Basis of Presentation and Significant Accounting Policies (Policies)

3 Months Ended

Jul. 31, 2026

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 unaudited condensed 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 unaudited condensed consolidated financial statements.

The accompanying unaudited condensed 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") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three months ended July 31, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2027.

The balance sheet information at April 30, 2026 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements.

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.

Segments

The Company operates through two operating and reportable segments, which reflects how the CODM allocates resources and assesses performance.

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 are 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 uses 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 41.0% and 34.0% for the three months ended July 31, 2026 and 42.0% and 37.0% for the period from May 1, 2025 through June 6, 2025, respectively, of inventory purchases. One of those two suppliers accounted for 81.0% of inventory purchases for the period from June 7, 2025 through July 31, 2025. 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 unaudited condensed 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 unaudited condensed 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 unaudited condensed 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 and Error Corrections

Accounting Changes

Accounting Changes and Error Corrections

As previously disclosed in the Company's quarterly financial statements filed on Form 10-Q on March 16, 2026, the Company erroneously recognized $4.6 million of compensation expense in July 2025 for equity-based awards granted under a proposed equity incentive plan (the "2025 Equity Incentive Plan") that had not been approved by shareholders of the Company, and has not been approved at July 31, 2026. In July 2026, the Company's shareholders voted against the 2025 Equity Incentive Plan, though the Company may be required to offer its shareholders the opportunity to vote upon the 2025 Equity Incentive Plan a second time.

The Company evaluated the impact in accordance with SEC Staff Accounting Bulletins ("SAB") 99 Topic 1.M, Materiality, and SAB 108 Topic 1.N, Accounting Changes and Error Corrections and concluded that the error and subsequent correction were not material to prior or current unaudited condensed consolidated financial statements. Accordingly, an amendment to the previously issued financial statements was not required.

The accompanying comparative unaudited condensed consolidated financial statements for the period from June 7, 2025 through July 31, 2025 have been recast to correct the immaterial error.

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.


Level						Measurement
1						Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
2						Inputs are other than quoted prices that are observable for the asset or liability as Level 1 inputs, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability.
3						Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

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 July 31, 2026:

Level

Asset or Liability

Measurement

Cash and cash equivalents

Estimates of fair value are measured using observable, quoted market prices, or Level 1 inputs. The Company estimates the fair value of USD Coin ("USDC") at parity with USD.

Digital Assets

Estimates of fair value are measured using observable, quoted market prices on principal exchanges, or Level 1 inputs, on Binance exchange for BNB, Bitcoin ("BTC"), and Tether ("USDT").

Warrant Liabilities

Estimates of fair value are measured using observable, quoted market prices on Nasdaq Capital Markets traded under BNCWZ that started trading on April 15, 2026, but are not actively traded at July 31, 2026, as well as unobservable inputs, including adjusted historical volatility of shares of the Company's common stock.

Cash Incentive Award

Estimates of fair value are measured using observable, quoted market prices of shares of the Company's common stock as well as unobservable inputs, including adjusted historical volatility of shares of the Company's common stock.

Intangible Assets & Goodwill

Estimates of fair value of Fat Panda's trade name and goodwill recorded from the Fat Panda Acquisition are based upon discounted future cash flows of Fat Panda. Carrying value represents the lower of carrying value or impaired fair value if undiscounted cash flows are less than the carrying value at the date of the impairment assessment.

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 July 31, 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 exchange as its principal market for its digital assets as it is the market to which it has access 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, applying 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. Management engaged an independent valuation firm to estimate the fair value of the Cash Incentive Award at April 30, 2026, applying 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 include future expected cash flows, including projected revenues and expenses, and applicable discount rates. These assumptions and estimates are 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.

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.

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.

Digital Assets

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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 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. Such third parties may not maintain these digital assets in segregated wallets under the Company's exclusive control and may pool the digital assets 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 Condensed 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 Condensed Consolidated Balance Sheets. The Company did not record any digital asset receivables at July 31, 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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) within "Realized loss on digital assets." The Company uses the specific identification method to calculate the realized gains and losses on digital assets.

Sales and purchases of digital assets are reflected as cash flows from investing activities in the Unaudited Condensed Consolidated Statements of Cash Flows whereas contributions of digital assets received as part of the consideration received from the Company's issuance of its common stock (Note 6) are presented within supplemental information for non-cash investing and financing activities.

Inventory

The Company accounts for inventory at the lower of cost or net realizable value on a first-in, first-out basis, and the Company evaluates lower of cost or net realizable value 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 the estimated excess, obsolescence, or impaired inventory and presented in "Cost of revenue" in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Goodwill

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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) within "Foreign currency translation adjustment."

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 a 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:



	Estimated Useful Life (Years)		Carrying Amount
Asset			July 31, 2026		April 30, 2026
			(Unaudited)		(Audited)
Trade names(A)		10.0	$	5,229	$	5,229



Accumulated amortization(B)(C)			(588)		(474)
Foreign currency translation adjustment			(121)		45
			$	4,520	$	4,800

A.Trade names 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 $0.1 million and $0.1 million for the three months ended July 31, 2026 and the period from June 7, 2025 through July 31, 2025, respectively.

