CEA Industries Inc.
06/23/2026 | Press release | Distributed by Public on 06/23/2026 14:14
Annual Report for Fiscal Year Ending April 30, 2026 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our Consolidated Financial Statements and related notes included elsewhere in this Annual Report, which include additional information about our accounting policies, practices, and the transactions underlying our financial results. In addition to historical information, the following discussion and other parts of this Annual Report contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under "Cautionary Statements" appearing elsewhere herein and the risks and uncertainties described or identified in "Item 1A - Risk Factors" in this Annual Report.
Introduction
CEA Industries Inc. is the largest publicly-traded DAT focused exclusively on BNB, the native token of the BNB Chain ecosystem. We seek to continue to build and manage the largest corporate treasury of BNB to provide institutional-grade exposure to BNB Chain and to generate income on our eligible BNB holdings through active treasury management, derivatives, or through Airdrops. We may also generate returns through additional digital asset-related activities such as validation and staking services, lending, and other DeFi protocols in the future, though we have not staked or pledged any BNB through April 30, 2026 aside from BNB pledged for our debt obligations. At April 30, 2026, we held 515,544 BNB tokens with an aggregate fair value of $317.3 million, and digital assets, primarily BNB, represented 94.6% of our total assets, while our Retail and Industry segment operating businesses represent a significantly smaller portion of our overall assets based on economic exposure.
Our strategy is built around a simple thesis: BNB is a scarce, utility-driven digital asset that serves as a core economic asset within one of the most active, and growing, blockchain ecosystems in the world. We seek to provide public equity market investors with exposure to BNB through a Nasdaq-listed, SEC-reporting company that combines direct BNB ownership, public company governance, audited financial reporting, treasury controls, custody infrastructure, and capital markets access. We view BNB as a strategic treasury asset and intends to continue evaluating opportunities to acquire additional digital assets as part of its capital allocation strategy.
We believe our platform is differentiated from direct token ownership, private digital asset vehicles, exchange-traded products, and operating companies that hold digital assets as part of a diversified treasury strategy. Our objective is not merely to hold BNB passively, but to build the leading public company platform for BNB ownership, treasury management, and participation in the BNB ecosystem.
We acquired Fat Panda on June 6, 2025 and continue to operate its core retail nicotine vape operations in Canada.
We have prepared the discussion of our results of operations for the fiscal year ended April 30, 2026 by combining the Predecessor and Successor results of operations and cash flows during the year ended April 30, 2026 ("Combined Annual Period") and comparing the combined data to the results of operations and cash flows of the Predecessor for the year ended April 30, 2025. We believe that the discussion of our combined operational results, while on different bases of accounting related to the application of purchase accounting, is appropriate as we highlight operational changes for the Predecessor as well as accounting related items specific to the Successor.
Overview of DAT Strategy
Our DAT Strategy represents a significant departure from traditional corporate treasury strategies, which typically involve holding cash, cash equivalents, and short-term investments. Instead, our financial condition and results of operations are significantly influenced by changes in the market price of BNB. Digital asset markets have historically exhibited significant volatility and are subject to evolving regulatory frameworks and technological risks. As a result, fluctuations in the market price of BNB will have a material impact on our financial condition, results of operations, and the market price of our common stock. Investors should carefully consider the risks associated with our DAT Strategy described under "Part I, Item 1A - Risk Factors" in this Annual Report on Form 10-K.
On August 5, 2025, we launched the DAT Strategy following the closing of the PIPE Transaction that raised approximately $500.0 million in cash and digital assets, with up to $750.0 million of additional proceeds available through warrant exercises.
We operate the DAT Strategy through our wholly-owned subsidiary, CEA BRS LLC, a Delaware limited liability company, as a special purpose entity to hold and manage certain cryptocurrency assets in accordance with the DAT Strategy.
Our BNB holdings are held in custody through Ceffu, a non-U.S. institutional digital asset custody platform operating within the Binance ecosystem. Ceffu uses 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, our 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 our ability to access, transfer, or liquidate our BNB holdings.
Key Drivers of Results of Operations
Our results of operations are influenced by several key factors, including: changes in the market price of BNB and other ancillary digital assets held by us; fair value adjustments recognized under applicable accounting standards, including our issued warrants treated as liabilities; the generation of Airdrop income; operating expenses associated with maintaining our public company infrastructure; and strategic decisions regarding the acquisition, holding, or disposition of digital assets. Because we hold a substantial quantity of digital assets, particularly BNB, changes in the market price of BNB may significantly affect our reported earnings. These fluctuations may not reflect changes in our operating performance but instead reflect market-driven changes in the value of our digital asset holdings.
Historically, our results of operations also included significant transactional expenses we incurred in connection with our acquisition of Fat Panda, the PIPE Transaction, and our shareholder advisory expenses in connection with our Board committee reconstitution and shareholder activism; however, we do not anticipate incurring such costs in connection with our ongoing operations.
BNB Holdings
During the period from June 7, 2025 through April 30, 2026, we accumulated 515,544 BNB. During this same period, the market price of BNB declined significantly by 28.9%, from $865.99 weighted-average price we paid per BNB, to $615.38 per BNB at April 30, 2026. As a result, the aggregate fair value of our BNB holdings decreased from our $446.5 million cost basis to $317.3 million, driven by market price volatility rather than changes in the quantity of BNB held. The decline in BNB market prices had a materially greater impact on the carrying value of digital assets than the operating results of our Retail and Industry business during the same period.
In addition to changes in the market value of BNB tokens, we recognized a substantial decrease in Airdrop-related income associated with those holdings. We maintain eligibility to receive Airdrops distributed within the Binance ecosystem for those BNB tokens we hold at Ceffu, however Airdrop activity has declined since we launched our DAT Strategy. This substantial decline in Airdrop-related income reflects reduced Airdrop activity within the Binance ecosystem during the current period. While airdrop income contributed positively to results, it did not offset the impact of the decline in BNB market prices during the period from June 7, 2025 through April 30, 2026.
In addition to Airdrops, a portion of our BNB treasury yield has historically been generated through participation in Binance Launchpool and HODLer Airdrops - platform programs through which BNB holders receive newly issued tokens by locking or holding BNB. Since we launched our DAT Strategy, the frequency and scale of these programs declined materially compared to historical program periods, contributing to a reduction in platform-delivered yield through April 30, 2026. Taken together with the decline in Airdrop activity described above, these trends reflect a broader moderation in yield generation during the period. We cannot predict the timing, frequency, or magnitude of future Launchpool or HODLer Airdrop allocations, and continued reduction in these programs may adversely affect our treasury yield and results of operations.
