SKYX Platforms Corp. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2026 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-41276 SKYX PLATFORMS CORP. (Exact name of registrant as specified in its charter) Florida 46-3645414 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 2855 W. McNab Road Pompano Beach , Florida 33069 (Address, including zip code, of principal executive offices) (855) 759-7584 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading symbol(s) Name of each exchange on which registered Common Stock, no par value per share SKYX The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of April 30, 2026, the registrant had 134,107,133 shares of common stock, no par value per share, issued and outstanding. SKYX PLATFORMS CORP. Form 10-Q TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Cautionary Note Regarding Forward Looking Statements Item 1 Financial Statements 4 Consolidated Balance Sheets (Unaudited) 4 Consolidated Statements of Operations (Unaudited) 5 Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited) 6 Consolidated Statements of Cash Flows (Unaudited) 7 Notes to Consolidated Financial Statements (Unaudited) 8 Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 3 Quantitative and Qualitative Disclosures About Market Risk 23 Item 4 Controls and Procedures 23 PART II. OTHER INFORMATION Item 1 Legal Proceedings 24 Item 1A Risk Factors 24 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 24 Item 3 Defaults Upon Senior Securities 24 Item 4 Mine Safety Disclosures 24 Item 5 Other Information 24 Item 6 Exhibits 25 Signatures 27 2 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q (this “Form 10-Q”) of SKYX Platforms Corp. (the “Company,” “we,” “us,” or “our”) contains forward-looking statements that are based on management’s beliefs and assumptions and on information currently available to management. All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management, outlook, and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “aim,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “target,” “seek” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties, and other factors, many of which have outcomes that are difficult to predict and may be outside our control, that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. Forward-looking statements in this Form 10-Q include, but are not limited to, statements about: ● our ability to successfully launch, develop additional features and achieve market acceptance of our smart products and technologies, access and integrate our products and technologies with third-party platforms or technologies, respond to rapidly changing technology and customer demands, and compete in our industry; ● our ability to successfully manage and grow the operations of Belami, Inc. (“Belami”) with our business; ● our ability to expand, operate and successfully manage our operations, including managing our business transformation in connection with evolving our business strategy to focus on smart products and technologies and integrating new lines of business; ● our ability to raise additional financing to support and continue our operations as needed; ● our ability to comply with the terms of, and timely repay, our current debt financing; ● our reliance on a limited number of third-party manufacturers and suppliers and our ability to successfully reduce our production costs; ● our potential dependence upon a limited number of customers and/or on contracts awarded through competitive bidding processes; ● any downturn in the cyclical industries in which our customers operate; ● our ability to acquire other businesses, license rights, form alliances or dispose of operations when desired; ● our ability to comply with regulations relating to applicable quality standards; ● our ability to maintain, protect and enhance our intellectual property and retain rights to use intellectual property owned by third parties; ● the potential outcome of any legal proceedings; ● compliance with various tax laws and regulations, including income and sale taxes; ● our ability to successfully sell and distribute our products and technologies; ● our ability to attract and retain key executives and qualified personnel; ● guidance provided by management, which may differ from our actual operating results; ● our ability to successfully manage our planned development and expansion, including the additional costs of being a public company; ● our estimated total addressable market; ● our ability to maintain effective internal control over financial reporting and disclosure controls and procedures; ● the potential impact of unstable market and economic