C.At July 31, 2026, the approximate aggregate annual amortization expense for definite-lived intangible assets is as follows:




Remaining nine months during fiscal year 2027	$	382
2028	512
2029	511
2030	511
2031	511
Thereafter	2,093
	$	4,520

Debt Obligations

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 short-term convertible note payable to a related party, each of which is denominated in CAD as well as borrowings collateralized by BNB. 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 measures such obligations 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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). At July 31, 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 pledges BNB as collateral under secured financing agreements with a financial institution, the terms and conditions of which are governed by each respective financing agreement. Such collateralized financing arrangements do not provide the counterparty the right to rehypothecate the underlying collateral, and the Company discloses in the notes to the financial statements the extent to which such collateral has been pledged. The related collateral and corresponding liabilities are presented on a gross basis in the financial statements and any associated interest expense is recognized on a basis consistent with the Company's other financing arrangements. The amounts available to be borrowed under financing agreements are dependent upon the fair value of the collateral, which can be volatile and fluctuate with changes in BNB supply, ecosystem growth rate, sentiment, and other factors. The Company manages credit, market, and liquidity risks related to these agreements by holding additional collateral available to pledge and actively monitoring and maintaining margin requirements.

The Company capitalizes and amortizes deferred debt facility costs incurred when entering into financing agreements on a straight-line basis over the expected term of term facilities or weighted-average life of the expected principal repayments for open loans, 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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Interest payable on debt of $0.2 million and $— million at July 31, 2026 and April 30, 2026, respectively, is recorded as a component of "Other current liabilities" in the Condensed Consolidated Balance Sheets.

Warrants

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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). 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 that were expensed at their respective 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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 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.

Other Assets and Liabilities

At July 31, 2026 and April 30, 2026, accounts payable and accrued expenses, other assets, and other liabilities included:

July 31,
2026

April 30,
2026

(Unaudited)

(Audited)

Other current and non-current assets(A)

$2.2 million of non-BNB digital assets, $1.7 million of right-of-use assets, $1.4 million of prepaid expenses; remaining balance is composed of receivables, property and equipment, and contract assets.

$2.4 million of non-BNB digital assets as well as right-of-use lease assets, prepaid expenses, accounts receivable, deposits, contract assets, and property and equipment.

Accounts payable and accrued expenses

$1.7 million of accrued professional fee expenses and $1.5 million of accounts payable; remaining balance is composed of accrued compensation and other expenses.

$5.3 million of accounts payable as well as accrued compensation, sales taxes payable, and other expenses.

Other current related party liabilities

Accrued fees under the AMA.

Other current related party liabilities, at fair value

n.a.

$0.6 million Cash Incentive Award(B)

Other current and non-current liabilities

$1.1 million of non-current lease liabilities; remaining balance is composed of current and deferred tax liabilities and deferred revenue.

Current and deferred tax liabilities, lease liabilities, and deferred revenue.

A.Net of accumulated depreciation and amortization of $0.6 million and $0.6 million at July 31, 2026 and April 30, 2026, respectively. Includes $0.1 million, $0.1 million, and $— million depreciation and amortization for the three months ended July 31, 2026, the period from June 7, 2025 through July 31, 2025, and the period from May 1, 2025 through June 6, 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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). See Note 8 and Note 10 for more information regarding the Cash Incentive Award.

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

Revenue from Fat Panda consists primarily of retail and e-commerce vape 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 that 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 July 31, 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

Revenue from the sale of climate control systems are derived from contracts that may include engineering and technical services as well as 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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Cost of Revenue

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

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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 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.

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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss); 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.

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 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 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, 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 unrecognized 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.

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.

Fat Panda Acquisition

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 a current employee of the Company, totaling $1.4 million ("Fat Panda Promissory Notes"). At the Acquisition Date, the Fat Panda Promissory Notes were composed of a $0.7 million promissory note payable in cash ("Promissory Note") and a $0.7 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 $0.7 million of expenses directly related to the Fat Panda Acquisition during the period from June 7, 2025 through July 31, 2025 and included in "Business combination expenses" in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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 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 fair value of assets acquired and liabilities assumed at the Acquisition Date and is based on the best estimates of management, which were subject to change within the measurement period.


	As Initially Reported		Adjustments(A)		Revised Amount
Cash and cash equivalents	$	1,922	$	—	$	1,922
Accounts receivable	177		88		265
Related party receivables	673		—		673
Inventory	3,685		(20)		3,665
Prepaid expenses	113		(33)		80
Fixed assets	314		—		314
Right-of-use asset	1,851		(19)		1,832
Deposits	219		—		219
Intangibles(B)	5,229		—		5,229
Goodwill	4,218		(782)		3,436
Accounts payable and accrued liabilities	(2,308)		46		(2,262)
Income taxes payable	(108)		670		562
Deferred tax liability	(1,256)		(33)		(1,289)
Lease liabilities, current	(533)		—		(533)
Current portion of royalty liabilities	(13)		13		—
Lease liabilities, non-current	(1,332)		—		(1,332)
Total net assets acquired	$	12,851	$	(70)	$	12,781

A.During the period from June 7, 2025 to June 6, 2026, the Company recorded measurement period adjustments resulting from new information about facts and circumstances that existed at 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 July 31, 2026, the release of amounts within the $1.9 million Escrow Deposit remains uncertain, and the Company expects to record further adjustments, if any, within the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as the measurement period ended in June 2026.

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 three months ended July 31, 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 give 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.


	Three Months Ended July 31,
		2026		2025
Revenue		$	7,165	$	10,133
Net loss		(11,400)		(616)

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 and Accounting Pronouncements Recently Adopted

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 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 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 adopted ASU 2025-05, which did not materially impact the Company's consolidated financial statements and disclosures.