What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-24 compared with 2024-04-01 · 272 added, 182 removed, 111 unchanged (80% of the section changed)

11 unchanged sentences

have a series of advanced-safe-smart platform technologies.

Our first-and second-generation technologies enable light fixtures, ceiling fans

and other electrically wired products to be installed safely and plugged in to a ceiling’s electrical outlet box within

seconds, and without the need to touch hazardous wires.

The plug and play technology method is a universal power-plug device that

has a matching receptacle that is simply connected to the electrical outlet box on the ceiling, enabling a safe and quick plug and

play installation of light fixtures and ceiling fans in just seconds.

The plug and play power-plug technology eliminates the need of

touching hazardous electrical wires while installing light fixtures, ceiling fans and other hard wired electrical products.

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, BLE 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 Sky Smart Platform, to be available in 2024.

Our first and second-generation technologies enable light fixtures, ceiling

fans and other electrically wired products to be installed safely and plugged in to a ceiling’s electrical outlet box within seconds,

and without the need to touch hazardous wires.

The plug and play technology method is a universal power-plug device that has a matching

receptacle that is simply connected to the electrical outlet box on the ceiling, enabling a safe and quick plug and play installation

of light fixtures and ceiling fans in just seconds.

The plug and play power-plug technology eliminates the need of touching hazardous

electrical wires while installing light fixtures, ceiling fans and other hard wired electrical products.

In recent years, we have expanded

the capabilities of our power-plug product to include advanced-safe and quick universal installation methods, as well as advanced-smart

capabilities.

The smart features include control of light fixtures and ceiling fans by the SkyHome App, through WIFI, Bluetooth Low Energy

and voice control.

It allows scheduling, energy savings eco mode, dimming, back-up emergency light, night light, light color changing

and much more.

Our third-generation technology is an all-in-one safe and smart-advanced platform that is designed to enhance all-around

safety and lifestyle of homes and other buildings.

Our products are designed to improve all around home and building safety and lifestyle.

We are continuing to refine our products and began manufacturing certain advanced and smart products in 2023 and expect additional products,

including the third-generation smart-advanced platform to be available in 2025.

We expect to manufacture the additional product offerings

within the next six months.

We hold over 96 U.S.

and global patents and patent

applications and have received a variety of final electrical code approvals, including UL, United Laboratories of Canada (cUL) and

Conformité Européenne (CE), and 2017 and 2020 inclusion in the NEC Code Book.

and global patents and patent applications and have received a variety of final electrical

code approvals, including UL, United Laboratories of Canada (cUL) and Conformité Européenne (CE), and 2017 and 2020 inclusion

in the NEC Code Book.

believe our total addressable market in the United States exceeds $500 billion, based on the Company’s internal calculations derived

8 unchanged sentences

be able to penetrate the existing market to capture additional market share.

continued to increase during 2023 and is expected to continue to increase during 2024.

Inflationary factors, such as increases in

interest rates, supply and overhead costs and transportation costs, may adversely affect our operating results and we may not be

able to offset increased costs with increased sales price per unit, particularly as we continue to work toward commercial

manufacturing and sale of our products.

Although we do not believe that inflation has had a material impact on our financial position or

results of operations to date, we may experience some effect in the foreseeable future (especially if inflation rates continue to

In addition, we may be negatively impacted because of supply chain constraints, consequences associated with government

regulations, ongoing and potential geopolitical conflicts, employee availability and wage increases.

In addition, the Israel-Hamas war may adversely impact our operations in the near future.

and related risk of recession increased during 2022 and continue to impact operations.

Inflationary factors,

such as increases in interest rates, supply and overhead costs and transportation costs, may adversely affect our operating results,

and we may not be able to offset increased costs with increased sales price per unit, particularly as we work toward commercial manufacturing

of our products.

Although we do not believe that inflation has had a material impact on our financial position or results of operations

to date, we may experience some effect in the near future (especially if inflation rates continue to rise).

In addition, we may be negatively

impacted because of supply chain constraints, consequences associated with government regulations, ongoing and potential geopolitical

conflicts, instability in the global banking system, employee availability and wage increases.

conflicts in the Middle East may adversely impact our operations in the near future.

We have a number of developers working in Israel.

If such individuals are called for service or this war escalates regionally, it may create work interruptions leading to longer periods between releases of offering improvements and increased costs.

