美國
證券交易委員會
華盛頓特區，20549
表格
截至季度結束
或者
在過渡時期從 到
委員會
文件編號：
（公司章程中指定的準確公司名稱）
（註冊地或組織所在管轄區） 文件號碼） |
(國 稅 號) (主要 執行人員之地址) |
(主要經營辦公室的地址，包括郵政編碼)
根據交易所法規（17 CFR 240.14a-12）第14a-12規定的招股材料
根據法案第12(b)節註冊的證券:
| 每一類別的名稱 | 交易標的 | 在每個交易所註冊的名稱 | ||
| 該
|
請勾選標記以指示註冊者是否（1）在過去12個月內（或註冊者需要提交這些報告的更短時間內）已提交證券交易所法案第13或15（d）節要求提交的所有報告，及 （2）是否已被提交要求過去90天的提交要求所制約。
通過勾選圓圈表明註冊者是否在過去12個月內(或註冊者需要提交這些文件的較短期限內)已經遞交規章S-T(本章第232.405條)規定的每個交互式數據文件。
在勾選標記處表示註冊人是大型加速提交人、加速提交人、非加速提交人、小型報告公司還是新興增長公司。請參閱證券交易法120億條規則中「大型加速提交人」、「加速提交人」、「小型報告公司」和「新興增長公司」的定義。
| 大號 加速文件管理器 | ☐ | 加速 申報人 | ☐ |
| ☒ | 更小 舉報公司 | ||
| 新興 成長型公司 |
如果是新興成長型企業，請打勾，以表明註冊人已選擇不使用遵守《證券交易法》第13(a)條所規定的任何新的或修訂後的財務會計準則的延長過渡期。 ☐
覈對標記表明，註冊人是一家空殼公司（根據證券法規則12b-2的定義）。是 ☐ 否
截至2024年11月1日，註冊人員已 。
SKYX平台corp。
表格 10-Q
目錄
| 第一部分 財務信息 | ||
| 關於前瞻性聲明的警告 | ||
| 項目 1 | 財務報表 | 4 |
| 合併資產負債表 | 4 | |
| 合併損益表和綜合損益表 | 5 | |
| 股東權益變動表 | 6 | |
| 合併現金流量表 | 7 | |
| 合併財務報表附註 | 8 | |
| 項目 2 | 分銷計劃 | 19 |
| 物品 3 | 有關市場風險的定量和定性披露 | 28 |
| 項目 4 | 控制和程序 | 28 |
| 第二部分.其他信息 | ||
| 項目 1 | 法律訴訟 | 29 |
| 項目 1A | 風險因素 | 29 |
| 項目 2 | 未註冊的股票股權銷售和籌款用途 | 30 |
| 項目 3 | 對優先證券的違約 | 30 |
| 項目 4 | 礦山安全披露 | 30 |
| 項目 5 | 其他信息 | 30 |
| 項目 6 | 展示資料 | 31 |
| 簽名 | 32 |
| 2 |
關於前瞻性聲明的注意事項
本 季度報告的10-Q表格（以下簡稱「10-Q表格」）由SKYX Platforms corp（以下簡稱「公司」、「我們」、「我們」、「我們的」）編寫，包含基於管理層信念和假設以及管理層當前可用信息的前瞻性聲明。除了本10-Q表格中包含的歷史事實之外，所有其他聲明，包括關於我們策略、未來財務狀況、未來運營、預測成本、前景、管理目標、展望和預期市場增長的聲明，均爲前瞻性聲明。在某些情況下，您可以通過以下詞語來識別前瞻性聲明：「可能」、「或許」、「將」、「能夠」、「會」、「應該」、「期望」、「打算」、「計劃」、「目標」、「預期」、「相信」、「估計」、「預測」、「項目」、「潛在」、「繼續」、「正在進行」、「目標」、「尋求」或這些術語的否定形式或其他可比術語，儘管並非所有前瞻性聲明都包含這些詞。這些聲明涉及風險、不確定性和其他因素，其結果難以預測並可能超出我們的控制，這可能導致實際結果、活動水平、表現或成就與這些前瞻性聲明所表達或暗示的信息存在重大差異。本10-Q表格中的前瞻性聲明包括但不限於關於：
| ● | 我們成功推出、發展附加功能並獲得智能產品和技術市場接受的能力，接入和整合我們的產品和技術與第三方平台或技術，響應快速變化的技術和客戶需求，並在我們的行業競爭； | |
| ● | 我們成功整合、管理和發展Belami, Inc.（"Belami"）業務的能力； | |
| ● | 我們擴大、運營和成功管理我們的業務的能力，包括在與業務轉型有關的過程中管理我們的業務，以便專注於智能產品和技術，並整合新的業務領域； | |
| ● | 我們籌集額外資金以支持並繼續我們的業務所需的操作的能力； | |
| ● | 我們遵守目前債務融資條款並及時償還債務的能力； | |
| ● | 我們依賴有限數量的第三方製造商和供應商，併成功降低生產成本的能力； | |
| ● | 我們可能依賴有限數量的客戶和/或通過競爭性招標流程獲得的合同； | |
| ● | 客戶運營的週期性行業出現任何下滑； | |
| ● | 我們在需要時能夠收購其他企業、取得許可權、建立聯盟或處置業務的能力; | |
| ● | 我們能夠遵守與適用質量標準相關的法規的能力; | |
| ● | 我們有能力維護、保護和增強我們的知識產權，並保留使用第三方擁有的知識產權的權利; | |
| ● | 任何法律訴訟的潛在結果; | |
| ● | 遵守各種稅法和法規，包括所得稅和銷售稅； | |
| ● | 我們成功銷售和分銷產品和技術的能力； | |
| ● | 我們吸引和留住關鍵高管和合格人才的能力； | |
| ● | 管理層提供的指引可能與我們的實際運營結果不同； | |
| ● | 我們成功管理我們計劃的發展和擴張的能力，包括成爲上市公司的額外成本； | |
| ● | 我們估計的總可尋址市場； | |
| ● | 我們保持有效的內部財務報告控制和信息披露控制程序的能力； | |
| ● | 不穩定的市場和經濟條件可能對我們的業務、財務狀況和股價產生潛在影響，包括政府監管的影響、地緣政治衝突（包括以色列-加沙-黎巴嫩戰爭）以及與中國關係的潛在惡化、通貨膨脹、勞動力短缺、供應鏈約束和短缺，包括可負擔得起的電子微芯片的供應短缺、全球銀行體系的不穩定以及經濟衰退的可能性； | |
| ● | 網絡安全概念入侵或干擾對我們信息系統，包括基於雲端的製造行業的潛在影響; | |
| ● | 與我們在產品提供中使用人工智能etf能力相關的風險，包括運營和聲譽風險; | |
| ● | 廣泛的中斷、中斷或其他運營、通信和其他系統故障的潛在影響; | |
| ● | 自然災害和其他災難事件的潛在影響; | |
| ● | 與持有我們普通股相關的風險；和 | |
| ● | 關於我們公司章程和佛羅里達州法律下的反收購、董事和高管責任規定的潛在影響。 |
這些 前瞻性陳述代表了我們對未來事件的意圖、計劃、期望、假設和信念，並且受到風險、不確定性及其他因素的影響，包括我們在本表格 10-Q中未討論的不可預測或意外因素。投資者應參考我們截至2023年12月31日的年度報告表格10-K中「第一部分。第1A項。風險因素」的標題，以及本表格10-Q中關於其他重要因素的討論，其中許多因素超出了我們的控制範圍，可能導致實際結果與前瞻性陳述所表達或暗示的結果存在重大差異。因此，基於這些因素，我們不能保證本表格10-Q中的前瞻性陳述將被證明是準確的。此外，如果前瞻性陳述被證明是不準確的，該不準確性可能是重大的。考慮到這些前瞻性陳述中存在的重大不確定性，你不應將這些陳述視爲我們或任何其他人在任何特定時間範圍內，或根本上將實現我們的目標和計劃的陳述或保證。本表格10-Q中的前瞻性陳述代表了我們截至本表格10-Q日期的觀點。我們預期隨後發生的事件和發展將導致我們的觀點發生變化；然而，除非美國聯邦證券法要求，我們不承擔公開更新任何前瞻性陳述的義務，無論是由於新信息、未來事件還是其他原因。因此，你不應依賴這些前瞻性陳述作爲我們在本表格10-Q日期之後任何日期的觀點。
| 3 |
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SKYX PLATFORMS CORP.
