Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 10, 2022 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2022 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-54286 | |
Entity Registrant Name | CEA INDUSTRIES INC. | |
Entity Central Index Key | 0001482541 | |
Entity Tax Identification Number | 27-3911608 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 385 South Pierce Avenue | |
Entity Address, Address Line Two | Suite C | |
Entity Address, City or Town | Louisville | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80027 | |
City Area Code | (303) | |
Local Phone Number | 993-5271 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 7,953,974 | |
Common Stock, $0.00001 Par Value [Member] | ||
Title of 12(b) Security | Common Stock, $0.00001 par value | |
Trading Symbol | CEAD | |
Security Exchange Name | NASDAQ | |
Warrants to Purchase Common Stock [Member] | ||
Title of 12(b) Security | Warrants to purchase common stock | |
Trading Symbol | CEADW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 20,611,388 | $ 2,159,608 |
Accounts receivable (net of allowance for doubtful accounts of $172,760 and $181,942, respectively) | 140,473 | 179,444 |
Other receivables | 78,943 | |
Inventory, net | 401,757 | 378,326 |
Prepaid expenses and other | 2,887,593 | 1,273,720 |
Total Current Assets | 24,120,154 | 3,991,098 |
Noncurrent Assets | ||
Property and equipment, net | 84,687 | 77,346 |
Goodwill | 631,064 | |
Intangible assets, net | 1,830 | 1,830 |
Deposits | 14,747 | 14,747 |
Operating lease right-of-use asset | 514,816 | 565,877 |
Total Noncurrent Assets | 616,080 | 1,290,864 |
TOTAL ASSETS | 24,736,234 | 5,281,962 |
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | 1,044,536 | 1,345,589 |
Deferred revenue | 5,935,270 | 2,839,838 |
Accrued equity compensation | 46,373 | 83,625 |
Other liabilities | 37,078 | 37,078 |
Current portion of operating lease liability | 113,999 | 100,139 |
Total Current Liabilities | 7,177,256 | 4,406,269 |
NONCURRENT LIABILITIES | ||
Operating lease liability, net of current portion | 432,496 | 486,226 |
Total Noncurrent Liabilities | 432,496 | 486,226 |
TOTAL LIABILITIES | 7,609,752 | 4,892,495 |
Commitments and Contingencies (Note 7) | ||
TEMPORARY EQUITY | ||
Series B Redeemable Convertible Preferred Stock, $0.00001 par value; 0 and 3,300 issued and outstanding, respectively | 3,960,000 | |
Total Temporary Equity | 3,960,000 | |
SHAREHOLDERS’ EQUITY (DEFICIT) | ||
Common stock, $0.00001 par value; 200,000,000 and 850,000,000 shares authorized, respectively; 7,953,974 and 1,600,835 shares issued and outstanding, respectively | 80 | 16 |
Additional paid in capital | 49,091,496 | 25,211,017 |
Accumulated deficit | (31,965,094) | (28,781,566) |
Total Shareholders’ Equity (Deficit) | 17,126,482 | (3,570,533) |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | $ 24,736,234 | $ 5,281,962 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts, net | $ 172,760 | $ 181,942 |
Temporary equity, par value | $ 0.00001 | $ 0.00001 |
Temporary equity, shares issued | 0 | 3,300 |
Temporary equity, shares outstanding | 0 | 3,300 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 200,000,000 | 850,000,000 |
Common stock, shares issued | 7,953,974 | 1,600,835 |
Common stock, shares outstanding | 7,953,974 | 1,600,835 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenue, net | $ 3,014,885 | $ 4,509,505 | $ 4,759,312 | $ 6,876,034 |
Cost of revenue | 2,708,646 | 3,227,181 | 4,362,565 | 5,249,104 |
Gross profit | 306,239 | 1,282,324 | 396,747 | 1,626,930 |
Operating expenses: | ||||
Advertising and marketing expenses | 309,690 | 168,042 | 560,705 | 345,187 |
Product development costs | 56,577 | 111,546 | 195,495 | 224,184 |
Selling, general and administrative expenses | 1,080,094 | 886,758 | 2,391,871 | 1,627,231 |
Goodwill impairment charges | 631,064 | 631,064 | ||
Total operating expenses | 2,077,425 | 1,166,346 | 3,779,135 | 2,196,602 |
Operating income (loss) | (1,771,186) | 115,978 | (3,382,388) | (569,672) |
Other income (expense): | ||||
Other income (expense), net | 150,518 | 185,000 | 43,518 | |
Interest income (expense),net | 10,600 | (1,254) | 13,860 | (1,972) |
Total other income (expense) | 10,600 | 149,264 | 198,860 | 41,546 |
Income (Loss) before provision for income taxes | (1,760,586) | 265,242 | (3,183,528) | (528,126) |
Income taxes | ||||
Net income (loss) | (1,760,586) | 265,242 | (3,183,528) | (528,126) |
Convertible preferred series B stock dividends | (35,984) | |||
Deemed dividend on convertible preferred series B stock on down round | (439,999) | |||
Net income (loss) available to common shareholders | $ (1,760,586) | $ 265,242 | $ (3,659,511) | $ (528,126) |
Income (loss) per common share – basic | $ (0.23) | $ 0.17 | $ (0.59) | $ (0.33) |
Income/(loss) per common share – diluted | $ (0.23) | $ 0.17 | $ (0.59) | $ (0.33) |
Weighted average number of common shares outstanding, basic | 7,801,211 | 1,582,998 | 6,220,600 | 1,579,938 |
Weighted average number of common shares outstanding, diluted | 7,801,211 | 1,605,526 | 6,220,600 | 1,579,938 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Common Shares To Be Issued [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 420 | $ 2,366 | $ 26,107,159 | $ (27,443,643) | $ (1,333,698) | |
Balance, shares at Dec. 31, 2020 | 280,202 | 1,576,844 | ||||
Fair value of vested stock options granted to employees | 143,770 | 143,770 | ||||
Fair value of vested stock options granted to directors | 6,412 | 6,412 | ||||
Net Income loss | (528,126) | (528,126) | ||||
Common shares issued in settlement of legal dispute, shares | 6,667 | |||||
Common shares issued in settlement of legal dispute | $ 10 | 66,990 | 67,000 | |||
Ending balance, value at Jun. 30, 2021 | $ 420 | $ 2,376 | 26,324,331 | (27,971,769) | (1,644,642) | |
Balance, shares at Jun. 30, 2021 | 280,202 | 1,583,511 | ||||
Beginning balance, value at Mar. 31, 2021 | $ 420 | $ 2,366 | $ 67,000 | 26,241,935 | (28,237,011) | (1,925,290) |
Balance, shares at Mar. 31, 2021 | 280,202 | 1,576,844 | 6,667 | |||
Fair value of vested stock options granted to employees | 15,336 | 15,336 | ||||
Fair value of vested stock options granted to directors | 70 | 70 | ||||
Net Income loss | 265,242 | 265,242 | ||||
Common shares issued in settlement of legal dispute, shares | 6,667 | (6,667) | ||||
Common shares issued in settlement of legal dispute | $ 10 | $ (67,000) | 66,990 | |||
Ending balance, value at Jun. 30, 2021 | $ 420 | $ 2,376 | 26,324,331 | (27,971,769) | (1,644,642) | |
Balance, shares at Jun. 30, 2021 | 280,202 | 1,583,511 | ||||
Beginning balance, value at Dec. 31, 2021 | $ 16 | 25,211,017 | (28,781,566) | (3,570,533) | ||
Balance, shares at Dec. 31, 2021 | 1,600,835 | |||||
Fair value of vested stock options granted to employees | 159,573 | 159,573 | ||||
Fair value of vested stock options granted to directors | 29,656 | 29,656 | ||||
Cashless exercise of prefunded warrants | $ 2 | (2) | ||||
Common shares and warrants issued for cash, shares | 5,811,138 | |||||
Net Income loss | (3,183,528) | (3,183,528) | ||||
Common shares issued in settlement of restricted stock units issued to directors | $ 0 | 24,994 | 24,994 | |||
Common shares issued in settlement of restricted stock units issued to directors, shares | 3,367 | |||||
Fair value of restricted stock units issued to directors | 11,173 | 11,173 | ||||
Issuance of common shares to round up partial shares following reverse split | $ 0 | 0 | 0 | |||
Common shares issued in settlement of legal dispute, shares | 6,798 | |||||
Common shares and warrants issued for cash | $ 58 | 21,711,073 | 21,711,131 | |||
Common shares and warrants issued on conversion of series B preferred stock | $ 4 | 1,979,996 | 1,980,000 | |||
Common shares issued and warrants on conversion of series B preferred stock, shares | 362,306 | |||||
Dividends on series B preferred stock | (35,984) | (35,984) | ||||
Cashless exercise of prepaid warrants, shares | 169,530 | |||||
Ending balance, value at Jun. 30, 2022 | $ 80 | 49,091,496 | (31,965,094) | 17,126,482 | ||
Balance, shares at Jun. 30, 2022 | 7,953,974 | |||||
Beginning balance, value at Mar. 31, 2022 | $ 78 | 48,958,618 | (30,204,508) | 18,754,188 | ||
Balance, shares at Mar. 31, 2022 | 7,784,444 | |||||
Fair value of vested stock options granted to employees | 126,635 | 126,635 | ||||
Fair value of vested stock options granted to directors | 6,245 | 6,245 | ||||
Cashless exercise of prefunded warrants | $ 2 | (2) | ||||
Common shares and warrants issued for cash, shares | 169,530 | |||||
Net Income loss | (1,760,586) | (1,760,586) | ||||
Ending balance, value at Jun. 30, 2022 | $ 80 | $ 49,091,496 | $ (31,965,094) | $ 17,126,482 | ||
Balance, shares at Jun. 30, 2022 | 7,953,974 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (3,183,528) | $ (528,126) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and intangible asset amortization expense | 16,697 | 37,180 |
Share-based compensation | 225,396 | 21,748 |
Common stock issued for other expense | 67,000 | |
Provision for doubtful accounts | (9,182) | 23,213 |
Provision for excess and obsolete inventory | (34,417) | (10,945) |
Loss on disposal of assets | 4,060 | 8,042 |
Amortization of ROU asset | 51,061 | 98,913 |
Goodwill impairment charges | 631,064 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 48,153 | (224,183) |
Inventory | 10,986 | (106,299) |
Prepaid expenses and other | (1,692,816) | (949,152) |
Accounts payable and accrued liabilities | (317,453) | 124,583 |
Deferred revenue | 3,095,431 | 331,585 |
Accrued interest | 1,972 | |
Deposits | (16,122) | |
Operating lease liability, net | (39,870) | (130,156) |
Accrued equity compensation | (37,251) | 108,945 |
Net cash used in operating activities | (1,231,669) | (1,141,802) |
Cash Flows From Investing Activities | ||
Purchases of property and equipment | (13,948) | (15,316) |
Proceeds from the sale of property and equipment | 2,250 | 1,500 |
Net cash used in investing activities | (11,698) | (13,816) |
Cash Flows From Financing Activities | ||
Payment of dividends on series B preferred stock | (35,984) | |
Redemption of series B preferred stock | (1,980,000) | |
Cash proceeds on sale of common stock and warrants, net of expenses | 21,711,131 | |
Proceeds from issuance of note payable | 514,200 | |
Net cash provided by financing activities | 19,695,147 | 514,200 |
Net change in cash and cash equivalents | 18,451,780 | (641,418) |
Cash and cash equivalents, beginning of period | 2,159,608 | 2,284,881 |
Cash and cash equivalents, end of period | 20,611,388 | 1,643,463 |
Supplemental cash flow information: | ||
Interest paid | ||
Income taxes paid | ||
Non-cash investing and financing activities: | ||
Unpaid purchases of equipment and other assets | 16,400 | |
Conversion of series B preferred stock | 1,980,000 | |
Deemed dividend on series B preferred stock arising on down round | 439,999 | |
Cashless exercise of prefunded warrants | $ 2 |
General
General | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
General | Note 1 – General Description of Business CEA Industries Inc., formerly Surna Inc. (the “Company”), was incorporated in Nevada on October 15, 2009. We design, engineer and sell environmental control and other technologies for the Controlled Environment Agriculture (“CEA”) industry. The CEA industry is one of the fastest-growing sectors of the United States’ economy. From leafy greens (kale, Swiss chard, mustard, cress), microgreens (leafy greens harvested at the first true leaf stage), ethnic vegetables, ornamentals, and small fruits (such as strawberries, blackberries and raspberries) to bell peppers, cucumbers, tomatoes and cannabis and hemp, more and more producers consider or act to grow crops indoors in response to market dynamics or as part of their preferred farming practice. In service of the CEA industry, we provide: (i) architectural design and licensed engineering of commercial scale thermodynamic systems specific to cultivation facilities, (ii) liquid-based process cooling systems and other climate control systems, (iii) air handling equipment and systems, (iv) air sanitation products, (v) LED lighting, (vi) benching and racking solutions for indoor cultivation, (vii) proprietary controls systems and technologies used for environmental, lighting, and climate control, and (viii) preventive maintenance services, through our partnership with a certified service contractor network, for CEA facilities. Our customers include commercial, state- and provincial-regulated CEA growers in the U.S. and Canada as well as other international locations. Customers are those growers building new facilities and those expanding or retrofitting existing facilities. Currently, our revenue stream is derived primarily from supplying our products, services, and technologies to commercial indoor facilities ranging from several thousand to more than 100,000 square feet. Headquartered in Louisville, Colorado, we leverage our experience in this space to bring value-added climate control solutions to our customers that help improve their overall crop quality and yield, optimize energy and water efficiency, and satisfy the evolving state and local codes, permitting and regulatory requirements. Although most of our customers do, we neither produce nor sell cannabis or its related products. Impact of the COVID-19 Pandemic on Our Business The impact of the government and the business economic response to the COVID-19 pandemic has affected demand across the majority of our markets and disrupted workflow and completion schedules on projects. The COVID-19 pandemic is expected to have continued adverse effects on our sales, project implementation, supply chain infrastructure, operating margins, and working capital. The resulting effects and uncertainties from the COVID-19 pandemic, including the depth and duration of the disruptions to customers and suppliers, its future effect on our business, on our results of operations, and on our financial condition, cannot be predicted. We expect that the economic disruptions will continue to have an effect on our business over the longer term. Despite this uncertainty, we continue to monitor costs and continue to take actions to reduce costs in order to mitigate the impact of the COVID-19 pandemic to the best of our ability. However, these actions may not be sufficient in the long run to avoid reduced sales, increased losses, and reduced operating cash flows in our business. During the six months ended June 30, 2022, the Company experienced significant delays in the receipt of equipment it had ordered to meet its customer orders due to disruption and delays in its supply chain arising from the long-term effects of the COVID-19 pandemic. Consequently, our revenue recognition of these customer sales has been delayed until future periods when the shipment of these orders can be completed. Impact of Ukrainian Conflict Currently, we believe that the conflict between Ukraine and Russia does not have any direct impact on our operations, financial condition, or financial reporting. We believe the conflict will have only a general impact on our operations in the same manner as it is having a general impact on all businesses that have their operations limited to North America resulting from international sanction and embargo regulations, possible shortages of goods and goods incorporating parts that may be supplied from the Ukraine or Russia, supply chain challenges, and the international and US domestic inflationary results of the conflict and government spending for and funding of our country’s response. As our operations are related only to the North American controlled environment agricultural industry, largely within the cannabis space, we do not believe we will be targeted for cyber-attacks related to this conflict. We have no operations in the countries directly involved in the conflict or are specifically impacted by any of the sanctions and embargoes, as we principally operate in the United States and Canada. We do not believe that the conflict will have any impact on our internal control over financial reporting. Other than general securities market trends, we do not have reason to believe that investors will evaluate the company as having special risks or exposures related to the Ukrainian conflict. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) Inflation We anticipate that our business and financial position will be impacted by the current inflationary environment. To the extent that we use borrowed funds, we believe our costs will increase. Access to capital for our business and our business plan will also be impacted by increased interest rates and may affect our ability to obtain capital. Inflation will also have an impact on the cost of supplies of goods and services that we use to complete our contracts for our customers. Depending on the terms of our contracts currently executed and in execution, we may not be able to pass on our increased costs, with the consequence of an adverse impact on our operating profit and overall margin. Financial Statement Presentation The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are available to be issued. The Company continues to experience recurring losses since its inception. As a result, in order to continue as a going concern, the Company has been reliant on the ability to obtain additional sources of financing to fund growth. As indicated in Note 8 – Shareholders Equity (Deficit) below, on February 15, 2022, the Company received approximately $ 22,000,000 Interim 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 (“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 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 six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. The balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2021. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its controlled and wholly owned subsidiaries, Hydro Innovations, LLC (“Hydro”) and Surna Cultivation Technologies LLC (“SCT”). Intercompany transactions, profit, and balances are eliminated in consolidation. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) Reverse Stock Split On January 17, 2022, the Company’s Board of Directors approved a reverse stock split at a ratio of one-for-one hundred and fifty. Such reverse stock split was implemented effective January 27, 2022 As a result of this reverse stock split, the number of the Company’s shares of common stock issued and outstanding as of December 31, 2021, was reduced from 240,125,224 1,600,835 All Common Stock, warrants, options and per share amounts set forth herein are presented to give retroactive effect to the Reverse Split for all periods presented. Use of Estimates Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Key estimates include: allocation of transaction prices to performance obligations under contracts with customers, standalone selling prices, timing of expected revenue recognition on remaining performance obligations under contracts with customers, valuation of intangible assets and goodwill, valuation of equity-based compensation, valuation of deferred tax assets and liabilities, warranty accruals, accounts receivable and inventory allowances, and legal contingencies. Cash, Cash Equivalents, and Restricted Cash All highly liquid investments with original maturities of three months or less at the date of purchase are considered to be cash equivalents. The Company may, from time to time, have deposits in financial institutions that exceed the federally insured amount of $ 250,000 20,611,000 20,361,000 Income (Loss) Per Common Share Basic income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period without consideration of common stock equivalents. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding and potentially dilutive common stock equivalents, including stock options, warrants and restricted stock units and other equity-based awards, except in cases where the effect of the common stock equivalents would be antidilutive. Potential common stock equivalents consist of common stock issuable upon exercise of stock options and warrants and the vesting of restricted stock units using the treasury method. During the six months ended June 30, 2022 and 2021, there were warrants and options outstanding to purchase Company common stock and restricted stock units that were convertible into shares of the Company’s common stock. During the three-months period ended June 30, 2020 and the six-months periods ended June 30, 2021 and 2020, the Company incurred a net loss and consequently the common share equivalents of these potentially dilutive equity instruments have not been included in the calculations of loss per share because such inclusion would have been anti-dilutive. However, during the three-month period ended June 30, 2021, we realized a net profit and therefore included 22,528 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) As of June 30, 2022, and 2021, there were respectively, 7,882,061 164,579 Goodwill The Company recorded goodwill in connection with its acquisition of Hydro Innovations, LLC in July 2014. Goodwill is reviewed for impairment annually or more frequently when events or changes in circumstances indicate that fair value of the reporting unit has been reduced to less than its carrying value. The Company performs a quantitative impairment test annually on December 31 by comparing the fair value of the reporting unit with its carrying amount, including goodwill. The Company’s fair value is calculated using a market valuation technique whereby an appropriate control premium is applied to the Company’s market capitalization as calculated by applying its publicly quoted share price to the number of its common shares issued and outstanding. If the fair value of the reporting unit exceeds its carrying amount, goodwill is considered not impaired. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company determined that it has one reporting unit. As of June 30, 2022, the Company experienced a triggering event due to a drop in its stock price and performed a quantitative analysis for potential impairment of its goodwill. As of June 30, 2022, the Company performed a quantitative analysis for potential impairment of its goodwill, by comparing the Company’s fair value to its carrying value as of June 30, 2022. Based on this analysis, the Company determined that its carrying value exceeded its fair value. As a result, the Company recorded a non-cash goodwill impairment charge of $ 631,064 Temporary Equity Shares of preferred stock that are redeemable for cash or other assets are classified as temporary equity if they are redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the Company. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, net of issuance costs, which is subsequently adjusted to redemption value (including the amount for dividends earned but not yet declared or paid) at each balance sheet date if the instrument is currently redeemable or if it is probable that the instrument will become redeemable. Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 (Topic 606), Revenue from Contracts with Customers CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) The following table sets forth the Company’s revenue by source: Schedule of Revenue by Source 2022 2021 2022 2021 For the Three Months Ended June, For the Six Months Ended June 30, 2022 2021 2022 2021 Equipment and systems sales $ 2,791,141 $ 4,245,897 $ 4,433,713 $ 6,409,365 Engineering and other services 192,076 172,648 278,125 353,731 Shipping and handling 31,668 90,960 47,474 112,938 Total revenue $ 3,014,885 $ 4,509,505 $ 4,759,312 $ 6,876,034 Revenue Recognition Accounting Policy Summary The Company accounts for revenue in accordance with ASC 606. Under the revenue standard, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Most of the Company’s contracts contain multiple performance obligations that include engineering and technical services as well as the delivery of a diverse range of climate control system equipment and components, which can span multiple phases of a customer’s project life cycle from facility design and construction to equipment delivery and system installation and start-up. The Company does not provide construction services or system installation services. Some of the Company’s contracts with customers contain a single performance obligation, typically engineering only services contracts. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, the Company allocates the transaction price to each performance obligation based on standalone selling price. When estimating the selling price, the Company uses various observable inputs. The best observable input is the Company’s actual selling price for the same good or service, however, this input is generally not available for the Company’s contracts containing multiple performance obligations. For engineering services, the Company estimates the standalone selling price by reference to certain physical characteristics of the project, such as facility size and mechanical systems involved, which are indicative of the scope and complexity of the mechanical engineering services to be provided. For equipment sales, the standalone selling price is determined by forecasting the expected costs of the equipment and components and then adding an appropriate margin, based on a range of acceptable margins established by management. Depending on the nature of the performance obligations, the Company may use a combination of different methods and observable inputs if certain performance obligations have highly variable or uncertain standalone selling prices. Once the selling prices are determined, the Company applies the relative values to the total contract consideration and estimates the amount of the transaction price to be recognized as each promise is fulfilled. Generally, satisfaction occurs when control of the promised goods is transferred to the customer or as services are rendered or completed in exchange for consideration in an amount for which the Company expects to be entitled. The Company recognizes revenue for the sale of goods when control transfers to the customer, which primarily occurs at the time of shipment. The Company’s historical rates of return are insignificant as a percentage of sales and, as a result, the Company does not record a reserve for returns at the time the Company recognizes revenue. The Company has elected to exclude from the measurement of the transaction price all taxes (e.g., sales, use, value added, and certain excise taxes) that are assessed by a governmental authority in connection with a specific revenue-producing transaction and collected by the Company from the customer. Accordingly, the Company recognizes revenue net of sales taxes. The revenue and cost for freight and shipping is recorded when control over the sale of goods passes to the Company’s customers. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) The Company also has performance obligations to perform certain engineering services that are satisfied over a period of time. Revenue is recognized from this type of performance obligation as services are rendered based on the percentage completion towards certain specified milestones. The Company offers assurance-type warranties for its products and products manufactured by others to meet specifications defined by the contracts with customers and does not have any material separate performance obligations related to these warranties. The Company maintains a warranty reserve based on historical warranty costs. Other Judgments and Assumptions The Company typically receives customer payments in advance of its performance of services or transfers of goods. Applying the practical expedient in ASC 606-10-32-18, which the Company has elected, the Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Accordingly, the remaining performance obligations related to customer contracts does not consider the effects of the time value of money. Applying the practical expedient in ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred since the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs include certain sales commissions and incentives, which are included in selling, general and administrative expenses, and are payable only when associated revenue has been collected and earned by the Company. Contract Assets and Contract Liabilities Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on the terms established in its contracts. Contract assets include unbilled amounts where revenue recognized exceeds the amount billed to the customer and the right of payment is conditional, subject to completing a milestone, such as a phase of a project. The Company typically does not have material amounts of contract assets since revenue is recognized as control of goods are transferred or as services are performed. As of June 30, 2022, and 2021, the Company had no contract assets. Contract liabilities consist of advance payments in excess of revenue recognized. The Company’s contract liabilities are recorded as a current liability in deferred revenue in the consolidated balance sheets since the timing of when the Company expects to recognize revenue is generally less than one year. As of June 30, 2022, and December 31, 2021, deferred revenue, which was classified as a current liability, was $ 5,935,270 2,839,838 For the three and six months ended June 30, 2022, the Company recognized revenue of $ 1,030,830 2,193,204 1,193,251 3,073,616 Remaining Performance Obligations Remaining performance obligations, or backlog, represents the aggregate amount of the transaction price allocated to the remaining obligations that the Company has not performed under its customer contracts. The Company has elected not to use the optional exemption in ASC 606-10-50-14, which exempts an entity from such disclosures if a performance obligation is part of a contract with an original expected duration of one year or less. Accordingly, the information disclosed about remaining performance obligations includes all customer contracts, including those with an expected duration of one year or less. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) The Company and its customers face various industry dynamics that make the timing and recognition of the Company’s revenue challenging. The Company’s ability to recognize revenue is driven by a customer’s ability to take possession of the sold equipment, which is predicated on completion of a customer’s cultivation facility. The Company’s customers are often first-time participants who face challenges associated with maintaining project funding, securing state and local licenses, and designing and installing complex equipment for the facility. Coordination of these efforts introduces uncertainty to the timing and completion of cultivation facilities, and all of these challenges are enhanced by the current economic environment. Global supply-chain delays and growing backlog challenges extend the duration, cost and timing uncertainty of many cultivation facility projects. In addition, as inflation-related cost increases affect the project returns that investors expect, many customers face funding uncertainty from initial investors. As a result of these challenges, the Company may experience contract cancellations, project scope reductions, and project delays from its customers, and there is no assurance that the Company will be able to fulfill its backlog. As of June 30, 2022, the Company’s remaining performance obligations, or backlog, was approximately $ 9,698,000 776,000 155,000 The remaining performance obligations expected to be recognized through 2023 are as follows: Schedule of Remaining Performance Obligations Expected to be Recognized 2022 2023 Total Remaining performance obligations related to engineering only paid contracts $ - $ - $ - Remaining performance obligations related to partial equipment paid contracts 8,767,000 931,000 9,698,000 Total remaining performance obligations $ 8,767,000 $ 931,000 $ 9,698,000 Product Warranty The Company warrants the products that it manufactures for a warranty period equal to the lesser of 12 months from start-up or 18 months from shipment. The Company’s warranty provides for the repair, rework, or replacement of products (at the Company’s option) that fail to perform within stated specification. The Company’s third-party suppliers also warrant their products under similar terms, which are passed through to the Company’s customers. The Company assesses the historical warranty claims on its manufactured products and, since 2016, warranty claims have been approximately 1% of annual revenue generated on these products. Based on the Company’s warranty policy, an accrual is established at 1% of the trailing 18 months revenue. The Company continues to assess the need to record a warranty reserve at the time of sale based on historical claims and other factors. As of June 30, 2022, and December 31, 2021, the Company had an accrued warranty reserve amount of $ 183,979 186,605 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) Accounting for Share-Based Compensation The Company recognizes the cost resulting from all share-based compensation arrangements, including stock options, restricted stock awards and restricted stock units that the Company grants under its equity incentive plan in its condensed consolidated financial statements based on their grant date fair value. The expense is recognized over the requisite service period or performance period of the award. Awards with a graded vesting period based on service are expensed on a straight-line basis for the entire award. Awards with performance-based vesting conditions, which require the achievement of a specific company financial performance goal at the end of the performance period and required service period, are recognized over the performance period. Each reporting period, the Company reassesses the probability of achieving the respective performance goal. If the goals are not expected to be met, no compensation cost is recognized and any previously recognized amount recorded is reversed. If the award contains market-based vesting conditions, the compensation cost is based on the grant date fair value and expected achievement of market condition and is not subsequently reversed if it is later determined that the condition is not likely to be met or is expected to be lower than initially expected. The grant date fair value of stock options is based on the Black-Scholes Option Pricing Model (the “Black-Scholes Model”). The Black-Scholes Model requires judgmental assumptions including volatility and expected term, both based on historical experience. The risk-free interest rate is based on U.S. Treasury interest rates whose term is consistent with the expected term of the option. The Company determines the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, the Company may use different assumptions for options granted throughout the year. During the six months ended June 30, 2022, the valuation assumptions used to determine the fair value of each option award on the date of grant were: expected stock price volatility ranged from 158.21 158.70 10 1.52 2.32 The grant date fair value of restricted stock and restricted stock units is based on the closing price of the underlying stock on the date of the grant. The Company has elected to reduce share-based compensation expense for forfeitures as the forfeitures occur since the Company does not have historical data or other factors to appropriately estimate the expected employee terminations and to evaluate whether particular groups of employees have significantly different forfeiture expectations. The following is a summary of share-based compensation expenses included in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and June 30, 2021: Schedule of Share-based Compensation Costs 2022 2021 2022 2021 For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Share-based compensation expense included in: Cost of revenue $ 5,104 $ 15,809 $ 5,895 $ 29,944 Advertising and marketing expenses 4,080 6,818 6,842 13,292 Product development costs 4,961 7,335 4,961 14,029 Selling, general and administrative expenses 81,482 41,595 170,446 73,428 Total share-based compensation expense included in consolidated statement of operations $ 95,627 $ 71,557 $ 188,144 $ 130,693 Included in the expense for the three and six months ended June 30, 2022, is an accrual for $ 46,374 46,374 56,151 108,945 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) Concentrations Two customers accounted for 53 12 47 28 27 11 18 18 13 Three customers accounted for 60 25 10 68 23 Recently Issued Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires companies to apply ASC 606, “Revenue from Contracts with Customers” to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. This creates an exception to the general recognition and measurement principle in ASC 805, which uses fair value. The guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted, and the guidance should be applied prospectively. The impact of the standard on Company’s consolidated financial statements is dependent on the size and frequency of any future acquisitions the Company may complete. In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. In March 2020, the FAS issued ASU No. 2020-04 “ Reference Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). 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 disclosures. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2022 | |
Leases | |
Leases | Note 2 – Leases In February 2016 the FASB issued ASU 2016-02, Leases (Topic 842) The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the “package of practical expedients” which allow the Company to not reassess: (i) whether existing or expired arrangements contain a lease, (ii) the lease classification of existing or expired leases, or (iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply the short-term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new lease standard. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) On July 28, 2021, the Company entered into an agreement to lease 11,491 The New Facility Lease commenced on November 1, 2021 and continues through January 31, 2027 10,055 3 14,747 Upon commencement of the New Facility Lease, the Company recognized on the balance sheet an operating lease right-of-use asset and lease liability in the amount of $ 582,838 The lease cost, cash flows and other information related to the New Facility Lease were as follows: Schedule of Lease Cost As of June 30, 2022 Operating lease right-of-use asset $ 514,816 Operating lease liability, current $ 113,999 Operating lease liability, long-term $ 432,496 Remaining lease term 4.6 Discount rate 3.63 % For the Six Months Ended June 30, 2022 Operating cash outflow from operating lease $ 50,273 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) Future annual minimum lease payments on the New Facility Lease as of June 30, 2022 are as follows: Schedule of Future Annual Minimum Lease Payments Years ended December 31, 2022 (excluding the six months ended June 30, 2022) $ 60,931 2023 124,897 2024 128,643 2025 132,503 2026 136,473 Thereafter 11,654 Total minimum lease payments 595,101 Less imputed interest (48,606 ) Present value of minimum lease payments $ 546,495 |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 3 – Inventory Inventory consisted of the following: Schedule of Inventory June 30, December 31, 2022 2021 Finished goods $ 228,378 $ 272,199 Work in progress 195 1,050 Raw materials 230,145 196,456 Allowance for excess & obsolete inventory (56,961 ) (91,379 ) Inventory, net $ 401,757 $ 378,326 Overhead expenses of $ 14,997 13,589 The inventory balance at June 30, 2022 includes $ 47,735 Advance payments on inventory purchases are recorded in prepaid expenses until title for such inventory passes to the Company. Prepaid expenses included approximately $ 2,720,000 1,069,000 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4 – Property and Equipment Property and equipment consisted of the following: Schedule of Property and Equipment June 30, December 31, 2022 2021 Furniture and equipment $ 282,748 $ 274,472 Vehicles 15,000 15,000 Leasehold improvements - - Property and equipment, gross 297,748 289,472 Accumulated depreciation (213,061 ) (212,126 ) Property and equipment, net $ 84,687 $ 77,346 Depreciation expense was $ 16,697 2,428 607 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | Note 5 – Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following: Schedule of Accounts Payable and Accrued Liabilities June 30, December 31, 2022 2021 Accounts payable $ 207,640 $ 616,056 Sales commissions payable 21,613 27,592 Accrued payroll liabilities 325,372 322,873 Product warranty accrual 183,979 186,605 Other accrued expenses 305,932 192,463 Total $ 1,044,536 $ 1,345,589 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6 – Commitments and Contingencies Litigation From time to time, in the normal course of its operations, the Company is subject to litigation matters and claims. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a liability for contingent losses when it is both probable that a liability has been incurred and the amount of the loss is known. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations. Leases The Company has a lease agreement for its manufacturing and office space. Refer to Note 2 Leases Other Commitments In the ordinary course of business, the Company enters into commitments to purchase inventory and may also provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers and employees that will require the Company to, among other things, indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and certain of its officers and employees, and former officers, directors, and employees of acquired companies, in certain circumstances. |
Temporary Equity
Temporary Equity | 6 Months Ended |
Jun. 30, 2022 | |
Temporary Equity | |
Temporary Equity | Note 7 – Temporary Equity On September 28, 2021, the Company sold to an institutional investor (the “Investor”), 3,300 1,000 3,000,000 1,260,000 1,365,000 The Series B Preferred Stock had an annual dividend of 8 8.55 The Series B Preferred Stock was mandatorily convertible on the third anniversary of its issuance. All conversions of the Series B Preferred Stock were subject to a blocker provision of 4.99 Probability of Redemption: As it was considered probable the Series B Preferred stock would become redeemable outside of the Company’s control, the Series B Preferred stock was disclosed as temporary equity and was initially adjusted as of September 30, 2021 to its redemption value of 120% of the stated value of $1,000 per share, or $3,960,000. 2,262,847 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) On February 16, 2022, the Company redeemed 1,650 2.016 36,000 On February 16, 2022, the remaining 1,650 362,306 703,069 170,382 0.01 532,688 5 5.00 8.55 75 8.55 4.13 8.55 3.0975 75 4.13 439,999 The Company has no remaining Preferred Shares outstanding as of June 30, 2022. |
Stockholders_ Equity (Deficit)
Stockholders’ Equity (Deficit) | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Stockholders’ Equity (Deficit) | Note 8 – Stockholders’ Equity (Deficit) As of June 30, 2022, the Company had 200,000,000 25,000,000 .00001 7,953,974 Directors Remuneration On January 3, 2022, the Company issued 3,125 4.80 On January 17, 2022, the Company issued an RSU grant of 3,367 1,684 1,683 1,684 Revised Compensation Plan On August 20, 2021, the Board of Directors revised the previously adopted equity-based compensation plan and adopted a new compensation plan for independent directors (the “Plan”). The Plan is effective retroactively for the current independent directors and for independent directors elected or appointed after the Effective Date of the Plan. The Company will pay its independent directors an annual cash fee of $ 15,000 15,000 7,500 On January 17, 2022, the Board of Directors revised the previously adopted compensation plan. This plan supersedes the plan adopted on August 20, 2021. The Plan is effective retroactively for the current independent directors and for independent directors elected or appointed after the Effective Date. The plan is divided into two phases: from the Effective Date of the Plan until February 9, 2022, the day prior to the uplisting of the Company to Nasdaq. (“Pre-uplist”) and from February 10, 2022, the uplist date forward (“Post-uplist”). Pre-uplist phase: The Company paid its independent directors an annual cash fee of $ 15,000 At the time of initial election or appointment, each independent director received an equity retention award in the form of restricted stock units (“RSUs”). The aggregate value of the RSUs at the time of grant was to be $ 25,000 Vesting of the RSUs was as follows: (i) 50% at the time of grant, and (ii) 50% on the first anniversary of the grant date. In addition, on the first business day of January each year, each independent director will also receive an equity retention award in the form of RSUs. The aggregate value of the RSUs at the time of grant will be $ 25,000 The Company pays the Audit Committee Chairman an additional annual fee of $ 10,000 The Company pays the Chairmen of any other committees of the Board an additional annual fee of $ 5,000 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) There is no additional compensation paid to members of any committee of the Board. Interested (i.e. Executive directors) serving on the Board do not receive compensation for their Board service. Post-uplist phase: The Company will pay its independent directors an annual cash fee of $ 25,000 Each director is responsible for the payment of any and all income taxes arising with respect to the issuance of common stock and the vesting and settlement of RSUs. The Company reimburses independent directors for out-of-pocket expenses incurred in attending Board and committee meetings and undertaking certain matters on the Company’s behalf. All independent directors, Messrs. Shipley, Etten, Reisner, and Mariathasan are subject to the Plan. Each independent director is responsible for the payment of any and all income taxes arising with respect to the issuance of any equity awarded under the plan, including the exercise of any non-qualified stock options. Employee directors do not receive separate fees for their services as directors. Reverse Stock Split On January 17, 2022, the Company’s Board of Directors approved a reverse stock split at a ratio of one-for-one hundred and fifty. The reverse stock split was implemented effective January 27, 2022. The par value for the Common Stock was not affected. An additional 6,798 shares of common stock were issued to round up partial shares following the reverse spilt. As a result of this reverse stock split, the number of the Company’s shares of common stock issued and outstanding at December 31, 2021 was reduced from 240,125,244 1,600,835 Change in Authorized Share Capital In connection with the aforementioned reverse stock split, the Company’s Board of Directors approved the reduction of the authorized capital of the Company to 200,000,000 25,000,000 Equity Raise On February 10, 2022, the Company signed a firm commitment underwriting agreement for the public offering of shares of common stock and warrants, which closed on February 15, 2022. The Company received net proceeds of approximately $ 22 5,811,138 6,572,808 five years 5.00 290,557 5.1625 February 10, 2027 Warrant Exercise On June 21, 2022, the Company issued 169,530 170,382 |