April 28, 2023, we completed our acquisition (the “Closing”) of all of the issued and outstanding shares of Belami, an

online retailer and e-commerce provider specializing in home lighting, ceiling fans, and other home furnishings.

We expect these 60

websites will serve as a marketing and growth platform for our smart products and should provide several distribution channels,

including to retail customers, builders, and professionals.

For additional information regarding the Acquisition, see “Item 1.

Business—Overview-E-Commerce.”

If such individuals are called for service or this war escalates regionally, it may create work interruptions leading to longer periods

between releases of offering improvements and increased costs.

April 2023, we completed the previously announced acquisition of all the issued and outstanding shares of Belami, a strategic e-commerce

lighting and home décor conglomerate.

The Company paid cash and issued an aggregate of 3,776,706 shares of our common stock as

consideration for the acquisition.

The Company expects that Belami will serve as a marketing and growth platform and should provide several

distribution channels for our products, including to retail customers, builders, and professionals.

connection with the acquisition, the Company engaged in private placements of its securities during the first quarter of 2023, pursuant

to which the Company issued and sold (i) subordinated secured convertible promissory notes in the aggregate principal amount of $10.35

million and (ii) warrants to purchase an aggregate of up to 1,391,667 shares of the Company’s common stock.

The proceeds were used

to fund the cash component of the Belami acquisition and to pay certain transaction expenses in connection with the acquisition and the

private placements.

March 2024, the Company and the Belami sellers entered into a letter agreement modifying certain obligations under the stock purchase

agreement for the acquisition of Belami.

In connection with the letter agreement, the Company issued convertible promissory notes to

each of the sellers (the “Seller Note(s)”) in substitution of an aggregate of $3,117,408 in cash due to the sellers on the

first anniversary of the closing of the Belami acquisition.

Each seller received a Seller Note in an amount of $1,039,303 on the same

In addition to other customary terms, the Seller Notes bear annual interest at 10%, with interest and principal coming due on May

16, 2025, and can be converted by the sellers into shares of our common stock at any time at $3.00 per share of our common stock.

Seller Notes include customary events of default accelerating maturity, including a breach of the Company’s covenants, representations,

and warranties under the Belami stock purchase agreement and a change of control of Belami.

The letter agreement further provided that

the Company would perform all other obligations arising on the first anniversary of the closing, including issuance of shares of common

stock due to sellers, and that on such date the non-fundamental representations and warranties will expire, and the Company would release

$750,000 held in escrow.

In April 2024, the Company issued an aggregate of 1,853,421 shares of common stock to the sellers and released

the escrow amount.

April 11, 2024, the Company entered into an amendment to the letter agreement previously entered into with GE-TL in December 2023, which

extended the deadline for the Company to issue the convertible note to GE-TL to May 1, 2024, and also issued a three-year, $1.0 million

convertible note to GE-TL, thereby reducing obligations due in 2027 by $400,000.

The note does not bear interest, and the principal amount

of the note is convertible into shares of the Company’s common stock at any time at the option of the holder at $1.07 per share.

the second quarter of 2023, we began our at the market offering (“ATM”) pursuant to which we may sell up to $20 million of

shares of our common stock.

October 2024, the Company completed its authorization of the issuance of 440,000 shares each of newly authorized Series A Preferred Stock

and Series A-1 Preferred Stock which generated proceeds of $11.0 million.

The Company sold an additional 40,000 shares of Series A-1 Preferred Stock for proceeds of $1.0 million during March

The designations of each class of preferred stock are as follows:

A Preferred Stock:

dividend of 8% annually, 12% if paid after dividend date;

issue price of $25 per share;

option at the holder’s option at $2 per share, with subsequent equity offering reset

provision of no less than $1.20 per share;

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);

rights on as converted basis.

A-1 Preferred Stock:

dividend of 8% annually, 12% if paid after dividend date;

issue price of $25 per share;

option at the holder’s option at $2 per share, with subsequent equity offering reset

provision of no less than $1.20 per share;

at the price of $25 per share at the Company’s option after three years or upon change

of control (substantially outside the control of the holder);

rights on as converted basis.

of Operations

Ended December 31, 2024 and 2023

For the year ended December 31,

Cost of revenues

Selling and marketing expenses

General and administrative expenses

Total expenses

Operating loss

(37,825,206 )

(26,625,182 )

Other income / (expense)

Interest expense, net

Gain on extinguishment of debt

Total other income (expense), net

the year ended December 31,

and marketing expenses

and administrative expenses

income / (expense)

on extinguishment of debt

other income (expense), net

(35,768,144 )

(39,732,656 )

Not meaningful

increase in revenues during 2023, when compared to 2022, is primarily due to revenues from products marketed by Belami which was acquired

on April 28, 2023.

believe that revenues will be higher in 2024 than in 2023, primarily resulting from revenues from Belami, which was acquired in April

2023, and the sale of our advanced and smart products.

increase in revenues is primarily due to revenues from products marketed by Belami which was acquired on April 28, 2023.

believe that revenues will be higher in 2025 than in 2024, primarily resulting from revenues the sale of our advanced products.