Consolidated Balance Sheets
(未經審計) 2024年9月30日 | (審計) 2023年12月31日 | |||||||
| 資產 | ||||||||
| 流動資產： | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 受限現金 | ||||||||
| 應收賬款 | ||||||||
| 存貨淨額 | ||||||||
| 推遲收入成本 | ||||||||
| 預付款和其他資產 | ||||||||
| 總流動資產 | ||||||||
| 其他資產： | ||||||||
| 物業和設備，淨額 | ||||||||
| 限制性現金 | ||||||||
| 使用權資產 | ||||||||
| 無形資產，有確定的使用壽命 | ||||||||
| 商譽 | ||||||||
| 其他資產 | ||||||||
| 其他資產總計 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債和股東權益 | ||||||||
| 流動負債: | ||||||||
| 應付賬款和應計費用 | $ | $ | ||||||
| $ | ||||||||
| 應付票據，短期 | ||||||||
| 經營租賃負債，流動負債 | ||||||||
| 特許權義務 | ||||||||
| 應付對價 | ||||||||
| 遞延收入 | ||||||||
| 可轉換票據，當前相關方 | ||||||||
| 可轉換票據，流動資產 | ||||||||
| 流動負債合計 | ||||||||
| 長期負債: | ||||||||
| 長期應付賬款和應計費用 | ||||||||
| 應付票據 | ||||||||
| 應付對價 | ||||||||
| 經營租賃負債 | ||||||||
| 可轉換票據 | ||||||||
| 可轉換債券相關方 | ||||||||
| 皇室義務 | ||||||||
| 長期負債總額 | ||||||||
| 總負債 | ||||||||
| 股東權益： | ||||||||
| 普通股和額外實收資本: $ 面值， 授權股份數爲 和 股份分別爲2024年9月30日和2023年12月31日已發行並流通 | ||||||||
| 累積赤字 | ( | ) | ( | ) | ||||
| 累計其他綜合損失 | ||||||||
| 股東權益總額 | ||||||||
| 負債及股東權益合計 | $ | $ | ||||||
附註是未經審計的基本報表的一部分。
| 4 |
SKYX 平台corp。
合併 損益表和綜合損失表
(未經審計)
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 營業收入 | $ | $ | ||||||||||||||
| 成本支出 | ||||||||||||||||
| 毛利潤虧損 | ||||||||||||||||
| 銷售和市場費用 | ||||||||||||||||
| 管理費用 | ||||||||||||||||
| 總費用，淨額 | ||||||||||||||||
| 營業損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收入 / (費用) | ||||||||||||||||
| 利息費用，淨額 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 償還債務所獲利潤 | ||||||||||||||||
| 其他支出合計，淨值 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 淨損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他全面損失： | ||||||||||||||||
| 其他全面收益（損失）： | ||||||||||||||||
| 歸屬於普通股股東的淨綜合損失 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 基本和稀釋每股淨損失 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| 基本和稀釋每股普通股平均餘額 | ||||||||||||||||
附註是未經審計的基本報表的一部分。
| 5 |
SKYX 平台corp。
合併股東權益報表
(未經審計)
| 截至9月30日的三個月內 | 截至九月三十日止九個月。 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 普通股股份 | ||||||||||||||||
| 期初餘額 | ||||||||||||||||
| 根據發行提供的普通股 | ||||||||||||||||
| 根據收購發行的普通股 | ||||||||||||||||
| 根據債務消除發行的普通股 | ||||||||||||||||
| 根據期權行使發行的普通股 | ||||||||||||||||
| 根據優先股轉換髮行的普通股 | ||||||||||||||||
| 根據服務發行的普通股 | ||||||||||||||||
| 截至9月30日的餘額 | ||||||||||||||||
| 普通股及實收資本 | ||||||||||||||||
| 期初餘額 | $ | $ | $ | $ | ||||||||||||
| 根據發行方案發行的普通股 | ||||||||||||||||
| 根據服務發行的普通股 | ||||||||||||||||
| 根據優先股轉換髮行的普通股 | ||||||||||||||||
| 根據收購發行的普通股 | ||||||||||||||||
| 根據期權行使發行的普通股 | ||||||||||||||||
| 根據債務消滅發行的普通股 | ||||||||||||||||
| 債務折讓 | ||||||||||||||||
| 餘額，九月三十日 | $ | $ | $ | $ | ||||||||||||
| 累計虧損 | ||||||||||||||||
| 期初餘額 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 淨損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 期末餘額 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 累計其他綜合損失 | ||||||||||||||||
| 期初餘額 | $ | $ | $ | $ | ( | ) | ||||||||||
| 其他綜合收益 | ||||||||||||||||
| 期末餘額 | ||||||||||||||||
| 股東權益總額 | $ | $ | $ | $ | ||||||||||||
附註是未經審計的基本報表的一部分。
| 6 |
SKYX 平台corp。
現金流量表的合併報表
(未經審計)
| 截至九月三十日止九個月。 | ||||||||
| 2024 | 2023 | |||||||
| 經營活動現金流量： | ||||||||
| 淨損失 | $ | ( | ) | $ | ( | ) | ||
| 調整爲淨損失到經營活動現金流量淨使用： | ||||||||
| 折舊和攤銷 | ||||||||
| 債務折扣攤銷 | ||||||||
| 無形資產減值 | ||||||||
| 債務減免盈利 | ( | ) | ||||||
| 非現金股權補償費用 | ||||||||
| 經營性資產和負債的變化： | ||||||||
| 存貨 | ( | ) | ( | ) | ||||
| 應收賬款 | ( | ) | ||||||
| 預付款和其他資產 | ( | ) | ||||||
| 遞延收費 | ( | ) | ||||||
| 遞延收入 | ( | ) | ||||||
| 經營租賃負債 | ( | ) | ( | ) | ||||
| 增值經營租賃負債 | ||||||||
| 其他資產 | ||||||||
| 特許權義務 | ( | ) | ||||||
| 應付對價 | ( | ) | ||||||
| 應付賬款和應計費用 | ||||||||
| 用於經營活動的淨現金 | ( | ) | ( | ) | ||||
| 投資活動現金流量： | ||||||||
| 購入債務證券 | ( | ) | ||||||
| 債務證券處置的收益 | ||||||||
| 收購，扣除淨現金 | ( | ) | ||||||
| 購置固定資產等資產支出 | ( | ) | ( | ) | ||||
| 投資活動的淨現金流量(使用)/提供的淨現金流量 | ( | ) | ||||||
| 籌集資金的現金流量： | ||||||||
| 普通股發行收益-募集 | ||||||||
| 安置費用 | ( | ) | ( | ) | ||||
| 信貸額度收到的款項 | ||||||||
| 預計發行優先股的收益 | ||||||||
| 預計發行優先股相關方的收益 | ||||||||
| 發行可轉換債券所得款項 | ||||||||
| 應付票據的本金償還 | ( | ) | ( | ) | ||||
| 籌資活動產生的現金淨額 | ||||||||
| 現金、現金等價物和受限制的現金減少（增加）金額 | ( | ) | ||||||
| 期初現金、現金等價物和受限制的現金餘額 | ||||||||
| 期末現金、現金等價物及受限制的現金餘額 | $ | $ | ||||||
| 期間支付的現金用於： | ||||||||
| 利息 | $ | $ | ||||||
非現金融資活動的補充披露： | ||||||||
| 支付給可轉換債券的對價替代 | $ | $ | ||||||
| 支付給可轉換債券的特許權使用費替代 | ||||||||
| 業務收購： | ||||||||
| 除可識別的無形資產和商譽及現金外的資產收購 | ||||||||
| 承擔的負債和應付對價 | ||||||||
| 可識別的無形資產和商譽 | ||||||||
| 債務折讓 | ||||||||
| 根據反稀釋條款發行的普通股 | ||||||||
| 根據收購發行的股份的公允價值 | $ | |||||||
| 根據債務解除發行的普通股 | ||||||||
| 租賃資產和租賃負債 | ||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 7 |
SKYX Platforms Corp.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 ORGANIZATION AND NATURE OF OPERATIONS
SKYX Platforms Corp., a corporation (the “Company”), was incorporated in Florida in May 2004.
