Amendment: SEC Form 10-K/A filed by SKYX Platforms Corp.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
Amendment No. 1
For
the fiscal year ended
OR
For the transition period from to
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address, including zip code, of principal executive offices)
(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 | ||
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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.
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).
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 | ☐ |
| ☒ | 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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The
aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $
As of March 18, 2026, the registrant had shares of common stock, par value per share, issued and outstanding.
EXPLANATORY NOTE
| 1 |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required to be included in this report appear as indexed in the appendix to this Amendment No. 1 beginning on page F-1.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
(a)(2) Financial Statement Schedules
Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.
(a)(3) Exhibit Index
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| 3 |
| 4 |
| 5 |
| 6 |
* Indicates management contract or any compensatory plan, contract or arrangement.
+ 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.
† Portions of this exhibit (indicated by bracketed asterisks) are omitted in accordance with the rules of the SEC because they are both not material and the Company customarily and actually treats such information as private or confidential.
♦ Filed as an exhibit to the Original Filing, filed with the SEC on March 26, 2026.
| 7 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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. | ||
| By: | /s/ Leonard J. Sokolow | |
| Leonard J. Sokolow, Chief Executive Officer and Director | ||
| Date: | March 27, 2026 | |
| 8 |
FINANCIAL STATEMENTS
SKYX PLATFORMS CORP.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Index to Consolidated Financial Statements
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of SKYX Platforms Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of SKYX Platforms Corp (the Company) as of December 31, 2025 and 2024 and the related consolidated statements of operation, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2025, and the related consolidated notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its consolidated operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
Going Concern
Due to the net loss, accumulated deficit and negative cash flows from operations for the year, the Company evaluated the need for a going concern.
Auditing management’s evaluation of a going concern can be a significant judgment given the fact that the Company uses management estimates on future revenues and expenses, which are not able to be easily substantiated.
To evaluate the appropriateness of the going concern, we examined and evaluated the financial information that was the initial cause for this consideration along with management’s plans to mitigate the going concern. Based on the audit procedures performed, we found that management’s conclusion that its plans alleviate the substantial doubt to be reasonable.
| /s/
|
|
| We have served as the Company’s auditor since 2019 | |
| March 26, 2026 |
| F-2 |
SKYX PLATFORMS CORP.
CONSOLIDATED BALANCE SHEETS
| December 31, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Deferred cost of revenues | ||||||||
| Prepaid expenses and other assets | ||||||||
| Total current assets | ||||||||
| Long-term assets: | ||||||||
| Property and equipment, net | ||||||||
| Restricted cash | ||||||||
| Right of use assets | ||||||||
| Intangibles, definite life | ||||||||
| Goodwill | ||||||||
| Other assets | ||||||||
| Total long term assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Notes payable | ||||||||
| Operating lease liabilities | ||||||||
| Royalty obligations | ||||||||
| Deferred revenues | ||||||||
| Convertible notes related parties | ||||||||
| Convertible notes | ||||||||
| Total current liabilities | ||||||||
| Long term liabilities | ||||||||
| Long term accounts payable | ||||||||
| Notes payable | ||||||||
| Operating lease liabilities | ||||||||
| Royalty obligations | ||||||||
| Convertible notes | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Mezzanine equity | ||||||||
| Series A Preferred Stock-shares authorized , outstanding and | ||||||||
| Stockholders’ Equity (deficit) | ||||||||
| Series A-1 Preferred Stock-shares authorized , outstanding and | ||||||||
| Series
A-2 Preferred Stock-shares authorized ,
outstanding and | ||||||||
| and additional paid-in-capital: shares authorized outstanding and | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total Liabilities and Stockholders’ Equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-3 |
SKYX PLATFORMS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AUDITED)
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Operating expenses | ||||||||
| Cost of revenues | ||||||||
| Selling and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Total expenses, net | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other expenses | ||||||||
