CEA Industries Inc. Common Stock Q3 FY2021 earnings call

• Organic growth strategy includes three components: new markets (expanding into non-cannabis controlled environment agriculture, specifically indoor food farming), new products and services (expanding product and service range from environmental control to more CEA technical infrastructure and full lifecycle support, acting as technology agnostic engineers offering alternative designs, and recent announcements like partnership with Anden dehumidifiers, expanded chiller line, EnviroPro Mini Air Handler line, architectural design services), and new trading. - Changed name to Surna Cultivation Technologies. - Corporate strategy pillars: pursue aggressive organic growth, seek strategic relationships/mergers acquisitions, and pursue uplifting to international exchange for growth capital.

Third quarter 2021 revenue was $3.7 million, representing a 127% increase over the third quarter of the previous year. The third quarter 2021 gross profit margin was 20.2% compared to 32.2% in the third quarter of 2020, a decrease of 12 percentage points. Year-to-date through September 30, 2021, revenue was $10.6 million versus $5.1 million for the same period last year, a 106% increase. The third quarter 2021 bookings were approximately $5.6 million, net of $500,000 cancellations, representing a 32% increase compared to the third quarter of 2020 and a 509% increase compared to the second quarter of 2021. As of September 30, 2021, cash, cash equivalents, and restricted cash was $2.3 million, same as at December 31, 2020.

• Continued execution of organic growth strategy is expected to bear fruit in the second half of the year. - Completion of pipe financing was a necessary first step towards uplisting to a national exchange, and the intention to pursue uplisting to a national exchange remains.

• Capital constraints as the company is capital constrained and a potential capital raise could be dilutive to existing shareholders. - Supply chain disruptions in the third quarter impacted revenue timing, with delays expected to push into the fourth quarter and possibly the first quarter of 2022.

Q: Your recent press release on preventative maintenance mentioned you have signed contracts. Why is this important for you and your customers?

A: Customers benefit from preventative maintenance for maximizing uptime in an optimal growth environment; for Surna, these maintenance contracts are part of the continual support from concept to grow.

Q: Earlier you stated you want to uplift, can you provide an update on where Surna is in these efforts?

A: In this quarter, we completed our pipe financing, which was a necessary first step to uplisting, and we still intend to pursue uplifting to a national exchange.

Q: You stated supply was disrupted in the quarter. How much from both dollar perspective and timing has this disruption impacted you in the third quarter?

A: We won't go into specifics on the dollar front, but the delays experienced in the third quarter from a revenue perspective will push into the fourth quarter and possibly into the first quarter of 2022