April 30, 2026. the Company has 35 non-cancellable leases on retail, office, and manufacturing spaces expiring through March 2033 that it does not sublease. Leases held by the Company include renewal options, and escalation clauses, though the Company has not considered such renewal provisions in the determination of the lease term as it is not reasonably certain it will exercise these options. The terms of the leases do not impose any financial restrictions or covenants.

One lease pertains to 11,491 square feet of manufacturing and office space in Louisville, CO used for the Company's industrial climate control system operations that expires in January 2027 while the remaining leases relate to an aggregate 49,046 square feet of retail, office, and manufacturing space in Manitoba, Saskatchewan, and Ontario, Canada for Fat Panda's operations.

The Company made the following rent payments and incurred expense, presented within "Selling, general and administrative expenses" in the Consolidated Statements of Operations and Comprehensive Income:

The Company's operating right-of-use assets and lease liabilities are as follows:

Future undiscounted, minimum lease payments for the Company's non-cancellable operating leases at April 30, 2026 were as follows:

Other information related to the Company's leases were as follows:

Other Contingent Payments

The Company has engaged various third parties entitled to contingent payments totaling $0.7 million, which primarily represent success fees contingent upon future events.

Note 12 — Subsequent Events

The following events occurred subsequent to April 30, 2026 through the issuance date of these Consolidated Financial Statements. Events subsequent to that date have not been considered in these financial statements.

On June 11, 2026, the management of the Company, with the concurrence of the Audit Committee of the Board of Directors, concluded that the previously issued condensed consolidated financial statements included in the Company's quarterly reports on Form 10-Q for the (i) three months ended October 31, 2025, the period from June 7, 2025 through October 31, 2025 (the “Second Quarter Successor” period) and the period from May 1, 2025 through June 6, 2025, originally filed with the SEC on December 15, 2025 (the “Second Quarter Form 10-Q”) and (ii) three months ended January 31, 2026 and the period from June 7, 2025 through January 31, 2026 (the “Third Quarter Successor” period) and the period from May 1, 2025 through June 6, 2025, originally filed with the SEC on March 16, 2026 (the “Third Quarter Form 10-Q” and together with the Second Quarter 10-Q, the “Quarterly Reports on Form 10-Q”) should no longer be relied upon.

The conclusion was based on the identification of an error in the calculation of the weighted-average number of shares outstanding used in determining basic and diluted EPS. The error resulted in an understatement of basic and diluted weighted-average shares outstanding, which in turn understated or overstated basic and diluted EPS. For the three months ended October 31, 2025, basic and diluted weighted average number of shares were understated by 2,214,508 shares and as a result, basic and diluted EPS were overstated by $0.21. For the Second Quarter Successor period, basic weighted average shares were understated by 1,857,056 shares and diluted weighted average shares were understated by 857,057 shares and as a result, basic and diluted EPS were overstated by $0.45. For the three months ended January 31, 2026, basic and diluted weighted average number of shares were understated by 2,376,236 shares and as a result, basic and diluted EPS were understated by $0.08. For the Third Quarter Successor period, basic weighted average shares were understated by 21,806,662 shares and diluted weighted average shares were understated by 21,806,663 shares and as a result, basic EPS was overstated by $4.26 and diluted EPS was overstated by $4.21. The error did not impact the Company's net income (loss), total assets, total liabilities, stockholders’ equity, revenue, cash flows, or net income (loss) available to common stockholders in each affected period.

On June 23, 2026, the Company restated its previously issued unaudited condensed consolidated financial statements for the second and third fiscal quarters of 2026 resulting from an error in the computation of weighted-average shares used to compute basic and diluted earnings (loss) per share, which it deemed material on June 11, 2026.

Asset Manager Litigation

On May 22, 2026, the Company filed a complaint against its Asset Manager in the United States District Court for the District of Delaware, regarding the AMA. The complaint seeks a declaration that the AMA is void from inception as unconscionable and orders all fees paid by the Company to its Asset Manager under the AMA since inception be returned to the Company. Alternatively, the complaint seeks a declaration that a liquidated damages clause in the AMA, which would accelerate nearly 20 years of future fees upon termination, is an unenforceable penalty.

On May 7, 2026, the Company received a letter from the staff of Nasdaq (the "Nasdaq Staff") notifying the Company that it no longer complies with Nasdaq Listing Rule 5620(a) for continued listing of shares of the Company's common stock, due to the Company's failure to hold an annual meeting within 12 months of the Company's fiscal year end. As a result, the Company has submitted a plan to Nasdaq to regain compliance. If Nasdaq accepts the Company's plan, Nasdaq can grant an exception of up to 180 calendar days from the fiscal year ended April 30, 2026, or until October 27, 2026, to allow the Company to regain compliance.

The Company's plan of compliance with respect to the foregoing requirement setting forth, among other things, a proxy statement preparation and proxy solicitation timeline leading to its annual meeting of our shareholders. There is no assurance that the Staff will accept the Company's plan of compliance. In the event our plan is not accepted, the Company's securities may be subject to delisting and it will have the opportunity to appeal the Staff’s delisting determination to a hearings panel. The Company expects to organize an annual meeting in the coming weeks to regain compliance with the applicable Nasdaq Listing Rules.

The Company intends to submit its plan of compliance with respect to the foregoing requirement setting forth, among other things, a proxy statement preparation and proxy solicitation timeline leading to the Company's annual meeting of its shareholders. While the Company intends to submit its compliance plan to address the foregoing deficiency, the Company cannot provide any assurance that it will be able to present a plan of compliance that will be accepted by the Nasdaq Staff. In the event the Company's plan is not accepted, the Company's securities may be subject to delisting and the Company will have the opportunity to appeal the Nasdaq Staff's delisting determination to a hearings panel. The Company expects to organize an annual meeting in the coming weeks to regain compliance with the applicable Nasdaq Listing Rules.

On May 1, 2026, the Company received $10.0 million of USDC from Lender 1 for which the Company pledged $17.0 million of BNB. (Note 11)

Share Repurchases

The Company purchased 1,434,112 shares of its common stock for $3.8 million, including costs of $— million, in connection with the Share Repurchase Program.

Other

On May 4, 2026, Anthony K. McDonald, the Company's President and a member of the Company's Board, resigned as President and as a director of the Company. In exchange for a release of claims and Mr. McDonald’s agreement to certain covenants, including cooperation, Mr. McDonald will receive an aggregate of $0.3 million payable over 12 months and reimbursement for legal fees of up to $10,000. Mr. McDonald’s outstanding equity awards will remain in effect in accordance with their terms.

On June 10, 2026, Nicholas J. Etten, a member of the Board, resigned as a director of the Company. In exchange for a release of claims and Mr. Etten's agreement to certain covenants, including cooperation, Mr. Etten received a payment of $85,000 and will receive reimbursement for legal fees of up to $50,000. Mr. Etten's outstanding equity award will remain in effect in accordance with its terms.