The Company maintains offices in Sacramento, California, Johns Creek, Georgia, Miami and Pompano Beach, Florida, New York City, and Guangdong Province, China.
The Company has a series of advanced-safe-smart platform technologies. The Company’s first-generation technologies enable light fixtures, ceiling fans and other electrically wired products to be installed safely and plugged-in to a ceiling’s electrical outlet box within seconds, and without the need to touch hazardous wires. The plug and play technology method is a universal power-plug device that has a matching receptacle that is simply connected to the electrical outlet box on the ceiling, enabling a safe and quick plug and play installation of light fixtures and ceiling fans in just seconds. The plug and play power-plug technology eliminates the need of touching hazardous electrical wires while installing light fixtures, ceiling fans and other hard wired electrical products. In recent years, the Company has expanded the capabilities of its power-plug product, to include its second generation advanced-safe and quick universal installation methods, as well as advanced-smart capabilities. The smart features include control of light fixtures and ceiling fans by the SkyHome App, through WIFI, Bluetooth Low Energy and voice control. It allows scheduling, energy savings eco mode, dimming, back-up emergency light, night light, light color changing and much more. The Company’s third-generation technology is an all-in-one safe and smart-advanced platform that is designed to enhance all-around safety and lifestyle of homes and other buildings.
Since April 2023, the Company also markets home lighting, ceiling fans and other home furnishings from third parties.
Going Concern
The
Company’s liquidity sources include $
Management intends to mitigate such conditions by supporting its continued growth, decreasing its cash used in operating activities through increased revenues and increased margins from products sold to large retailers and its internet portals, and to the extent necessary, generate cash provided by financing activities through its at the market (“ATM”) offering or other equity or debt financing means.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 are unaudited. The results of operations for the interim periods are not necessarily indicative of the results of operations for the respective fiscal years. The consolidated statement of financial condition at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statement presentation. The accompanying consolidated financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for additional disclosures and accounting policies.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable and inventory, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets, estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded as debt discount, estimates of tax liabilities and estimates of the probability and potential magnitude of contingent liabilities.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future nonconforming events. Accordingly, actual results will differ from estimates.
| 8 |
Basis of Consolidation
The consolidated financial statements include the results of the Company and one of its subsidiaries, SQL Lighting and Fans LLC from January 1, 2023 and the results from its remaining subsidiaries, Belami, Inc., BEC, CA 1, Inc., BEC CA 2, LLC, Luna BEC, Inc., and Confero Group LLC from April 28, 2023. All intercompany balances and transactions have been eliminated in consolidation.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents. On September 30, 2024, and December 31, 2023, the Company’s cash composition was follows:
| September 30, 2024 | December 31, 2023 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
Restricted Cash
The
Company issued a letter of credit of $
Customer Contracts Balances
Accounts
receivables are recorded in the period when the right to receive payment or other consideration becomes unconditional. Accounts receivables
are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts based upon
an estimate of probable credit losses in existing accounts receivable. The majority of the Company’s accounts receivable are from
third-party payers and are paid within a few days from the order date. The Company determines the allowance based upon individual accounts
when information indicates the customers may have an inability to meet their financial obligations, historical experience, and currently
available evidence. As of September 30, 2024, and December 31, 2023, the Company’s allowance for doubtful accounts was $
The Company determines an allowance for sales returns based upon historical experience. As of September 30, 2024,
and December 31, 2023, the Company’s allowance for sales returns was $
The
Company defers the revenue related to undelivered customer orders for which it was paid or has a right to be paid at each measurement
date. Such amounts are recognized as deferred revenues in the accompanying balance sheet. Deferred revenues amounted to $
The
costs associated with such deferred revenues are recognized as deferred charges in the accompanying balance sheet. Such charges include
the carrying value of related inventory, freight, and sales charges. The deferred charges amounted to $
Inventory
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) method. Cost principally consists of the purchase price (adjusted for lower of cost or market), customs, duties, and freight. The Company periodically reviews historical sales activity to determine potentially obsolete items and evaluates the impact of any anticipated changes in future demand.
| September 30, 2024 | December 31, 2023 | |||||||
| Inventory, component parts | $ | $ | ||||||
| Inventory, finished goods | ||||||||
| Allowance | ( | ) | ( | ) | ||||
| Inventory-total | $ | $ | ||||||
The
Company will maintain an allowance based on specific inventory items that have shown no activity over a reasonable period. The Company
tracks inventory as it is repurposed, disposed, scrapped, or sold at below cost to determine whether additional items on hand should
be reduced in value through an allowance method. The Company has recorded an allowance of $
| 9 |
GE Agreements
The Company has the following agreements with General Electric (“GE”) related to the Company’s products.
| A U.S. and Global Licensing and Master Service Agreement dated December 4, 2023, which replaced a prior agreement with similar terms. The agreement expires on December 4, 2028 and includes automatic renewal provisions. Pursuant to such agreement, GE’s licensing team has the rights to exclusively license certain of the Company’s Standard and Smart plug-and-play products set forth in a statement of work in the U.S. and worldwide. Pursuant to the agreement, the Company expects that GE’s licensing team will seek and arrange licensee partners for our products in the U.S. and globally, including negotiating agreement terms, managing contracts, collecting payments, auditing partners, assisting with patent strategy and protection, and assisting in auditing product quality control under the “Nine Sigma” guidelines. For products licensed to third parties, the Company and GE will each receive a specified percentage of the revenue earned from such licensing, unless otherwise provided in the applicable statement of work. | |
| The
second agreement consists of a letter agreement dated November 28, 2023, as amended on April 11, 2024. The agreement expires on December
15, 2027 and includes a Repayment Plan Under U.S. and Global Trademark Agreement dated June 15, 2011 (as later amended), which expired
November 30, 2023, between SQL Lighting & Fans, LLC and GE Trademark Licensing, Inc. Under this new payment arrangement, the
Company pays royalty payment obligation of $ |
Basic net earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common stock outstanding during each period. Diluted earnings (loss) per share are computed by dividing net income (loss) for the period by the weighted average number of common stocks, common stock equivalents and potentially dilutive securities outstanding during each period.
The Company uses the “treasury stock” method to determine whether there is a dilutive effect of outstanding convertible debt, option, and warrant contracts. For the three- and nine-month ended September 30, 2024, and 2023, the Company recognized net loss and a dilutive net loss, and the effect of considering any common stock equivalents would have been antidilutive for the period. Therefore, a separate computation of diluted earnings (loss) per share is not presented for the periods presented.
| September 30, 2024 | September 30, 2023 | |||||||
| Stock warrants | ||||||||
| Stock options | ||||||||
| Unvested restricted stock | ||||||||
| Convertible notes | ||||||||
| Preferred stock | ||||||||
| Total | ||||||||
Recently Issued Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on its consolidated financial statements.
| 10 |
NOTE 3 PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| September 30, 2024 | December 31, 2023 | |||||||
| Equipment and furniture | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total, net | $ | $ | ||||||
Depreciation
expense amounted to $
NOTE 4 INTANGIBLE ASSETS AND GOODWILL
Intangible assets consisted of the following:
| September 30, 2024 | December 31, 2023 | |||||||||||||||||||||||||||
| Useful life | Carrying Value | Accumulated Amortization | Net carrying value | Carrying Value | Accumulated Amortization | Net carrying value | ||||||||||||||||||||||
| Customer relationships | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| E-commerce technology platforms | ( | ) | ||||||||||||||||||||||||||
| Patents and other | ( | ) | ( | ) | ||||||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Amortization
expense on intangible assets amounted to $
During
the quarter ended September 30, 2024, the Company evaluated the effectiveness of the E-commerce technology platforms it acquired in 2023.
