SKYX Platforms Corp.
For the period ended Mar 31, 2026. Filed May 11, 2026.
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Mar 31, 2026 · Filed May 11, 2026
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Notes to Consolidated Financial Statements (Unaudited)
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.
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 balance sheet as of March 31, 2026 and consolidated financial statements for the three months ended March 31, 2026 and 2025 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 balance sheet as of December 31, 2025 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 2025 Annual Report on Form 10-K 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.
Basis of Consolidation
The consolidated financial statements include the results of the Company and its subsidiaries. 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. The Company’s cash composition was as follows:
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Cash and cash equivalents | $30,263,740 | $8,052,621 |
| Restricted cash | 2,050,000 | 2,050,000 |
| Total cash, cash equivalents and restricted cash | $32,313,740 | $10,102,621 |
Restricted Cash
The Company issued a letter of credit of $2.8 million in September 2022 to use as collateral for certain obligations to one of its lessors. The letter of credit was issued by a financial institution and was secured by cash of $2.0 million as of March 31, 2026, and December 31, 2025.
Customer Contracts Balances
Accounts receivable are recorded in the period when the right to receive payment or other consideration becomes unconditional. Accounts receivable 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 March 31, 2026, and December 31, 2025, the Company’s allowance for doubtful accounts was $20,059 and $22,668, respectively.
The Company determines an allowance for sales returns based upon historical experience. The Company’s allowance for sales returns was $128,724 and $284,469, as of March 31, 2026, and December 31, 2025, respectively, and is recorded as accrued expenses in the accompanying consolidated financial statements.
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 $1,561,154 and $2,082,622 as of March 31, 2026, and December 31, 2025, respectively.
The costs associated with such deferred revenues are recognized as deferred charges in the accompanying balance sheet. Such charges include the carrying value of freight, and sales charges. Deferred charges are included in prepaid costs and other assets in the accompanying balance sheet.
Inventory
Inventories are stated at the lower of cost or market, 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.
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Inventory, component parts | 1,383,777 | 2,413,821 |
| Inventory, finished goods | 3,214,504 | 3,136,347 |
| Allowance | (1,300,000) | (1,300,000) |
| Inventory-total | 3,298,281 | 4,250,168 |
The Company maintains 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 $1.3 million as of March 31, 2026, and December 31, 2025.
Loss Per Share
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-month ended March 31, 2026, and 2025, 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.
The Company had the following anti-dilutive common stock equivalents on March 31, 2026, and December 31, 2025:
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Stock warrants | 321,750 | 1,588,417 |
| Stock options | 31,721,286 | 31,838,322 |
| Unvested restricted stock | 4,022,391 | 4,988,817 |
| Convertible notes | 15,190,014 | 14,863,205 |
| Preferred stock | 10,249,997 | 10,999,997 |
| Anti-dilutive securities | 61,505,438 | 64,278,758 |
Comprehensive Income- Improvements to Expense Disaggregation Disclosures
In November 2024, the Financial Accounting Standards Board (“FASB”) issued a new standard to improve expense disaggregation disclosures. The guidance expands the disclosures required for certain costs and expenses in our annual and interim consolidated financial statements, primarily through enhanced disclosures about significant expenses. The standard is effective as of March 31, 2026 and interim and annual periods thereafter. The impact of this standard is only on the Company’s expenses disclosures.
NOTE 3 PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Equipment and furniture | $876,099 | $924,266 |
| Leasehold improvements | 1,487,850 | 1,400,859 |
| Total | 2,363,949 | 2,325,125 |
| Less: accumulated depreciation | (1,112,705) | (977,485) |
| Total, net | $1,251,244 | $1,347,640 |
Depreciation expense for the three-month periods ended March 31, 2026, and 2025 is $190,375 and $70,762, respectively.