conditions on our business, financial condition, and stock price, including the effects of governmental regulations, geopolitical conflicts, including the conflict in the Middle East and potentially deteriorating relationships with China, tariffs and other trade barriers or restrictions, inflation, labor shortages, supply chain constraints and shortages, including availability of affordable electronic microchips, instability in the global banking system and the possibility of an economic recession; ● the potential impact of cybersecurity breaches or disruptions to our or our third-party vendors’ information systems, including our cloud-based infrastructure, and of related disclosures; ● risks related to our use of artificial intelligence (“AI”) capabilities in our product offerings, including operational, data privacy, AI hallucination, regulatory, and reputational risks; ● the potential impact of widespread outages, interruptions, or other failures of operational, communication, and other systems; ● the potential impact of natural disasters and other catastrophic events; ● risks related to ownership of our common stock; ● the potential impact of anti-takeover and director and officer liability provisions in our charter documents and under Florida law; and ● other risks and uncertainties, including those listed under the section titled “Risk Factors.” These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties, and other factors, including unpredictable or unanticipated factors that we have not discussed in this Form 10-Q. Investors should refer to the heading “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 and in this Form 10-Q for a discussion of other important factors, many of which are outside of our control, that may cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-Q will prove to be accurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. Considering the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Form 10-Q represent our views as of the date of this Form 10-Q. We anticipate that subsequent events and developments will cause our views to change; however, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by U.S. federal securities laws. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Form 10-Q. 3 Part I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SKYX PLATFORMS CORP. CONSOLIDATED BALANCE SHEETS (Unaudited) (Audited) March 31, 2026 December 31, 2025 Assets Current assets: Cash and cash equivalents $ 30,263,740 $ 8,052,621 Accounts receivable 1,933,752 1,891,488 Inventory 3,298,281 4,250,168 Prepaid expenses and other assets 1,282,481 1,206,639 Total current assets 36,778,254 15,400,916 Long-term assets: Property and equipment, net 1,251,244 1,347,640 Restricted cash 2,050,000 2,050,000 Right of use assets 16,905,311 17,502,685 Intangibles, definite life 4,599,427 5,051,949 Goodwill 16,157,000 16,157,000 Other assets 205,040 205,044 Total long-term assets 41,168,022 42,314,318 Total assets $ 77,946,276 $ 57,715,234 Liabilities and Stockholders’ Equity (Deficit) Current liabilities Accounts payable and accrued expenses $ 14,595,473 $ 16,014,585 Notes payable 221,611 356,474 Operating lease liabilities 2,560,152 2,589,994 Royalty obligations 1,175,000 1,300,000 Deferred revenues 1,561,154 2,082,622 Convertible notes related parties 350,000 350,000 Convertible notes 1,119,601 1,884,347 Total current liabilities 21,582,991 24,578,022 Long term liabilities Long term accounts payable 687,680 552,354 Notes payable 145,022 145,022 Operating lease liabilities 17,192,003 17,791,453 Convertible notes 14,515,268 14,236,769 Total long-term liabilities 32,539,973 32,725,598 Total liabilities 54,122,964 57,303,620 Mezzanine equity Series A Preferred Stock-shares authorized 400,000 , outstanding 200,000 and 200,000 5,000,000 5,000,000 Stockholders’ Equity (deficit) Series A-1 Preferred Stock-shares authorized 480,000 , outstanding 253,000 and 292,000 6,149,167 7,124,167 Series A-2 Preferred Stock-shares authorized 160,000 , outstanding 60,000 and 60,000 1,500,000 1,500,000 Preferred Stock 1,500,000 1,500,000 Common stock and additional paid-in-capital: shares authorized 500,000,000 outstanding 133,487,783 and 117,666,800 236,957,871 203,046,051 Accumulated deficit ( 225,783,726 ) ( 216,258,604 ) Total stockholders’ equity (deficit) 18,823,312 ( 4,588,386 ) Total Liabilities and Stockholders’ Equity (deficit) $ 77,946,276 $ 57,715,234 The accompanying notes are an integral part of the unaudited consolidated financial statements. 