Management determined that revenues could increase without increasing its operating expenses (and potentially decrease its general and
administrative expenses) using a different E-commerce technology platform. Management believes it will discontinue using its legacy platforms
and deploy a new E-commerce technology platform by October 1, 2025. Accordingly, the estimated useful life of its legacy platforms decreased
from
The following table sets forth the estimated amortization expense for the next five years:
| Twelve months ended September 30: | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 11 |
NOTE 5 DEBTS
The following table presents the details of the principal outstanding:
| September 30, 2024 | December 31, 2023 | APR at September 30, 2024 | Maturity | Collateral | ||||||||||||||
| Convertible Notes (b,c) | % | Substantially all company assets | ||||||||||||||||
| Notes payable to financial institutions and others(a) | % | Substantially all Company assets | ||||||||||||||||
| Notes payable to Belami sellers | % | – | ||||||||||||||||
| Total | $ | $ | ||||||||||||||||
| Unamortized debt discount | ( | ) | ( | ) | ||||||||||||||
| Debt, net of Unamortized debt Discount | $ | $ | ||||||||||||||||
| For the nine-month period ended | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Interest expense | $ | $ | ||||||
As of September 30, 2024, the expected future principal payments for the Company’s debt are due as follows:
| Twelve months ended September 30, 2025 | $ | |||
| Twelve months ended September 30, 2026 | ||||
| Twelve months ended September 30, 2027 | ||||
| Twelve months ended September 30, 2028 | ||||
| Twelve months ended September 30, 2029 and thereafter | ||||
| $ |
| (a) | ||
| (b) | ||
| During
2023, the Company issued convertible promissory notes for $ |
| 12 |
| (c) | ||
| Additionally,
the convertible promissory notes include a $ |
NOTE 6 OPERATING LEASE LIABILITIES
In
April 2022, the Company entered into a 58-month lease related to certain office and showroom space pursuant to a sublease that expires
in February 2027. The Company recognized a right-of-use asset and a liability of $
In
September 2022, the Company entered a 124-month lease related to its future headquarters offices and showrooms space. The Company
recognized a right-of-use asset and a liability of $
The following table outlines the total lease cost for the Company’s operating leases as well as weighed average information for these leases as of September 30, 2024:
| Nine Month Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash paid for operating lease liabilities | $ | $ | ||||||
| Right-of-use assets obtained in exchange for new operating lease obligations | $ | $ | ||||||
| Fixed rent payments | ||||||||
| Lease – Depreciation expense | $ | $ | ||||||
| Weighted-average discount rate | % | % | ||||||
| Weighted-average remaining lease term (in months) | ||||||||
| Minimum Lease obligation | ||||
| Twelve months ended September 30, 2025 | $ | |||
| Twelve months ended September 30, 2026 | ||||
| Twelve months ended September 30, 2027 | ||||
| Twelve months ended September 30, 2028 | ||||
| Twelve months ended September 30, 2029 and thereafter | ||||
| Total | $ | |||
| For the nine-month period ended | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Interest expense | $ | $ | ||||||
| 13 |
NOTE 7 ROYALTY OBLIGATIONS
The Company had a license agreement with General Electric (“GE”) which provided, among other things, for rights to market certain of the Company’s products displaying the GE brand in consideration of royalty payments to GE. The agreement expired in 2023.
The
Company owes $
NOTE 8 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
| September 30, 2024 | December 31, 2023 | |||||||
| Accrued interest, convertible notes | $ | $ | ||||||
| Funds received in anticipation of closing of Preferred shares | ||||||||
| Trade payables | ||||||||
| Accrued compensation | ||||||||
| $ | $ | |||||||
NOTE 9 RELATED PARTY TRANSACTIONS
Convertible Notes
Convertible
notes due to related parties represent amounts provided to the Company from a director and the Company’s Co-Chief Executive Officers.
The outstanding principal on the convertible promissory notes, associated with related parties was $
Series A Preferred Stock
The
Company received $
NOTE 10 STOCKHOLDERS’ EQUITY
(A) Common Stock
The Company issued the following common stock during the nine months ended September 30, 2024, and 2023:
| Transaction Type | Shares Issued | Valuation $ | Range of Value Per Share | |||||||||
| 2024 Equity Transactions | ||||||||||||
| Common stock issued, pursuant to services provided | $ | - | ||||||||||
| Common stock issued pursuant to stock at the market offering, net | - | |||||||||||
| Common stock issued pursuant to exercise of options, net | ||||||||||||
| Common stock issued pursuant to acquisition (1) | – | – | ||||||||||
| Transaction Type | Shares Issued | Valuation $ | Range of Value Per Share | |||||||||
| 2023 Equity Transactions | ||||||||||||
| Common stock issued, pursuant to services provided | $ | - | ||||||||||
| Common stock issued pursuant to stock at the market offering, net | - | |||||||||||
| Common stock issued pursuant to conversion of preferred stock | ||||||||||||
| Common stock issued pursuant to acquisition | ||||||||||||
| Common stock issued pursuant to extinguishment of debt | ||||||||||||
As
of September 30, 2024, the remaining amount to be used under the ATM offering program is $
| (1) |
| 14 |
(B) Preferred Stock
The following is a summary of the Company’s Preferred Stock activity during the nine months ended September 30, 2023:
| Transaction Type | Quantity | Carrying Value | Value per Share | |||||||||
| Preferred Stock Balance at January 1, 2023 | $ | $ | ||||||||||
| 2023 Preferred Stock redemptions | ||||||||||||
| Preferred Stock Balance at September 30, 2023 | $ | $ | ||||||||||
The Series A Preferred Stock was convertible at the holder’s option. The Company could repurchase shares of the Preferred Stock for $- per share. Holders also had a put option, allowing them to sell their shares of Preferred Stock back to the Company at $0.25 per share, and therefore the stock was classified as Mezzanine equity rather than permanent equity. This Series A Preferred Stock was retired during 2023.
During October 2024, the Company completed its authorization of the issuance of shares of newly authorized Series A Preferred Stock and Series A-1 Preferred Stock. The designations of each class of preferred stock are as follows:
Series A Preferred Stock:
| ● | Cumulative
dividend of | |
| ● | Original issue price of $ per share; | |
| ● | Conversion
option at the holder’s option at $ | |
| ● | Redemption
at the price of $ per share at | |
| ● | Voting rights on as converted basis. |
Series A-1 Preferred Stock:
| ● | Cumulative
dividend of | |
| ● | Original issue price of $ per share; | |
| ● | Conversion
option at the holder’s option at $ | |
| ● | Redemption
at the price of $ per share at | |
| ● | Voting rights on as converted basis. |
(C) Stock Options
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | Aggregate Intrinsic Value | ||||||||||||
| Outstanding, January 1, 2024 | $ | –– | $ | |||||||||||||
| Exercised | –– | –– | ||||||||||||||
| Granted | –– | –– | ||||||||||||||
| Forfeited | ( | ) | — | — | ||||||||||||
| Outstanding, September 30, 2024 | $ | $ | ||||||||||||||
| Exercisable, September 30, 2024 | $ | $ | ||||||||||||||
| 15 |
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | Aggregate Intrinsic Value | ||||||||||||
| Outstanding, January 1, 2023 | $ | - | $ | |||||||||||||
| Awards Granted in Period | - | - | ||||||||||||||
| Awards expired | ( | ) | $ | - | - | |||||||||||
| Outstanding, September 30, 2023 | $ | $ | ||||||||||||||
| Exercisable, September 30, 2023 | $ | $ | ||||||||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Range | Range | |||||||
| Stock price | $ | - | $ | - | ||||
| Exercise price | $ | - | $ | - | ||||
| Expected life (in years) | - yrs. | - yrs. | ||||||
| Volatility | – | % | - | % | ||||
| Risk-fee interest rate | - | % | - | % | ||||
| Dividend yield | ||||||||
The Company does not have historical stock prices that can be reliably determined for a period that is at least equal to the expected terms of its options. The expected options terms are years, and its historical period is years. The Company relies on the expected volatility of comparable peer-group publicly traded companies within its industry sector, to supplement the Company’s historical data for the period of the expected terms of the options that exceeds the period of the Company’s historical volatility data.
Unamortized
future option expense was $
(D) Warrants Issued
The following is a summary of the Company’s warrant activity during the nine months ended September 30, 2024 and 2023:
Number of Warrants | Weighted Average Exercise Price | |||||||
| Balance, January 1, 2024 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Forfeited | ( | ) | ||||||
| Balance, September 30, 2024 | $ | |||||||
| 16 |
Number of Warrants | Weighted Average Exercise Price | |||||||
| Balance, January 1, 2023 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Balance, September 30, 2023 | $ | |||||||
During
the nine months ended September 30, 2024, the Company did not issue any warrants. During the nine months ended September 30, 2023, as
an inducement to enter certain financing transactions, the Company issued
(E) Restricted stock units
A summary of the Company’s non-vested restricted stock units during the nine months ended September 30, 2024 and 2023 are as follows:
| Shares | Weighted Average Grant Due Fair Value | |||||||
| Non-vested restricted stock units, January 1, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Non-Vested restricted stock units, September 30, 2024 | ||||||||
| Non-vested restricted stock units, January 1, 2023 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Non-vested restricted stock units on September 30, 2023 | ||||||||
The weighted-average remaining contractual life of the restricted units as of September 30, 2024, is years.