Cost of revenues

cost of revenues consists primarily of costs associated with selling the products marketed by Belami.

The increase in cost of revenues

during 2023 when compared to 2022, is primarily due to costs associated with revenues from products marketed by Belami which was acquired

on April 28, 2023.

believe that cost of revenues will increase in 2024 compared to 2023, commensurate with an anticipated increase in revenues.

The increase is primarily due to

costs associated with revenues from products marketed by Belami which was acquired on April 28, 2023, commensurate with the increase

believe that the cost of revenues will increase in 2025 compared to 2024, in similar proportions to the anticipated increase in revenues.

and Marketing Expenses

Selling and marketing expenses

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

increase in selling and marketing expenses during 2023 when compared to 2022 is primarily due to such expenses following the acquisition

of Belami aggregating $11.1 million during 2023.

increase in selling and marketing expenses is primarily due to such expenses increasing following the acquisition of Belami on April

believe that our selling and marketing expenses will be higher during 2025 when compared to 2024 as we continue to invest to support

our anticipated growth and now includes such expenses related to Belami’s operations following its acquisition.

our anticipated growth.

and Administrative Expenses

General and administrative expenses

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.

increase in general, and administrative expenses during 2023 when compared to 2022 was primarily due to the following:

in general and administrative expenses following the acquisition of Belami aggregating $8 million

of depreciation and amortization expenses of $2.0 million primarily related to increase in intangibles acquired during the second

quarter of 2023 and right-of-use assets acquired during the third quarter of 2022.

Increase in consideration due to General Electric of $1.4 million, pursuant to agreements negotiated in November 2023.

Loss from subsequent measurement of inventory of $1.3 million recognized during 2023.

believe that our operating expenses may be higher during 2024 when compared to 2023 as we continue to invest to support our

anticipated growth and now includes such expenses related to Belami’s operations following its acquisition.

decrease in general, and administrative expenses during 2024 when compared to 2023, primarily due to the following:

share-based payments of $4.5 million resulting from smaller issuance of restricted stock

units and options.

Our share-based payments were higher in 2023 primarily as a result of

the acquisition of Belami, Inc..

incurred non-recurring expenditures of $2.7 million related our inventory and royalties payable

decrease was offset by increased amortization of intangibles which were amortized over nine

months during 2024 and five months during 2023, following the acquisition of Belami in April

The increase in depreciation and amortization expenses of $1.0 million primarily related

to increased intangibles acquired during the second quarter of 2023.

Additionally, we recognized

an impairment expense of $1.1 million during 2024.

believe that our operating expenses will be higher during 2025 when compared to 2024 as we continue to invest to support our anticipated

growth which now includes such expenses related to Belami’s operations following its acquisition.

Income (Expense)

increase in interest expense during 2023 when compared to 2022 is primarily due to interest imputed pursuant to operating lease liabilities

and debt which were entered into the latter part of 2022 and convertible debt (including amortization of debt discount, which were entered

into the first quarter of 2023.

The debt discount is related to inducements the Company granted to holders of convertible debt.

variations in gain on extinguishment debt is due to two separate non-recurring transactions:

the forgiveness of the PPP loan recognized

during 2022 and a gain on forgiveness of debt in April 2023 as the debt forgiven to a lender exceeded the consideration we paid.

Interest expense, net

increase in interest expense resulted primarily from interest charges related to increased interest-bearing weighted average debt in

the current periods when compared to the prior year periods.

Gain on extinguishment of debt

decrease in gain on extinguishment of debt is due to non-recurring gain on extinguishment of debt which occurred during the respective

and Capital Resources

of December 31, 2023 and 2022, we had $22.4 million and $16.8 million in cash and cash equivalents, restricted cash, and investments

in debt securities, respectively.

have raised additional funds through the sale of our common stock and securities convertible into our common stock and issuance of

debt, including completing our initial public offering in February 2022 for gross proceeds of $23.1 million and engaging in

private placements and offerings during, 2023 of a combination of convertible notes payable and shares of our common stock

aggregating $19.6 million.

of December 31, 2024 and 2023, we had $15.5 million and $22.4 million in cash and cash equivalents, restricted cash, respectively.

