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.

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 reasonably estimated. An unfavorable outcome to any matter, if material, could adversely affect the Company's financial condition, liquidity, or results of operations.

The Company is party to the AMA with the Asset Manager, which by its terms continues for a twenty-year term expiring in 2045 and provides for a management fee representing a flat fee of 1.4% of the fair value of assets within the Company's DAT Strategy. The AMA provides that, if the Company terminates the AMA during the term for any reason, or if the Asset Manager terminates the AMA following a material breach by the Company, the Company shall pay the Asset Manager, as liquidated damages, all fees and other compensation that would have accrued through the end of the term, payable monthly in accordance with the agreement's payment provisions. The Asset Manager is controlled by Mr. Hans Thomas, who served as a member of the Company's Board of Directors until March 2026.

On May 22, 2026, the Company filed a complaint against the Asset Manager in the United States District Court for the District of Delaware seeking a declaration that the AMA is void from inception as unconscionable and that all fees paid under it be returned to the Company and, in the alternative, a declaration that the liquidated damages provision in Section 13(a) is an unenforceable penalty under Delaware law. On July 28, 2026, the Asset Manager moved to dismiss the complaint, contending among other things that Section 13(a) is an enforceable liquidated damages provision and that any amount payable under it would be paid monthly over the remainder of the term rather than in a single accelerated payment. The Company filed its opposition to the motion on August 14, 2026. The motion remains pending, and the Company cannot predict its outcome or the timing of any ruling.

The Company has not terminated the AMA, and no amount is presently due under Section 13(a). The provision nonetheless remains in effect and its enforceability has not been determined, which constrains the Board's ability to terminate or restructure the Company's treasury management arrangements and continues to affect the strategic alternatives available to the Company.

While the Company accrues current monthly management fees under the AMA (Note 10), it has not recorded a liability in respect of Section 13(a). Any obligation under the provision would arise only upon a termination that has not occurred. Further, the Company is unable to estimate the amount of any possible loss, or range of possible loss, since the amount of any such obligation would depend on the resolution of the pending litigation regarding the provision's enforceability. An adverse determination as to enforceability, followed by a termination of the AMA, could result in obligations material to the Company's financial condition, results of operations, and liquidity.

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 removed the action to the United States District Court for the Eastern District of California, where it is pending as Case No. 1:26-cv-02403-KES-SAB. On April 3, 2026, the Company moved to dismiss the complaint for lack of personal jurisdiction and for failure to state a claim upon which relief can be granted. The motion was fully briefed, the court heard argument on August 26, 2026, and the court took the motion under submission. The Company intends to defend the action vigorously.

On July 17, 2026, counsel for Saad Naja delivered a pre-litigation demand letter to Mr. David Namdar, the Company's former Chief Executive Officer, addressed to him personally and in his capacity as an officer of the Company. Mr. Naja was part of the outside deal team that brought the private placement to the Company and is not affiliated with the Company. The letter asserts claims against Mr. Namdar personally arising out of Mr. Naja's alleged involvement in the transactions relating to the Company's July 2025 private placement, including alleged representations regarding an executive role and associated compensation, and demands a payment of $8.0 million by Mr. Namdar personally in resolution of those claims. No claim has been asserted against the Company, and no litigation has been commenced.

No liability has been recorded in respect of this matter. Because no claim has been asserted against the Company and the matter is at a preliminary stage, the Company is unable to estimate the amount or range of any reasonably possible loss, if any, arising from this matter, including in respect of any indemnification obligation.

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 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.

Neither Mr. Etten's nor Mr. McDonald's restricted stock units, granted under the 2025 Equity Incentive Plan, were affected by their respective separation agreements. Because that plan did not receive the vote required for approval at the special meeting held July 22, 2026, no grant date has been established and no compensation expense has been recognized with respect to these awards in any period presented (Note 2).

At July 31, 2026, the Company has 36 non-cancellable leases on retail, office, and manufacturing spaces, including a retail location not yet operational, expiring through March 2033, none of which the Company subleases. 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 that the Company 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.



	Condensed Consolidated Balance Sheets Line Items	July 31, 2026		April 30, 2026
		(Unaudited)		(Audited)
Operating lease right-of-use asset	Other current and non-current assets	$	1,672	$	1,710
Operating lease liability, current	Current portion of operating lease liability	621		670
Operating lease liability, long-term	Other non-current liabilities	1,111		1,100