| Interest expense - related party | ||||||||
| Interest expense, net | ||||||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Total other expenses, net | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Preferred dividends - related party | ||||||||
| Preferred dividends | ||||||||
| Net loss attributed to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss per share - basic and diluted | $ | ) | $ | ) | ||||
| Weighted average number of common shares outstanding – basic and diluted | ||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-4 |
SKYX PLATFORMS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AUDITED)
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operations: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Impairment of intangible assets | ||||||||
| Non-cash equity-based compensation expense | ||||||||
| Gain on forgiveness of debt | ( | ) | ||||||
| Equity-based payment of interest | ||||||||
| Change in operating assets and liabilities | ||||||||
| Inventory | ( | ) | ( | ) | ||||
| Accounts receivable | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Deferred charges | ||||||||
| Deferred revenues | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Royalty obligation | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Acquisition, net of cash acquired | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing: | ||||||||
| Proceeds from issuance of common stock - offerings | ||||||||
| Placement cost | ( | ) | ( | ) | ||||
| Dividends paid | ( | ) | ||||||
| Proceeds from line of credit | ||||||||
| Proceeds from issuance of preferred stock-related parties | ||||||||
| Proceeds from issuance of preferred stocks | ||||||||
| Proceeds from exercise of options | ||||||||
| Proceeds from issuance of convertible notes | ||||||||
| Principal repayments of notes payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Change in cash and cash equivalents, and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of the year | ||||||||
| Cash, cash equivalents and restricted cash at end of year | $ | $ | ||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | $ | ||||||
| Taxes | ||||||||
| Supplementary disclosure of non-cash financing activities: | ||||||||
| Preferred stock conversion to common | $ | $ | ||||||
| Substitution of royalty payable to convertible note | ||||||||
| Substitution of consideration payable to convertible note | ||||||||
| Right-of-use assets and operating lease liabilities | ||||||||
| Accrued dividends payable | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-5 |
SKYX PLATFORMS CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(AUDITED)
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Shares of preferred stock ( Series A-1) | ||||||||
| Balance, beginning of year | ||||||||
| Preferred stock Conversion to common | ( | ) | ||||||
| Preferred stock issued pursuant to offerings | ||||||||
| Balance, end of year | ||||||||
| Preferred stock ( Series A-1) | ||||||||
| Balance, beginning of year | $ | $ | ||||||
| Preferred stock Conversion to common | ( | ) | ||||||
| Preferred stock issued pursuant to offerings | ||||||||
| Balance, end of year | $ | $ | ||||||
| Shares of preferred stock ( Series A-2) | ||||||||
| Balance, beginning of year | ||||||||
| Preferred stock Conversion to common | ||||||||
| Preferred stock issued pursuant to offerings | ||||||||
| Balance, end of year | ||||||||
| Preferred stock ( Series A-2) | ||||||||
| Balance, beginning of year | $ | $ | ||||||
| Preferred stock Conversion to common | ||||||||
| Preferred stock issued pursuant to offerings | ||||||||
| Balance, end of year | $ | $ | ||||||
| Shares of common stock | ||||||||
| Balance, beginning of year | ||||||||
| Common stock issued pursuant to offerings | ||||||||
| Common stock issued pursuant to acquisition | ||||||||
| Common stock issued pursuant to conversion of preferred stock | ||||||||
| Common stock issued pursuant to preferred dividends | ||||||||
| Common stock issued pursuant to conversion of notes | ||||||||
| Common stock issued pursuant to conversion of accrued interest | ||||||||
| Common stock issued pursuant to exercise of options | ||||||||
| Common stock issued pursuant to services | ||||||||
| Balance, end of year | ||||||||
| Common stock and paid-in capital | ||||||||
| Balance, beginning of year | $ | $ | ||||||
| Common stock issued pursuant to offerings | ||||||||
| Common stock issued pursuant to conversion of preferred stock | ||||||||
| Common stock issued pursuant to preferred dividends | ||||||||
| Common stock issued pursuant to conversion of notes | ||||||||
| Common stock issued pursuant to conversion of accrued interest | ||||||||
| Common stock issued pursuant to exercise of options | ||||||||
| Common stock issued pursuant to services | ||||||||
| Balance, end of year | $ | $ | ||||||
| Accumulated Deficit | ||||||||
| Balance, beginning of year | $ | ( | ) | $ | ( | ) | ||
| Preferred dividends | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Balance, end of year | $ | ( | ) | $ | ( | ) | ||
| Total Stockholders’ Equity (deficit) | $ | ( | ) | $ | ||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-6 |
SKYX Platforms Corp.
