YZi Labs, A Significant Stockholder Of CEA Industries Raises Alarm Over $2M CEO Exit Package; Highlighting Governance Failures, Weak Internal Controls, And Related-Party Transactions

Recent Filings Document a Catastrophic Failure of Internal Controls, Including a Lack of Segregation of Duties between the CEO and Accounting FunctionsYZi Labs Breaks Down the Seemingly Egregious ~$1.98 Million Exit Package for the Outgoing CEO and Calls on the Board to Justify its Approval of this Wealth Transfer in Apparent Gross Dereliction of DutyFilings Reveal Retroactive "Make-Up" Pay, Unapproved Equity Plan Substitutes, and Millions in Related-Party Fees Flowing to an Entity Controlled by a Sitting DirectorROAD TOWN, British Virgin Islands, March 23, 2026 (GLOBE NEWSWIRE) -- YZILabs Management Ltd. ("YZi Labs" or "we"), a significant stockholder of CEA Industries Inc. (NASDAQ:BNC) ("BNC" or the "Company"), today issued the following statement in response to the Company's deeply concerning Form 10-Q and Form 8-K, both filed on March 16, 2026.While YZi Labs recently addressed the Company's chronic inability to ensure timely insider ownership disclosures in a separate March 10th statement, these newest SEC filings document an even more alarming reality. The filings lay bare a staggering breakdown in basic public company governance, internal controls, and related-party oversight. They also raise serious questions about whether Company communications and agreements, taken together, were structured to manage a live control contest and influence stockholder outcomes rather than simply address ordinary business needs.Key Issues Identified in the March 16 SEC Filings:Material Weakness and Segregation-of-Duties Failure: The Form 10-Q explicitly discloses an identified material weakness in internal control over financial reporting. The filing states that the roles of Chief Executive Officer and Principal Financial and Accounting Officer were previously held by the same person. The Company further acknowledges insufficient controls and processes to adequately verify the accuracy and completeness of information used across key areas such as revenue, taxes, and stock-based compensation, and a resulting significant reliance on such information for financial reporting. A newly appointed CFO does not, by itself, remediate these deficiencies. The Board bears ultimate responsibility for ensuring that these failures are remediated promptly and credibly, rather than papered over while authorizing substantial discretionary payouts.A ~$1.98 Million "Golden Parachute" to a conflicted and ineffective CEO: At the exact moment the Company is disclosing material weaknesses and continues to fail to schedule an annual meeting, the Board has authorized a jaw-dropping exit package for outgoing CEO David Namdar. Based on the Form 8-K disclosures and the Company's March 16 stock price ($3.29),1 YZi Labs estimates the total value of this Transition Agreement at nearly $2 million through the August 31, 2026 separation date. By approving this egregious wealth transfer, the Board is failing its stockholders to the tune of:$375,000 in retroactive "makeup" consulting fees for past services.~$276,000 in future monthly consulting fees ($50,000/month through August 2026) while he transitions out.$434,2802 in a highly concerning "cash in lieu of equity" scheme (132,000 shares multiplied by the $3.29 share price). We believe this structure is unjustifiable because the Board failed to get stockholder approval for its equity plan in August 2025 – this structure bypasses stockholders entirely by substituting unapproved equity with floating cash payouts.$900,000 in a post-separation lump sum tied to what we view as toxic restrictive covenants that explicitly mandate "non-assistance to litigants."Problematic Transition Agreement Terms: Beyond the size of the payout, the Transition Agreement exposes a troubling attempt to restrict accountability:Pay-for-Silence Restrictions: It prohibits Mr. Namdar from aiding or assisting stockholders in any claim or taking actions to influence management or the Board, while conditioning a significant portion of the nearly $2 million payout on compliance with restrictive covenants. This structure appears designed to limit access to critical information from a former CEO, evidencing a clear lack of transparency and a significant governance red flag. These provisions should not be evaluated clause-by-clause in isolation. Taken together, they read less like an ordinary transition arrangement and more like a control-contest management instrument – one that rewards cooperation with incumbents while contractually chilling engagement with current or prospective stockholders and other outside parties.A Control-Contest Management Package, Not a Routine Transition: The timing is impossible to ignore. On March 13, 2026, the Company disclosed receipt of YZi Labs' request for a record date in connection with its consent solicitation. Within days, the Company issued an earnings press release emphasizing governance improvements, capital allocation, and strategic positioning, filed an 8-K announcing the CEO's transition, and entered into a Transition Agreement with restrictive covenants affecting a key insider. The asymmetry is striking: Mr. Namdar is required to cooperate with the Company, provide information, interviews, testimony, documents, and assistance in internal and external proceedings, while simultaneously being restricted from assisting current or prospective stockholders in claims or taking actions to influence management or directors. Stockholders are entitled to ask whether this was a routine transition arrangement, or a Board-approved mechanism to manage dissent and control outcomes using corporate funds.Misleading References in Non-Compete Covenant: The non-compete provision specifically references "YZILabs Asset Management LLC," an entity that is not affiliated with or controlled by YZi Labs and does not correspond to any known entity within its corporate structure. Embedding such a reference in a binding restrictive covenant calls into question the integrity of the agreement and the level of diligence applied in its review and approval. The express inclusion of a YZi Labs-related reference in the non-compete further raises the concern that the agreement was drafted with a known dissatisfied stockholder and the consent solicitation specifically in mind.AMA – Talk is Cheap, Fees are Real: While the Board issues empty press releases claiming it "plans" to revise the disastrous Asset Management Agreement, it has taken no actual action to stop the bleeding. Despite YZi Labs' repeated and public requests since September 2025 to bring the AMA to market terms, the Company continues to operate under an arrangement that channels significant value to 10X and its affiliated parties.Rampant Related-Party Economics: The Company is hemorrhaging capital to its Asset Manager, an entity majority-owned and controlled by a sitting BNC director, Hans Thomas. The Form 10-Q reveals the Company paid the Asset Manager $2.0 million in fees this quarter alone, bringing the total to $3.8 million since June 7, 2025, with another $0.6 million accrued but unpaid as of January 31, 2026.Sloppy Disclosure: The Form 10-Q reports 43,673,955 shares outstanding as of January 31, 2026, but the filing's internal math fails to reconcile. The equity roll-forward shows 2,393,884 shares issued from the "exercise of warrants," yet the combined Strategic Advisor/Asset Manager warrant activity table shows only 2,376,236 exercised. This unexplained 17,648-share discrepancy raises secondary but serious questions about the Company's disclosure discipline. These issues are not isolated. Taken together, the Company's recent disclosures point to a broader pattern of governance failures, including weak internal controls, opaque related-party transactions, and a lack of independent oversight of key decisions affecting stockholder value. At minimum, they also raise serious questions about whether stockholders received complete, balanced, and plain-English disclosure regarding the practical effect of the Transition Agreement after the filing of YZi Labs' preliminary consent statement and the pending consent solictiation.