One RSU and RSA give the right to receive one share of the Company’s common stock. RSU and RSAs that vest based on service and performance are measured based on the fair values of the underlying stock on the date of grant. The Company used a Lattice model to determine the fair value of the RSU with a market condition. Compensation with respect to RSU and RSA awards is expensed on a straight-line basis over the vesting period.
During the nine-month ended September 30, 2024, and 2023, the Company recognized compensation expenses of $ , and $, respectively, related to RSUs and RSAs.
NOTE 11 CONCENTRATIONS OF RISKS
Major Customers and Accounts Receivable
The
Company had no customers whose revenue individually represented 10% or more of the Company’s total revenue during the nine-month
period ended September 30, 2024, and 2023. The Company had two customers with accounts receivable balances aggregating representing
| 17 |
Liquidity
The Company’s cash and cash equivalents are held primarily with two financial institutions. The Company has deposits which exceed the amount insured by the FDIC. To reduce the risk associated with the failure of such counterparties, the Company periodically evaluates the credit quality of the financial institutions in which it holds deposits.
Product and Geographic Markets
The Company generates its income primarily from lighting and heating products, and increasingly, smart-based products sold primarily in the United States.
NOTE 12 PROFORMA FINANCIAL STATEMENTS (unaudited)
The following pro forma consolidated results of operations have been prepared as if the acquisition occurred on January 1, 2023:
| Nine-month period ended September 30, | ||||
| 2023 | ||||
| Revenues | $ | |||
| Net loss | $ | ( | ) | |
| Basic and diluted loss per share | $ | ) | ||
| Weighted average number of shares outstanding- basic and diluted | ||||
These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results to reflect, among other things, 1) additional amortization that would have been charged assuming the fair value adjustments to amortizable intangible assets had been applied, 2) the shares issued and issuable by the Company to acquire Belami, 3) fair value of the initial grant and options to Belami employees, and 4) the increase in interest expense related to the issuance of convertible notes payable, including amortization of debt discount. Furthermore, it excludes transaction costs related to the Belami acquisition. These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that would have resulted had the acquisition occurred on the date indicated or that may result in the future.
NOTE 13 SUBSEQUENT EVENTS
Management has evaluated subsequent events through November 12, 2024, which is the date the consolidated financial statements were available to be issued. There were no significant subsequent events that required adjustment to or disclosure in the unaudited consolidated financial statements other than the following:
The
Company generated proceeds of $
| 18 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes included elsewhere in this Form 10-Q and our audited financial statements and related notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023. This discussion and analysis and other parts of this Form 10-Q contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties, and assumptions, such as statements regarding our plans, objectives, strategy, expectations, outlook, intentions, and projections. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in “Part I. Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, in this Form 10-Q, and in other filings with the Securities and Exchange Commission (the “SEC”). Please also see the section entitled “Cautionary Note Regarding Forward-Looking Statements” contained in this Form 10-Q.
Overview
We have a series of advanced-safe-smart platform technologies. Our first and second-generation technologies enable light fixtures, ceiling fans and other electrically wired products to be installed safely and plugged in to a ceiling’s electrical outlet box within seconds, and without the need to touch hazardous wires. The plug and play technology method is a universal power-plug device that has a matching receptacle that is simply connected to the electrical outlet box on the ceiling, enabling a safe and quick plug and play installation of light fixtures and ceiling fans in just seconds. The plug and play power-plug technology eliminates the need of touching hazardous electrical wires while installing light fixtures, ceiling fans and other hard wired electrical products. In recent years, we have expanded the capabilities of our power-plug product to include advanced-safe and quick universal installation methods, as well as advanced-smart capabilities. The smart features include control of light fixtures and ceiling fans by the SkyHome App, through WIFI, Bluetooth Low Energy and voice control. It allows scheduling, energy savings eco mode, dimming, back-up emergency light, night light, light color changing and much more. Our third-generation technology is an all-in-one safe and smart-advanced platform that is designed to enhance all-around safety and lifestyle of homes and other buildings. Our products are designed to improve all around home and building safety and lifestyle. We are continuing to refine our products and began manufacturing certain advanced and smart products in 2023 and expect additional products, including the third-generation smart-advanced platform to be available in 2024. We expect to manufacture the additional product offerings within the next six months. We hold over 97 U.S. and global patents and patent applications and have received a variety of final electrical code approvals, including UL, United Laboratories of Canada (cUL) and Conformité Européenne (CE), and 2017 and 2020 inclusion in the NEC Code Book.
We believe our total addressable market in the United States exceeds $500 billion, based on the Company’s internal calculations derived from the estimation of the total target user pool, projected average selling price, and projected units per household. We believe there are billions of installations of light and other electrical fixtures globally. Our estimates of the addressable market for our products may prove to be incorrect. The projected demand for our products could differ materially from actual demand. Even if the total addressable market for our products is as large as we have estimated and even if we are able to gain market awareness and acceptance, we may not be able to penetrate the existing market to capture additional market share.
Inflation and related risk of recession increased during 2022 and have continued to impact operations during 2023 and 2024. Inflationary factors, such as increases in interest rates, supply and overhead costs and transportation costs, may adversely affect our operating results, and we may not be able to offset increased costs with increased sales price per unit, particularly as we work toward commercial manufacturing of our products. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates continue to rise). In addition, we may be negatively impacted because of supply chain constraints, consequences associated with government regulations, ongoing and potential geopolitical conflicts, instability in the global banking system, employee availability and wage increases.
The Israel-Hamas-Lebanon war may adversely impact our operations in the near future. We have a number of developers working in Israel. If such individuals are called for service or this war escalates regionally, it may create work interruptions leading to longer periods between releases of offering improvements and increased costs.
During April 2023, we completed the previously announced acquisition of all the issued and outstanding shares of Belami, a strategic e-commerce lighting and home décor conglomerate. The Company paid cash and issued an aggregate of 3,776,706 shares of our common stock as consideration for the acquisition. The Company expects that Belami will serve as a marketing and growth platform and should provide several distribution channels for our products, including to retail customers, builders, and professionals.
In connection with the acquisition, the Company engaged in private placements of its securities during the first quarter of 2023, pursuant to which the Company issued and sold (i) subordinated secured convertible promissory notes in the aggregate principal amount of $10.35 million and (ii) warrants to purchase an aggregate of up to 1,391,667 shares of the Company’s common stock. The proceeds were used to fund the cash component of the Belami acquisition and to pay certain transaction expenses in connection with the acquisition and the private placements.
| 19 |
Recent Developments
In March 2024, the Company and the Belami sellers entered into a letter agreement modifying certain obligations under the stock purchase agreement for the acquisition of Belami. In connection with the letter agreement, the Company issued convertible promissory notes to each of the sellers (the “Seller Note(s)”) in substitution of an aggregate of $3,117,408 in cash due to the sellers on the first anniversary of the closing of the Belami acquisition. Each seller received a Seller Note in an amount of $1,039,303 on the same date. In addition to other customary terms, the Seller Notes bear annual interest at 10%, with interest and principal coming due on May 16, 2025, and can be converted by the sellers into shares of our common stock at any time at $3.00 per share of our common stock. The Seller Notes include customary events of default accelerating maturity, including a breach of the Company’s covenants, representations, and warranties under the Belami stock purchase agreement and a change of control of Belami. The letter agreement further provided that the Company would perform all other obligations arising on the first anniversary of the closing, including issuance of shares of common stock due to sellers, and that on such date the non-fundamental representations and warranties will expire, and the Company would release $750,000 held in escrow. In April 2024, the Company issued an aggregate of 1,853,421 shares of common stock to the sellers and released the escrow amount.
On April 11, 2024, the Company entered into an amendment to the letter agreement previously entered into with GE Trademark Licensing, Inc. (“GE-TL”) in December 2023, which extended the deadline for the Company to issue the convertible note to GE-TL to May 1, 2024, and also issued a three-year, $1.0 million convertible note to GE-TL, thereby reducing obligations due in 2027 by $400,000. The note does not bear interest, and the principal amount of the note is convertible into shares of the Company’s common stock at any time at the option of the holder at $1.07 per share.
During the second quarter of 2023, we began our at the market offering (“ATM”) pursuant to which we may sell up to $20 million of shares of our common stock.
During October 2024, the Company completed its authorization of the issuance of 440,000 shares each of newly authorized Series A Preferred Stock and Series A-1 Preferred Stock which generated proceeds of $11.0 million.
The designations of each class of preferred stock are as follows:
Series A Preferred Stock:
| ● | Cumulative dividend of 8% annually, 12% if paid after dividend date; | |
| ● | Original issue price of $25 per share; | |
| ● | Conversion option at the holder’s option at $2 per share, with subsequent equity offering reset provision of no less than $1.20 per share; | |
| ● | Redemption at the price of $25 per share at the Company’s option after 5 years or upon change of control (substantially outside the control of the holder) | |
| ● | Voting rights on as converted basis. |
Series A-1 Preferred Stock:
| ● | Cumulative dividend of 8% annually, 12% if paid after dividend date; | |
| ● | Original issue price of $25 per share; | |
| ● | Conversion option at the holder’s option at $2 per share, with subsequent equity offering reset provision of no less than $1.20 per share; | |
| ● | Redemption at the price of $25 per share at the Company’s option after three years or upon change of control (substantially outside the control of the holder) | |
| ● | Voting rights on as converted basis. |
| 20 |
Results of Operations
Comparison of the Three and Nine months Ended September 30, 2024, and 2023
| Three months ended September 30, | Increase/ | Increase/ | Nine months ended September 30, | Increase/ | Increase/ | |||||||||||||||||||||||||||
| 2024($) | 2023($) | Decrease $ | Decrease % | 2024($) | 2023($) | Decrease $ | Decrease % | |||||||||||||||||||||||||
| Revenue | 22,168,919 | 21,617,579 | 551,340 | 3 | 62,592,888 | 36,611,659 | 25,981,229 | 71 | ||||||||||||||||||||||||
| Cost of revenues | 15,327,319 | 14,917,493 | 409,826 | 3 | 43,596,611 | 25,207,604 | 18,389,007 | 73 | ||||||||||||||||||||||||
| Gross profit | 6,841,600 | 6,700,086 | 141,514 | 2 | 18,996,277 | 11,404,055 | 7,592,222 | 67 | ||||||||||||||||||||||||
| Selling and marketing expenses | 6,275,742 | 5,702,647 | 573,095 | 10 | 19,074,266 | 12,546,736 | 6,527,530 | 52 | ||||||||||||||||||||||||
| General and administrative expenses | 8,171,293 | 7,519,042 | 662,251 | 9 | 22,651,096 | 24,869,910 | (2,218,814 | ) | (9 | ) | ||||||||||||||||||||||
| Total expenses | 14,447,035 | 13,221,689 | 1,225,346 | 9 | 41,725,362 | 37,416,646 | 4,308,716 | 12 | ||||||||||||||||||||||||
| Operating loss | (7,605,435 | ) | (6,521,603 | ) | 1,083,832 | 17 | (22,729,085 | ) | (26,012,591 | ) | (3,283,506 | ) | (13 | ) | ||||||||||||||||||
| Other income / (expense) | - | |||||||||||||||||||||||||||||||
| Interest expense, net | (1,015,871 | ) | (662,173 | ) | (353,698 | ) | 53 | (3,031,371 | ) | (2,601,526 | ) | (429,845 | ) | 17 | ||||||||||||||||||
| Gain on extinguishment of debt | - | - | - | (1,201,857 | ) | (1,201,857 | ) | (100 | ) | |||||||||||||||||||||||
| Total other income (expense), net | (1,015,871 | ) | (662,173 | ) | (353,698 | ) | NM | (3,031,371 | ) | (1,399,669 | ) | (1,631,702 | ) | 117 | ||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||
| Net loss | (8,621,306 | ) | (7,183,776 | ) | (1,437,530 | ) | 20 | (25,760,456 | ) | (27,412,260 | ) | (1,651,804 | ) | (6 | ) | |||||||||||||||||
NM: Not meaningful
Revenue
Three months ended September 30, |
Increase/ | Increase/ | Nine months ended September 30, |
Increase/ | Increase/ | |||||||||||||||||||||||||||
| 2024($) | 2023($) | Decrease $ | Decrease % | 2024($) | 2023($) | Decrease $ | Decrease % | |||||||||||||||||||||||||
| Revenue | 22,168,919 | 21,617,579 | 551,340 | 3 | 62,592,888 | 36,611,659 | 25,981,229 | 71 | ||||||||||||||||||||||||
The increase in revenues during the three-month period ended September 30, 2024 is primarily due increased weighted average price of lighting and heating products offset by a decrease of units sold. The increase in revenues during the nine-month period ended September 30, 2024 is primarily due to revenues from products marketed by Belami which was acquired on April 28, 2023.
We believe that revenues will be higher in 2024 than in 2023, primarily resulting from revenues from Belami, which was acquired in April 2023 and the sale of our advanced and smart products. We believe that our revenues will be higher in 2025 than in 2024 primarily resulting from revenues from the sale of our advanced and smart products.
| 21 |
Cost of Revenues
Three months ended September 30, |
Increase/ | Increase/ | Nine
months ended September 30, |
Increase/ | Increase/ | |||||||||||||||||||||||||||
| 2024 ($) | 2023 ($) | Decrease $ | Decrease % | 2024 ($) | 2023 ($) | Decrease $ | Decrease % | |||||||||||||||||||||||||
| Cost of revenues | 15,327,319 | 14,917,493 | 409,826 | 3 | 43,596,611 | 25,207,604 | 18,389,007 | 73 | ||||||||||||||||||||||||
The cost of revenue consists primarily of costs associated with selling the products marketed by Belami. The increase in cost of revenues during the 2024 interim periods is commensurate with the increase in revenues and is primarily due to costs associated with revenues from products marketed by Belami which was acquired on April 28, 2023.
We believe that the cost of revenues will increase in 2024 compared to 2023, commensurate with an anticipated increase in revenues.
Sales and Marketing Expenses
| Three
months ended September 30, |
Increase/ | Increase/ | Nine
months ended September 30, |
Increase/ | Increase/ | |||||||||||||||||||||||||||
| 2024 ($) | 2023 ($) | Decrease $ | Decrease % | 2024 ($) | 2023 ($) | Decrease $ | Decrease % | |||||||||||||||||||||||||
| Selling and marketing expenses | 6,275,742 | 5,702,647 | 573,095 | 10 | 19,074,266 | 12,546,736 | 6,527,530 | 52 | ||||||||||||||||||||||||
Sales and marketing expenses consist primarily of sales and marketing compensation as well as sales and marketing programs.
The increase in selling and marketing expenses during the three-month period ended September 30, 2024 is primarily due to increased marketing programs expenses. The increase in selling and marketing expenses during the nine-month period ended September 30, 2024 is primarily due to such expenses increasing following the acquisition of Belami on April 28, 2023
General and Administrative Expenses
| Three month ended September 30, | Increase/ | Increase/ | Nine months ended September 30, | Increase/ | Increase/ | |||||||||||||||||||||||||||
| 2024 ($) | 2023 ($) | Decrease $ | Decrease % | 2024 ($) | 2023 ($) | Decrease $ | Decrease % | |||||||||||||||||||||||||
| General and administrative expenses | 8,171,293 | 7,519,042 | 662,251 | 9 | 22,651,096 | 24,869,910 | (2,218,814 | ) | (9 | ) | ||||||||||||||||||||||
General and administrative expenses consist primarily of an allocation of product development, finance, legal, human resources, including salaries, wages, and benefits, and depreciation and amortization, including share-based payments.
The increase in general and administrative expenses during the three-month period ended September 30, 2024 is primarily due to the following:
| ● | Nonrecurring impairment charge of $1.1 million of our E-commerce technology platforms which will be discontinued in September 2025 which will be replaced by a new platform expected to increase our revenues and possibly decrease our general and administrative expenses, offset by a decrease in share-based payments. |
The decrease in general, and administrative expenses during the nine-month period ended September 30, 2024 primarily due to the following:
| ● | Decreased share-based payments resulting from greater issuance of shares to employees following the acquisition of Belami, Inc. during the second quarter of 2023; | |
| ● | Offset by increased amortization of intangibles which were amortized over nine months during 2024 and five months during 2023, following the acquisition of Belami in April 2023. The increase of depreciation and amortization expenses of $1.0 million primarily related to increased intangibles acquired during the second quarter of 2023. Additionally, we recognized an impairment expense of $1.1 million during the quarter ended September 30, 2024. |
We believe that our operating expenses will be higher during 2024 when compared to 2023 as we continue to invest to support our anticipated growth which now includes such expenses related to Belami’s operations following its acquisition.
| 22 |
Other Income (Expense)
| Three-month ended September 30, | Increase/ | Increase/ | Nine-month ended September 30, | Increase/ | Increase/ | |||||||||||||||||||||||||||
| 2024($) | 2023($) | Decrease $ | Decrease % | 2024($) | 2023($) | Decrease $ | Decrease % | |||||||||||||||||||||||||
| Interest expense, net | (1,015,871 | ) | (662,173 | ) | 353,697 | 53 | (3,031,374 | ) | (2,601,526 | ) | 429,848 | 17 | ||||||||||||||||||||
The increase in interest expense during the interim 2024 periods resulted primarily from interest charges related to increased interest-bearing weighted average debt in the current periods when compared to the prior year periods.
Three-month ended September 30, | Increase/ | Increase/ | Nine-month ended September 30, | Increase/ | Increase/ | |||||||||||||||||||||||||||
| 2024($) | 2023($) | Decrease $ | Decrease % | 2024($) | 2023($) | Decrease $ | Decrease % | |||||||||||||||||||||||||
| Gain on extinguishment of debt | - | - | - | - | - | 1,201,857 | (1,201,857 | ) | (100 | ) | ||||||||||||||||||||||
The decrease in gain on extinguishment of debt is due to a non-recurring gain on extinguishment of debt which occurred during the second quarter of 2023.
Liquidity and Capital Resources
As of September 30, 2024, and 2023, we had $13.0 million and $22.1 million in cash, cash equivalents, and restricted cash, respectively.
We have raised additional funds through the sale of our common stock for gross proceeds of $4.4 million pursuant to placements and offerings during the nine-month period ended September 30, 2024.
These offerings included shares sold pursuant to our ATM offering program which provides us with additional access to capital, as needed, subject to market conditions. During the three months ended September 30, 2024, we did not issue any shares of common stock under such program. From inception through September 30, 2024, we issued 7,894,899 shares of common stock under such a program for net proceeds of $13,795,059, net of brokerage fees and legal fees of $619,415. As of September 30, 2024, the remaining amount to be used under the ATM offering program is $5.9 million.
On October 4, 2024, we sold an aggregate of 440,000 shares of two series of preferred stock, resulting in total gross proceeds of $11.0 million, pursuant to (i) a Securities Purchase Agreement entered into with an accredited investor, pursuant to which such investor purchased an aggregate of 200,000 shares of Series A Preferred Stock, at a purchase price of $25.00 per share, and (ii) a Securities Purchase Agreement entered into with certain accredited investors, pursuant to which such investors purchased an aggregate of 240,000 shares of Series A-1 Preferred Stock, at a purchase price of $25.00 per share.
Our future capital requirements will depend on many factors, including the Belami integration of operations, our revenue growth rate, expenditures related to our headcount growth and manufacturing, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the price at which we are able to purchase parts to incorporate in our product offerings, the introduction of platform enhancements, and the market adoption of our platforms. We may continue to enter arrangements to acquire or invest in complementary businesses, products, and technologies. We may, because of those arrangements, or the general expansion of our business, be required to seek additional equity or debt financing. If we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition.
| 23 |
We owe approximately $15.6 million under fixed rate obligations as of September 30, 2024. In addition, we owe GE certain minimum royalty payments under a license agreement and other accrued expenses which amounted to $2.3 million as of September 30, 2024.
On March 29, 2024, we entered into a letter agreement with Belami sellers, modifying certain obligations under the Stock Purchase Agreement. In connection with the letter agreement, the Company issued convertible promissory notes to each of the Sellers (the “Seller Note(s)”) in substitution of an aggregate of $3,117,408 in cash due to the Sellers on the first anniversary of the Closing. Each Seller received a Seller Note in the amount of $1,039,303 on the same date. In addition to other customary terms, the Seller Notes bear annual interest at 10%, with interest and principal coming due on May 16, 2025, and can be converted by the Sellers at any time at $3.00 per share of our common stock.
On September 23, 2024, the Company, through its wholly owned subsidiary, Belami, entered into a $3.5 million secured revolving line of credit (the “line of credit”) with a commercial bank, increasing, and renewing its previous revolving line of credit with such bank. The line of credit bears interest at a variable rate per annum equal to The Wall Street Journal Prime Rate, subject to a floor of 7.5% and ceiling of the maximum rate allowed under applicable law, payable monthly, and matures September 5, 2025. The line of credit is subject to customary default and acceleration provisions and to certain financial covenants, including working capital in excess of $1.75 million and a debt service coverage ratio in excess of 1.25 to 1.00 (calculated as described in the business loan agreement governing the line of credit). In addition, the Company agreed to guarantee Belami’s obligations under the line of credit, pursuant to a commercial guaranty agreement.
As common with companies having a similar cash conversion cycle as ours, when sales are converted into cash rapidly, often referred to as the “Dell Working Capital Model,” we leverage our trades payable to finance our operations to lower our cost of capital, and accordingly, we may have negative working capital. This negative working capital is partly inherent to the relatively quick turnaround of finished goods inventory, quicker collection of accounts receivables, and longer payment cycle of trades payable. Our accounts receivable, inventory, net of trades payable, amounted to $(7.5) million and $(7.2) million as of September 30, 2024, and 2023, respectively.
During October 2024, the Company authorized the issuance of 440,000 shares of newly authorized Series A Preferred Stock and Series A-1 Preferred Stock which generated proceeds of $11.0 million. We received $2.3 million of such proceeds in September 2024. The designations of each class of preferred stock are as follows:
Series A Preferred Stock:
| ● | Cumulative dividend of 8% annually, 12% if paid after dividend date; | |
| ● | Original issue price of $25 per share; | |
| ● | Conversion option at the holder’s option at $2 per share, with a subsequent reset provision of $1.20 per share; | |
| ● | Redemption at the price of $25 per share at the Company’s option after 5 years or upon change of control (substantially outside the control of the holder) | |
| ● | Voting rights on as converted basis. |
Series A-1 Preferred Stock:
| ● | Cumulative dividend of 8% annually, 12% if paid after dividend date; | |
| ● | Original issue price of $25 per share; | |
| ● | Conversion option at the holder’s option at $2 per share, with a subsequent reset provision of $1.20 per share; | |
| ● | Redemption at the price of $25 per share at the Company’s option after three years or upon change of control (substantially outside the control of the holder) | |
| ● | Voting rights on as converted basis. |
| 24 |
Please see below a summary of the primary components of our cash used in or provided by operating investing and financing activities during the nine-month period ended September 30, 2024
| For the nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (25,760,456 | ) | $ | (27,412,260 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation, amortization, and impairment | 4,244,653 | 2,098,935 | ||||||
| Amortization of debt discount | 933,476 | 867,572 | ||||||
| Gain on forgiveness of debt | — | (1,201,857 | ) | |||||
| Non-cash equity-based compensation expense | 9,035,220 | 13,109,135 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Working capital changes | (1,404,341 | ) | 2,446,112 | |||||
| Net cash used in operating activities | (12,951,448 | ) | (10,092,363 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from disposition of debt securities, net | — | 7,436,103 | ||||||
| Acquisition, net of cash acquired | — | (4,206,200 | ) | |||||
| Purchase of property and equipment | (536,014 | ) | (119,942 | ) | ||||
| Net cash used in investing activities | (536,014 | ) | 3,109,961 | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of equity instruments, net of costs | 4,337,795 | 8,231,529 | ||||||
| Proceeds from anticipated issuance of preferred stocks | 2,300,000 | — | ||||||
| Proceeds from issuance of debt instruments, net | (2,531,817 | ) | 11,400,395 | |||||
| Net cash provided by financing activities | 4,105,978 | 19,631,924 | ||||||
| (Decrease) increase in cash, cash equivalents and restricted cash | (9,381,484 | ) | 12,649,522 | |||||
| Cash, cash equivalents, and restricted cash at beginning of period | 22,430,253 | 9,461,597 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 13,048,769 | $ | 22,111,119 | ||||
The changes in working capital, net are primarily attributable to timing differences in accounts receivable, accounts payable related to operations and deferred revenues.
| 25 |
Going Concern
The Company’s liquidity sources include $ 13.0 million in cash, cash equivalents and restricted cash, and $ 11.7 million of working capital deficit as of September 30, 2024. The Company has a history of recurring operating losses and its net cash used in operating activities amounted to $13.0 million and $10.1 million during the nine months ended September 30, 2024, and 2023, respectively. The Company has also generated net cash provided by financing activities of $4.1 million and $19.6 million during the nine months ended September 30, 2024 and 2023, respectively. Accordingly, the Company’s management cannot ascertain that there is no substantial doubt that it will be able to meet its obligations as they become due within one year after the date that its financial statements are issued.
Management intends to mitigate such conditions by supporting its continued growth, decreasing its cash used in operating activities through increased revenues and increased margins from products sold to large retailers and its internet portals, and to the extent necessary, generate cash provided by financing activities through its at the market offering or other equity or debt financing means.
Non-GAAP Financial Measures
Management considers earnings (loss) before interest, taxes, depreciation and amortization, or EBITDA, as adjusted, an important indicator in evaluating our business on a consistent basis across various periods. Due to the significance of non-recurring items, EBITDA, as adjusted, enables our management to monitor and evaluate our business on a consistent basis. We use EBITDA, as adjusted, as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions regarding future operating investments and potential acquisitions. We believe that EBITDA, as adjusted, eliminates items that are not part of our core operations, such as interest expense and amortization and impairment expense associated with intangible assets, or items that do not involve a cash outlay, such as share-based payments, and non-recurring items, such as transaction costs. EBITDA, as adjusted, should be considered in addition to, rather than as a substitute for, pre-tax income (loss), net income (loss) and cash flows used in operating activities. This non-GAAP financial measure excludes significant expenses that are required by GAAP to be recorded in our financial statements and is subject to inherent limitations. Investors should review the reconciliation of this non-GAAP financial measure to the comparable GAAP financial measure included below. Investors should not rely on any single financial measure to evaluate our business.
| For the three-months ended September 30, | For the nine-months ended September 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net loss | $ | (8,621,306 | ) | $ | (7,183,776 | ) | $ | (25,760,456 | ) | $ | (27,412,260 | ) | ||||
| Share-based payments | 2,964,2856 | 2,470,601 | 9,035,221 | 13,109,035 | ||||||||||||
| Interest expense | 1,015,871 | 662,173 | 3,031,371 | 2,601,526 | ||||||||||||
| Impairment | 1,118,750 | — | 1,118,750 | — | ||||||||||||
| Depreciation, amortization | 928,794 | 1,067,203 | 3,125,903 | 2,098,935 | ||||||||||||
| Transaction costs | - | 123,000 | - | 516,601 | ||||||||||||
| EBITDA, as adjusted | $ | (2,593,606 | ) | $ | (2,860,779 | ) | $ | (9,449,211 | ) | $ | (9,086,063 | ) | ||||
Critical Accounting Policies
Our significant accounting policies are disclosed in Note 2 to our consolidated financial statements for the year ended December 31, 2023 contained in our Annual Report on Form 10-K for the year ended December 31, 2023. The following is a summary of those accounting policies that involve significant estimates and judgment of management.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes.
| 26 |
Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable and inventory, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets, estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded as debt discount, estimates of tax liabilities and estimates of the probability and potential magnitude of contingent liabilities.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, actual results could differ significantly from estimates.
Fair Value of Financial Instruments
Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2024, and December 31, 2023, we believe the amounts reported for cash, prepaid expenses, accounts payable and accrued expenses and other current liabilities, accrued interest, notes payable and convertible note payable approximate fair value because of their short maturities.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; | |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation–Stock Compensation”, which requires recognition in the financial statements of the cost of employee, non-employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Stock-based compensation is measured at the grant date based on the value of the award granted using the Black- Scholes option pricing model based on projections of various potential future outcomes and recognized over the period in which the award vests. For stock awards no longer expected to vest, any previously recognized stock compensation expense is reversed in the period of termination. The stock-based compensation expense is included in general and administrative expenses.
| 27 |
Revenue Recognition
We account for revenues in accordance with Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (Topic 606).
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through the following steps:
| ● | identification of the contract, or contracts, with a customer; | |
| ● | identification of the performance obligations in the contract; | |
| ● | determination of the transaction price; | |
| ● | allocation of the transaction price to the performance obligations in the contract; and | |
| ● | recognition of revenue when, or as, we satisfy a performance obligation. |
Recent Accounting Pronouncements
Although there are several new accounting pronouncements issued or proposed by the Financial Accounting Standards Board, which we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements have had or will have a material impact on our financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company”, we are not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures and any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving their control objectives.
As of the end of the period covered by this report, management, including our Principal Executive Officers and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based upon the evaluation, our Principal Executive Officers and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.
Changes in Internal Controls Over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we become involved in legal proceedings arising in the ordinary course of our business. As of the date of this Form 10-Q, we are not a party to any material legal matters or claims. Legal proceedings are inherently uncertain and the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.
We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, we do not record an accrual, consistent with applicable accounting guidance.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors set forth in “Part I. Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, other than as noted below. Our business, operations and financial results are subject to various risks and uncertainties that could materially adversely affect our business, results of operations, financial condition, and the trading price of our common stock. You should carefully read and consider the risks and uncertainties included in the report referenced above, together with all of the other information in such report and this Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, and other documents that we file with the SEC. The risks and uncertainties described in these reports may not be the only ones we face, and the disclosure of any risk factor should not be interpreted to imply that the risk has not already materialized. The factors discussed in these reports, among others, could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors, and oral statements.
We have begun to incorporate artificial intelligence capabilities in our product offerings, which may present operational and reputational risks.
We are in the early stages of incorporating artificial intelligence (“AI”) capabilities into certain product offerings. These features may become important in our operations over time. Our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, we could be subject to competitive risks, potential legal liability, and reputational harm, and our business, financial condition and results of operations may be adversely affected. The use of AI capabilities may also result in cybersecurity incidents, and any such cybersecurity incidents related to our use of AI capabilities could adversely affect our business. Furthermore, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, and compliance with new or changing laws, regulations or industry standards relating to AI may impose significant operational costs and may limit our ability to use AI technologies in our products. There can be no assurance that the measures we have taken to mitigate the potential risks related to the use of AI technologies in our products will be sufficient. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action or brand and reputational harm.
The issuance of shares of convertible preferred stock reduced the relative voting power of holders of our common stock, and the conversion of such stock into shares of common stock could materially dilute our stockholders.
Holders of our preferred stock are entitled to vote, on an as-converted basis, together with holders of our common stock on all matters submitted to a vote of the holders of our common stock. As a result, the issuance of the preferred stock effectively reduces the relative voting power of the holders of our common stock. In addition, the conversion of the preferred stock into shares of our common stock would dilute the ownership interest of existing holders of our common stock, and any sales in the public market of our common stock issuable upon conversion of the preferred stock could adversely affect prevailing market prices of our common stock. Sales by such holders of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
There are no unregistered sales of equity securities during the period covered by this report that were not previously reported in a Current Report on Form 8-K.
Issuer Purchases of Equity Securities
There were no share repurchases during the quarter ended September 30, 2024 other than shares repurchased to settle tax withholdings related to the vesting of restricted stock units.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During
the quarter ended September 30, 2024, none of the Company’s directors or executive officers
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Item 6. Exhibits
* Indicates management contract or any compensatory plan, contract, or arrangement.
+ Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SKYX PLATFORMS CORP. | ||||
| Date: | November 12, 2024 | By: | /s/ John P. Campi | |
| John P. Campi, Co- Chief Executive Officer | ||||
| (Principal Executive Officer) | ||||
| Date: | November 12, 2024 | By: | /s/ Leonard J. Sokolow | |
| Leonard J. Sokolow, Co-Chief Executive Officer | ||||
| (Principal Executive Officer) | ||||
| Date: | November 12, 2024 | By: | /s/ Marc-Andre Boisseau | |
| Marc-Andre Boisseau, Chief Financial Officer | ||||
| (Principal Financial and Accounting Officer) | ||||
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