Equity Incentive Plans
Equity Incentive Plans | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Equity Incentive Plans | Note 9 – Equity Incentive Plans 2017 Equity Incentive Plan Under the Company’s 2017 Equity Incentive Plan, as may be modified and amended by the Company from time to time (the “2017 Equity Plan”), the Board of Directors (the “Board”) (or the compensation committee of the Board, if one is established) may award stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock unit awards (“RSUs”), shares granted as a bonus or in lieu of another award, and other stock-based performance awards. The 2017 Equity Plan allocates 333,333 During the six months ended June 30, 2022, no shares or options were issued, and 13,333 As of June 30, 2022, of the 333,333 163,692 148,905 20,736 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) 2021 Equity Incentive Plan On March 22, 2021, the Board approved the 2021 Equity Incentive Plan (the “2021 Equity Plan”), which was approved by the stockholders on July 22, 2021. The 2021 Equity Plan permits the Board to grant awards of up to 666,667 i.e. During the six months ended June 30, 2022, the Company issued 3,367 During the six months ended June 30, 2022, the Company granted awards for 21,167 During the six months ended June 30, 2022, the Company granted awards for 6,250 On April 1, 2022, 31,793 10 2.51 As of June 30, 2022, of the 666,667 10,170 65,201 40,816 3,367 547,113 There was $ 168,766 3 Non-Qualified and Incentive Stock Options A summary of the non-qualified stock options and incentive stock options granted to employees and consultants under the 2017 and 2021 Equity Plans during the six months ended June 30, 2022, are presented in the table below: Schedule of Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding, December 31, 2021 158,174 $ 10.99 7.60 $ - Granted 52,960 $ 2.92 9.70 $ - Exercised - $ - - $ - Forfeited (13,333 ) $ 9.15 9.50 $ - Expired - $ - - $ - Outstanding, June 30, 2022 197,800 $ 8.95 8.20 $ - Exercisable, June 30, 2022 150,621 $ 9.91 7.80 $ - CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) During the six months ended June 30, 2022, we issued a total of 52,960 ● 6,167 three years 10 4.80 6.90 ● 15,000 The options vest as follows: 2,000 vested immediately, 3,000 on March 11, 2023, 5,000 on March 11, 2024, and 5,000 on March 11, 2025 10 2.20 ● 31,793 10 2.51 ● During the six months ended June 30, 2022, 1,667 11,667 . A summary of non-vested non-qualified stock options activity for employees and consultants under the 2017 and 2021 Equity Plans for the six months ended June 30, 2022, are presented in the table below: Summary of Non-vested Non-qualified Stock Option Activity Number of Options Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Grant-Date Fair Value Nonvested, December 31, 2021 41,846 $ 7.65 $ - $ 320,122 Granted 52,960 $ 2.89 $ - $ 153,151 Vested (35,960 ) $ 2.72 $ - $ 97,674 Forfeited (11,667 ) $ 9.01 $ - $ (105,118 ) Expired - $ - $ - $ - Nonvested, June 30, 2022 47,179 $ 5.73 $ - $ 270,481 For the six months ended June 30, 2022 and June 30, 2021, the Company recorded $ 75,947 15,336 A summary of the non-qualified stock options granted to directors under the 2017 Equity Plan and the 2021 Equity Plan, during the six months ended June 30, 2022, are presented in the table below: Schedule of Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding, December 31, 2021 50,872 $ 10.02 6.6 $ - Granted 6,250 $ 4.80 9.5 $ - Exercised - $ - - $ - Forfeited/Cancelled - $ - - $ - Expired - $ - - $ - Outstanding, June 30, 2022 57,122 $ 9.44 6.5 $ - Exerciseable, June 30, 2022 57,122 $ 9.44 6.5 $ - CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) A summary of non-vested non-qualified stock options activity for directors under the 2017 Equity Plan and the 2021 Equity Plan, for the six months ended June 30, 2022, are presented in the table below: Summary of Non-vested Non-qualified Stock Option Activity Number of Options Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Grant-Date Fair Value Nonvested, December 31, 2021 - $ - $ - $ - Granted 6,250 $ 4.80 $ - $ 29,656 Vested (6,250 ) $ 4.80 $ - $ (29,656 ) Forfeited - $ - $ - $ - Expired - $ - $ - $ - Nonvested, June 30, 2022 - $ - $ - During the six months ended June 30, 2022 and June 30, 2021, the Company incurred $ 29,656 6,412 6,250 3,333 Effective January 3, 2022, the Company issued 6,250 10 Restricted Stock Units Effective January 17, 2022, the Company issued 6,734 3,367 3,367 The Company recorded $ 36,168 Schedule of Restricted Stock Units Activity Number of Units Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Outstanding, December 31, 2021 - $ - $ - Granted 6,734 $ 7.42 $ - Vested and settled with share issuance (3,367 ) $ 7.42 $ - Forfeited/canceled - $ - $ - Outstanding, June 30, 2022 3,367 $ 7.42 $ - CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) |
Warrants
Warrants | 6 Months Ended |
Jun. 30, 2022 | |
Warrants | |
Warrants | Note 10 - Warrants The following table summarizes information with respect to outstanding warrants to purchase common stock during the six months ended June 30, 2022: Schedule of Outstanding Warrants to Purchase Common Stock Weighted Weighted Average Average Remaining Aggregate Number Exercise Life Intrinsic Outstanding Price In Months Value Outstanding at December 31, 2021 227,719 $ 9.59 33 $ 0 Granted 7,566,435 $ 4.89 55 $ 212,978 Exercised (170,382 ) $ 0.01 - * $ 212,978 Expired - - - - Outstanding at June 30, 2022 7,623,772 $ 5.14 55 * $ 0 * Excludes 170,382 The following table summarizes information about warrants outstanding at June 30, 2022: Schedule of Warrants Outstanding Warrants Weighted Average Exercise price Outstanding Months Outstanding 9.45 192,982 27 10.40 34,737 28 5.00 7,105,496 56 5.16 290,557 56 7,623,772 55 Q3 2021 Warrants Issued to Series B Preferred Stockholder On September 28, 2021, the Company entered into a Securities Purchase Agreement with an institutional investor, pursuant to which the investor purchased from the Company 3,300 1,000 3,300,000 192,982 3,000,000 9.45 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) Q3 2021 Warrants Issued to Series B Preferred Placement Agent In connection with the sale of the shares of convertible Series B Preferred Stock described above, the Company issued 34,737 10.40 Q1 2022 Investor Warrants On February 15, 2022, the Company issued 5,811,138 24,000,000 4.13 5 5.00 Q1 2022 Overallotment Warrants Further on February 15, 2022, in connection the Company’s issuance of 5,811,138 24,000,000 4.13 761,670 15 0.01 5 5.00 Q1 2022 Underwriter Warrants Further on February 15, 2022, in connection the Company’s issuance of 5,811,138 24,000,000 4.13 290,557 5.1625 Q1 2022 Series B Preferred Shares Pre-Funded Conversion Warrants On February 16, 2022, in connection with the conversion of 1,650 362,306 170,382 0.01 On June 21, 2022, the holder of all 170,382 169,530 No pre-funded conversion warrants remained outstanding at June 30, 2022. Q1 2022 Series B Preferred Shares Conversion Warrants Further on February 16, 2022, in connection with the conversion of 1,650 362,306 532,688 5.00 5 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11 – Income Taxes As of June 30, 2022, the Company has U.S. federal and state net operating losses (“NOLs”) of approximately $ 24,275,000 11,196,000 80 80 In addition, pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, use of the Company’s NOLs carryforwards may be limited in the event of cumulative changes in ownership of more than 50% within a three-year period. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year The Company must assess the likelihood that its net deferred tax assets will be recovered from future taxable income, and to the extent the Company believes that recovery is not likely, the Company establishes a valuation allowance. Management’s judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against the net deferred tax assets. The Company recorded a full valuation allowance as of June 30, 2022 and December 31, 2021. Based on the available evidence, the Company believes it is more likely than not that it will not be able to utilize its net deferred tax assets in the foreseeable future. The Company intends to maintain valuation allowances until sufficient evidence exists to support the reversal of such valuation allowances. The Company makes estimates and judgments about its future taxable income that are based on assumptions that are consistent with the Company’s plans. Should the actual amounts differ from the Company’s estimates, the carrying value of the Company’s deferred tax assets could be materially impacted. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 12 – Related Party Transactions The Company entered into a manufacturer representative agreement with RSX Enterprises (“RSX”) in March 2021 to become a non-exclusive representative for the Company to assist in marketing and soliciting orders. James R. Shipley, a current director of the Company, has a significant ownership interest in RSX. Under the manufacturer representative agreement, RSX will act as a non-exclusive representative for the Company within the United States, Canada and Mexico and may receive a commission for qualified customer leads. The agreement had an initial term through December 31, 2021 with automatic one-year renewal terms unless notice is given 90 days prior to each annual expiration. During the six months ended June 30, 2022, the Company paid $ 9,884 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13 – Subsequent Events In accordance with ASC 855, Subsequent Events |
General (Policies)
General (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business CEA Industries Inc., formerly Surna Inc. (the “Company”), was incorporated in Nevada on October 15, 2009. We design, engineer and sell environmental control and other technologies for the Controlled Environment Agriculture (“CEA”) industry. The CEA industry is one of the fastest-growing sectors of the United States’ economy. From leafy greens (kale, Swiss chard, mustard, cress), microgreens (leafy greens harvested at the first true leaf stage), ethnic vegetables, ornamentals, and small fruits (such as strawberries, blackberries and raspberries) to bell peppers, cucumbers, tomatoes and cannabis and hemp, more and more producers consider or act to grow crops indoors in response to market dynamics or as part of their preferred farming practice. In service of the CEA industry, we provide: (i) architectural design and licensed engineering of commercial scale thermodynamic systems specific to cultivation facilities, (ii) liquid-based process cooling systems and other climate control systems, (iii) air handling equipment and systems, (iv) air sanitation products, (v) LED lighting, (vi) benching and racking solutions for indoor cultivation, (vii) proprietary controls systems and technologies used for environmental, lighting, and climate control, and (viii) preventive maintenance services, through our partnership with a certified service contractor network, for CEA facilities. Our customers include commercial, state- and provincial-regulated CEA growers in the U.S. and Canada as well as other international locations. Customers are those growers building new facilities and those expanding or retrofitting existing facilities. Currently, our revenue stream is derived primarily from supplying our products, services, and technologies to commercial indoor facilities ranging from several thousand to more than 100,000 square feet. Headquartered in Louisville, Colorado, we leverage our experience in this space to bring value-added climate control solutions to our customers that help improve their overall crop quality and yield, optimize energy and water efficiency, and satisfy the evolving state and local codes, permitting and regulatory requirements. Although most of our customers do, we neither produce nor sell cannabis or its related products. |
Impact of the COVID-19 Pandemic on Our Business | Impact of the COVID-19 Pandemic on Our Business The impact of the government and the business economic response to the COVID-19 pandemic has affected demand across the majority of our markets and disrupted workflow and completion schedules on projects. The COVID-19 pandemic is expected to have continued adverse effects on our sales, project implementation, supply chain infrastructure, operating margins, and working capital. The resulting effects and uncertainties from the COVID-19 pandemic, including the depth and duration of the disruptions to customers and suppliers, its future effect on our business, on our results of operations, and on our financial condition, cannot be predicted. We expect that the economic disruptions will continue to have an effect on our business over the longer term. Despite this uncertainty, we continue to monitor costs and continue to take actions to reduce costs in order to mitigate the impact of the COVID-19 pandemic to the best of our ability. However, these actions may not be sufficient in the long run to avoid reduced sales, increased losses, and reduced operating cash flows in our business. During the six months ended June 30, 2022, the Company experienced significant delays in the receipt of equipment it had ordered to meet its customer orders due to disruption and delays in its supply chain arising from the long-term effects of the COVID-19 pandemic. Consequently, our revenue recognition of these customer sales has been delayed until future periods when the shipment of these orders can be completed. |
Impact of Ukrainian Conflict | Impact of Ukrainian Conflict Currently, we believe that the conflict between Ukraine and Russia does not have any direct impact on our operations, financial condition, or financial reporting. We believe the conflict will have only a general impact on our operations in the same manner as it is having a general impact on all businesses that have their operations limited to North America resulting from international sanction and embargo regulations, possible shortages of goods and goods incorporating parts that may be supplied from the Ukraine or Russia, supply chain challenges, and the international and US domestic inflationary results of the conflict and government spending for and funding of our country’s response. As our operations are related only to the North American controlled environment agricultural industry, largely within the cannabis space, we do not believe we will be targeted for cyber-attacks related to this conflict. We have no operations in the countries directly involved in the conflict or are specifically impacted by any of the sanctions and embargoes, as we principally operate in the United States and Canada. We do not believe that the conflict will have any impact on our internal control over financial reporting. Other than general securities market trends, we do not have reason to believe that investors will evaluate the company as having special risks or exposures related to the Ukrainian conflict. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) |