NOTE 4 INTANGIBLE ASSETS AND GOODWILL
Intangible assets consisted of the following:
| March 31, 2026 · December 31, 2025 | |||||||
|---|---|---|---|---|---|---|---|
| Useful life | Carrying Value | Accumulated Amortization | Net carrying value | Carrying Value | Accumulated Amortization | Net carrying value | |
| Customer relationships | 7 | $4,500,000 | $(1,875,000) | $2,625,000 | $4,500,000 | $(1,607,143) | $2,892,857 |
| E-commerce technology platforms | 1 - 4 | 3,097,040 | (1,652,673) | 1,444,367 | 3,097,040 | (1,482,974) | 1,614,066 |
| Patents and other | 15 | 931,831 | (401,771) | 530,060 | 931,831 | (386,805) | 545,026 |
| $8,528,871 | $(3,929,444) | $4,599,427 | $8,528,871 | $(3,476,922) | $5,051,949 | ||
Amortization expense on intangible assets for the three-month periods ended March 31, 2026, and 2025 amounted to $452,524 and $419,427, respectively.
The following table sets forth the estimated amortization expenses for the next five years:
| Twelve months ended March 31: | |
|---|---|
| 2027 | 1,438,033 |
| 2028 | 1,373,313 |
| 2029 | 740,666 |
| 2030 | 701,600 |
| 2031 | 109,901 |
NOTE 5 DEBTS
The following table presents the details of the principal’s outstanding:
| March 31, 2026 | December 31, 2025 | APR on March 31, 2026 | Maturity | Collateral | |
|---|---|---|---|---|---|
| Convertible Notes (a,b,c) | $18,069,600 | $18,834,348 | 0.00 – 10.00% | September 2023- October 2030 | Substantially all Company assets |
| Notes payable to financial institutions and others | 366,634 | 501,495 | 3.75-8.5% | August 2025- November 2052 | Substantially all Company assets |
| Total | $18,436,234 | $19,335,843 | |||
| Unamortized debt discount | (2,084,732) | (2,363,231) | |||
| Debt, net of Unamortized debt Discount | $16,351,502 | $16,972,612 | |||
| For the three months ended March 31, | ||
|---|---|---|
| 2026 | 2025 | |
| Interest expense | $1,113,417 | $1,339,103 |
As of March 31, 2026, the expected future principal payments for the Company’s debt are due as follows:
| Twelve months ended March 31, 2027 | $1,691,212 |
|---|---|
| Twelve months ended March 31, 2028 | 1,707,553 |
| Twelve months ended March 31, 2029 | 3,994 |
| Twelve months ended March 31, 2030 | 4,146 |
| Twelve months ended March 31, 2031 and thereafter | 15,029,329 |
| Total | $18,436,234 |
| (a) | Included in Convertible Notes are loans provided to the Company from two directors and an officer. The notes each have the following terms: three-year subordinated convertible promissory note of principal face amounts. Subject to other customary terms, a convertible promissory note with a principal amount of $600,000 payable to a director, together with accrued interest of $235,900, was converted into 379,955 shares of the Company’s common stock. The other remaining convertible promissory notes matured in May 2025, bear interest at an annual rate of 10% thereafter, which is payable annually in cash or common stock, at the holder’s discretion. At any time after issuance and prior to or on the maturity date, the notes are convertible at the option of the holder into shares of common stock at a conversion price of $3 per share. During 2023, the Company issued convertible promissory notes. As an inducement to enter the financing transactions, the Company issued 1,391,667 warrants to the noteholders at an adjusted exercise price of $2.7 per warrant. The Company recorded a debt discount aggregating $5.6 million which was recognized as debt discount and additional paid-in capital in the accompanying balance sheet. The Company recognized $278,499 as amortized debt discount during the three months ended March 31, 2026, and 2025, respectively, and it is reflected as interest expense in the accompanying unaudited consolidated statement of operations. |
| (b) | In March 2024, and as amended in June 2025, the Company and the Belami sellers entered into a letter agreement modifying certain obligations under the Belami 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 in monthly principal and interest payments of $300,000 beginning in July 2025 until fully paid in June 2026. Additionally pursuant to the January 2026 letter agreement, the Company agreed to issue monthly restricted stock awards to the sellers as payment to partially satisfy interest and principal obligations under the notes for the period from February 2026 through June 2026. The number of shares issued each month is determined by dividing $83,333 by the lesser of the Company’s share price on the applicable grant date or $2.25 per share. The notes are convertible at $3 per share of common stock. Additionally, the convertible promissory notes include a $1 million note payable to GE issued in April 2024. The convertible note is due in April 2027, does not bear interest and is convertible at a price of $1.07 per share. |