Historically, we have raised funds through the issuances of common stock, securities convertible into common stock

and notes payable.

have raised funds through the sale of our common stock and preferred stocks for gross proceeds of $15.4 million pursuant to

placements and offerings during 2024.

We also generated gross proceeds of $1.0 pursuant to the issuance of 40,000 shares of our Series A-1 Preferred Stock

in March 2025.

offerings included shares sold pursuant to our ATM offering program which provides us with additional access to capital, as needed, subject

to market conditions.

During the three months ended December 31, 2023, we issued 783,374 shares of common stock under such program for

net proceeds of $1,228,000, net of brokerage fees and legal expenses of approximately $25,000.

In aggregate, from the start of the ATM

offering program through December 31, 2023, we sold 4,359,832 shares of common stock, generating approximately $9.4 million of proceeds,

net of brokerage fees and legal expenses of $604,000.

As of March 21, 2024, we had the remaining capacity to issue shares of common stock

with a consideration of up to $6.5 million under the offering program.

Our future capital requirements will depend on many factors, including the Belami acquisition

and 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

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.

April and May 2023, the Company repaid in full approximately $6.2 million due to a lender by issuing 574,713 shares of the Company’s

common stock and paying $2.0 million in cash.

The Company also obtained an aggregate $6.5 million in revolving lines of credits and a

term loan with two financial institutions during 2023.

The lines of credit mature in 2024 and the term loan matures in 2026.

2022, we entered into certain lease and sublease agreements, including (i) a sublease agreement entered into during April 2022, pursuant

to which we agreed to sublease approximately 3,400 square feet of office space located on the 54th floor of Carnegie Hall Tower, located

at 152 West 57th Street, New York, New York, at a fixed monthly base rent starting at $26,893 for the first year of the sublease, and

(ii) a lease agreement entered into during September 2022, pursuant to which we agreed to lease approximately 32,200 square feet located

at 400 Biscayne Boulevard, Miami, Florida, at a fixed minimum monthly base rent of $214,480 during the first full year of the lease.

The Miami, Florida lease provides for rent abatements of a minimum of 10 months, as well as for the lessor’s leasehold improvements

of up to $2.3 million.

We also issued a letter of credit of $2.7 million to one of the lessors as collateral for certain obligations

related to the lease.

February 10, 2023, we entered into a Managed Client Agreement and, as subsequently amended (as amended, the “Office Management

Agreement”) with RGN-MCA Miami II, LLC (“Spaces”), having a term commensurate with the Miami lease, pursuant to which

Spaces will manage one floor of the Miami office for the Company, renting co-working office spaces and providing support services, following

completion of the office construction.

The Office Management Agreement is subject to final approval by the landlord under the Miami lease.

The Company will receive net revenues from the rentals, after deducting up to 16% in platform and management fees and certain operating

The Company projects to receive net revenues to offset a significant portion of the costs of the Miami lease.

During 2024, we t issued 3,535,067 shares of common stock under such program.

From inception through December 31, 2024, we issued 7,894,899 shares of common stock under such a program for net proceeds of $13,795,059,

net of brokerage fees and legal fees of $619,415.

As of March 13, 2025, the remaining amount to be used under the ATM offering program

is $5.4 million.

October, 2024 and March 2025, we sold an aggregate of 480,000 shares of two series of preferred stock, resulting in total gross

proceeds of $12.0 million, pursuant to (i) a Securities Purchase Agreement entered into with an accredited investor, pursuant to

which such investor purchased an aggregate of 200,000 shares of Series A Preferred Stock, at a purchase price of $25.00 per share,

and (ii) a Securities Purchase Agreement entered into with certain accredited investors, pursuant to which such investors purchased

an aggregate of 280,000 shares of Series A-1 Preferred Stock, at a purchase price of $25.00 per share.

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.

owe approximately $15.6 million under fixed rate obligations as of December 31, 2024.

In addition, we owe GE certain minimum royalty

payments under a license agreement which amounted to $3.9 million as of December 31, 2023.