Notes to Consolidated Financial Statements
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 hardwired 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.
Going Concern
The
Company’s liquidity sources include $
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Company’s significant accounting policies:
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) under the accrual basis of accounting.
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.
| F-7 |
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 could differ significantly from estimates.
Reclassifications
For comparability, reclassifications of certain prior-year balances were made in order to conform with current-year presentations, such as costs of internal-use software reclassified as intangible assets which were previously included in property and equipment.
Basis of Consolidation
The consolidated financial statements include the results of the Company and all its subsidiaries, including SQL Lighting and Fans LLC, Belami, Inc., BEC, CA 1, Inc. (through December 31, 2024), BEC CA 2, LLC, Luna BEC (through December 31, 2024), Inc., and Confero Group LLC. 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:
| December 31, 2025 | December 31, 2024 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
Restricted Cash
The
Company issued a letter of credit of $
Customer Contracts Balances
Accounts
receivables are recorded in the period when the right to receive payment or other consideration becomes unconditional. Accounts receivables
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. The Company’s allowance for doubtful accounts was $
| F-8 |
The
Company’s allowance for sales returns was $
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. The deferred revenues amounted to $
The costs associated with such deferred revenues are recognized as deferred charges in the accompanying balance sheet. Such charges include the carrying value of freight, and sales charges. Deferred charges are included in prepaid costs and other assets in the accompanying balance sheet.
Inventory
Inventories are stated at the lower of cost, determined on the first-in, first-out 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.
| December 31, 2025 | December 31, 2024 | |||||||
| Inventory, component parts | $ | $ | ||||||
| Inventory, finished goods | ||||||||
| Allowance | ( | ) | ( | ) | ||||
| Inventory-total | $ | $ | ||||||
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.
Furniture and Equipment
Furniture and equipment are stated at cost, less accumulated depreciation, and is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Depreciation
of property and equipment is provided utilizing the straight-line method over the estimated useful lives, ranging from
Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.
Intangible Asset
Intangible assets were recorded in connection with the acquisition of Belami. Intangible assets with finite lives, which consist of customer relationships and e-commerce technology platforms, are being amortized over their estimated useful lives on a straight-line basis. Such intangible assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company assesses the recoverability of its intangible assets by determining whether the unamortized balance can be recovered over the assets’ remaining estimated useful life through undiscounted estimated future cash flows. If undiscounted estimated future cash flows indicate that the unamortized amounts will not be recovered, an adjustment will be made to reduce such amounts to fair value based on estimated future cash flows discounted at a rate commensurate with the risk associated with achieving such cash flows. Estimated future cash flows are based on trends of historical performance and the Company’s estimate of future performance, considering existing and anticipated competitive and economic conditions.
| F-9 |
The
Company developed various patents for an installation device used in light fixtures and ceiling fans. Costs incurred for submitting the
applications to the United States Patent and Trademark Office for these patents have been capitalized. Patent costs are amortized using
the straight-line method over the related
The Company incurs certain legal and related costs in connection with patent applications. The Company capitalizes such costs to be amortized over the expected life of the patent to the extent that an economic benefit is anticipated from the resulting patent or alternative future use is available to the Company. The Company also capitalizes legal costs incurred in the defense of the Company’s patents when it is believed that the future economic benefit of the patent will be maintained or increased, and a successful defense is probable. Capitalized patent defense costs are amortized over the remaining expected life of the related patent. The Company’s assessment of future economic benefit or a successful defense of its patents involves considerable management judgment, and an unfavorable outcome of litigation could result in a material impairment charge up to the carrying value of these assets.