4 SKYX PLATFORMS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Unaudited) (Unaudited) For the three months ended March 31, 2026 2025 Revenue $ 22,094,389 $ 20,113,938 Operating expenses Cost of revenues 15,468,946 14,402,488 Selling and marketing expenses 7,067,829 6,827,420 General and administrative expenses 7,719,774 6,597,055 Total expenses, net 30,256,549 27,826,963 Loss from operations ( 8,162,160 ) ( 7,713,025 ) Other expenses Interest expense - related party 8,750 17,750 Interest expense, net 1,104,667 1,321,353 Total other expenses, net 1,113,417 1,339,103 Net loss ( 9,275,577 ) ( 9,052,128 ) Preferred dividends - related party 15,000 10,000 Preferred dividends 234,545 209,148 Net loss attributed to common stockholders $ ( 9,525,122 ) $ ( 9,271,276 ) Net loss per share - basic and diluted $ ( 0.07 ) $ ( 0.09 ) Weighted average number of common shares outstanding – basic and diluted 129,441,468 103,548,494 The accompanying notes are an integral part of the unaudited consolidated financial statements. 5 SKYX PLATFORMS CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED) (Unaudited) (Unaudited) For the three months ended March 31, 2026 2025 Shares of preferred stock ( Series A-1) Balance, beginning of period 292,000 240,000 Preferred stock Conversion to common ( 39,000 ) ( 20,000 ) Preferred stock issued pursuant to offerings - 40,000 Balance, end of period 253,000 260,000 Preferred stock ( Series A-1) Balance, beginning of period $ 7,124,167 $ 6,000,000 Preferred stock Conversion to common ( 975,000 ) ( 500,000 ) Preferred stock issued pursuant to offerings - 1,000,000 Balance, end of period $ 6,149,167 $ 6,500,000 Shares of preferred stock ( Series A-2) Balance, beginning of period 60,000 - Preferred stock Conversion to common - - Preferred stock issued pursuant to offerings - - Balance, end of period 60,000 - Preferred stock ( Series A-2) Balance, beginning of period $ 1,500,000 $ - Preferred stock Conversion to common - - Preferred stock issued pursuant to offerings - - Balance, end of period $ 1,500,000 $ - Shares of common stock Balance, beginning of period 117,666,800 103,358,975 Common stock issued pursuant to offerings 12,000,000 223,756 Common stock issued pursuant to conversion of preferred stock 812,501 251,935 Common stock issued pursuant to preferred dividends 5,526 - Common stock issued pursuant to conversion of notes and accrued interest 240,648 - Common stock issued pursuant to exercise of options and warrants 1,301,667 - Common stock issued pursuant to services 1,460,641 1,117,964 Balance, end of period 133,487,783 104,952,630 Common stock and paid-in capital Balance, beginning of period $ 203,046,051 $ 179,837,253 Common stock issued pursuant to offerings 27,392,004 450,428 Common stock issued pursuant to conversion of preferred stock 975,000 500,000 Common stock issued pursuant to preferred dividends 8,044 3,869 Common stock issued pursuant to conversion of notes and accrued interest 527,786 - Common stock issued pursuant to exercise of options and warrants 1,911,101 - Common stock issued pursuant to services 3,097,885 3,041,157 Balance, end of period $ 236,957,871 $ 183,832,707 Accumulated Deficit Balance, beginning of period $ ( 216,258,604 ) $ ( 181,783,825 ) Preferred dividends ( 249,545 ) ( 219,148 ) Net loss ( 9,275,577 ) ( 9,052,128 ) Balance, end of period $ ( 225,783,726 ) $ ( 191,055,101 ) Total Stockholders’ Equity (deficit) $ 18,823,312 $ ( 722,394 ) Balance $ 18,823,312 $ ( 722,394 ) The accompanying notes are an integral part of the unaudited consolidated financial statements. 6 SKYX PLATFORMS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Unaudited) (Unaudited) For the three months ended March 31, 2026 2025 Operations: Net loss ( 9,275,577 ) $ ( 9,052,128 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 1,240,273 1,007,817 Amortization of debt discount 278,499 278,499 Non-cash equity-based compensation expense 3,097,885 3,041,157 Equity-based payment of interest 363,039 - Change in operating assets and liabilities Inventory 951,887 105,050 Accounts receivable ( 42,264 ) ( 396,008 ) Prepaid expenses and other assets ( 75,838 ) ( 782,169 ) Deferred revenues ( 521,468 ) 398,599 Operating lease liabilities ( 629,292 ) ( 564,922 ) Royalty obligation ( 125,000 ) - Accounts payable and accrued expenses ( 1,276,176 ) 1,639,430 Net cash used in operating activities ( 6,014,032 ) ( 4,324,675 ) Investing: Purchase of property and equipment ( 93,979 ) ( 413,365 ) Net cash used in investing activities ( 93,979 ) ( 413,365 ) Financing: Proceeds from issuance of common stock - offerings 27,423,760 459,634 Placement cost ( 31,756 ) ( 9,206 ) Dividends paid ( 249,111 ) ( 212,668 ) Proceeds from issuance of preferred stocks - 1,425,000 Proceeds from exercise of warrants and options 1,911,101 - Principal repayments of notes payable ( 734,864 ) ( 121,908 ) Net cash provided by financing activities 28,319,130 1,540,852 Change in cash and cash equivalents, and restricted cash 22,211,119 ( 3,197,188 ) Cash, cash equivalents and restricted cash at beginning of the period 10,102,621 15,500,495 Cash, cash equivalents and restricted cash at end of period 32,313,740 $ 12,303,307 Supplementary disclosure of non-cash financing activities: Fair value of shares to satisfy obligations under convertible notes 363,039 - Accrued dividends payable 8,044 - Cash paid during the period for: Interest 1,113,417 $ 1,378,223 Taxes - - 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. 