Inflation | Inflation We anticipate that our business and financial position will be impacted by the current inflationary environment. To the extent that we use borrowed funds, we believe our costs will increase. Access to capital for our business and our business plan will also be impacted by increased interest rates and may affect our ability to obtain capital. Inflation will also have an impact on the cost of supplies of goods and services that we use to complete our contracts for our customers. Depending on the terms of our contracts currently executed and in execution, we may not be able to pass on our increased costs, with the consequence of an adverse impact on our operating profit and overall margin. |
Financial Statement Presentation | Financial Statement Presentation The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are available to be issued. The Company continues to experience recurring losses since its inception. As a result, in order to continue as a going concern, the Company has been reliant on the ability to obtain additional sources of financing to fund growth. As indicated in Note 8 – Shareholders Equity (Deficit) below, on February 15, 2022, the Company received approximately $ 22,000,000 |
Interim Financial Statements | Interim 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 (“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 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 six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. The balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2021. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its controlled and wholly owned subsidiaries, Hydro Innovations, LLC (“Hydro”) and Surna Cultivation Technologies LLC (“SCT”). Intercompany transactions, profit, and balances are eliminated in consolidation. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) |
Reverse Stock Split | Reverse Stock Split On January 17, 2022, the Company’s Board of Directors approved a reverse stock split at a ratio of one-for-one hundred and fifty. Such reverse stock split was implemented effective January 27, 2022 As a result of this reverse stock split, the number of the Company’s shares of common stock issued and outstanding as of December 31, 2021, was reduced from 240,125,224 1,600,835 All Common Stock, warrants, options and per share amounts set forth herein are presented to give retroactive effect to the Reverse Split for all periods presented. |
Use of Estimates | Use of Estimates Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Key estimates include: allocation of transaction prices to performance obligations under contracts with customers, standalone selling prices, timing of expected revenue recognition on remaining performance obligations under contracts with customers, valuation of intangible assets and goodwill, valuation of equity-based compensation, valuation of deferred tax assets and liabilities, warranty accruals, accounts receivable and inventory allowances, and legal contingencies. |
Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash All highly liquid investments with original maturities of three months or less at the date of purchase are considered to be cash equivalents. The Company may, from time to time, have deposits in financial institutions that exceed the federally insured amount of $ 250,000 20,611,000 20,361,000 |
Income (Loss) Per Common Share | Income (Loss) Per Common Share Basic income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period without consideration of common stock equivalents. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding and potentially dilutive common stock equivalents, including stock options, warrants and restricted stock units and other equity-based awards, except in cases where the effect of the common stock equivalents would be antidilutive. Potential common stock equivalents consist of common stock issuable upon exercise of stock options and warrants and the vesting of restricted stock units using the treasury method. During the six months ended June 30, 2022 and 2021, there were warrants and options outstanding to purchase Company common stock and restricted stock units that were convertible into shares of the Company’s common stock. During the three-months period ended June 30, 2020 and the six-months periods ended June 30, 2021 and 2020, the Company incurred a net loss and consequently the common share equivalents of these potentially dilutive equity instruments have not been included in the calculations of loss per share because such inclusion would have been anti-dilutive. However, during the three-month period ended June 30, 2021, we realized a net profit and therefore included 22,528 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) As of June 30, 2022, and 2021, there were respectively, 7,882,061 164,579 |
Goodwill | Goodwill The Company recorded goodwill in connection with its acquisition of Hydro Innovations, LLC in July 2014. Goodwill is reviewed for impairment annually or more frequently when events or changes in circumstances indicate that fair value of the reporting unit has been reduced to less than its carrying value. The Company performs a quantitative impairment test annually on December 31 by comparing the fair value of the reporting unit with its carrying amount, including goodwill. The Company’s fair value is calculated using a market valuation technique whereby an appropriate control premium is applied to the Company’s market capitalization as calculated by applying its publicly quoted share price to the number of its common shares issued and outstanding. If the fair value of the reporting unit exceeds its carrying amount, goodwill is considered not impaired. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company determined that it has one reporting unit. As of June 30, 2022, the Company experienced a triggering event due to a drop in its stock price and performed a quantitative analysis for potential impairment of its goodwill. As of June 30, 2022, the Company performed a quantitative analysis for potential impairment of its goodwill, by comparing the Company’s fair value to its carrying value as of June 30, 2022. Based on this analysis, the Company determined that its carrying value exceeded its fair value. As a result, the Company recorded a non-cash goodwill impairment charge of $ 631,064 |
Temporary Equity | Temporary Equity Shares of preferred stock that are redeemable for cash or other assets are classified as temporary equity if they are redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the Company. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, net of issuance costs, which is subsequently adjusted to redemption value (including the amount for dividends earned but not yet declared or paid) at each balance sheet date if the instrument is currently redeemable or if it is probable that the instrument will become redeemable. |
Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 (Topic 606), Revenue from Contracts with Customers CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) The following table sets forth the Company’s revenue by source: Schedule of Revenue by Source 2022 2021 2022 2021 For the Three Months Ended June, For the Six Months Ended June 30, 2022 2021 2022 2021 Equipment and systems sales $ 2,791,141 $ 4,245,897 $ 4,433,713 $ 6,409,365 Engineering and other services 192,076 172,648 278,125 353,731 Shipping and handling 31,668 90,960 47,474 112,938 Total revenue $ 3,014,885 $ 4,509,505 $ 4,759,312 $ 6,876,034 Revenue Recognition Accounting Policy Summary The Company accounts for revenue in accordance with ASC 606. Under the revenue standard, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Most of the Company’s contracts contain multiple performance obligations that include engineering and technical services as well as the delivery of a diverse range of climate control system equipment and components, which can span multiple phases of a customer’s project life cycle from facility design and construction to equipment delivery and system installation and start-up. The Company does not provide construction services or system installation services. Some of the Company’s contracts with customers contain a single performance obligation, typically engineering only services contracts. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, the Company allocates the transaction price to each performance obligation based on standalone selling price. When estimating the selling price, the Company uses various observable inputs. The best observable input is the Company’s actual selling price for the same good or service, however, this input is generally not available for the Company’s contracts containing multiple performance obligations. For engineering services, the Company estimates the standalone selling price by reference to certain physical characteristics of the project, such as facility size and mechanical systems involved, which are indicative of the scope and complexity of the mechanical engineering services to be provided. For equipment sales, the standalone selling price is determined by forecasting the expected costs of the equipment and components and then adding an appropriate margin, based on a range of acceptable margins established by management. Depending on the nature of the performance obligations, the Company may use a combination of different methods and observable inputs if certain performance obligations have highly variable or uncertain standalone selling prices. Once the selling prices are determined, the Company applies the relative values to the total contract consideration and estimates the amount of the transaction price to be recognized as each promise is fulfilled. Generally, satisfaction occurs when control of the promised goods is transferred to the customer or as services are rendered or completed in exchange for consideration in an amount for which the Company expects to be entitled. The Company recognizes revenue for the sale of goods when control transfers to the customer, which primarily occurs at the time of shipment. The Company’s historical rates of return are insignificant as a percentage of sales and, as a result, the Company does not record a reserve for returns at the time the Company recognizes revenue. The Company has elected to exclude from the measurement of the transaction price all taxes (e.g., sales, use, value added, and certain excise taxes) that are assessed by a governmental authority in connection with a specific revenue-producing transaction and collected by the Company from the customer. Accordingly, the Company recognizes revenue net of sales taxes. The revenue and cost for freight and shipping is recorded when control over the sale of goods passes to the Company’s customers. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) The Company also has performance obligations to perform certain engineering services that are satisfied over a period of time. Revenue is recognized from this type of performance obligation as services are rendered based on the percentage completion towards certain specified milestones. The Company offers assurance-type warranties for its products and products manufactured by others to meet specifications defined by the contracts with customers and does not have any material separate performance obligations related to these warranties. The Company maintains a warranty reserve based on historical warranty costs. Other Judgments and Assumptions The Company typically receives customer payments in advance of its performance of services or transfers of goods. Applying the practical expedient in ASC 606-10-32-18, which the Company has elected, the Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Accordingly, the remaining performance obligations related to customer contracts does not consider the effects of the time value of money. Applying the practical expedient in ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred since the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs include certain sales commissions and incentives, which are included in selling, general and administrative expenses, and are payable only when associated revenue has been collected and earned by the Company. Contract Assets and Contract Liabilities Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on the terms established in its contracts. Contract assets include unbilled amounts where revenue recognized exceeds the amount billed to the customer and the right of payment is conditional, subject to completing a milestone, such as a phase of a project. The Company typically does not have material amounts of contract assets since revenue is recognized as control of goods are transferred or as services are performed. As of June 30, 2022, and 2021, the Company had no contract assets. Contract liabilities consist of advance payments in excess of revenue recognized. The Company’s contract liabilities are recorded as a current liability in deferred revenue in the consolidated balance sheets since the timing of when the Company expects to recognize revenue is generally less than one year. As of June 30, 2022, and December 31, 2021, deferred revenue, which was classified as a current liability, was $ 5,935,270 2,839,838 For the three and six months ended June 30, 2022, the Company recognized revenue of $ 1,030,830 2,193,204 1,193,251 3,073,616 Remaining Performance Obligations Remaining performance obligations, or backlog, represents the aggregate amount of the transaction price allocated to the remaining obligations that the Company has not performed under its customer contracts. The Company has elected not to use the optional exemption in ASC 606-10-50-14, which exempts an entity from such disclosures if a performance obligation is part of a contract with an original expected duration of one year or less. Accordingly, the information disclosed about remaining performance obligations includes all customer contracts, including those with an expected duration of one year or less. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) The Company and its customers face various industry dynamics that make the timing and recognition of the Company’s revenue challenging. The Company’s ability to recognize revenue is driven by a customer’s ability to take possession of the sold equipment, which is predicated on completion of a customer’s cultivation facility. The Company’s customers are often first-time participants who face challenges associated with maintaining project funding, securing state and local licenses, and designing and installing complex equipment for the facility. Coordination of these efforts introduces uncertainty to the timing and completion of cultivation facilities, and all of these challenges are enhanced by the current economic environment. Global supply-chain delays and growing backlog challenges extend the duration, cost and timing uncertainty of many cultivation facility projects. In addition, as inflation-related cost increases affect the project returns that investors expect, many customers face funding uncertainty from initial investors. As a result of these challenges, the Company may experience contract cancellations, project scope reductions, and project delays from its customers, and there is no assurance that the Company will be able to fulfill its backlog. As of June 30, 2022, the Company’s remaining performance obligations, or backlog, was approximately $ 9,698,000 776,000 155,000 The remaining performance obligations expected to be recognized through 2023 are as follows: Schedule of Remaining Performance Obligations Expected to be Recognized 2022 2023 Total Remaining performance obligations related to engineering only paid contracts $ - $ - $ - Remaining performance obligations related to partial equipment paid contracts 8,767,000 931,000 9,698,000 Total remaining performance obligations $ 8,767,000 $ 931,000 $ 9,698,000 |