Management determined that there was impairment of the Company’s intangible assets as of December 31, 2025.
Goodwill
Goodwill, which was recorded in connection with the acquisition of Belami, is not subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Goodwill represents the excess of the purchase price of Belami over the fair value of its identifiable net assets acquired. Goodwill is tested for impairment at the reporting unit level. Fair value is typically based upon estimated future cash flows discounted at a rate commensurate with the risk involved or market-based comparables. If the carrying amount of the reporting unit’s net assets exceeds its fair value, then an analysis will be performed to compare the implied fair value of goodwill with the carrying amount of goodwill. An impairment loss will be recognized in an amount equal to the excess of the carrying amount over its implied fair value. After an impairment loss is recognized, the adjusted carrying amount of goodwill is its new accounting basis. Accounting guidance on the testing of goodwill for impairment allows entities testing goodwill for impairment the option of performing a qualitative assessment to determine the likelihood of goodwill impairment and whether it is necessary to perform such two-step impairment test.
Management
determined that there was
Fair Value of Financial Instruments
The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs used in valuation techniques, are assigned to a hierarchical level.
The following are the hierarchical levels of inputs to measure fair value:
| ● | Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. | |
| ● | Level 2 – Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
| ● | Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. |
| F-10 |
The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, inventory, prepaid expenses, other current assets, accounts payable, accrued interest payable, certain notes payable and notes payable – related party, and GE royalty obligation, approximate their fair values because of the short maturity of these instruments.
Embedded Conversion Features
The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion features.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date, with changes in the fair value reported as charges or credits to income.
As of December 31, 2025, the Company had a sufficient number of authorized shares of common stock to accommodate the conversion features on Series A, A-1 and A-2 Preferred Stock, warrants, options, and convertible notes. These shares have been reserved for issuance by the Company, and accordingly, no derivative liability has been recognized.
Distinguishing Liabilities from Equity
The Company evaluates at each measurement date the proper classification of its liabilities and equity accounts. The Company has evaluated how it should classify its Series A, A-1 and A-2 Preferred Stock issued in the year 2025. The Company has determined that the Series A, A-1 and A-2 Preferred Stock should not be classified as liabilities as of December 31, 2025. The designation of Series A includes provisions that under certain contingent circumstances outside of liquidation, the holders of the Series A Preferred Stock control whether they could receive cash consideration. Management determined that based on these provisions, the Series A Preferred Stock should be classified as temporary equity. Management determined the Company controls the contingent circumstances under which the holders of Series A-1 and A-2 would be granted cash consideration outside of liquidation, and , accordingly, classified Series A-1 and A-2 Preferred Stock as permanent equity.
Extinguishments of Liabilities
The Company accounts for extinguishments of liabilities in accordance with ASC 405-20 (formerly SFAS 140) “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities”. When the conditions are met for extinguishment accounting, the liabilities are derecognized and the gain or loss on the sale is recognized.
Stock-based Compensation
The Company periodically issues common stock, RSUs and stock options to officers, directors, employees and consultants for services rendered.
| F-11 |
The Company accounts for stock incentive awards issued to employees and non-employees in accordance with FASB ASC 718, Stock Compensation. Accordingly, stock-based compensation is measured at the grant date, based on the fair value of the award. Stock-based awards to employees are recognized as an expense over the requisite service period, or upon the occurrence of certain vesting events. Additionally, stock-based awards to non-employees are expensed over the period in which the related services are rendered.
The expense resulting from share-based payments is recorded in operating expenses in the statements of operations.
Revenue Recognition
The Company currently generates revenues substantially from home lighting, ceiling fans, and smart products through its family of internet sites and marketplaces. A substantial portion of the Company’s customers’ orders are made and paid contemporaneously by credit card and shipped through third-party delivery providers. The Company recognizes revenues once it concludes that the control of the product is transferred to the customer, which is upon delivery.