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. 8 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: SCHEDULE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH 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. 9 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. SCHEDULE OF INVENTORY 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: SCHEDULE OF ANTI-DILUTIVE COMMON STOCK EQUIVALENTS 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. 10 NOTE 3 PROPERTY AND EQUIPMENT Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT 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: SCHEDULE OF INTANGIBLE ASSETS 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: SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE FOR FUTURE 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: SCHEDULE OF DEBT 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 SCHEDULE OF INTEREST EXPENSE DEBT For the three months ended March 31, 2026 2025 Interest expense $ 1,113,417 $ 1,339,103 11 As of March 31, 2026, the expected future principal payments for the Company’s debt are due as follows: SCHEDULE OF FUTURE PRINCIPAL PAYMENTS 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: SCHEDULE OF LEASE COST OPERATING LEASE 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 SCHEDULE OF MINIMUM LEASE OBLIGATION 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 12 NOTE 7 ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following: SCHEDULE OF ACCRUED EXPENSES 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. SCHEDULE OF RELATED PARTY TRANSACTIONS 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 - 13 NOTE 9 STOCKHOLDERS’ EQUITY (A) Common Stock The Company issued the following common stock during the three months ended March 31, 2026, and 2025: SCHEDULE OF COMMON STOCK 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: SCHEDULE OF PREFERRED STOCK ACTIVITY 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. 14 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: SCHEDULE OF STOCK OPTION ACTIVITY 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: SCHEDULE OF BLACK SCHOLES PRICING MODEL 31-Mar-26 31-Mar-25 Range Exercise price and s tock 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. 15 A summary of the Company’s non-vested restricted stock units during the three months ended March 31, 2026, and 2025 are as follows: SCHEDULE OF NON-VESTED RESTRICTED STOCK 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 to six 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: SCHEDULE OF WARRANT ACTIVITY 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 16 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 in one 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. SCHEDULE OF CONSOLIDATED REVENUES AND SEGMENT LOSS 2026 2025 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. 17 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 ) Net cash used in investing activities (93,979 ) (413,365 ) Financing: Proceeds from issuance of stock 27,392,004 1,875,428 Dividends paid (249,111 ) (212,668 ) Proceeds from exercise of warrants and options 1,911,101 - Principal repayments of notes payable (734,864 ) (121,908 ) Net cash provided by financing activities 28,319,130 1,540,852 Change in cash and cash equivalents, and restricted cash 22,211,119 (3,197,188 ) Cash, cash equivalents and restricted cash at beginning of the period 10,102,621 15,500,495 Cash, cash equivalents and restricted cash at end of period $ 32,313,740 $ 12,303,307 The changes in working capital, net are primarily attributable to timing differences in accounts receivable, accounts payable related to operations and deferred revenues. 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 supplemental 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 March 31, 2026 2025 Net loss $ (9,275,577 ) $ (9,052,128 ) Share-based payments 3,097,885 3,041,157 Interest expense 1,113,417 1,378,223 Depreciation, amortization 1,179,223 1,007,817 EBITDA, as adjusted $ (3,885,052 ) $ (3,624,931 ) 21 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 our Annual Report on Form 10-K. 