NOTE 6 OPERATING LEASE LIABILITIES
The following table outlines the total lease cost for the Company’s operating leases as well as weighted-average information for these leases as of March 31, 2026, and 2025 respectively:
| For the three months ended March 31, | ||
|---|---|---|
| 2026 | 2025 | |
| Cash paid for operating lease liabilities | $594,080 | $564,922 |
| Fixed rent payments | 522,693 | 2,703,789 |
| Lease - Depreciation expense | $536,323 | $517,628 |
| Weighted-average discount rate | 6.48% | 6.48% |
| Weighted-average remaining lease term (in months) | 82 | 92 |
| Minimum Lease obligation | |
|---|---|
| Twelve months ended March 31, 2027 | $2,560,152 |
| Twelve months ended March 31, 2028 | 2,286,013 |
| Twelve months ended March 31, 2029 | 2,535,879 |
| Twelve months ended March 31, 2030 | 2,805,382 |
| Twelve months ended March 31, 2031, and thereafter | 9,564,729 |
| Total | $19,752,155 |
NOTE 7 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Accrued interest, convertible notes | $687,680 | $552,354 |
| Accrued dividends | 241,500 | 249,111 |
| Trade payables | 13,114,267 | 14,533,064 |
| Accrued compensation | 1,239,706 | 1,232,410 |
| Total | $15,283,153 | $16,566,939 |
NOTE 8 RELATED PARTY TRANSACTIONS
The following schedule summarizes the Company’s related party transactions for the three-month periods ended March 31, 2026 and 2025.
| Amounts expended during the three-month period ended March 31, · Convertible Notes Payable as of March 31, 2026 and December 31, | ||||
|---|---|---|---|---|
| Related Party Affiliation | Purpose(s) | 2026 | 2025 | 2025 |
| Chief Executive Officer and Director | ||||
| Dividends on Series A-1 Preferred Stock | $5,000 | $5,000 | $ | - |
| Interest on Convertible Note | 6,250 | 6,250 | 250,000 | |
| Former Chief Executive Officer | ||||
| Dividends on Series A-1 Preferred Stock | 5,000 | 5,000 | - | |
| Interest on convertible note | 2,500 | 2,500 | 100,000 | |
| Officer | ||||
| Dividends on Series A-1 Preferred Stock | 10,000 | 10,000 | - | |
NOTE 9 STOCKHOLDERS’ EQUITY
(A) Common Stock
The Company issued the following common stock during the three months ended March 31, 2026, and 2025:
| Transaction Type | Shares Issued | Valuation $ | Average Value Per Share |
|---|---|---|---|
| 2026 Equity Transactions | |||
| Common stock issued, pursuant to services provided | 1,460,641 | 3,097,885 | $2.12 |
| Common stock issued pursuant to stock at the market offering, net | 12,000,000 | 27,392,004 | 2.28 |
| Common stock issued pursuant to preferred dividends | 5,526 | 8,044 | 1.46 |
| Common stock issued pursuant to conversion of notes and accrued interest | 240,648 | 527,786 | 2.19 |
| Common stock issued pursuant to exercise of options and warrants | 1,301,667 | 1,911,101 | 1.47 |
| Common stock issued pursuant to conversion of preferred stock | 812,501 | 975,000 | 1.20 |
| 2025 Equity Transactions | |||
| Common stock issued, pursuant to services provided | 1,117,964 | $3,041,157 | $1.16 – 1.87 |
| Common stock issued pursuant to stock at the market offering, net | 223,756 | 450,428 | 2.0 – 2.08 |
| Common stock issued pursuant to conversion of preferred stock | 250,000 | 500,000 | 2.00 |
(B) Preferred Stock
The following is a summary of the Company’s Preferred Stock activity during the three months ended March 31, 2026 and 2025:
| Transaction Type | Quantity | Carrying Value | Value per Share, gross |
|---|---|---|---|
| Preferred Stock Series A-1 Balance at January 1, 2026 | 292,000 | $7,124,167 | $25 |
| Conversion to common stock | (39,000) | (975,000) | 25 |
| Preferred Stock Series A-1 Balance at March 31, 2026 | 253,000 | $6,149,167 | $25 |
| Preferred Stock Series A-2 Balance at January 1, 2026 | 60,000 | $1,500,000 | $25 |
| Preferred Stock Series A-2 Balance at March 31, 2026 | 60,000 | $1,500,000 | $25 |
| Transaction Type | Quantity | Carrying Value | Value per Share, gross |
|---|---|---|---|
| Preferred Stock Series A-1 Balance at January 1, 2025 | 240,000 | $6,000,000 | $25 |
| Issuance | 40,000 | 1,000,000 | 25 |
| Conversion to common stock | (20,000) | (500,000) | 25 |
| Preferred Stock Series A-1 Balance at March 31, 2025 | 260,000 | $6,500,000 | $25 |
During the three months ended March 31, 2026, holders converted an aggregate of 39,000 shares of Series A-1 Preferred Stock into 812,501 shares of common stock at a conversion price of 1.20 per share.
