CEA Industries Reports 64% Revenue Decline, Operating Losses Increase Amid Supply Chain Disruptions and Reduced Order Bookings

CEA Industries Inc. (formerly Surna Inc.), a company focused on the Controlled Environment Agriculture (CEA) industry, reported significant declines in revenue and profitability for the nine months ended September 30, 2024. Revenue for this period was $2.39 million, a decrease of 64% from $6.66 million in the same period of 2023. For the third quarter alone, revenue fell to $391,000 from $914,000, marking a 57% decline year-over-year. The drop in revenue was attributed to delays in equipment receipt due to supply chain disruptions and a reduction in new order bookings.

The company experienced an operating loss of $2.15 million for the nine months ended September 30, 2024, compared to a loss of $1.96 million for the same period in 2023, reflecting a 10% increase in losses. The net loss for the nine months was $2.13 million, up from $1.92 million in the prior year, indicating an 11% increase in net losses. Despite these challenges, the operating loss for the third quarter improved slightly to $747,000 from $807,000 in the previous year.

Total assets decreased to $11.34 million as of September 30, 2024, down from $13.77 million at the end of 2023. Current assets also fell to $11.04 million, while total liabilities were reduced to $1.13 million from $1.51 million. Shareholders’ equity decreased to $10.20 million from $12.26 million, reflecting ongoing financial pressures.

The company has been actively evaluating merger and acquisition opportunities and is considering a potential dissolution plan, which would require shareholder approval. As of September 30, 2024, CEA Industries had cash and cash equivalents of approximately $10.30 million, down from $12.51 million at the end of 2023. The company reported a significant improvement in cash used in operating activities, which was $(2.21 million) for the nine months ended September 30, 2024, compared to $(5.29 million) in the same period of 2023.

Management has acknowledged material weaknesses in internal controls over financial reporting and plans to enhance financial organization and controls as resources allow. The company continues to face challenges from inflationary pressures, high energy costs, and labor shortages, which have impacted its operational efficiency and profitability.