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 or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2026, and December 31, 2025, 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. 22 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 Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based upon the evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2026. Changes in Internal Controls Over Financial Reporting: There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 23 PART II. OTHER INFORMATION Item 1. Legal Proceedings From time to time, we may 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, 2025. 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. 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 quarter ended March 31, 2026 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 March 31, 2026 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 March 31, 2026, none of the Company’s directors or executive officers adopted , modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K). 24 Item 6. Exhibits Incorporated by Reference Exhibit Number Description Form Exhibit No. Filing Date *Filed or **Furnished Herewith 2.1+ Stock Purchase Agreement, dated February 6, 2023, by and among the Company and Mihran Berejikian, Nancy Berejikian, and Michael Lack. 8-K 2.1 February 7, 2023 2.2 First Amendment to Stock Purchase Agreement, dated April 28, 2023, by and among SKYX Platforms Corp. and Mihran Berejikian, Nancy Berejikian, and Michael Lack. 8-K 2.2 May 1, 2023 3.1 Articles of Incorporation of the Company. S-1 (File No. 333-261829) 3.1 December 22, 2021 3.2 Articles of Amendment to Articles of Incorporation (effective August 12, 2016). S-1 (File No. 333-261829) 3.2 December 22, 2021 3.3 Articles of Amendment to Articles of Incorporation (effective February 7, 2022). 8-K 3.3 February 14, 2022 3.4 Articles of Amendment to Articles of Incorporation (effective June 14, 2022). 8-K 3.1 June 14, 2022 3.5 Articles of Amendment to Articles of Incorporation (effective May 2, 2023). 8-K 3.1 May 5, 2023 3.6 Certificate of Designation of Rights, Preferences and Privileges of Series A Preferred Stock (effective September 30, 2024). 8-K 3.1 October 4, 2024 3.7 Certificate of Designation of Rights, Preferences and Privileges of Series A-1 Preferred Stock (effective September 30, 2024). 8-K 3.2 October 4, 2024 3.8 Articles of Amendment to the Certificate of Designation of Rights, Preferences and Privileges of Series A-1 Preferred Stock (effective May 2, 2025). 8-K 3.1 May 8, 2025 3.9 Certificate of Designation of Rights, Preferences and Privileges of Series A-2 Preferred Stock (effective December 2, 2025). 8-K 3.1 December 5, 2025 3.10 Articles of Amendment to the Certificate of Designation of Rights, Preferences and Privileges of Series A-2 Preferred Stock (effective December 23, 2025). 8-K 3.1 January 2, 2026 25 3.11 Third Amended and Restated Bylaws of the Company (effective March 21, 2025). 8-K 3.1 March 21, 2025 10.1+ Form of Securities Purchase Agreement for Series A-2 Preferred Stock, dated December 30, 2025. 8-K 10.1 January 2, 2026 10.2 Amendment No. 1 to Subordinated Balloon Promissory Note, dated December 30, 2025. 8-K 10.1 January 2, 2026 10.3+ Form of Securities Purchase Agreement for Common Stock, dated January 7, 2026. 8-K 10.1 January 13, 2026 10.4 Placement Agency Agreement, dated January 23, 2026, by and between SKYX Platforms Corp. and Roth Capital Partners, LLC. 8-K 1.1 January 26, 2026 10.5 Form of Securities Purchase Agreement, dated January 23, 2026. 8-K 10.1 January 26, 2026 10.6 Form of Amendment No.2 to SKYX Platforms Corp. Convertible Promissory Note dated March 29, 2024 and Letter Agreement ( effective January 16, 2026) * 31.1 Certification by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * 31.2 Certification by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * 32.1 Certification by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ** 32.2 Certification by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ** 101 The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements. * 104 Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101). * + 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. 26 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: May 11, 2026 By:  /s/ Leonard J. Sokolow Leonard J. Sokolow, Chief Executive Officer (Principal Executive Officer) Date: May 11, 2026 By:  /s/ Marc-Andre Boisseau Marc-Andre Boisseau, Chief Financial Officer (Principal Financial and Accounting Officer) 27