2023, we used $13.0 million in our operating activities, which consisted of our net loss of $38.0 million adjusted for non-cash equity

compensation of $18.0 million as well as an increase of accounts payable and accrued expenses

of $5.5 million.

We are managing our accounts payable based on vendor terms.

net cash provided by investing activities amounted to $3.2 million and consisted primarily of disposition of debt securities of $7.6

million offset by cash used to acquire Belami, net of acquired cash of $4.2 million.

generated $22.7 million in financing activities, of which $19.6 million was generated from a combination of issuance of convertible

notes and proceeds from issuance of shares of common stock at the market.and $6.5 million proceeds from lines of credit lines term

loan and offsetting term loan repayment of debt of $3.4 million.

2022, we used $13.8 million in our operating activities, which consisted of our net loss of $527.0 million adjusted for non-cash equity

compensation of $13.9 million.

used $8.1 million in our investing activities, which primarily consisted of purchase of debt securities of $7.4 million.

generated $20.9 million in financing activities, which consisted primarily of proceeds from the issuance of our shares of common

stock of $23.1 million.

Company’s liquidity’s sources include $22.4 million in cash and cash equivalents and $3.1 million of working capital.

the Company has a history of recurring operating losses and its net cash used in operating activities amounted to $13.0 million and $13.8

payments under a license agreement and other accrued expenses which amounted to $1.7 million as of December 31, 2024.

March 29, 2024, we entered into a letter agreement with Belami sellers, modifying certain obligations under the Stock Purchase Agreement.

In connection with the letter agreement, the Company issued convertible promissory notes to each of the Sellers (the “Seller Note(s)”)

in substitution of an aggregate of $3,117,408 in cash due to the Sellers on the first anniversary of the Closing.

Each Seller received

a Seller Note in the amount of $1,039,303 on the same date.

In addition to other customary terms, the Seller Notes bear annual interest

at 10%, with interest and principal coming due on May 16, 2025, and can be converted by the Sellers at any time at $3.00 per share of

our common stock.

September 23, 2024, the Company, through its wholly owned subsidiary, Belami, entered into a $3.5 million secured revolving line of credit

(the “line of credit”) with a commercial bank, increasing, and renewing its previous revolving line of credit with such bank.

The line of credit bears interest at a variable rate per annum equal to The Wall Street Journal Prime Rate, subject to a floor of 7.5%

and ceiling of the maximum rate allowed under applicable law, payable monthly, and matures September 5, 2025.

The line of credit is subject

to customary default and acceleration provisions and to certain financial covenants, including working capital in excess of $1.75 million

and a debt service coverage ratio in excess of 1.25 to 1.00 (calculated as described in the business loan agreement governing the line

In addition, the Company agreed to guarantee Belami’s obligations under the line of credit, pursuant to a commercial

guaranty agreement.

common with companies having a similar cash conversion cycle as ours, when sales are converted into cash rapidly, often referred to as

the “Dell Working Capital Model,” we leverage our trades payable to finance our operations to lower our cost of capital,

and accordingly, we may have negative working capital.

This negative working capital is partly inherent to the relatively quick turnaround

of finished goods inventory, quicker collection of accounts receivables, and longer payment cycle of trades payable.

Our accounts receivable,

inventory, net of trades payable, amounted to $(6.1) million and $(6.8) million as of December 31, 2024, and 2023, respectively.

The designations of each class of

Series A and A-1 Preferred stock are as follows:

A Preferred Stock:

dividend of 8% annually, 12% if paid after dividend date;

issue price of $25 per share;

option at the holder’s option at $2 per share, with a subsequent reset provision of $1.20 per share;

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)

rights on as converted basis.

A-1 Preferred Stock:

dividend of 8% annually, 12% if paid after dividend date;

issue price of $25 per share;

option at the holder’s option at $2 per share, with a subsequent reset provision of $1.20 per share;

at the price of $25 per share at the Company’s option after three years or upon change of control (substantially outside the

control of the holder)

rights on as converted basis.

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

2024 and 2023

Cash flows from operating activities:

$ (35,768,144 )

$ (39,732,656 )

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

Depreciation and amortization, and impairment

Amortization of debt discount

Gain on forgiveness of debt

Share-based payments

Change in operating assets and liabilities:

Working capital changes

Net cash used in operating activities

(18,260,370 )

(12,998,073 )

Cash flows from investing activities:

Proceeds from disposition of debt securities, net

Acquisition, net of cash acquired

Purchase of property and equipment

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from issuance of stock- offerings, net

Proceeds from issuance of debt instruments, net

Net cash provided by financing activities

Change in cash and cash equivalents, and restricted cash

Cash, cash equivalents and restricted cash at beginning of year

Cash, cash equivalents and restricted cash at end of year

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

Company’s liquidity sources include $ 15.5 million in cash and cash equivalents, including restricted cash of $2.9 million held

for long-term purposes, and $ 5.7 million of working capital deficit as of December 31, 2024.