Product Warranty | Product Warranty The Company warrants the products that it manufactures for a warranty period equal to the lesser of 12 months from start-up or 18 months from shipment. The Company’s warranty provides for the repair, rework, or replacement of products (at the Company’s option) that fail to perform within stated specification. The Company’s third-party suppliers also warrant their products under similar terms, which are passed through to the Company’s customers. The Company assesses the historical warranty claims on its manufactured products and, since 2016, warranty claims have been approximately 1% of annual revenue generated on these products. Based on the Company’s warranty policy, an accrual is established at 1% of the trailing 18 months revenue. The Company continues to assess the need to record a warranty reserve at the time of sale based on historical claims and other factors. As of June 30, 2022, and December 31, 2021, the Company had an accrued warranty reserve amount of $ 183,979 186,605 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) |
Accounting for Share-Based Compensation | Accounting for Share-Based Compensation The Company recognizes the cost resulting from all share-based compensation arrangements, including stock options, restricted stock awards and restricted stock units that the Company grants under its equity incentive plan in its condensed consolidated financial statements based on their grant date fair value. The expense is recognized over the requisite service period or performance period of the award. Awards with a graded vesting period based on service are expensed on a straight-line basis for the entire award. Awards with performance-based vesting conditions, which require the achievement of a specific company financial performance goal at the end of the performance period and required service period, are recognized over the performance period. Each reporting period, the Company reassesses the probability of achieving the respective performance goal. If the goals are not expected to be met, no compensation cost is recognized and any previously recognized amount recorded is reversed. If the award contains market-based vesting conditions, the compensation cost is based on the grant date fair value and expected achievement of market condition and is not subsequently reversed if it is later determined that the condition is not likely to be met or is expected to be lower than initially expected. The grant date fair value of stock options is based on the Black-Scholes Option Pricing Model (the “Black-Scholes Model”). The Black-Scholes Model requires judgmental assumptions including volatility and expected term, both based on historical experience. The risk-free interest rate is based on U.S. Treasury interest rates whose term is consistent with the expected term of the option. The Company determines the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, the Company may use different assumptions for options granted throughout the year. During the six months ended June 30, 2022, the valuation assumptions used to determine the fair value of each option award on the date of grant were: expected stock price volatility ranged from 158.21 158.70 10 1.52 2.32 The grant date fair value of restricted stock and restricted stock units is based on the closing price of the underlying stock on the date of the grant. The Company has elected to reduce share-based compensation expense for forfeitures as the forfeitures occur since the Company does not have historical data or other factors to appropriately estimate the expected employee terminations and to evaluate whether particular groups of employees have significantly different forfeiture expectations. The following is a summary of share-based compensation expenses included in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and June 30, 2021: Schedule of Share-based Compensation Costs 2022 2021 2022 2021 For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Share-based compensation expense included in: Cost of revenue $ 5,104 $ 15,809 $ 5,895 $ 29,944 Advertising and marketing expenses 4,080 6,818 6,842 13,292 Product development costs 4,961 7,335 4,961 14,029 Selling, general and administrative expenses 81,482 41,595 170,446 73,428 Total share-based compensation expense included in consolidated statement of operations $ 95,627 $ 71,557 $ 188,144 $ 130,693 Included in the expense for the three and six months ended June 30, 2022, is an accrual for $ 46,374 46,374 56,151 108,945 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements June 30, 2022 (in US Dollars except share numbers) (Unaudited) |
Concentrations | Concentrations Two customers accounted for 53 12 47 28 27 11 18 18 13 Three customers accounted for 60 25 10 68 23 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires companies to apply ASC 606, “Revenue from Contracts with Customers” to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. This creates an exception to the general recognition and measurement principle in ASC 805, which uses fair value. The guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted, and the guidance should be applied prospectively. The impact of the standard on Company’s consolidated financial statements is dependent on the size and frequency of any future acquisitions the Company may complete. In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. In March 2020, the FAS issued ASU No. 2020-04 “ Reference Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). 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 disclosures. |
General (Tables)
General (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Revenue by Source | The following table sets forth the Company’s revenue by source: Schedule of Revenue by Source 2022 2021 2022 2021 For the Three Months Ended June, For the Six Months Ended June 30, 2022 2021 2022 2021 Equipment and systems sales $ 2,791,141 $ 4,245,897 $ 4,433,713 $ 6,409,365 Engineering and other services 192,076 172,648 278,125 353,731 Shipping and handling 31,668 90,960 47,474 112,938 Total revenue $ 3,014,885 $ 4,509,505 $ 4,759,312 $ 6,876,034 |
Schedule of Remaining Performance Obligations Expected to be Recognized | The remaining performance obligations expected to be recognized through 2023 are as follows: Schedule of Remaining Performance Obligations Expected to be Recognized 2022 2023 Total Remaining performance obligations related to engineering only paid contracts $ - $ - $ - Remaining performance obligations related to partial equipment paid contracts 8,767,000 931,000 9,698,000 Total remaining performance obligations $ 8,767,000 $ 931,000 $ 9,698,000 |
Schedule of Share-based Compensation Costs | The following is a summary of share-based compensation expenses included in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and June 30, 2021: Schedule of Share-based Compensation Costs 2022 2021 2022 2021 For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Share-based compensation expense included in: Cost of revenue $ 5,104 $ 15,809 $ 5,895 $ 29,944 Advertising and marketing expenses 4,080 6,818 6,842 13,292 Product development costs 4,961 7,335 4,961 14,029 Selling, general and administrative expenses 81,482 41,595 170,446 73,428 Total share-based compensation expense included in consolidated statement of operations $ 95,627 $ 71,557 $ 188,144 $ 130,693 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases | |
Schedule of Lease Cost | The lease cost, cash flows and other information related to the New Facility Lease were as follows: Schedule of Lease Cost As of June 30, 2022 Operating lease right-of-use asset $ 514,816 Operating lease liability, current $ 113,999 Operating lease liability, long-term $ 432,496 Remaining lease term 4.6 Discount rate 3.63 % For the Six Months Ended June 30, 2022 Operating cash outflow from operating lease $ 50,273 |
Schedule of Future Annual Minimum Lease Payments | Future annual minimum lease payments on the New Facility Lease as of June 30, 2022 are as follows: Schedule of Future Annual Minimum Lease Payments Years ended December 31, 2022 (excluding the six months ended June 30, 2022) $ 60,931 2023 124,897 2024 128,643 2025 132,503 2026 136,473 Thereafter 11,654 Total minimum lease payments 595,101 Less imputed interest (48,606 ) Present value of minimum lease payments $ 546,495 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following: Schedule of Inventory June 30, December 31, 2022 2021 Finished goods $ 228,378 $ 272,199 Work in progress 195 1,050 Raw materials 230,145 196,456 Allowance for excess & obsolete inventory (56,961 ) (91,379 ) Inventory, net $ 401,757 $ 378,326 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following: Schedule of Property and Equipment June 30, December 31, 2022 2021 Furniture and equipment $ 282,748 $ 274,472 Vehicles 15,000 15,000 Leasehold improvements - - Property and equipment, gross 297,748 289,472 Accumulated depreciation (213,061 ) (212,126 ) Property and equipment, net $ 84,687 $ 77,346 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of the following: Schedule of Accounts Payable and Accrued Liabilities June 30, December 31, 2022 2021 Accounts payable $ 207,640 $ 616,056 Sales commissions payable 21,613 27,592 Accrued payroll liabilities 325,372 322,873 Product warranty accrual 183,979 186,605 Other accrued expenses 305,932 192,463 Total $ 1,044,536 $ 1,345,589 |
Equity Incentive Plans (Tables)
Equity Incentive Plans (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Schedule of Stock Option Activity | A summary of the non-qualified stock options and incentive stock options granted to employees and consultants under the 2017 and 2021 Equity Plans during the six months ended June 30, 2022, are presented in the table below: Schedule of Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding, December 31, 2021 158,174 $ 10.99 7.60 $ - Granted 52,960 $ 2.92 9.70 $ - Exercised - $ - - $ - Forfeited (13,333 ) $ 9.15 9.50 $ - Expired - $ - - $ - Outstanding, June 30, 2022 197,800 $ 8.95 8.20 $ - Exercisable, June 30, 2022 150,621 $ 9.91 7.80 $ - |
Summary of Non-vested Non-qualified Stock Option Activity | A summary of non-vested non-qualified stock options activity for employees and consultants under the 2017 and 2021 Equity Plans for the six months ended June 30, 2022, are presented in the table below: Summary of Non-vested Non-qualified Stock Option Activity Number of Options Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Grant-Date Fair Value Nonvested, December 31, 2021 41,846 $ 7.65 $ - $ 320,122 Granted 52,960 $ 2.89 $ - $ 153,151 Vested (35,960 ) $ 2.72 $ - $ 97,674 Forfeited (11,667 ) $ 9.01 $ - $ (105,118 ) Expired - $ - $ - $ - Nonvested, June 30, 2022 47,179 $ 5.73 $ - $ 270,481 |
Schedule of Restricted Stock Units Activity | Schedule of Restricted Stock Units Activity Number of Units Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Outstanding, December 31, 2021 - $ - $ - Granted 6,734 $ 7.42 $ - Vested and settled with share issuance (3,367 ) $ 7.42 $ - Forfeited/canceled - $ - $ - Outstanding, June 30, 2022 3,367 $ 7.42 $ - |
2017 Equity Plan and 2021 Equity Plan [Member] | Directors [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Schedule of Stock Option Activity | A summary of the non-qualified stock options granted to directors under the 2017 Equity Plan and the 2021 Equity Plan, during the six months ended June 30, 2022, are presented in the table below: Schedule of Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding, December 31, 2021 50,872 $ 10.02 6.6 $ - Granted 6,250 $ 4.80 9.5 $ - Exercised - $ - - $ - Forfeited/Cancelled - $ - - $ - Expired - $ - - $ - Outstanding, June 30, 2022 57,122 $ 9.44 6.5 $ - Exerciseable, June 30, 2022 57,122 $ 9.44 6.5 $ - |
Summary of Non-vested Non-qualified Stock Option Activity | Summary of Non-vested Non-qualified Stock Option Activity Number of Options Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Grant-Date Fair Value Nonvested, December 31, 2021 - $ - $ - $ - Granted 6,250 $ 4.80 $ - $ 29,656 Vested (6,250 ) $ 4.80 $ - $ (29,656 ) Forfeited - $ - $ - $ - Expired - $ - $ - $ - Nonvested, June 30, 2022 - $ - $ - |
Warrants (Tables)
Warrants (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Warrants | |
Schedule of Outstanding Warrants to Purchase Common Stock | The following table summarizes information with respect to outstanding warrants to purchase common stock during the six months ended June 30, 2022: Schedule of Outstanding Warrants to Purchase Common Stock Weighted Weighted Average Average Remaining Aggregate Number Exercise Life Intrinsic Outstanding Price In Months Value Outstanding at December 31, 2021 227,719 $ 9.59 33 $ 0 Granted 7,566,435 $ 4.89 55 $ 212,978 Exercised (170,382 ) $ 0.01 - * $ 212,978 Expired - - - - Outstanding at June 30, 2022 7,623,772 $ 5.14 55 * $ 0 * Excludes 170,382 |
Schedule of Warrants Outstanding | The following table summarizes information about warrants outstanding at June 30, 2022: Schedule of Warrants Outstanding Warrants Weighted Average Exercise price Outstanding Months Outstanding 9.45 192,982 27 10.40 34,737 28 5.00 7,105,496 56 5.16 290,557 56 7,623,772 55 |
Schedule of Revenue by Source (
Schedule of Revenue by Source (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Product Information [Line Items] | ||||
Total revenue | $ 3,014,885 | $ 4,509,505 | $ 4,759,312 | $ 6,876,034 |
Equipment And Systems Sales [Member] | ||||
Product Information [Line Items] | ||||
Total revenue | 2,791,141 | 4,245,897 | 4,433,713 | 6,409,365 |
Engineering And Other Services [Member] | ||||
Product Information [Line Items] | ||||
Total revenue | 192,076 | 172,648 | 278,125 | 353,731 |
Shipping and Handling [Member] | ||||
Product Information [Line Items] | ||||
Total revenue | $ 31,668 | $ 90,960 | $ 47,474 | $ 112,938 |
Schedule of Remaining Performan
Schedule of Remaining Performance Obligations Expected to be Recognized (Details) | Jun. 30, 2022 USD ($) |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Remaining performance obligations related to engineering only paid contracts | |
Remaining performance obligations related to partial equipment paid contracts | 9,698,000 |
Total remaining performance obligations | 9,698,000 |
2022 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Remaining performance obligations related to engineering only paid contracts | |
Remaining performance obligations related to partial equipment paid contracts | 8,767,000 |
Total remaining performance obligations | 8,767,000 |
2023 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Remaining performance obligations related to engineering only paid contracts | |
Remaining performance obligations related to partial equipment paid contracts | 931,000 |
Total remaining performance obligations | $ 931,000 |
Schedule of Share-based Compens
Schedule of Share-based Compensation Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Total share-based compensation expense included in consolidated statement of operations | $ 95,627 | $ 71,557 | $ 188,144 | $ 130,693 |
Cost of Sales [Member] | ||||
Total share-based compensation expense included in consolidated statement of operations | 5,104 | 15,809 | 5,895 | 29,944 |
Advertising And Marketing Expenses [Member] | ||||
Total share-based compensation expense included in consolidated statement of operations | 4,080 | 6,818 | 6,842 | 13,292 |
Product Development Costs [Member] | ||||
Total share-based compensation expense included in consolidated statement of operations | 4,961 | 7,335 | 4,961 | 14,029 |