Warrant Liabilities
Our warrant liabilities were also a significant driver of our reported results of operations for the period, and we believe they will continue to contribute meaningful volatility to our earnings, independent of our underlying operating performance. During the period from June 7, 2025 through April 30, 2026, we recognized a non-cash gain of $282.9 million related to our stapled warrant liability, which was a primary driver of net income. Because the fair value of these out-of-the-money warrants generally fluctuate inversely with the trading price and volatility of our common stock and the underlying digital assets, as well as the passage of time and changes in our assumptions about warrant exercise behavior that can change significantly from period to period, the resulting fair value adjustments can produce substantial non-cash gains or losses that do not reflect our core operating performance, and we caution investors that our reported net income or loss for any given period may be disproportionately influenced by these mark-to-market changes rather than by the underlying profitability of our operating segments.
Digital Asset Market Conditions
Our treasury strategy is designed to accumulate and compound BNB over time, with a focus on growing the value of our digital asset holdings on a per-share basis as a key long-term measure of shareholder value creation. Digital asset markets are inherently cyclical, and short-term price fluctuations - while material to our GAAP-reported results in any given quarter - do not alter our management's conviction in the long-term trajectory of BNB and the broader Binance ecosystem. We believe our disciplined approach to treasury management positions the Company to benefit from market recoveries while managing risk through custody, yield optimization, and strategic capital allocation.
During the period from June 7, 2025 through April 30, 2026, digital asset markets experienced periods of significant price volatility. The market price of BNB fluctuated in response to a variety of factors, including macroeconomic conditions, investor sentiment toward digital assets, developments affecting cryptocurrency exchanges and blockchain networks, and regulatory developments in the United States and other jurisdictions. Because we hold a significant quantity of BNB, changes in the market price of BNB had, and will continue to have, a substantial impact on our balance sheet and results of operations. Investors should consider that fluctuations in our financial results during the period were driven primarily by changes in digital asset market prices and Airdrop yield rather than changes in our operating activities.
Our Retail and Industry Business
We operate our Fat Panda and industrial climate control systems businesses within our Retail and Industry segment. At April 30, 2026, Fat Panda operates 34 retail locations, including 30 Fat Panda branded stores and 4 Electric Fog branded outlets, along with an e-commerce platform. Fat Panda also manufactures a proprietary line of premium e-liquids in-house and maintains a portfolio of trademarks and related intellectual property. Revenue from our industrial climate control systems business represents a relatively small portion of consolidated revenue, totaling $1.7 million for the period from June 7, 2025 through April 30, 2026.
Recent Developments
Restatements
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, we restated our 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.
Nasdaq Compliance
On May 7, 2026, we received a letter from the Staff of Nasdaq notifying us that we no longer comply with Nasdaq Listing Rule 5620(a) for continued listing of shares of our common stock, due to our failure to hold an annual meeting within 12 months of our fiscal year end. As a result, we have submitted a plan to Nasdaq to regain compliance. If Nasdaq accepts our 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
Our plan of compliance with respect to the foregoing requirement setting forth, among other things, a proxy statement preparation and proxy solicitation timeline leading to our annual meeting of our shareholders. We cannot provide any assurance that the Staff will accept our plan of compliance. In the event our plan is not accepted, our securities may be subject to delisting and we will have the opportunity to appeal the Staff's delisting determination to a hearings panel. We expect to organize an annual meeting in the coming weeks to regain compliance with the applicable Nasdaq Listing Rules.
AMA Litigation
On May 22, 2026, we filed a complaint against the Asset Manager, in the United States District Court for the District of Delaware, regarding the Asset Management Agreement. The complaint seeks a declaration that the Asset Management Agreement is void from inception as unconscionable and orders all fees paid by us to the Asset Manager under the Asset Management Agreement since inception be returned to the Company. Alternatively, the complaint seeks a declaration that a liquidated damages clause in the Asset Management Agreement, which would accelerate nearly 20 years of future fees upon termination, is an unenforceable penalty.
Board and Executive Changes
On May 4, 2026, Anthony K. McDonald, our President and a member of our Board, resigned as our 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.
Components of Results of Operation
Revenue
We earn revenues from the two operating businesses within our Retail and Industry segment:
●Retail sales of vaping products through our Fat Panda retail locations in Central Canada and e-commerce sales through Fat Panda's online platform and
●Sales of industrial climate control systems for the controlled environment agriculture industry.
Our revenues do not include any activities within our BNB Treasury Management segment, including the income we earn on our BNB holdings such as income earned from Airdrops.
Fat Panda
Revenues earned by Fat Panda from its retail stores at point of sale are presented at the stated sales price, gross of transaction costs such as credit card processing fees, and net of sales taxes and applicable sales discounts and promotions.
Industrial Climate Control System
We also earn revenue from the design, engineering, and sale of environmental control technologies and components for the controlled environment agriculture industry. Contracts may span multiple phases of a customer's project life cycle, from facility design and system engineering to equipment delivery and start-up, though we do not provide construction or installation services. Generally, we accept a customer's deposit to acquire the necessary equipment and recognize revenue only when we, or our supplier, ship the finished equipment and fulfill our contractual performance obligations.
Cost of Revenue
Like our revenues, our cost of revenue arises solely from our Fat Panda and Industrial Climate Control System businesses within our Retail and Industry segment and consist primarily of the cost of inventory sold, including certain labor costs and charges for inventory excess or obsolescence, shipping and handling costs, and applicable excise taxes.
Operating Expenses
Our operating expenses generally consist of fees we pay to the Asset Manager; selling, general and administrative expenses; and net realized and unrealized gains and losses on our digital assets, primarily on our BNB holdings. During the period from June 7, 2025 through April 30, 2026, we also incurred elevated advisory expenses in connection with a shareholder action.
Management fees to affiliate
We expense contractual asset management fees incurred in connection with the AMA for assets within our DAT Strategy on a monthly basis. Such fees are based on a tiered percentage of the value of those assets.
Selling, general and administrative expenses
Selling, general, and administrative expenses include costs incurred in the day-to-day operations of the business, including employee compensation and benefits, stock-based compensation issued to directors and employees, occupancy and facilities costs, professional and legal fees, insurance, advertising and marketing.
Shareholder advisory expenses
We incurred significant legal, strategic, and investor communications advisors costs in connection with our ongoing response to the shareholder activism campaign. YZi Labs filed preliminary consent solicitation materials seeking to expand the size of the Board and elect its own slate of director candidates, and stated its intent to nominate candidates at our next annual meeting of stockholders. As a result, we engaged advisors to protect shareholder interests and respond to the unsolicited proxy and consent solicitation activities. These matters have required significant time and resources from the Board and management and are expected to continue to do so in the near term.
Unrealized and Realized Loss on Digital Assets
Unrealized and realized loss on digital assets represents net unrealized and realized fair value gains and losses on our digital assets, primarily BNB holdings. Unrealized gains and losses result from the remeasurement of digital assets at fair value at each reporting date using quoted prices. Unrealized losses are driven primarily by fluctuations in the market price of our digital assets rather than changes in the quantity of digital assets held. Realized gains and losses are recognized upon the sale or other disposition of digital assets and are determined using the specific identification method.
Other affiliate operating expenses
Other affiliate operating expenses represent a liability recognized for an incentive award granted to our Chief Executive Officer in connection with a transition agreement, payable in a variable amount of cash in lieu of an equity incentive award.
Other Income, Net
Our other income represents the income or loss generated from non-operating activities, including the income we receive on our BNB holdings, as well as interest we pay on our debt obligations and changes in the fair value of warrants we've issued and treat as liabilities for accounting purposes. During the period from June 7, 2025 through April 30, 2026, we also incurred costs in connection with our acquisition of Fat Panda and our issuance of shares of our common stock and warrants as part of the PIPE Transaction.
Airdrop income
Represents income generated from new tokens or coins distributed by projects within the Binance ecosystem to our eligible BNB holdings. We hold the majority of our BNB tokens with Ceffu, a non-U.S. institutional digital asset custody platform operating within the Binance ecosystem, which enables us to maintain eligibility to receive airdrops. Airdrop income is measured at the fair value of the tokens received on the date of distribution. The timing, frequency, and magnitude of future airdrop allocations are determined by third-party projects and the Binance platform and are outside our control.
Gain on change in fair value of warrant liability
Non-cash gains or losses resulting from the remeasurement of our Stapled Warrants issued as part of the PIPE Transaction are treated as liabilities. Changes in fair value are driven primarily by fluctuations in the market price of the publicly-traded warrants as well as our assumptions around the implied volatility and other inputs used in our valuation model during periods when the publicly-traded warrants become less liquid. Generally, reductions in the market price of our common stock cause us to report unrealized gains since the warrants are more out-of-the-money and their value declines, and the reduced likelihood of warrant exercise reduces our liability. The fair value of the warrants are determined on a gross basis, and does not consider the value of the cash contribution to us upon exercise.
Interest expense, and interest expense to affiliate
Interest expense represents the interest payable by us on our outstanding debt obligations, including a $4.0 million bridge loan used to acquire Fat Panda, which we paid in full in December 2025, as well as convertible and non-convertible note payables also in connection with the Fat Panda acquisition. We include the amortization of debt discounts or premiums as well as applicable foreign currency translation adjustments associated with those instruments.
PIPE transaction costs
Costs incurred in connection with the PIPE Transaction, including legal, advisory, placement agent, and other transaction-related fees allocable to the Stapled Warrants, which are classified as liabilities and carried at fair value. We allocated remaining costs to additional paid-in capital, which did not impact net income.
Business combination expenses
These expenses represent transaction costs incurred in connection with the acquisition of Fat Panda, including legal, advisory, and other professional fees directly attributable to the business combination. These costs are expensed as incurred and are not capitalizable as part of the purchase price allocation.
Other income (expense), net
Other income and expense items include foreign currency transaction gains and losses arising from the our Canadian retail vape operations, interest income on cash deposits, and other non-operating items.
Results of Operations
Because fair value changes in digital assets are recorded through our consolidated statements of operations, our BNB Treasury Management segment results-and consequently our consolidated net income-will be subject to significant volatility based on fluctuations in the market price of BNB. Investors should expect material period-to-period variations in our reported net income that may bear no relationship to the operating performance of our Retail and Industry segment.
Consolidated Statements of Operations and Comprehensive Income
| Successor | Predecessor | Predecessor | ||||||||||||||||||||||||||||||||||||
|
Period from June 7, 2025 through April 30, 2026 |
Period from May 1, 2025 through June 6, 2025 |
Combined Annual Period | Year Ended April 30, 2025 | Increase (Decrease) | ||||||||||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||||||||||||||
|
Revenue
|
$
|
26,407
|
$
|
2,928
|
$
|
29,335
|
$
|
27,992
|
$
|
1,343
|
4.8
|
%
|
||||||||||||||||||||||||||
|
Cost of revenue
|
18,536
|
2,002
|
20,538
|
18,013
|
2,525
|
14.0
|
||||||||||||||||||||||||||||||||
|
Gross profit
|
7,871
|
926
|
8,797
|
9,979
|
(1,182)
|
(11.8)
|
||||||||||||||||||||||||||||||||
|
Operating expenses
|
||||||||||||||||||||||||||||||||||||||
|
Management fees to affiliate
|
5,010
|
-
|
5,010
|
-
|
5,010
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Selling, general and administrative expenses
|
25,618
|
905
|
26,523
|
8,819
|
17,704
|
200.7
|
||||||||||||||||||||||||||||||||
|
Shareholder advisory expenses
|
4,644
|
-
|
4,644
|
-
|
4,644
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Unrealized loss on digital assets
|
130,315
|
-
|
130,315
|
-
|
130,315
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Realized loss on digital assets
|
1,293
|
-
|
1,293
|
-
|
1,293
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other affiliate operating expenses
|
558
|
-
|
558
|
-
|
558
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total operating expenses
|
167,438
|
905
|
168,343
|
8,819
|
159,524
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Operating income (loss)
|
(159,567)
|
21
|
(159,546)
|
1,160
|
(160,706)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other income (loss), net
|
||||||||||||||||||||||||||||||||||||||
|
Airdrop income
|
7,863
|
-
|
7,863
|
-
|
7,863
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Gain on change in fair value of warrant liability
|
282,920
|
-
|
282,920
|
-
|
282,920
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Interest expense
|
(697)
|
-
|
(697)
|
-
|
(697)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Interest expense to affiliate
|
(143)
|
-
|
(143)
|
-
|
(143)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
PIPE Transaction costs
|
(14,551)
|
-
|
(14,551)
|
-
|
(14,551)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Business combination expenses
|
(970)
|
-
|
(970)
|
-
|
(970)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other income (expense), net
|
18
|
-
|
18
|
(453)
|
471
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total other income (loss), net
|
274,440
|
-
|
274,440
|
(453)
|
274,893
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Income before income tax expense (benefit)
|
114,873
|
21
|
114,894
|
707
|
114,187
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Income tax expense (benefit)
|
(372)
|
2
|
(370)
|
137
|
(507)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Net income
|
115,245
|
19
|
115,264
|
570
|
114,694
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other comprehensive income (loss)
|
||||||||||||||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
59
|
35
|
94
|
(1)
|
95
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total comprehensive income
|
$
|
115,304
|
$
|
54
|
$
|
115,358
|
$
|
569
|
$
|
114,789
|
n.m.
|
|||||||||||||||||||||||||||
Revenues
While our revenues increased $1.3 million for the Combined Annual Period compared to the year ended April 30, 2025, $1.7 million of the increase relates to our Industrial Climate Control Systems business, which we omit from our historical results as those operations were not part of the Predecessor and therefore not comparable.
| Successor | Predecessor | Predecessor | ||||||||||||||||||||||||||||||||||||
|
Period from June 7, 2025 through April 30, 2026 |
Period from May 1, 2025 through June 6, 2025 |
Combined Annual Period | Year Ended April 30, 2025 | Increase (Decrease) | ||||||||||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||||||||||||||
|
Fat Panda
|
||||||||||||||||||||||||||||||||||||||
|
Retail
|
$
|
23,574
|
$
|
2,761
|
$
|
26,335
|
$
|
25,365
|
$
|
970
|
3.8
|
%
|
||||||||||||||||||||||||||
|
E-commerce
|
742
|
166
|
908
|
1,939
|
(1,031)
|
(53.2)
|
||||||||||||||||||||||||||||||||
|
Other
|
379
|
1
|
380
|
688
|
(308)
|
(44.8)
|
||||||||||||||||||||||||||||||||
|
Total Fat Panda
|
24,695
|
2,928
|
27,623
|
27,992
|
(369)
|
(1.3)
|
||||||||||||||||||||||||||||||||
|
Industrial Climate Control Systems
|
||||||||||||||||||||||||||||||||||||||
|
Equipment and systems sales
|
1,538
|
-
|
1,538
|
-
|
1,538
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other
|
174
|
-
|
174
|
-
|
174
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total industrial climate control systems
|
1,712
|
-
|
1,712
|
-
|
1,712
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total revenue, net
|
$
|
26,407
|
$
|
2,928
|
$
|
29,335
|
$
|
27,992
|
$
|
1,343
|
4.8
|
|||||||||||||||||||||||||||
Fat Panda
Revenue for the Combined Annual Period was $27.6 million, compared to $28.0 million for the year ended April 30, 2025, representing a decrease of $0.4 million, or approximately 1.3%. Retail revenue increased by $1.0 million as a result of increased prices driven by increases in Canadian provincial excise taxes that led to higher excise taxes paid by our customers, partially offset by a decline in volume primarily related to the price increases. The changes in Canadian provincial excise taxes also necessitated substantial changes to our webstore, which experienced prolonged downtime as we redesigned the webstore to comply with the new regulations. As a result, Fat Panda's e-commerce revenue declined $1.0 million as customers were unable to access the Fat Panda webstore and visits to the webstore have not yet returned to levels Fat Panda experienced prior to the webstore redesign as well as impacts from the aforementioned increased excise taxes. Other revenue declined $0.3 million from reduced business-to-business wholesale sales that did not provide attractive margins.
Industrial Climate Control Systems
We earned $1.7 million from the sale of Industrial Climate Control Systems, with $1.5 million representing the delivery of equipment systems under three new contracts and $0.2 million earned from related services provided.
Cost of Revenue
We recognized $2.0 million of costs associated with the $1.7 million in revenues we earned from our Industrial Climate Control Systems business, both of which we omit from presentation during Predecessor periods. The negative margin is a result of project management and manufacturing salaries and overhead exceeding the margin from equipment sales.
The following table presents the results of Fat Panda that relate to both Predecessor and Successor periods:
Fat Panda
| Successor | Predecessor | Predecessor | Increase (Decrease) | ||||||||||||||||||||||||||||||||||||||
| Period from June 7, 2025 through April 30, 2026 | Period from May 1, 2025 through June 6, 2025 | Combined Annual Period | Year Ended April 30, 2025 | $ | % | ||||||||||||||||||||||||||||||||||||
|
Fat Panda
|
$
|
16,494
|
$
|
2,002
|
$
|
18,496
|
$
|
18,013
|
$
|
483
|
2.7
|
%
|
|||||||||||||||||||||||||||||
Fat Panda's cost of revenue was $18.5 million for the Combined Annual Period, compared to $18.0 million for the year ended April 30, 2025, an increase of $0.5 million, or 2.7%. The increase was primarily driven by higher prices we paid for finished goods that we purchased for resale and are subject to increases in provincial excise taxes enacted in April 2025, partially offset by reduced purchases of discontined products.
Operating Expenses
All our operating expenses other than certain selling, general and administrative costs pertain to corporate and BNB Treasury Management business segment activities
| Successor | Predecessor | Predecessor | ||||||||||||||||||||||||||||||||||||
|
Period from June 7, 2025 through April 30, 2026 |
Period from May 1, 2025 through June 6, 2025 |
Combined Annual Period | Year Ended April 30, 2025 | Increase (Decrease) | ||||||||||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||||||||||||||
|
Management fees to affiliate
|
$
|
5,010
|
$
|
-
|
$
|
5,010
|
$
|
-
|
$
|
5,010
|
n.m.
|
|||||||||||||||||||||||||||
|
Selling, general and administrative expenses
|
25,618
|
905
|
26,523
|
8,819
|
17,704
|
200.7
|
%
|
|||||||||||||||||||||||||||||||
|
Shareholder advisory expenses
|
4,644
|
-
|
4,644
|
-
|
4,644
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Unrealized loss on digital assets
|
130,315
|
-
|
130,315
|
-
|
130,315
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Realized loss on digital assets
|
1,293
|
-
|
1,293
|
-
|
1,293
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other affiliate operating expenses
|
558
|
-
|
558
|
-
|
558
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total operating expenses
|
$
|
167,438
|
$
|
905
|
$
|
168,343
|
$
|
8,819
|
$
|
159,524
|
n.m.
|
|||||||||||||||||||||||||||
Selling, General, and Administrative Expenses
| Successor | Predecessor | Predecessor | ||||||||||||||||||||||||||||||||||||
|
Period from June 7, 2025 through April 30, 2026 |
Period from May 1, 2025 through June 6, 2025 |
Combined Annual Period | Year Ended April 30, 2025 | Change In | ||||||||||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||||||||||||||
|
Retail and Industry
|
||||||||||||||||||||||||||||||||||||||
|
Compensation expense
|
$
|
5,374
|
$
|
431
|
$
|
5,805
|
$
|
4,950
|
$
|
855
|
17.3
|
%
|
||||||||||||||||||||||||||
|
Professional and contractor fees
|
535
|
135
|
670
|
704
|
(34)
|
(4.8)
|
||||||||||||||||||||||||||||||||
|
Advertising and marketing expense
|
193
|
63
|
256
|
622
|
(366)
|
(58.8)
|
||||||||||||||||||||||||||||||||
|
Equity-based compensation
|
34
|
-
|
34
|
-
|
34
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other
|
3,967
|
276
|
4,243
|
2,543
|
1,700
|
66.9
|
||||||||||||||||||||||||||||||||
|
Total Retail and Industry
|
10,103
|
905
|
11,008
|
8,819
|
2,189
|
24.8
|
||||||||||||||||||||||||||||||||
|
BNB Treasury Management
|
||||||||||||||||||||||||||||||||||||||
|
Compensation expense
|
245
|
-
|
245
|
-
|
245
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Professional and contractor fees
|
208
|
-
|
208
|
-
|
208
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other
|
272
|
-
|
272
|
-
|
272
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total BNB Treasury Management
|
725
|
-
|
725
|
-
|
725
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Corporate
|
||||||||||||||||||||||||||||||||||||||
|
Compensation expense
|
2,152
|
-
|
2,152
|
-
|
2,152
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Professional and contractor fees
|
5,056
|
-
|
5,056
|
-
|
5,056
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Advertising and marketing expense
|
4,938
|
-
|
4,938
|
-
|
4,938
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Equity-based compensation
|
43
|
-
|
43
|
-
|
43
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other
|
2,601
|
-
|
2,601
|
-
|
2,601
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total Corporate
|
14,790
|
-
|
14,790
|
-
|
14,790
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total
|
$
|
25,618
|
$
|
905
|
$
|
26,523
|
$
|
8,819
|
$
|
17,704
|
200.7
|
|||||||||||||||||||||||||||
Retail and Industry
Our Retail and Industry segment includes the results of operations for both our Fat Panda and Industrial Climate Control Systems businesses. The Industrial Climate Control Systems operations, which we do not present in the Predecessor period and are therefore not comparable, incurred $0.6 million of compensation expense, $0.1 million of professional and contractor fees, and $0.6 million of other general and administrative expense during the period from June 7, 2025 through April 30, 2026.
The remaining $0.9 million increase in selling, general, and administrative costs relate to the operations of Fat Panda and includes increased expenses comprised of $1.7 million of accounting, audit, and consulting expenses, directors' and officers' insurance, and board fees, $0.6 million related to amortization of our acquisition of Fat Panda trade names, and $0.1 million of increased compensation. The increases were partially offset by declines of $0.4 million in travel, office, and other benefits related to prior ownership, $0.4 million in advertising and marketing, $0.3 million in shipping, and $0.4 million in other general and administrative costs.
BNB Treasury Management
We incurred $0.7 million of selling, general, and administrative costs that included $0.2 million in compensation expense for personnel supporting treasury operations, $0.2 million in professional and contractor fees related to custody and digital asset advisory services, and $0.3 million in other expenses, which included digital asset management fees and related operational costs, during the period from June 7, 2025 through April 30, 2026.
Corporate
During the period from June 7, 2025 through April 30, 2026, we incurred $14.8 million of selling, general, and administrative costs, which included $5.1 million of professional and contractor fees driven by legal, accounting, and advisory fees incurred for outsourced accounting integration support, public company reporting obligations, and other legal fees incurred in connection with ongoing legal matters, $4.9 million of advertising and marketing expenses incurred primarily in connection with our at-the-market program and investor relations activities, $2.2 million of compensation expense that included $1.4 million related to the transition agreement we entered into with our CEO on March 16, 2026 as well as the addition of other management. Additionally, we incurred other corporate expenses of $2.0 million in insurance costs associated with our expanded public company operations and $0.6 million of general corporate overhead.
Operating Expenses Applicable Solely to the Successor Period
Management fees to affiliate
We incurred $5.0 million of management fees under the AMA, representing tiered fees ranging from 1.4% to 1.8% of the fair value of assets within our DAT Strategy, which included our BNB holdings, with a weighted-average fair value of $330.2 million during the period from June 7, 2025 through April 30, 2026.
Shareholder advisory expenses
We incurred $4.6 million of professional fees for legal, strategic, and communications advice during the period from June 7, 2025 through April 30, 2026 as part of our ongoing response to an activist shareholder campaign, which have required significant time and resources from the Board and management.
Unrealized and Realized Loss on Digital Assets
We experienced unrealized losses of $130.3 million, of which $129.2 million related to a decline in the market value our BNB holdings and $1.1 million related to a decline in the market value of Bitcoin ("BTC"). In addition to these unrealized losses, we realized a loss of $1.3 million upon our disposition of BTC.
Other affiliate operating expenses
Other affiliate operating expenses represent the $0.6 million estimated fair value of a cash incentive award granted to Mr. David Namdar, our Chief Executive Officer, in connection with a transition agreement, payable in a variable amount of cash in lieu of an equity incentive award.
Other income (expense), net
Aside from a $0.5 million impairment of a note receivable from a party related to Fat Panda during the year ended April 30, 2025, substantially all non-operating income and expense relates to our acquisition of Fat Panda, the PIPE Transaction, and our DAT Strategy.
| Successor | Predecessor | Predecessor | ||||||||||||||||||||||||||||||||||||
|
Period from June 7, 2025 through April 30, 2026 |
Period from May 1, 2025 through June 6, 2025 |
Combined Annual Period | Year Ended April 30, 2025 | Increase (Decrease) | ||||||||||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||||||||||||||
|
Airdrop income
|
$
|
7,863
|
$
|
-
|
$
|
7,863
|
$
|
-
|
$
|
7,863
|
n.m.
|
|||||||||||||||||||||||||||
|
Gain on change in fair value of warrant liability
|
282,920
|
-
|
282,920
|
-
|
282,920
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Interest expense
|
(697)
|
-
|
(697)
|
-
|
(697)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Interest expense to affiliate
|
(143)
|
-
|
(143)
|
-
|
(143)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
PIPE Transaction costs
|
(14,551)
|
-
|
(14,551)
|
-
|
(14,551)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Business combination expenses
|
(970)
|
-
|
(970)
|
-
|
(970)
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Other income (expense), net
|
18
|
-
|
18
|
(453)
|
471
|
n.m.
|
||||||||||||||||||||||||||||||||
|
Total other income (loss), net
|
$
|
274,440
|
$
|
-
|
$
|
274,440
|
$
|
(453)
|
$
|
274,893
|
n.m.
|
|||||||||||||||||||||||||||
Airdrop income
We collected Airdrops valued at $7.9 million on our BNB holdings, based on the U.S. dollar equivalent of the token received. During the period from June 7, 2025 through April 30, 2026, Airdrop activity has decreased in the greater BNB ecosystem and there can be no assurance that activity will increase in the future as we cannot predict the timing or magnitude of future Airdrops, and continued reduction in Airdrops frequency or size could have an adverse effect on our results of operations.
Gain on change in fair value of warrant liability
We issued Stapled Warrants in connection with the PIPE Transaction, recognized as a liability under U.S. GAAP, and to which we allocated $305.0 million of value. Since the issuance, the market price of our common stock has declined and the Stapled Warrants began to trade separately on Nasdaq under the symbol "BNCWZ" in April 2026. Increases (decreases) in the market price of our common stock generally corresponds to a higher (lower) value of the Stapled Warrants, resulting in a loss (gain) on such warrants, as it becomes more (less) likely warrant holders will exercise their warrants. The fair value of the Stapled Warrants represent a gross value and do not offset amounts by the cash we would receive upon exercise of such warrants.
Interest expense
We incurred $0.7 million of interest expense incurred on a $4.0 million bridge loan we used to finance the acquisition of Fat Panda that we fully repaid in December 2025.
Interest expense to affiliate
We incurred $0.1 million of interest expense that included amounts paid as well as amortization of debt discount on a promissory note and convertible promissory note issued to the President of Fat Panda and current employee in connection with the Fat Panda Acquisition.
PIPE transaction costs
We incurred $23.9 million of legal, underwriting, and other costs in connection with the PIPE Transaction, of which we allocated $14.6 million to the Stapled Warrants that we recognized in the Consolidated Statements of Operations and Comprehensive Income while we reduced additional paid-in capital by the remaining $9.3 million.
Business combination expenses
We expensed $1.0 million of professional, advisory, and legal costs in connection with our acquisition of Fat Panda.
Income Tax Provision
Our income tax provision is generally not comparable between the Predecessor and Successor periods as the nature and amount of our pre-tax income substantially differs and the Predecessor is solely subject to Canadian federal and provincial tax jurisdictions whereas the Successor is also subject to U.S. federal, state and local taxes. Our effective tax rates were (0.3)%, 10.7%, and 19.4% 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. Our effective tax rate for the period from June 7, 2025 through April 30, 2026 differed from the U.S. federal statutory rate of 21.0% primarily due to foreign statutory tax rate differences, particularly in the Cayman Islands where our income was not generally subject to tax, the impact of non-taxable gains on our warrant liability, and changes in our valuation allowance against deferred tax assets such as net operating loss carryforwards, and nondeductible expenses. See Note 9 to our Consolidated Financial Statements for further details.
Foreign Currency Translation Adjustment
Our Fat Panda business uses Canadian dollars as its functional currency while we use U.S. dollars as our reporting currency. As a result, we record other comprehensive income related to the difference of certain period-end amounts between the two currencies, though such adjustments have not historically been material.
Financial Condition, Liquidity and Capital Resources
At April 30, 2026, we held cash and cash equivalents of $3.1 million; 515,544 BNB tokens with a fair value of $317.3 million, of which we pledged 27,588, or $17.0 million, to borrow $10.0 million on May 1, 2026; and other digital assets with an aggregate fair value of $2.4 million, and we borrowed a total of $1.9 million consisting of notes payable to the prior owners of Fat Panda issued in connection with the related acquisition.
Our primary sources of liquidity include cash we receive from the sale of retail vape products and, to a lesser extent, the sale of industrial climate control system; cash received from our debt obligations; proceeds from the sale of shares of or common stock through at-the-market offerings or other capital raise activities; the cash we would receive from the exercise of our outstanding warrants if the market value of our common stock rises above the warrants' exercise price and such in-the-money warrants are not exercised on a cashless basis. We may also sell our digital assets, including BNB tokens, at their then-current market price for cash, but do not generally intend to sell BNB tokens for working capital purposes.
Our primary uses of liquidity include acquisitions of digital assets, primarily BNB tokens, repurchases of our common stock, repayment of our debt obligations, and payment of selling, general, and administrative costs to operate as a publicly-traded company. We may also use cash to acquire, or otherwise fund, operating or other businesses.
Historically, we have incurred substantial costs in connection with the PIPE Transaction and shareholder advisory costs in connection with recent shareholder activism. While there can be no assurance that we will not incur such costs in the future, we do not expect to incur such costs on a recurring basis over the long-term.
Digital Assets
We hold a significant portion of our liquid assets in digital assets, which are measured at fair value with changes recognized in earnings, further described in Note 4 to our Consolidated Financial Statements.
Our liquidity and capital resources are subject to substantial volatility in the market price of BNB and other digital assets. A decline in the market price of BNB or other digital assets would reduce the fair value of our digital assets and could adversely affect our ability to fund operations, invest in growth, or meet obligations as they come due. We manage this risk by maintaining fiat liquidity; however, these measures may not fully mitigate market, custodial, regulatory, or other risks. A 10.0% increase (decline) in the price of BNB at April 30, 2026, holding all other factors constant, would have resulted in an additional unrealized gain (loss) of approximately $31.7 million. These potential fluctuations significantly exceed the operating income or loss expected from our Retail and Industry segment.
Although digital assets may be traded on various cryptocurrency exchanges, the liquidity of these assets may vary depending on market conditions. Periods of significant volatility or market stress may reduce liquidity, widen bid-ask spreads, and limit our ability to sell digital assets at favorable prices. Our ability to generate liquidity from our digital assets may depend in part on our ability to sell digital assets in the market. If we were required to liquidate a significant portion of our BNB holdings to meet liquidity needs, such sales could adversely affect the market price of BNB and reduce the value of our remaining holdings. Management evaluates the Company's liquidity requirements on an ongoing basis and may determine to sell or otherwise utilize portions of its digital asset holdings to fund operations, pursue strategic opportunities, or satisfy other capital requirements.
Digital Asset Treasury Risk Management
We have implemented policies and procedures designed to manage risks associated with holding digital assets. These measures include the use of institutional custodial platforms, internal controls governing the authorization and execution of digital asset transactions, and monitoring market conditions affecting our digital asset holdings. Despite these measures, digital assets are subject to risks that differ from traditional financial assets, including cybersecurity risks, technological risks associated with blockchain networks, and the potential for rapid changes in market conditions. We continuously evaluate and update our risk management practices as our digital asset treasury strategy evolves.
At-the-Market Program
In August 2025, we entered into an at-the-market offering agreement (the "ATM Program"), under which we may offer and sell shares of our common stock having an aggregate offering price of up to $50.0 million from time to time through our agent acting as our 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 this program, we have provided our agent with customary indemnification rights, and they are entitled to a commission of up to 3.0% of the gross proceeds from each sale of shares made through, or to, the agent. We 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.
Share Repurchase Program
In September 2025, our Board authorized a share repurchase program pursuant to which we may repurchase up to $250.0 million of our common stock on a perpetual basis period from the date of authorization. We intend to fund the share repurchases through a combination of cash on hand, future cash flow from operations, and borrowings under our debt obligations. Under the share repurchase program, we may purchase common stock through open market purchases, privately-negotiated transactions, accelerated share repurchases, or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended, or by any combination of such methods, in each case subject to compliance with all SEC rules and other legal requirements. The number of shares to be purchased and the timing of the purchases are based on a variety of factors, including, but not limited to, the level of cash balances, debt covenant restrictions, general business conditions, the market price of our stock, self-imposed trading blackout periods, and the availability of alternative investment opportunities. 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. We repurchased and cancelled 3,242,210 shares of common stock at an average price per share 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.
Debt Obligations
Promissory Note
In connection with the Fat Panda Acquisition, we issued an interest-only promissory note in the principal amount of $0.8 million to the President of Fat Panda, bearing interest at a rate of 7.0% per annum, payable monthly. The Promissory Note matures in November 2026. We expect to satisfy this debt obligation at maturity with available cash on hand.
Convertible Promissory Note
We issued a convertible promissory note in the principal amount of $0.8 million to the President of Fat Panda, bearing interest at a rate of 7.0% per annum. The holder has the right to convert the outstanding principal amount of the convertible promissory note into shares of our common stock at a conversion price of $19.00 per share at any time on or before June 1, 2027. If no conversion election is made by the holder on or prior to such date, we are required to repay the entire outstanding principal balance plus accrued and unpaid interest in cash. To the extent the holder elects conversion, the settlement would not require the use of cash and would instead result in the issuance of additional shares of common stock.
Tax Indemnification Note
We issued a non-interest-bearing note in the amount of $0.4 million to the former Fat Panda shareholders that does not have a fixed maturity date. Within 15 days following the date on which the Canada Revenue Agency issues a letter confirming that a certain tax liability does not exist in connection with our acquisition of Fat Panda, we are required to repay the note, reduced by any taxes assessed, if any.
Other Debt Activities
We entered into a collateralized loan agreement on April 30, 2026 and pledged $17.0 million of BNB tokens, for which received $10.0 million USDC on May 1, 2026. Our ability to sell, transfer, or otherwise use the pledged digital assets is restricted for the duration of the borrowing, the proceeds from which we expect to use for share repurchases and working capital.
Summary of Cash Flows
The following summarizes our cash flow data for the each of the periods presented:
| Successor | Predecessor | |||||||||||||||||||
|
Period from June 7, 2025 through April 30, 2026 |
Period from May 1, 2025 through June 6, 2025 |
Year Ended April 30, 2025 | ||||||||||||||||||
|
Net cash provided by (used in) operating activities
|
$
|
(26,622)
|
$
|
(239)
|
$
|
171
|
||||||||||||||
|
Net cash used in investing activities
|
(387,694)
|
(2)
|
(97)
|
|||||||||||||||||
|
Net cash provided by financing activities
|
405,779
|
-
|
-
|
|||||||||||||||||
Cash Flow from Operating Activities
For the Period from June 7, 2025 through April 30, 2026
Cash used in operating activities for the period from June 7, 2025 through April 30, 2026 was $26.6 million. We received $24.7 million in cash from Fat Panda vape sales and $1.7 million from the sale of industrial climate control system and related services, as well as $0.7 million in income tax refunds. We paid $19.9 million for inventory (which includes excise tax paid on inventory items purchased from suppliers), and excise taxes on production of $1.8 million. We also paid $7.6 million in cash compensation, $5.1 million for advertising and marketing, $4.6 million for asset management fees, $3.9 million for shareholder advisory costs, $5.1 million for other professional fees, $2.0 million for directors' and officers' insurance, other legal fees of $1.8 million, and $1.9 million for rent, utilities, insurance and other office expenses.
For the Period from May 1, 2025 through June 6, 2025
Cash used in operating activities for the period from May 1, 2025 through June 6, 2025 was $0.2 million. We received $2.9 million in cash from Fat Panda vape sales, for which we paid $2.4 million for inventory, including excise taxes on inventory items purchased from suppliers, $0.3 million in excise tax for produced items, and $0.4 million in cash compensation.
For the Year Ended April 30, 2025
Cash provided by operating activities for the year ended April 30, 2025 was $0.2 million. We received $26.8 million in cash from Fat Panda vape sales, for which we paid $16.2 million for inventory, including excise tax paid for finished items purchased from suppliers, and excise taxes on produced items of $1.4 million. Additionally, we paid $5.0 million in cash compensation, $1.2 million for rent, utilities, insurance and office expenses, $0.7 million in accounting, consulting and legal fees, $0.6 million in advertising and marketing, $0.4 million for shipping and postage, $0.4 million in travel and vehicle expenses, $0.3 million in income taxes paid, and $0.3 million for bank and credit card fees, and other expenses.
Cash Flow from Investing Activities
Cash used in investing activities for the period from June 7, 2025 through April 30, 2026 was $387.7 million, including $380.9 million paid to purchase digital assets and $10.6 million paid to acquire Fat Panda, partially offset by $3.7 million we received from the sale of digital assets.
Additionally, we purchased $- million, $- million, and $0.1 million of property and equipment during 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.
Cash Flow from Financing Activities
Cash provided by financing activities for the period from June 7, 2025 through April 30, 2026 was $405.8 million, including $433.8 million received from issuance of common stock and warrants from the PIPE Transaction, less $23.9 million paid for related costs, and $12.9 million received from the sale of our common stock under our at-the-market program, partially offset by $17.0 million we paid to repurchase shares of our common stock under our share repurchase program. Additionally, we received $3.9 million, net of issuance discounts, on $4.0 million bridge loan that we fully repaid during the period from June 7, 2025 through April 30, 2026.
Fat Panda, our accounting Predecessor, did not receive or pay any cash for financing activities during the period from May 1, 2025 through June 6, 2025 or the year ended April 30, 2025.
Other Changes in Financial Position
In addition to the changes in our financial position from April 30, 2025 to April 30, 2026 described in "-Results of Operations" and "-Summary of Cash Flows," the following activities also occurred:
●In connection with the PIPE Transaction, we received approximately $66.3 million of in-kind digital asset contributions from investors in exchange for the issuance of common stock and warrants.
●We issued 39,000 shares of our common stock, valued at $0.3 million, and issued related party seller notes totaling $1.4 million, net of discounts and a $0.4 million non-interest-bearing tax indemnification note as non-cash transactions in connection with our acquisition of Fat Panda. Our acquisition of Fat Panda also resulted in our acquisition of $5.2 million of identifiable intangible assets and $4.2 million of goodwill, reduced by $0.7 million of measurement period and foreign exchange rate adjustments that also resulted in corresponding adjustments to the estimated fair values of certain assets acquired and liabilities assumed.
●We repurchased $0.5 million of our common stock in connection with our share repurchase program that we had not yet settled with our broker at April 30, 2026.
●We issued 2,393,884 shares of our common stock upon cashless exercise of 3,831,719 warrants.
Commitments and Contingencies
See Note 11 to our Consolidated Financial Statements, included as part of this Annual Report, for a discussion of commitments and contingencies, including contractual payment obligations.
Known Trends and Uncertainties Affecting Our Business
Management is aware of several trends and uncertainties that may affect our financial condition and results of operations, including: continued volatility in digital asset markets; evolving regulatory frameworks governing digital assets and cryptocurrency exchanges; technological developments affecting blockchain networks and decentralized applications; and macroeconomic conditions affecting investor demand for digital assets. These trends may influence the market value and liquidity of BNB and other digital assets and may therefore materially affect our financial condition and results of operations.
Critical Accounting Estimates
The preparation of our Consolidated Financial Statements in accordance with U.S. GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions that in certain circumstances affect amounts reported therein. In preparing these financial statements, our estimates and judgments are based on historical experience, information from third-party valuation professionals and various other assumptions, giving due consideration to materiality. We consider the accounting policy discussed below to be critical to the understanding of our consolidated financial statements. Actual results could differ from our estimates and assumptions, and any such difference could be material to our consolidated financial statements, particularly as many of the critical policies relate to our DAT Strategy, for which we have little history with which to compare the accuracy of our estimates. These significant accounting policies are described more fully in Note 2 of our Consolidated Financial Statements.
Warrant Liabilities
We classify the Stapled Warrants issued in connection with the PIPE Transaction as liabilities measured at fair value. These were initially recorded at a fair value of $305.0 million at the date of issuance and are remeasured at each reporting period, with changes in fair value recognized in earnings. The determination of fair value requires significant estimates and assumptions, including expected volatility, risk-free interest rate, expected term. During the period from June 7, 2025 through April 30, 2026, we recognized a $282.9 million gain from changes in the fair value of warrant liabilities. Given the magnitude of the warrant liability and the sensitivity of the valuation to changes in the underlying assumptions, small changes in these inputs could result in material differences in the reported fair value. In April 2026, the Stapled Warrants began trading on Nasdaq under the ticker symbol "BNCWZ." Since management does not believe the Stapled Warrants trade with sufficient liquidity on which we can solely rely on the traded market price, we equal-weight the traded market price with its internal valuation model, with assistance from an independent valuation agent.
Digital Assets
We hold significant digital asset positions, including BNB, Bitcoin, Tether, and USDC, which are accounted for at fair value with changes recognized in earnings in accordance with ASC 350-60. Fair value is determined using observable, quoted market prices on principal exchanges, classified within Level 1 of the fair value hierarchy. While the fair value measurements themselves rely on observable inputs, management judgment is required in evaluating the determination of the principal market for each digital asset and in the valuation of digital assets received through non-cash transactions, including Airdrops. Additionally, management periodically reassesses whether the selected principal market continues to represent the most advantageous market for each digital asset. Key indicators monitored by management in this assessment include changes in trading volume, liquidity, and the availability of reliable pricing data across exchanges. During the period from June 7, 2025 through April 30, 2026, we acquired $455.0 million of digital assets, including $7.9 million of Airdrops for which we recognized non-cash income, and recognized unrealized and realized losses of $130.3 million and $1.3 million, respectively. Given the inherent price volatility of digital assets, changes in fair value between reporting periods could be material to our Consolidated Financial Statements.
Cash Incentive Award
We awarded a cash-settled incentive award that is classified as a liability and remeasured at fair value at each reporting period, with changes in fair value recognized in net income. The determination of fair value requires the use of observable inputs, including quoted market prices of our common stock, as well as significant unobservable inputs, including adjusted historical volatility of our common stock, for which we classify the cash incentive award within Level 3 of the fair value hierarchy and engage an independent valuation agent to assist us with these valuations. Changes in the assumptions used to determine fair value, particularly volatility, could result in materially different fair value amounts in future periods.
Goodwill and Intangible Assets
We account for business combinations under the acquisition method of accounting and allocate the purchase price we pay to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. Any purchase consideration in excess of the fair value of net assets acquired is recorded as goodwill. We determine the fair value of tangible and identifiable intangible assets acquired and liabilities assumed using the best available information, which incorporates various estimates and assumptions, including, but not limited to, future expected cash flows, useful lives, discount rates, and royalty rates. These estimates are based on historical data, internal estimates, and external sources. Unanticipated events may affect the validity of these assumptions.
In connection with the Fat Panda Acquisition, we initially recorded $4.2 million of goodwill, reduced by $0.7 million of measurement period and foreign exchange rate adjustments, and $5.2 million of definite-lived intangible assets. The fair value of the intangible assets was determined based on the relief-from-royalty method, which required applying significant assumptions including the discount rate, revenue projections, the selected royalty rate, and estimated useful life. While we believe these assumptions to be reasonable and appropriate, changes in these estimates could result in different fair value amounts.
Goodwill
Goodwill represents the excess of the purchase price we paid to acquire Fat Panda over the fair value of identifiable net assets acquired. Goodwill is denominated in Canadian dollars, the functional currency of the acquired entity, and translated into U.S. dollars at each reporting date, with changes recognized in accumulated other comprehensive income (loss). Goodwill impairment testing is performed at least annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For goodwill impairment testing purposes, we have determined that there is one reporting unit. During the quarter ended April 30, 2026, management performed a quantitative goodwill impairment test with the assistance of an independent third-party valuation firm. For purposes of this assessment, management estimated the fair value of the reporting unit using an equal weighting of the discounted cash flow method (income approach) and the guideline public company method (market approach), and determined that the estimated fair value of the reporting unit exceeded its carrying value. Accordingly, no impairment was identified. At April 30, 2026, the carrying value of goodwill was $3.5 million.
Definite-lived intangible assets
Definite-lived intangible assets consist of Fat Panda trade names, which are expected to contribute to the future cash flows of Fat Panda over its estimated useful life of 10 years, are amortized on a straight-line basis over its remaining expected useful life. Management periodically evaluates the remaining useful life and carrying value of the intangible asset to determine whether events or changes in circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include significant adverse changes in the business climate, declines in revenue performance relative to historical results, changes to applicable legal, regulatory, or contractual provisions, and reductions in underlying operating cash flows. During the quarter ended April 30, 2026, management identified triggering events and performed a recoverability test under ASC 360-10 by comparing estimated future undiscounted cash flows of the asset group to its carrying value. Based on this analysis, management concluded that the undiscounted cash flows exceeded the carrying value and no impairment was recorded. As of April 30, 2026, the carrying value of definite-lived intangible assets was $4.8 million, net of accumulated amortization.
Income Taxes
We recognize deferred tax assets and liabilities for temporary differences between the financial reporting and tax bases of assets and liabilities. Management evaluates the realizability of deferred tax assets on a jurisdictional basis and establishes a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
At April 30, 2026, we recorded a $4.0 million increase in our valuation allowance, primarily related to our results of operations in the United States, reflecting cumulative losses and updated forecasts of future taxable income. The valuation allowance remains affected by cumulative losses in certain jurisdictions and uncertainty about the timing of future reversals of deferred tax liabilities.
Future changes in the valuation allowance could materially affect our effective tax rate and results of operations.
We are subject to income taxes in the United States and Canada and subject to audit by taxing authorities. As part of the income tax provision, we evaluate our tax positions to determine whether it is more likely than not that such positions will be sustained upon examination based on their technical merits. For those positions that do not meet the recognition threshold, we record a liability for unrecognized tax benefits.
We account for uncertainty in income taxes under the recognition and measurement framework of ASC 740. An uncertain tax position is a position taken or expected to be taken in a tax return where there is uncertainty as to whether the relevant taxing authority would sustain the position upon examination.
Tax benefits are recognized only for positions that meet the more-likely-than-not recognition threshold, and the amount recognized is measured as the largest benefit that is greater than 50 percent likely to be realized upon settlement.
We record liabilities for unrecognized tax benefits related to these positions, as well as interest and penalties, where applicable. Changes in uncertain tax positions may result from new information, audit developments, expiration of statutes of limitation, or changes in tax law.
At April 30, 2026 and April 30, 2025, we had no unrecognized tax benefits under ASC 740.
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