Financial Performance - Revenue for Q2 2024 was $1,760,700, a 65.7% increase from $1,063,714 in Q2 2023[13] - Gross profit for Q2 2024 was $179,800, compared to $78,693 in Q2 2023, reflecting a significant improvement[13] - Operating loss for Q2 2024 was $(477,205), reduced from $(704,628) in Q2 2023, indicating better cost management[13] - Net loss for the six months ended June 30, 2024, was $(1,386,902), compared to $(1,125,013) for the same period in 2023[13] - Loss per common share for Q2 2024 was $(0.66), an improvement from $(1.03) in Q2 2023[13] - Total operating expenses for Q2 2024 were $657,005, down from $783,321 in Q2 2023, showing a reduction in costs[13] Cash Flow and Liquidity - The company's cash and cash equivalents decreased to $11,325,387 as of June 30, 2024, down from $14,197,485 at the end of June 2023, reflecting a decline of about 20.5%[16] - Net cash used in operating activities for the six months ended June 30, 2024, was $1,182,864, a significant improvement compared to $4,439,829 for the same period in 2023, representing a reduction of approximately 73%[16] - Cash and cash equivalents as of June 30, 2024, were $11,325,000, down from $12,508,000 as of December 31, 2023, a decrease of $1,183,000[142] - Cash used in operations for the six months ended June 30, 2024, was $1,183,000, a decrease of $3,257,000 compared to $4,440,000 for the same period in 2023[146] Inventory and Accounts Payable - CEA Industries Inc. experienced a provision for excess and obsolete inventory of $37,781 in 2024, compared to $60,574 in 2023, showing a decrease of about 37.7%[16] - Inventory as of June 30, 2024, totaled $23,670, a significant decrease from $296,404 as of December 31, 2023, primarily due to an allowance for excess and obsolete inventory of $(230,478)[68] - Accounts payable increased to $598,745 as of June 30, 2024, compared to $183,359 as of December 31, 2023, indicating a rise in short-term liabilities[71] Revenue Recognition and Backlog - The company reported a backlog that may impact future revenue generation, with ongoing efforts to convert backlog into revenue[6] - Remaining performance obligations, or backlog, decreased to approximately $227,000 as of June 30, 2024, down from $1,066,000 a year earlier[48] - The company faces significant uncertainty regarding the timing of revenue recognition on remaining performance obligations due to various external factors[47] Challenges and Market Conditions - The company is facing challenges from increased competitive pressures in the Controlled Environment Agriculture (CEA) industry[6] - Future revenue projections remain uncertain due to various macroeconomic factors and potential disruptions in the CEA industry[6] - CEA Industries Inc. continues to face challenges due to inflation, which is impacting the cost of products and operational expenses, potentially affecting margins and financial results[22] - The company continues to face challenges in the CEA industry, including high energy costs, labor shortages, and evolving regulatory standards[107] Corporate Actions and Future Plans - The company is actively evaluating merger and acquisition opportunities and considering a potential plan for dissolution, which would involve distributing cash assets after settling corporate obligations[18] - A reverse stock split at a ratio of one-for-twelve was approved on May 7, 2024, reducing the number of shares outstanding from 8,076,372 to 673,090[28] - The Company has been experiencing recurring losses since its inception, necessitating reliance on additional financing sources for growth[25] Shareholder and Stock Information - As of June 30, 2024, the Company had 791,580 shares of common stock issued and outstanding following a reverse stock split at a ratio of one-for-twelve[82] - The Company issued 11,364 shares of common stock in settlement of restricted stock units to independent directors under the 2021 Equity Incentive Plan[87] - As of June 30, 2024, 22,411 shares have been issued under the 2021 Equity Plan, with 18,639 shares remaining available for future equity awards[87] Accounting and Estimates - Key accounting estimates include revenue recognition, valuation of intangible assets, and warranty accruals, which are subject to significant judgment and uncertainty[156] - The Company has established a full valuation allowance against its net deferred tax assets as of June 30, 2024, indicating it is unlikely to utilize these assets in the foreseeable future[98]
CEA Industries(CEAD) - 2024 Q2 - Quarterly Report