Selling, General and Administrative Expenses [Member] | ||||
Total share-based compensation expense included in consolidated statement of operations | $ 81,482 | $ 41,595 | $ 170,446 | $ 73,428 |
General (Details Narrative)
General (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Feb. 15, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 30, 2021 | Dec. 29, 2021 | |
Product Information [Line Items] | ||||||||
Proceeds from issuance of common stock | $ 22,000,000 | |||||||
Reverse stock split description | On January 17, 2022, the Company’s Board of Directors approved a reverse stock split at a ratio of one-for-one hundred and fifty. Such reverse stock split was implemented effective January 27, 2022 | |||||||
Common stock shares issued | 7,953,974 | 7,953,974 | 1,600,835 | 240,125,224 | 240,125,244 | |||
Common stock shares outstanding | 7,953,974 | 7,953,974 | 1,600,835 | 240,125,244 | ||||
Federal insured amount | $ 250,000 | $ 250,000 | ||||||
Cash balance, amount | 20,611,000 | 20,611,000 | ||||||
Cash balance, amount | 20,361,000 | $ 20,361,000 | ||||||
Antidilutive securities | 22,528 | |||||||
Potentially dilutive equity instruments that are convertible into common stock | 7,882,061 | 164,579 | ||||||
Goodwill and intangible asset impairment | 631,064 | $ 631,064 | ||||||
Contract with customer liability current | 5,935,270 | 5,935,270 | $ 2,839,838 | |||||
Revenue recognized | 1,030,830 | 1,193,251 | 2,193,204 | 3,073,616 | ||||
Revenue remaining performance obligation | 9,698,000 | 9,698,000 | ||||||
Product Warranty Accrual, Current | 183,979 | $ 183,979 | $ 186,605 | |||||
Expected Term | 10 years | |||||||
Share-Based Payment Arrangement, Expense | $ 95,627 | $ 71,557 | $ 188,144 | $ 130,693 | ||||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer One [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentration risk percentage | 53% | 47% | 18% | |||||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer Two [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentration risk percentage | 12% | 18% | ||||||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer Three [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentration risk percentage | 13% | |||||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer One [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentration risk percentage | 28% | 60% | 68% | |||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Two [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentration risk percentage | 27% | 25% | 23% | |||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Three [Member] | ||||||||
Product Information [Line Items] | ||||||||
Concentration risk percentage | 11% | 10% | ||||||
2021 Annual Employee Incentive Compensation Plan [Member] | ||||||||
Product Information [Line Items] | ||||||||
Share-Based Payment Arrangement, Expense | $ 46,374 | $ 56,151 | $ 46,374 | $ 108,945 | ||||
Minimum [Member] | ||||||||
Product Information [Line Items] | ||||||||
Volatility | 158.21% | |||||||
Interest rate | 1.52% | |||||||
Maximum [Member] | ||||||||
Product Information [Line Items] | ||||||||
Volatility | 158.70% | |||||||
Interest rate | 2.32% | |||||||
Two Customer [Member] | ||||||||
Product Information [Line Items] | ||||||||
Revenue remaining performance obligation | 155,000 | $ 155,000 | ||||||
2023 [Member] | ||||||||
Product Information [Line Items] | ||||||||
Revenue remaining performance obligation | 931,000 | 931,000 | ||||||
2023 [Member] | Booked Sales Orders From Several Customers [Member] | ||||||||
Product Information [Line Items] | ||||||||
Revenue remaining performance obligation | $ 776,000 | $ 776,000 |
Schedule of Lease Cost (Details
Schedule of Lease Cost (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Leases | ||
Operating lease right-of-use asset | $ 514,816 | $ 565,877 |
Operating lease liability, current | 113,999 | 100,139 |
Operating lease liability, long-term | $ 432,496 | $ 486,226 |
Remaning lease term | 4 years 7 months 6 days | |
Discount rate | 3.63% | |
Operating cash outflow from operating lease | $ 50,273 |
Schedule of Future Annual Minim
Schedule of Future Annual Minimum Lease Payments (Details) | Jun. 30, 2022 USD ($) |
Leases | |
2022 (excluding the six months ended June 30, 2022) | $ 60,931 |
2023 | 124,897 |
2024 | 128,643 |
2025 | 132,503 |
2026 | 136,473 |
Thereafter | 11,654 |
Total minimum lease payments | 595,101 |
Less imputed interest | (48,606) |
Present value of minimum lease payments | $ 546,495 |
Leases (Details Narrative)
Leases (Details Narrative) | Jul. 28, 2021 USD ($) ft² | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Operating lease, liability | $ 546,495 | ||
Operating lease right-of-use asset | $ 514,816 | $ 565,877 | |
New Facility Lease [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Area of land | ft² | 11,491 | ||
Operating lease term description | The New Facility Lease commenced on November 1, 2021 and continues through January 31, 2027 | ||
Lease rental expense | $ 10,055 | ||
Increase in rent percent | 3% | ||
Security deposit | $ 14,747 | ||
Operating lease, liability | 582,838 | ||
Operating lease right-of-use asset | $ 582,838 |
Schedule of Inventory (Details)
Schedule of Inventory (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 228,378 | $ 272,199 |
Work in progress | 195 | 1,050 |
Raw materials | 230,145 | 196,456 |
Allowance for excess & obsolete inventory | (56,961) | (91,379) |
Inventory, net | $ 401,757 | $ 378,326 |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | ||
Overhead expenses | $ 14,997 | $ 13,589 |
Inventory in transit | 47,735 | |
Prepaid inventory expenses | $ 2,720,000 | $ 1,069,000 |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 297,748 | $ 289,472 |
Accumulated depreciation | (213,061) | (212,126) |
Property and equipment, net | 84,687 | 77,346 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 282,748 | 274,472 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 15,000 | 15,000 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation expenses | $ 16,697 | |||
Selling, general, and administrative expense | $ 1,080,094 | $ 886,758 | 2,391,871 | $ 1,627,231 |
Property, Plant and Equipment [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Cost of sales, amount | 2,428 | |||
Property, Plant and Equipment [Member] | Inventory [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Selling, general, and administrative expense | $ 607 |
Schedule of Accounts Payable an
Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 207,640 | $ 616,056 |
Sales commissions payable | 21,613 | 27,592 |
Accrued payroll liabilities | 325,372 | 322,873 |
Product warranty accrual | 183,979 | 186,605 |
Other accrued expenses | 305,932 | 192,463 |
Total | $ 1,044,536 | $ 1,345,589 |
Temporary Equity (Details Narra
Temporary Equity (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Feb. 16, 2022 | Nov. 04, 2021 | Sep. 28, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Feb. 15, 2022 | |
Temporary equity shares issued | 0 | 0 | 3,300 | ||||||
Temporary equity, stated value per share | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||||||
Aggregate purchase price amount | $ 3,960,000 | ||||||||
Net proceeds amount | $ 1,365,000 | $ 1,260,000 | |||||||
Exercise price per share | $ 5.14 | $ 5.14 | $ 9.59 | ||||||
Vesting period | 3 years | ||||||||
Recognized deemed dividend | $ 439,999 | ||||||||
Common Stock [Member] | |||||||||
Stock issued during period, shares, conversion | 362,306 | 362,306 | |||||||
Warrant [Member] | |||||||||
Number of shares vested in period | 532,688 | ||||||||
Exercise price per share | $ 5 | $ 5 | |||||||
Vesting period | 5 years | ||||||||
Series B Redeemable Convertible Preferred Stock [Member] | Investor [Member] | |||||||||
Temporary equity shares issued | 3,300 | ||||||||
Temporary equity, stated value per share | $ 1,000 | ||||||||
Aggregate purchase price amount | $ 3,000,000 | ||||||||
Series B Preferred Stock [Member] | |||||||||
Dividend rate percentage | 8% | ||||||||
Common stock conversion price | $ 8.55 | ||||||||
Percentage of preferred stock conversion provision | 4.99% | ||||||||
Probability of redemption description | Probability of Redemption: As it was considered probable the Series B Preferred stock would become redeemable outside of the Company’s control, the Series B Preferred stock was disclosed as temporary equity and was initially adjusted as of September 30, 2021 to its redemption value of 120% of the stated value of $1,000 per share, or $3,960,000. | ||||||||
Non-cash redemption value adjustment | $ 2,262,847 | ||||||||
Shares redeemed or called during period, shares | 1,650 | ||||||||
Shares redeemed or called during period, value | $ 2,016,000 | ||||||||
Principal and accrued dividends, amount | $ 36,000 | ||||||||
Stock issued during period, shares, conversion | 1,650 | ||||||||
Preferred stock convertible conversion price | $ 8.55 | ||||||||
Conversion price reduced offering price percentage | 75% | ||||||||
Offering price per share | $ 4.13 | $ 4.13 | |||||||
Series B Preferred Stock [Member] | Minimum [Member] | |||||||||
Preferred stock convertible conversion price | 8.55 | ||||||||
Series B Preferred Stock [Member] | Maximum [Member] | |||||||||
Preferred stock convertible conversion price | $ 3.0975 | ||||||||
Series B Preferred Stock [Member] | Common Stock [Member] | |||||||||
Conversion of stock shares converted1 | 362,306 | ||||||||
Series B Preferred Stock [Member] | Warrant [Member] | |||||||||
Conversion of stock shares converted1 | 703,069 | ||||||||
Series B Preferred Stock [Member] | Warrant One [Member] | Indefinite Term [Member] | |||||||||
Number of shares vested in period | 170,382 | ||||||||
Series B Preferred Stock [Member] | Pre-funded conversion Warrants [Member] | Indefinite Term [Member] | |||||||||
Exercise price per share | $ 0.01 |
Stockholders_ Equity (Deficit)
Stockholders’ Equity (Deficit) (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
Jun. 21, 2022 | Feb. 15, 2022 | Jan. 17, 2022 | Jan. 17, 2022 | Jan. 03, 2022 | Jan. 03, 2022 | Aug. 20, 2021 | Jun. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Feb. 16, 2022 | Dec. 30, 2021 | Dec. 29, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | 850,000,000 | ||||||||||
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | |||||||||||
Common stock par value | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||||||||||
Preferred stock par value | $ 0.00001 | $ 0.00001 | |||||||||||
Common stock, shares issued | 7,953,974 | 7,953,974 | 1,600,835 | 240,125,224 | 240,125,244 | ||||||||
Common stock, shares outstanding | 7,953,974 | 7,953,974 | 1,600,835 | 240,125,244 | |||||||||
Net proceeds from sale of common stock | $ 22,000,000 | ||||||||||||
Exercise price | $ 5.14 | $ 5.14 | $ 9.59 | ||||||||||
Number of shares issued | 169,530 | ||||||||||||
Prefunded conversion warrants | 170,382 | ||||||||||||
Common Stock [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Number of shares sold | 5,811,138 | ||||||||||||
Number of shares issued | 169,530 | 5,811,138 | |||||||||||
Warrant [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Number of shares sold | 6,572,808 | ||||||||||||
Warrant term | 5 years | ||||||||||||
Exercise price | $ 5 | $ 5 | |||||||||||
Director [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Annual cash fee | $ 15,000 | $ 15,000 | $ 25,000 | ||||||||||
Board of Directors Chairman [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | |||||||||||
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | |||||||||||
Audit Committee Chairman [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Annual cash fee | 10,000 | ||||||||||||
Committee Chairman [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Annual cash fee | $ 5,000 | ||||||||||||
Underwriters [Member] | Warrant [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Exercise price | $ 5.1625 | ||||||||||||
Stock issued during period, shares, issued for services | 290,557 | ||||||||||||
Warrants maturity date | Feb. 10, 2027 | ||||||||||||
2021 Equity Incentive Plan [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Exercise price | $ 4.80 | ||||||||||||
Non-Qualified Stock Options [Member] | Board of Directors Chairman [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Stock option additional grant | $ 7,500 | ||||||||||||
Non-Qualified Stock Options [Member] | 2021 Equity Incentive Plan [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Number of stock options issued | 3,125 | ||||||||||||
Stock option additional grant | $ 15,000 | ||||||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Vesting rights description | Vesting of the RSUs was as follows: (i) 50% at the time of grant, and (ii) 50% on the first anniversary of the grant date. | ||||||||||||
Restricted Stock Units (RSUs) [Member] | Director [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Stock option additional grant | $ 25,000 | ||||||||||||
Restricted Stock Units (RSUs) [Member] | 2021 Equity Incentive Plan [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Shares, granted | 3,367 | 3,367 | |||||||||||
Restricted Stock Units (RSUs) [Member] | 2021 Equity Incentive Plan [Member] | Two Directors [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Shares, vested | 1,684 | ||||||||||||
Restricted Stock Units (RSUs) [Member] | 2021 Equity Incentive Plan [Member] | January 17, 2022 [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Shares, granted | 1,684 | 1,684 | |||||||||||
Restricted Stock Units (RSUs) [Member] | 2021 Equity Incentive Plan [Member] | January 17, 2023 [Member] | |||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||||
Shares, granted | 1,683 | 1,683 |
Schedule of Stock Option Activi
Schedule of Stock Option Activity (Details) - 2017 Equity Plan and 2021 Equity Plan [Member] | 6 Months Ended |
Jun. 30, 2022 USD ($) $ / shares shares | |
Employees And Consultants [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options, Granted | 52,960 |
Employees And Consultants [Member] | Non-Qualified Stock Options [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options, Outstanding Beginning | 158,174 |
Weighted Average Exercise Price, Outstanding Beginning | $ / shares | $ 10.99 |
Weighted Average Remaining Contractual Term, Beginning | 7 years 7 months 6 days |
Aggregate Intrinsic Value, Outstanding Beginning | $ | |
Number of Options, Granted | 52,960 |
Weighted Average Exercise Price, Granted | $ / shares | $ 2.92 |
Weighted Average Remaining Contractual Term, Granted | 9 years 8 months 12 days |
Number of Options, Exercised | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Number of Options, Forfeited/Cancelled | (13,333) |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | $ 9.15 |
Weighted Average Remaining Contractual Term, Forfeited | 9 years 6 months |
Number of Options, Expired | |
Weighted Average Exercise Price, Expired | $ / shares | |
Number of Options, Outstanding Ending | 197,800 |
Weighted Average Exercise Price, Outstanding Ending | $ / shares | $ 8.95 |
Weighted Average Remaining Contractual Term, Outstanding Ending | 8 years 2 months 12 days |
Aggregate Intrinsic Value, Outstanding Ending | $ | |
Number of Options, Exercisable Ending | 150,621 |
Weighted Average Exercise Price, Exercisable Ending | $ / shares | $ 9.91 |
Weighted Average Remaining Contractual Term, Exercisable Ending | 7 years 9 months 18 days |
Aggregate Intrinsic Value, Exercisable Ending | $ | |
Directors [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options, Granted | 6,250 |
Directors [Member] | Non-Qualified Stock Options [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options, Outstanding Beginning | 50,872 |