The Company has a history of recurring

operating losses, and its net cash used in operating activities amounted to $18.3 million and $13.0 million during the year ended December

31, 2024, and 2023, respectively.

The Company has also generated net cash provided by financing activities of $13.1 million and $22.7

million during 2024, and 2023, respectively.

The Company has also generated net cash provided by financing activities of $22.7 million

and $20.9 million during 2023 and 2022, respectively.

Accordingly, the Company’s management cannot ascertain that there is no substantial

doubt that it will be able to meet its obligations as they become due within one year after the date that its financial statements are

intends to mitigate such conditions by continuing to support its continued growth by decreasing its cash used in operating

activities through increased revenues and increased margins from products sold to large retailers and its internet portals, and to

the extent necessary, generating cash provided by financing activities through it’s at the market offering or other equity or

debt financing means.

intends to mitigate such conditions by continuing to support its continued growth by decreasing its cash used in operating activities

through increased revenues and increased margins from products sold to large retailers and its internet portals, and to the extent necessary,

generating cash provided by financing activities through it’s at the market offering or other equity or debt financing means.

Financial Measures

considers earnings (loss) before interest, taxes, depreciation and amortization, or EBITDA, as adjusted, an important indicator in evaluating

our business on a consistent basis across various periods.

Due to the significance of non-recurring items, EBITDA, as adjusted, enables

our management to monitor and evaluate our business on a consistent basis.

We use EBITDA, as adjusted, as a primary measure, among others,

to analyze and evaluate financial and strategic planning decisions regarding future operating investments and potential acquisitions.

We believe that EBITDA, as adjusted, eliminates items that are not part of our core operations, such as interest expense and amortization

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.

considers earnings (loss) before interest, taxes, depreciation and amortization, or EBITDA, as adjusted, an important indicator in

evaluating our business on a consistent basis across various periods.

Due to the significance of non-recurring items, EBITDA, as

adjusted, enables our management to monitor and evaluate our business on a consistent basis.

We use EBITDA, as adjusted, as a

primary measure, among others, to analyze and evaluate financial and strategic planning decisions regarding future operating

investments and potential acquisitions.

We believe that EBITDA, as adjusted, eliminates items that are not part of our core

operations, such as interest expense and amortization and impairment expense associated with intangible assets, or items that do not

involve a cash outlay, such as share-based payments and non-recurring items, such as transaction costs.

EBITDA, as adjusted, should

be considered in addition to, rather than as a substitute for, pre-tax income (loss), net income (loss) and cash flows used in

operating activities.

This non-GAAP financial measure excludes significant expenses that are required by GAAP to be recorded in our

financial statements and is subject to inherent limitations.

Investors should review the reconciliation of this non-GAAP financial

measure to the comparable GAAP financial measure included below.

Investors should not rely on any single financial measure to

evaluate our business.

For the year ended

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significant accounting policies are disclosed in Note 2 to our consolidated financial statements for the year ended December 31,

contained in our Annual Report on Form 10-K for the year ended December 31, 2023.

The following is a summary of those accounting policies

that involve significant estimates and judgment of management.

2024, contained in this Annual Report on Form 10-K for the year ended December 31, 2024.

The following is a summary of those

accounting policies that involve significant estimates and judgment of management.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts

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As of December 31, 2024 and 2023, we believe the amounts reported for cash,

prepaid expenses, accounts payable and accrued expenses and other current liabilities, accrued interest, notes payable and convertible

note payable approximate fair value because of their short maturities.

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.

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

5 unchanged sentences

These tiers include:

1, defined as observable inputs such as quoted prices for identical instruments in active markets;

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;

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.

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.

1, defined as observable inputs such as quoted prices for identical instruments in active

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;

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.

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.

compensation is measured at the grant date based on the value of the award granted using the Black- Scholes option pricing model based

16 unchanged sentences

of the transaction price to the performance obligations in the contract;

● recognition

of revenue when, or as, we satisfy a performance obligation.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis