SKYX Platforms Corp. (SKYX)

CIK: 0001598981. SIC: 3640 Electric Lighting & Wiring Equipment. Latest 10-K as of: 2026-03-26.

SIC breadcrumb: Manufacturing > Electronic And Other Electrical Equipment And Components, Except Computer Equipment > SIC 3640 Electric Lighting & Wiring Equipment

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1598981. Latest filing source: 0001493152-26-012927.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001598981.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001598981.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001493152-26-022230.

Extracted from Part I Item 2 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-05-11. Report date: 2026-03-31.

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, 2025
included in our Annual Report on Form 10-K for the year ended December 31, 2025. 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, 2025, 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 into 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 hardwired 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 2026. We expect to manufacture the additional product offerings
within the next six months. We hold over 100 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 Conformite Europeenne (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.

Monetary
and trade policies impact in varying degrees our industry market participants (from manufacturer to user). The reaction(s) by the market
participants to such policies or changes in policies may have an impact on our operations. Those policies, such as tariffs, 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 monetary and trade policies have had a material impact on our financial position or results of operations
to date, we may experience some effect in the near future as we continue to navigate changes in such policies. 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.

Recent
Developments

During
2025 and January 2026, we generated proceeds of $5.6 million pursuant to our ATM, $29.3 million pursuant to the issuance of shares
of our common stock, $5.4 million pursuant to the issuance of our preferred stock, and $5.3 million pursuant to the issuance of
convertible notes.

We
have expanded our product lines to include an all-in-one plug and play combined heater, fan, and lighting product which will eventually
accommodate the integration of our smart and advanced products.

18

Results
of Operations

Comparison
of the Three months ended March 31, 2026, and 2025

For the three months ended March 31,

Increase/

Increase/

(Decrease)

2026

2025

(Decrease)

%

Revenue

$

22,094,389

$

20,113,938

$

1,980,451

9.8

Cost of revenues

15,468,946

14,402,488

1,066,458

7.4

Selling and marketing expenses

7,067,829

6,827,420

240,409

3.5

General and administrative expenses

7,719,774

6,597,055

1,122,719

17.0

Total expenses

$

30,256,549

$

27,826,963

$

2,429,586

8.7

Operating loss

$

(8,162,160

)

$

(7,713,025

)

$

(449,135

)

5.8

Other expense

Interest expense, net

1,113,417

1,339,103

(225,686

)

(16.9

)

Total other expense, net

$

1,113,417

$

1,339,103

$

(225,686

)

(16.9

)

Net loss

$

(9,275,577

)

$

(9,052,128

)

$

(223,449

)

2.5

Revenue

For the three months ended March 31,

Increase/

Increase/

(Decrease)

2026

2025

(Decrease)

%

Revenue

$

22,094,389

$

20,113,938

$

1,980,451

9.8

%

The
increase in revenues is primarily due to an increased number of units of lighting and heating products sold.

We
believe that our revenues will be higher in 2026 than in 2025 primarily resulting from revenues from the sale of our advanced and smart
products.

Cost
of Revenues

For the three months ended March 31,

Increase/

Increase/

(Decrease)

2026

2025

(Decrease)

%

Cost of revenues

$

15,468,946

$

14,402,488

$

1,066,458

7.4

%

The
increase in cost of revenue is proportionate to the increase in revenues.

We
believe that the cost of revenues will increase in 2026 compared to 2025, commensurate with an anticipated increase in revenues.

Selling
and Marketing Expenses

For the three months ended March 31,

Increase/

Increase/

(Decrease)

2026

2025

(Decrease)

%

Selling and marketing expenses

$

7,067,829

$

6,827,420

$

240,409

3.5

%

Selling
and marketing expenses consist primarily of sales and marketing compensation as well as sales and marketing programs.

We
believe that our selling and marketing expenses in 2026 will remain relatively unchanged compared to 2025.

19

General
and Administrative Expenses

For
the three months ended March 31,

Increase/

Increase/

(Decrease)

2026

2025

(Decrease)

%

General
and administrative expenses

$

7,719,774

$

6,597,055

$

1,122,719

17.0

%

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 is primarily due to increased share-based payments during the first quarter of 2026.

We
believe that our general and administrative expenses in 2026 will remain relatively unchanged compared to 2025.

For the three months ended March 31,

Increase/

Increase/

(Decrease)

2026

2025

(Decrease)

%

Other expense

Interest expense, net

$

1,113,417

$

1,339,103

$

(225,686

)

(16.9

)%

The
decrease in interest expense resulted primarily from declining operating lease liabilities.

Liquidity
and Capital Resources

As
of March 31, 2026, and December 31, 2025, we had $32.3 million and $10.1 million in cash, cash equivalents, and restricted cash, respectively.

During
the three months ended March 31, 2026, the Company issued approximately 12 million shares of common stock pursuant to offerings, for
aggregate net proceeds of approximately $27.4 million.

The
Company received proceeds of approximately $1.9 million from the exercise of warrants.

During
the three months ended March 31, 2026, the Company issued shares of its common stock to the Belami sellers in connection with these note
arrangements with an aggregate value of $528,000.

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.

We
owe approximately $17.5 million under fixed rate obligations as of March 31, 2026

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 negative working
capital, which consists of accounts receivable, inventory, net of trades and compensation payable, amounted to $9.1 million and $9.6
million as of March 31, 2026, and 2025 respectively.

20

Please
see below a summary of the primary components of our cash used in or provided by operating investing and financing activities during
the three-month periods ended March 31, 2026, and 2025:

For the three months ended March 31,

2026

2025

Operations:

Net loss

$

(9,275,577

)

$

(9,052,128

)

Non-cash adjustments (combined)

4,979,696

4,327,473

Working capital changes

(1,718,151

)

399,980

Net cash used in operating activities

(6,014,032

)

(4,324,675

)

Investing:

Purchase of property and equipment

(93,979

)

(413,365

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-03-26. Report date: 2025-12-31.

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You
should read the following discussion and analysis of our financial condition and results of operations together with our financial statements
and the related notes appearing elsewhere in this Form 10-K. This discussion and other parts of this Form 10-K contain forward-looking
statements that involve risks and uncertainties, such as statements regarding our plans, objectives, strategy, expectations, outlook,
intentions, and projections. Our actual results could differ materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors”
section of this Form 10-K. Please also see the section entitled “Cautionary Note Regarding Forward-Looking Statements” contained
in this Form 10-K.

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 into 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 hardwired 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 2026. We expect to manufacture the additional product offerings
within the next six months. We hold over 100 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 Conformite Europeenne (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.

40

Monetary
and trade policies impact in varying degrees our industry market participants (from manufacturer to user). The reaction(s) by the market
participants to such policies or changes in policies may have an impact on our operations. Those policies, such as tariffs, 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 monetary and trade policies have had a material impact on our financial position or results of operations
to date, we may experience some effect in the near future as we continue to navigate changes in such policies. 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.

Recent
Developments

During
2025 and January 2026, we generated proceeds of $5.6 million pursuant to our ATM, $29.3 million pursuant to issuance of shares of our
common stock, $5.4 million pursuant to issuance of our preferred stock, and $5.3 million pursuant
to the issuance of convertible notes.

We
have expanded our product lines to include an all-in-one plug and play combined heater, fan, and lighting product which will eventually
accommodate the integration of our smart and advanced products.

Results
of Operations

Years
Ended December 31, 2025 and 2024

For
the year ended December 31,

Increase/

Increase/

(Decrease)

2025

2024

(Decrease)

%

Revenue

$

92,009,949

$

86,276,876

$

5,733,073

6.6

%

Cost
of revenues

64,173,870

61,682,934

2,490,936

4.0

%

Selling
and marketing expenses

25,701,665

25,353,172

348,493

1.4

%

General
and administrative expenses

31,246,804

31,353,009

(106,205

) 

(0.3

)%

Total
expenses

$

121,122,339

$

118,389,115

$

3,164,224

23

%

Operating
loss

$

(29,112,390

)

$

(32,112,239

)

$

2,999,849

(9.3

)%

Other
expense

Interest
expense, net

4,303,214

4,055,905

247,309

6.1

%

Gain
on extinguishment of debt

-

(400,000

)

400,000

(100.0

)%

Total
other expense, net

$

4,303,214

$

3,655,905

$

647,309

17.7

%

Net
loss

$

(33,415,604

)

$

(35,768,144

)

$

2,352,540

(6.6

)%

Revenue

For
the year ended December 31,

Increase/

Increase/

(Decrease)

2025

2024

(Decrease)

%

Revenue

$

92,009,949

$

86,276,876

$

5,733,073

6.6

%

The
increase in revenues is primarily due to an increased number of units of lighting and heating products sold.

We
believe that our revenues will be higher in 2026 than in 2025 primarily resulting from revenues from the sale of our advanced and smart
products.

Cost
of Revenues

For the year ended December 31,

Increase/

Increase/

(Decrease)

2025

2024

(Decrease)

%

Cost of revenues

64,173,870

61,682,934

2,490,936

4.0

%

41

The
increase in cost of revenue is proportionate to the increase in revenues.

We
believe that the cost of revenues will increase in 2026 compared to 2025, commensurate with an anticipated increase in revenues.

Selling
and Marketing Expenses

For
the year ended December 31,

Increase/

Increase/

(Decrease)

2025

2024

(Decrease)

%

Selling and marketing expenses

$

25,701,665

$

25,353,172

$

348,493

1.4

%

Selling
and marketing expenses consist primarily of sales and marketing compensation as well as sales and marketing programs.

The
selling and marketing expenses are relatively unchanged.

We
believe that our selling and marketing expenses in 2026 will remain relatively unchanged compared to 2025.

General
and Administrative Expenses

For
the year ended December 31,

Increase/

Increase/

(Decrease)

2025

2024

(Decrease)

%

General and administrative expenses

31,677,804

31,353,009

324,795

1.0

%

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 is primarily due to increased share-based payments of approximately $1.6 million during
the second quarter of 2025.

We
believe that our general and administrative expenses in 2026 will remain relatively unchanged compared to 2025.

Other
Expense (Income)

For
the year ended December 31,

Increase/

Increase/

(Decrease)

2025

2024

(Decrease)

%

Other expense

Interest expense, net

4,303,214

4,055,905

247,309

6.1

)%

Gain on extinguishment of debt

-

(400,000

)

400,000

(100.0

)%

The
interest expense is relatively unchanged. We recognized a non-recurring gain on extinguishment of debt related to our royalty obligations
during 2024, none of which occurred during 2025.

42

Liquidity
and Capital Resources

We
had $10.1 million and $15.5 million in cash and cash equivalents, and restricted cash, as of December 31, 2025 and 2024,
respectively.

Historically,
we have raised funds through the issuances of common stock, preferred stock, securities convertible into common stock and notes payable.
We have raised funds through the sale of our common stock and preferred stocks for gross proceeds of $10.9 million pursuant to placements
and offerings during 2025. We also generated gross proceeds of $29.3 million pursuant to the issuance of shares of our common stock during January 2026.

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 fourth quarter of 2025, we issued 368,110 shares of common stock under such program. From inception
through December 31, 2025, we issued 12,138,022 shares of common stock under such a program for net proceeds of $19,219,347, net of brokerage
fees and legal fees of $779,508. As of March 2, 2026, there are no significant remaining amount to be used under the ATM offering program.

During
the year 2025, we sold an aggregate of 214,000 shares of two series of preferred stock, resulting in total gross proceeds of $5.1 million,
pursuant to (i) a Securities Purchase Agreement entered into with an accredited investor, pursuant to which such investor purchased an
aggregate of 154,000 shares of Series A-1 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 60,000 shares of Series A-2
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 into 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.

We
owe approximately $18.8 million under fixed rate obligations as of December 31, 2025. In addition, we owe GE royalty payments which amounted
to $1.3 million as of December 31, 2025.

On
March 29, 2024, and as amended in June 2025, 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 $3,117,909 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 January, 2026, and can be converted by the Sellers
at any time at $3.00 per share of our share of our common stock.

43

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 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 net working
capital deficit, which consists of accounts receivable, inventory, net of trades payable, amounted to $8.4 million and $6.8 million as
of December 31, 2025, and 2024, respectively.

The
designations of each class of Series A, A-1 and A-2 Preferred stock are relatively similar and are as follows:

●

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 $1.20 per share for Series A and A-1, $2 per share for Series A-2;

●

Redemption
at the price of $25 per share at the Company’s option after 5 years within the holder’s control for Series A and 3 years
outside the holder’s control for Series A-1 and A-2, or upon change of control;

●

Voting
rights on as converted basis.

Please
see below a summary of the primary components of our cash used in or provided by operating investing and financing activities during
2025 and 2024.

2025

2024

Operations:

Net loss

$

(33,415,604

)

$

(35,768,144

)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation and amortization

4,320,338

5,185,706

Amortization of debt discount

1,113,996

1,211,974

Non-cash equity-based compensation expense

13,560,580

13,474,433

Non-cash equity-based interest payments

615,291

-

Gain on forgiveness of debt

-

(400,000

)

Change in operating assets and liabilities

Working capital changes

514,352

(1,964,339

)

Net cash used in operating activities

(13,291,059

)

(18,260,370

)

Investing:

Purchase of property and equipment

(1,932,873

)

(981,428

)

Acquisition, net of cash acquired

-

(750,000

)

Net cash used in investing activities

(1,932,873

)

(1,731,428

)

Financing:

Proceeds from issuance of stock

11,018,535

15,337,796

Dividends paid

(1,020,616

)

-

Proceeds from line of credit

-

500,000

Proceeds from issuance of convertible notes

5,250,000

-

Principal repayments of notes payable

(5,421,861

)

(2,775,756

)

Net cash provided by financing activities

9,826,058

13,062,040

Change in cash and cash equivalents, and restricted cash

(5,397,874

)

(6,929,758

)

Cash, cash equivalents and restricted cash at beginning
of the year

15,500,495

22,430,253

Cash, cash equivalents and restricted cash at end of year

$

10,102,621

$

15,500,495

The
changes in working capital, net are primarily attributable to timing differences in accounts receivable, trade accounts payable and deferred
revenues.

44

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 year ended December 31,

2025

2024

Net loss

$

(33,415,604

)

$

(35,768,144

)

Share-based payments

13,560,580

13,474,433

Interest expense

4,303,214

4,055,905

Impairment

-

1,118,750

Depreciation, amortization

4,320,338

4,066,957

EBITDA, as adjusted

$

(11,375,344

)

$

(13,052,099

)

Off
Balance Sheet Arrangements

We
do not have any off-balance sheet arrangements.

Critical
Accounting Policies

Our
significant accounting policies are disclosed in Note 2 to our consolidated financial statements for the year ended December 31, 2025,
contained in this Annual Report on Form 10-K for the year ended December 31, 2025. 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.

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 recognized in the balance sheet,
where it is practicable to estimate that value. As of December 31, 2025 and 2024, 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 input
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.

45

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.

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 is 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.