CEA Industries Inc.

Kurta Law is investigating brokers who recommended that their clients purchase shares of CEA Industries, Inc. This investment came with substantial risks that may have made it unsuitable for many investors. These risks appear in the prospectus, the SEC filing that companies use to disclose their business strategy and related risks prior to offering the securities for sale. Unsuitable investments violate FINRA Rule 2111 and Regulation Best Interest, and investors who incur losses may be able to recover via FINRA arbitration.

If your broker recommended that you invest in CEA Industries, Inc., you may have a claim against the firm through FINRA arbitration.  FINRA arbitration offers a quicker and cheaper remedy for investors than suing in civil court. Contact (877) 600-0098 or email info@kurtalawfirm.com to speak to a securities attorney for free today.

What is CEA Industries?

According to its website, CEA Industries is a Controlled Environment Agriculture company that focuses on the development, design, and distribution of indoor cultivation technologies for crops, including cannabis.

CEA Industries Stock

CEA Industries, Inc. (CEAD) investments involve a high degree of risk, according to the company’s prospectus. The company debuted at $4.13 per share and recently traded at $0.55 per share. This massive drop in value was not surprising, given the risks disclosed in the company’s prospectus.

Risks Associated with CEA Industries

Brokerage firms that approve an investment are required to understand the risks associated with that investment. Furthermore, brokers must accurately represent the risks associated with certain investments.

The prospectus indicates several risks related to CEA Industries’ business. At the time the prospectus was filed, risks included limited revenues and the inability to obtain necessary financing as well as dilution to shareholders. The company’s independent registered public accounting firm expressed substantial doubt about its ability to continue. Additionally, the company had a material weakness in internal control over financing reporting which could lead to the inability to accurately report financial results.

Other risks indicated in the prospectus included the company’s inability to manage growth, changes, and compliance with governmental laws and regulations, supply chain issues, industry competition, unsuccessful development and commercialization of products or services, etc.

Moreover, Cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in the inability to execute the company’s business plan. Success is dependent on states’ legalization of cannabis use. There are several risks associated with the cannabis industry including potential civil asset forfeiture, difficulty accessing bankruptcy courts, difficulty enforcing commercial agreements and contracts, difficulty obtaining insurance, etc.

ThinkEquity Underwriter

ThinkEquity served as the underwriter of CEA Industries. Investors should know about this broker’s potential conflicts of interest. An underwriter should keep potentially overly risky investments from trading on the public stock market. But because underwriters make money by bringing new stocks to market, they may have a motivation to overlook certain risks.

What Can I Do If I Suffered Losses?

If you lose money CEA Industries, consider reaching out to a Kurta Law securities attorney. Our securities attorneys have 5-star reviews on Google and a proven track record when it comes to securing fair settlements for our clients. Call (877) 600-0098 or email info@kurtalawfirm.com.