Series A Preferred Stock (temporary equity):
| ● | 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; |
| ● | Redemption at the price of $25 per share at the Company’s option after 5 years or upon change of control (substantially within the control of the holder); |
| ● | Voting rights on as converted basis. |
Series A-1 and A-2 Preferred Stock (permanent equity):
| ● | 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-1 and $2 per share for Series A-2; |
| ● | Redemption at the price of $25 per share at the Company’s option after 3 years or upon change of control (substantially outside the control of the holder); |
| ● | Voting rights on as converted basis. |
(C) Stock Options and Restricted Stock
The following is a summary of the Company’s stock option activity during the three-months ended March 31, 2026, and 2025:
| Options · Shares · Weighted Average Exercise Price · Weighted Average Remaining Contractual Life (In Years) · Aggregate Intrinsic Value | |||||
|---|---|---|---|---|---|
| Outstanding, January 1, 2026 | 31,838,322 | $6.81 | 2 | $7,382,321 | |
| Exercised | 35,000 | $0.97 | - | $ | - |
| Granted | 70,500 | 1.12 | - | - | |
| Forfeited | (222,536) | (6.08) | - | - | |
| Outstanding, March 31, 2026 | 31,721,286 | $6.80 | 1.91 | $264,990 | |
| Exercisable, March 31, 2026 | 12,010,702 | $4.26 | 2.50 | $152,798 | |
| Outstanding, January 1, 2025 | 32,493,392 | $7.31 | - | - | |
| Granted | 1,358,030 | 1.26 | - | - | |
| Forfeited | (2,407,434) | 9.75 | - | - | |
| Outstanding, March 31, 2025 | 31,443,988 | $6.86 | 2.33 | $1,624,810 | |
| Exercisable, March 31, 2025 | 11,697,698 | $4.31 | 2.05 | $1,380,058 | |
The following table summarizes the range of the Black Scholes pricing model assumptions used by the Company during the three months ended March 31, 2026, and 2025:
| 31-Mar-26 | 31-Mar-25 | |
|---|---|---|
| Range | ||
| Exercise price and stock price | $1.12 | $1.26 |
| Expected life (in years) | 2.77 | 2.60- 3.47 |
| Volatility | 86.84% | 102.29% |
| Risk-free interest rate | 3.81 | 3.50 - 4.62% |
| Dividend yield | - | - |
Prior to the second quarter of 2025, the Company did not have historical stock prices that could be reliably determined for a period that is at least equal to the expected terms of its options. The expected options terms, which were calculated using the plain vanilla method, are 3.5 years, and its historical period was 3 years. The Company relied 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 exceeded the period of the Company’s historical volatility data. As of May 1, 2025, the Company uses its historical stock prices to determine its expected volatility.
A summary of the Company’s non-vested restricted stock units during the three months ended March 31, 2026, and 2025 are as follows:
| Shares | Weighted Average Grant Due Fair Value | |
|---|---|---|
| Non-vested restricted stock units, January 1, 2026 | 4,988,817 | $1.76 |
| Granted | 863,039 | - |
| Vested | (1,779,465) | 1.24 |
| Forfeited | (50,000) | - |
| Non-vested restricted stock units, March 31, 2026 | 4,022,391 | $1.59 |
| Non-vested restricted stock units, January 1, 2025 | 6,278,370 | $2.65 |
| Granted | 1,900,978 | 1.26 |
| Vested | (1,242,872) | 2.13 |
| Forfeited | (586,297) | 9.11 |
| Non-vested restricted stock units on March 31, 2025 | 6,350,179 | $1.69 |
The weighted-average remaining contractual life of the restricted units as of March 31, 2026, is 1.14 years.