Weighted Average Exercise Price, Outstanding Beginning | $ / shares | $ 10.02 |
Weighted Average Remaining Contractual Term, Beginning | 6 years 7 months 6 days |
Aggregate Intrinsic Value, Outstanding Beginning | $ | |
Number of Options, Granted | 6,250 |
Weighted Average Exercise Price, Granted | $ / shares | $ 4.80 |
Weighted Average Remaining Contractual Term, Granted | 9 years 6 months |
Number of Options, Exercised | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Number of Options, Forfeited/Cancelled | |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | |
Number of Options, Expired | |
Weighted Average Exercise Price, Expired | $ / shares | |
Number of Options, Outstanding Ending | 57,122 |
Weighted Average Exercise Price, Outstanding Ending | $ / shares | $ 9.44 |
Weighted Average Remaining Contractual Term, Outstanding Ending | 6 years 6 months |
Aggregate Intrinsic Value, Outstanding Ending | $ | |
Number of Options, Exercisable Ending | 57,122 |
Weighted Average Exercise Price, Exercisable Ending | $ / shares | $ 9.44 |
Weighted Average Remaining Contractual Term, Exercisable Ending | 6 years 6 months |
Aggregate Intrinsic Value, Exercisable Ending | $ | |
Weighted Average Remaining Contractual Term, Expired |
Summary of Non-vested Non-quali
Summary of Non-vested Non-qualified Stock Option Activity (Details) - 2017 Equity Plan and 2021 Equity Plan [Member] | 6 Months Ended |
Jun. 30, 2022 USD ($) $ / shares shares | |
Employees And Consultants [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options Nonvested, Beginning | shares | 41,846 |
Weighted Average Grant-Date Fair Value, Nonvested, Beginning | $ / shares | $ 7.65 |
Aggregated Intrinsic Value, Nonvested Beginning | |
Grant Date Fair Value Nonvested, Beginning | $ 320,122 |
Number of Options Nonvested, Granted | shares | 52,960 |
Weighted Average Grant-Date Fair Value Nonvested, Granted | $ / shares | $ 2.89 |
Grant Date Fair Value Nonvested, Granted | $ 153,151 |
Number of Options Nonvested, Vested | shares | (35,960) |
Weighted Average Grant-Date Fair Value Nonvested, Vested | $ / shares | $ 2.72 |
Grant Date Fair Value Nonvested, Vested | $ 97,674 |
Number of Options Nonvested, Forfeited/Cancelled | shares | (11,667) |
Weighted Average Grant-Date Fair Value Nonvested, Forfeited/Cancelled | $ / shares | $ 9.01 |
Grant Date Fair Value Nonvested, Forfeited/Cancelled | $ (105,118) |
Number of Options Nonvested, Expired | shares | |
Weighted Average Grant-Date Fair Value Nonvested, Expired | $ / shares | |
Grant Date Fair Value Nonvested, Expired | |
Number of Options Nonvested, Beginning | shares | 47,179 |
Weighted Average Grant-Date Fair Value, Ending | $ / shares | $ 5.73 |
Aggregated Intrinsic Value, Nonvested Ending | |
Grant Date Fair Value Nonvested, Ending | $ 270,481 |
Directors [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options Nonvested, Beginning | shares | |
Weighted Average Grant-Date Fair Value, Nonvested, Beginning | $ / shares | |
Aggregated Intrinsic Value, Nonvested Beginning | |
Grant Date Fair Value Nonvested, Beginning | |
Number of Options Nonvested, Granted | shares | 6,250 |
Weighted Average Grant-Date Fair Value Nonvested, Granted | $ / shares | $ 4.80 |
Grant Date Fair Value Nonvested, Granted | $ 29,656 |
Number of Options Nonvested, Vested | shares | (6,250) |
Weighted Average Grant-Date Fair Value Nonvested, Vested | $ / shares | $ 4.80 |
Grant Date Fair Value Nonvested, Vested | $ (29,656) |
Number of Options Nonvested, Forfeited/Cancelled | shares | |
Weighted Average Grant-Date Fair Value Nonvested, Forfeited/Cancelled | $ / shares | |
Number of Options Nonvested, Expired | shares | |
Weighted Average Grant-Date Fair Value Nonvested, Expired | $ / shares | |
Number of Options Nonvested, Beginning | shares | |
Aggregated Intrinsic Value, Nonvested Ending | |
Grant Date Fair Value Nonvested, Ending |
Schedule of Restricted Stock Un
Schedule of Restricted Stock Units Activity (Details) - 2017 Equity Incentive Plan [Member] - Employees, Directors and Consultants [Member] - Restricted Stock Units (RSUs) [Member] | 6 Months Ended |
Jun. 30, 2022 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Units Outstanding, beginning | shares | |
Weighted Average Grant-Date Fair Value Outstanding, Beginning | $ / shares | |
Aggregate Intrinsic Value Outstanding, Beginning | $ | |
Number of Units, Granted | shares | 6,734 |
Weighted Average Grant-Date Fair Value, Granted | $ / shares | $ 7.42 |
Number of Units, Vested and settled with share issuance | shares | (3,367) |
Weighted Average Grant-Date Fair Value, Vested and settled with share issuance | $ / shares | $ 7.42 |
Number of Units, Forfeited/canceled | shares | |
Weighted Average Grant-Date Fair Value, Forfeited/Canceled | $ / shares | |
Number of Units Outstanding, ending | shares | 3,367 |
Weighted Average Grant-Date Fair Value Outstanding,ending | $ / shares | $ 7.42 |
Aggregate Intrinsic Value Outstanding, ending | $ |
Equity Incentive Plans (Details
Equity Incentive Plans (Details Narrative) - USD ($) | 6 Months Ended | ||||||||
Jun. 21, 2022 | Apr. 02, 2022 | Jan. 17, 2022 | Jan. 03, 2022 | Jan. 03, 2022 | Jan. 03, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Mar. 22, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares issued during the period | 169,530 | ||||||||
Expected term years | 3 years | ||||||||
Share based compensation | $ 225,396 | $ 21,748 | |||||||
Employees [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares, granted | 52,960 | ||||||||
21 Employees [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares, granted | 31,793 | ||||||||
Expected term years | 10 years | ||||||||
Exercise price | $ 2.51 | ||||||||
Three New Employees [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares, granted | 6,167 | ||||||||
Expected term years | 10 years | ||||||||
Exercise price, lower | $ 4.80 | ||||||||
Exercise price, upper | $ 6.90 | ||||||||
Cheif Financial Officer [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares, granted | 15,000 | ||||||||
Expected term years | 10 years | ||||||||
Exercise price | $ 2.20 | ||||||||
Description,shares | The options vest as follows: 2,000 vested immediately, 3,000 on March 11, 2023, 5,000 on March 11, 2024, and 5,000 on March 11, 2025 | ||||||||
One Former Employee [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of options to purchase shares | 1,667 | ||||||||
Issuance of stock, unvested | 11,667 | ||||||||
2017 Equity Incentive Plan [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of options to purchase shares | 333,333 | ||||||||
Number of shares cancelled | 13,333 | ||||||||
Number of shares authorized for equity awards | 333,333 | ||||||||
Number of shares issued | 163,692 | ||||||||
Number of option remain outstanding | 148,905 | ||||||||
Shares available for future equity awards | 20,736 | ||||||||
2017 Equity Incentive Plan [Member] | Non-Qualified Stock Options [Member] | Employees And Consultants [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Share based compensation | $ 75,947 | $ 15,336 | |||||||
2017 Equity Incentive Plan [Member] | Director [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of options to purchase shares | 6,250 | 3,333 | |||||||
Share based compensation | $ 29,656 | $ 6,412 | |||||||
2021 Equity Plan [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares available for future equity awards | 547,113 | ||||||||
Number of shares grant in period | 666,667 | ||||||||
Shares issued during the period | 3,367 | ||||||||
Expected term years | 3 years | ||||||||
Number of shares authorized | 666,667 | ||||||||
Unrecognized compensation expense | $ 168,766 | ||||||||
2021 Equity Plan [Member] | Non Qualified Stock Option [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of option remain outstanding | 65,201 | ||||||||
2021 Equity Plan [Member] | Incentive Stock Option [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of option remain outstanding | 40,816 | ||||||||
2021 Equity Plan [Member] | Restricted Stock [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of shares issued | 10,170 | ||||||||
2021 Equity Plan [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of option remain outstanding | 3,367 | ||||||||
2021 Equity Plan [Member] | Employees [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares, granted | 21,167 | ||||||||
2021 Equity Plan [Member] | Directors [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares, granted | 6,250 | ||||||||
2021 Equity Plan [Member] | Directors [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Share based compensation | $ 36,168 | ||||||||
Number of shares granted | 6,734 | ||||||||
Number of shares vested in period | 3,367 | ||||||||
Number of shares will vest | 3,367 | ||||||||
2021 Equity Incentive Plan [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Exercise price | $ 4.80 | ||||||||
2021 Equity Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of shares grant in period | 3,367 | ||||||||
2021 Equity Incentive Plan [Member] | Non-Qualified Stock Options [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of shares issued | 3,125 | ||||||||
2021 Equity Incentive Plan [Member] | 21 Employees [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares, granted | 31,793 | ||||||||
Expected term years | 10 years | ||||||||
Exercise price | $ 2.51 | ||||||||
2021 Plan [Member] | Director [Member] | Non-Qualified Stock Options [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of options to purchase shares | 6,250 | ||||||||
2021 Equity Plan [Member] | Non-Qualified Stock Options [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Expected term years | 10 years |
Schedule of Outstanding Warrant
Schedule of Outstanding Warrants to Purchase Common Stock (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | ||
Warrants | |||
Warrants Outstanding, Beginning Balance | 227,719 | ||
Weighted Average Exercise Price, Beginning Balance | $ 9.59 | ||
Weighted Average Life of Outstanding Warrants in Months, Beginning Balance | 55 months | 33 months | |
Aggregate Intrinsic Value, Beginning Balance | $ 0 | ||
Warrants, Granted | 7,566,435 | ||
Weighted Average Exercise Price, Granted | $ 4.89 | ||
Weighted Average Life of Outstanding Warrants in Months, Issued | 55 months | ||
Aggregate Intrinsic Value, Issued | $ 212,978 | ||
Warrants, Exercised | (170,382) | ||
Weighted Average Exercise Price, Exercised | $ 0.01 | ||
Weighted Average Remaining Life, Exercised | [1] | ||
Aggregate Intrinsic Value, Exercised | $ 212,978 | ||
Warrants, Expired | |||
Weighted Average Exercise Price, Expired | |||
Aggregate Intrinsic Value, Expired | |||
Warrants Outstanding, Ending Balance | 7,623,772 | 227,719 | |
Weighted Average Exercise Price, Ending Balance | $ 5.14 | $ 9.59 | |
Weighted Average Life of Outstanding Warrants in Months, Ending Balance | [1] | 55 months | |
Aggregate Intrinsic Value, Ending Balance | $ 0 | $ 0 | |
[1]Excludes 170,382 |
Schedule of Outstanding Warra_2
Schedule of Outstanding Warrants to Purchase Common Stock (Details) (Parenthetical) - shares | Jun. 30, 2022 | Dec. 31, 2021 |
Indefinite-Lived Intangible Assets [Line Items] | ||
Warrants | 7,623,772 | 227,719 |
Indefinite Life [Member] | ||
Indefinite-Lived Intangible Assets [Line Items] | ||
Warrants | 170,382 |
Schedule of Warrants Outstandin
Schedule of Warrants Outstanding (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 5.14 | $ 9.59 |
Warrants Outstanding | 7,623,772 | 227,719 |
Weighted Average Life of Outstanding Warrants in Months | 55 months | 33 months |
Warrants Range [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 9.45 | |
Warrants Outstanding | 192,982 | |
Weighted Average Life of Outstanding Warrants in Months | 27 months | |
Warrants Range One [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 10.40 | |
Warrants Outstanding | 34,737 | |
Weighted Average Life of Outstanding Warrants in Months | 28 months | |
Warrants Range Two [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 5 | |
Warrants Outstanding | 7,105,496 | |
Weighted Average Life of Outstanding Warrants in Months | 56 months | |
Warrants Range Three [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 5.16 | |
Warrants Outstanding | 290,557 | |
Weighted Average Life of Outstanding Warrants in Months | 56 months |
Warrants (Details Narrative)
Warrants (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 21, 2022 | Feb. 16, 2022 | Feb. 15, 2022 | Sep. 28, 2021 | Sep. 28, 2021 | Jun. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | |
Number of shares issued | 169,530 | |||||||
Per share | $ 0.00001 | $ 0.00001 | ||||||
Issuance of Value | $ 21,711,131 | |||||||
Exercise price | $ 5.14 | $ 5.14 | $ 9.59 | |||||
Issuance of warrants | 7,623,772 | 7,623,772 | 227,719 | |||||
Prefunded conversion warrants | 170,382 | |||||||
2022 Investor Warrants [Member] | ||||||||
Issuance of warrants | 5,811,138 | |||||||
Exercise price | $ 5 | |||||||
Proceeds from warrants issuance | $ 24,000,000 | |||||||
Issuance of per unit | $ 4.13 | |||||||
Warrants term | 5 years | |||||||
2022 OverAllotment Warrants [Member] | ||||||||
Number of shares issued | 761,670 | |||||||
Issuance of warrants | 5,811,138 | |||||||
Exercise price | $ 5 | |||||||
Proceeds from warrants issuance | $ 24,000,000 | |||||||
Issuance of per unit | $ 4.13 | |||||||
Warrants term | 5 years | |||||||
Warrants percent | 15% | |||||||
Warrant price per share | $ 0.01 | |||||||
2022 Underwriterwarrants [Member] | ||||||||
Number of shares issued | 290,557 | |||||||
Issuance of warrants | 5,811,138 | |||||||
Exercise price | $ 5.1625 | |||||||
Proceeds from warrants issuance | $ 24,000,000 | |||||||
Issuance of per unit | $ 4.13 | |||||||
Common Stock [Member] | ||||||||
Number of shares issued | 169,530 | 5,811,138 | ||||||
Issuance of Value | $ 58 | |||||||
Stock issued during period, shares, conversion of convertible securities | 362,306 | 362,306 | ||||||
Series B Preferred Shares Pre Funded Conversion Warrants [Member] | ||||||||
Number of shares issued | 169,530 | |||||||
Exercise price | $ 0.01 | |||||||
Stock issued during period, shares, conversion of convertible securities | 170,382 | |||||||
Prefunded conversion warrants | 170,382 | |||||||
Series B Preferred Shares Conversion Warrants [Member] | ||||||||
Exercise price | $ 5 | |||||||
Warrants term | 5 years | |||||||
Stock issued during period, shares, conversion of convertible securities | 532,688 | |||||||
Private Placement [Member] | Placement Agent Warrants [Member] | ||||||||
Exercise price | $ 10.40 | $ 10.40 | ||||||
Issuance of warrants | 34,737 | 34,737 | ||||||
Series B Preferred Stock [Member] | ||||||||
Issuance of per unit | $ 4.13 | $ 4.13 | ||||||
Stock issued during period, shares, conversion of convertible securities | 1,650 | |||||||
Series B Preferred Stock [Member] | Securities Purchase Agreement [Member] | ||||||||
Number of shares issued | 3,300 | |||||||
Per share | $ 1,000 | $ 1,000 | ||||||
Issuance of Value | $ 3,300,000 | |||||||
Purchase price | $ 3,000,000 | |||||||
Exercise price | $ 9.45 | $ 9.45 | ||||||
Series B Preferred Stock [Member] | Securities Purchase Agreement [Member] | Maximum [Member] | ||||||||
Issuance of warrants | 192,982 | 192,982 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Income Tax Disclosure [Abstract] | |
Operating loss carry forwards | $ 24,275,000 |
Net operating loss carryforward expected to expire amount | $ 11,196,000 |
NOLs usage against taxable income percentage | 80% |
NOLs carryforwards term description | three-year |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Consulting Agreement [Member] | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Payments for commissions | $ 9,884 |