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 financial statements as of June 30, 2026 and for the three and six months ended June 30, 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 statement of financial condition at 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 Annual Report on Form10-K for the fiscal year ended December 31, 2025 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:

Restricted Cash

Customer Contracts Balances

The characteristics of the Company’s customer contracts balances are as follows:

Characteristics of accounts receivables

Accounts receivables are recorded in the period when the right to receive payment or other consideration becomes unconditional. The majority of accounts receivable are due from third-party payers and are generally collected within a few days of the order date.

The Company maintains an allowance for doubtful accounts based on its estimate of probable credit losses inherent in existing accounts receivable. The allowance is determined through a review of individual accounts when information indicates that a customer may be unable to meet its financial obligations, as well as consideration of historical collection experience and currently available evidence.

The Company also records an allowance for sales returns based on historical experience and expected future returns.

Characteristics of deferred revenues

Revenue is deferred for undelivered customer orders for which it was paid or has a right to be paid at each measurement date.

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.

Characteristics of allowance for sales returns

The allowances associated with customer contract balances for the period presented are as follows:

Inventory

Characteristics of Inventory

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 six-month ended June 30, 2026, and 2025, the Company recognized a net loss and the effect of including any shares of common stock equivalents would have been antidilutive for the period. Accordingly, the presumed issuance of potential shares of common stock was excluded from the computation of diluted loss per share. 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 June 30, 2026, and December 31, 2025:

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, 2028 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:

Depreciation expense for the presented periods is as follows:

NOTE 4 INTANGIBLE ASSETS AND GOODWILL

Intangible assets consisted of the following:

Amortization expense for the presented periods is as follows:

The following table sets forth the estimated amortization expenses for the next five years:

NOTE 5 DEBTS

The following table presents the details of the principal amounts outstanding:

As of June 30, 2026, the expected future principal payments for the Company’s debt are due as follows:

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 June 30, 2026, and 2025 respectively:

NOTE 7 ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:

NOTE 8 RELATED PARTY TRANSACTIONS

The following schedule summarizes the Company’s related party transactions for the six-month periods ended June 30, 2026 and 2025.

NOTE 9 STOCKHOLDERS’ EQUITY

(A) Common Stock

The Company issued the following common stock during the six months ended June 30, 2026, and 2025:

(B) Preferred Stock

The following is a summary of the Company’s Preferred Stock activity during the six months ended June 30, 2026 and 2025:

During the six months ended June 30, 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.

(C) Stock Options and Restricted Stock

The following is a summary of the Company’s stock option activity during the six-months ended June 30, 2026, and 2025:

The following table summarizes the range of the Black Scholes pricing model assumptions used by the Company during the six months ended June 30, 2026, and 2025:

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 during the six months ended June 30, 2026, and 2025 are as follows:

Compensation expense associated with restricted units and awards and stock options for the periods presented is as follows:

Characteristics of the restricted units and awards and stock options are as follows:

(D) Warrants

The following is a summary of the Company’s warrant activity during the six months ended June 30, 2026, and 2025:

NOTE 10 CONCENTRATIONS OF RISKS AND SEGMENT

Major Customers and Accounts Receivable

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.

NOTE 11 SUBSEQUENT EVENTS

Management has evaluated subsequent events since June 30, 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 with the exception of the following transaction (s):

The Company amended the lease associated with its Miami facilities during July 2026. The amendment provides for a decrease in minimum lease obligations to $15.6 million for the remainder of the initial lease term.