Each share of restricted stock gives the right to receive one share of the Company’s common stock upon vesting. Restricted stock that are 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 restricted stock with a market condition. Compensation with respect to restricted stock units and awards is expensed on a straight-line basis over the vesting period.
The Company recognized compensation expenses of $2,694,938, and $2,411,650, respectively, related to RSUs and RSAs during the three-month period ending March 31, 2026 and 2025. The Company recognized compensation expenses of $930,732 and $629,507, respectively, related to stock options during the three-month period ending March 31, 2026 and 2025.
The options and restricted stock units and awards are granted to the Company’s employees, board members, and certain consultants. There is no difference in characteristics of the awards other than the stock options have to be exercised and restricted awards and units do not. The vesting of the options, restricted stock units or awards is based on the requisite service period of the employees and the non-employee’s vesting period is generally based on a period of up tosix years. The maximum contractual term of the options is up to 5 years. The number of shares available for grant of options, and restricted stock units or awards amounts to 19,059,167 at March 31, 2026.
(D) Warrants
The following is a summary of the Company’s warrant activity during the three months ended March 31, 2026, and 2025:
| Number of Warrants | Weighted Average Exercise Price | |
|---|---|---|
| Balance, January 1, 2026 | 1,588,417 | $5.50 |
| Issued | - | - |
| Exercised | (1,266,667) | 4.19 |
| Forfeited | - | - |
| Balance, March 31, 2026 | 321,750 | 8.87 |
| Balance, January 1, 2025 | 1,523,667 | $4.30 |
| Issued | - | - |
| Exercised | - | - |
| Forfeited | - | - |
| Balance, March 31, 2025 | 1,523,667 | $4.30 |
NOTE 10 CONCENTRATIONS OF RISKS AND SEGMENT
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 three-month periods ended March 31, 2026, and 2025. The Company had no customers with accounts receivable balances representing more than 10% on March 31, 2026, and March 31, 2025, and one and three third party payors representing 43% and 36% of the Company’s total accounts receivable on March 31, 2026, and 2025, respectively.
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.
Segment and Expense Disaggregation
The Company operates inone segment: advanced-safe-smart technologies and related products. The Company used the following factors to identify its segment(s) includes the basis of organization and the relative similarities in types of product offerings. The chief operating decision maker consists of a team comprised of the Company’s Executive Chairman and its Chief Executive Officer. The total assets of the segments amount to the Company’s consolidated assets. Long-lived assets, which consists of property and equipment and right of use assets are located in the United States.
The Company has concluded that consolidated net income or loss is the measure of segment profitability. The following is a reconciliation of the Company’s revenues from external customers and consolidated revenues and the consolidated and segment loss, including significant disaggregated segment expenses.
| For the three months ended March 31, | ||
|---|---|---|
| 2026 | 2025 | |
| Revenues from external customers and consolidated revenues | $22,094,389 | $20,113,938 |
| Cost of revenues | 15,468,946 | 14,402,488 |
| Compensation costs, excluding share-based payments | 2,931,157 | 2,416,572 |
| Share-based payments | 3,097,885 | 3,041,157 |
| Marketing programs | 5,109,313 | 4,677,381 |
| Professional fees, excluding share-based payments | 2,083,137 | 1,677,936 |
| Depreciation, amortization, and impairment of intangibles | 1,179,223 | 1,007,817 |
| Other operating expenses | 386,888 | 603,612 |
| Total operating expenses, net | $30,256,549 | $27,826,963 |
| Other expenses | ||
| Amortization of debt discount | 278,499 | 278,499 |
| Interest expense, net | 834,918 | 1,060,604 |
| Net loss | $(9,275,577) | $(9,052,128) |
NOTE 11 SUBSEQUENT EVENTS
Management has evaluated subsequent events since March 31, 2026, through 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 consolidated financial statements.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.