The Company records reductions to revenue for estimated customer sales returns and replacements, net of sales tax. The Company receives rebate and cooperative allowances based on a percentage of periodic purchases from certain vendors. These vendor considerations are reflected as a reduction of cost of revenues. The vendor considerations, the rights of returns and replacements are based upon estimates that are determined by historical experience, contractual terms, and current market conditions. The primary factors affecting the Company’s accrual for estimated customer return rights include estimated customer return rates as well as the number of units shipped that have a right of return that have not expired as of the measurement date.
Cost of Revenues
Cost of revenues represents costs directly related to produce, acquiring and source inventory for sale, and provisions for inventory shrinkage and obsolescence. These costs include the costs of purchased products, inbound freight, and custom duties.
Selling, General and Administrative Expenses
Shipping and handling costs incurred by the Company to deliver finished goods are expensed and recorded in selling, general and administrative expenses.
Additionally, selling, general and administrative expenses include marketing, professional fees, distribution, warehouse costs, and other related selling costs. Selling expenses include costs incurred in the selling of merchandise. General and administrative expenses include costs incurred in the administration or general operations of the business.
Stock compensation expense consists of non-cash charges resulting from the issuance of stock units and stock options that are disclosed in the selling, general and administrative expenses and included as operating expenses.
| F-12 |
Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to be reversed. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (Section 740-10-25). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty (50) percent likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carrybacks and carryforwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In the management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Uncertain Tax Positions
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for fiscal 2025.
Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
| F-13 |
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, consolidated financial position, and consolidated results of operations or consolidated cash flows.
Comprehensive Income or loss
Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the stockholders’ equity section of the statements of financial condition. Such items along with net income are components of comprehensive income.
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 is computed by dividing net income (loss) for the period by the weighted average number of common stock, 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. The Company recognized net loss and a dilutive net loss during 2025 and 2024, 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.
| December 31, 2025 | December 31, 2024 | |||||||
| Stock warrants | ||||||||
| Stock options | ||||||||
| Unvested restricted stock | ||||||||
| Convertible notes | ||||||||
| Preferred stock | ||||||||
| Anti-dilutive securities | ||||||||
Recently Issued Accounting Pronouncements
Segment Reporting – Improvements to Reportable Segment Disclosures
In November 2023, the Financial Accounting Standards Board (“FASB”) issued a new standard to improve reportable segment disclosures. The guidance expands the disclosures required for reportable segments in our annual and interim consolidated financial statements, primarily through enhanced disclosures about significant segment expenses. We adopted this standard in 2024. The impact of this standard is only on the Company’s segment disclosures.
| F-14 |
Comprehensive Income- Improvements to Expense Disaggregation Disclosures
In November 2024, the Financial Accounting Standards Board (“FASB”) issued a new standard to improve expense disaggregation disclosures. The guidance expands the disclosures required for certain costs and expenses in our annual and interim consolidated financial statements, primarily through enhanced disclosures about significant expenses. The standard is effective as of March 31, 2026 and interim and annual periods thereafter. The impact of this standard is only on the Company’s expenses disclosures.
NOTE 3 PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| December 31, 2025 | December 31, 2024 | |||||||
| Equipment and furniture | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total, net | $ | $ | ||||||
Depreciation
expenses amounted to $
NOTE 4 INTANGIBLE ASSETS AND GOODWILL
Intangible assets consisted of the following:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||
| Useful life | Carrying Value | Accumulated Amortization | Net carrying value | Carrying Value | Accumulated Amortization | Net carrying value | |||||||||||||||||||||
| Customer relationships | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| E-commerce technology platforms | ( | ) | ( | ) | |||||||||||||||||||||||
| Patents and other | ( | ) | ( | ) | |||||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Amortization
expense on intangible assets was $
During
the quarter ended September 30, 2024, the Company evaluated the effectiveness of the E-commerce technology platforms it acquired in 2023.
Management determined that revenues could increase without increasing its operating expenses (and potentially decrease its general and
administrative expenses) using a different E-commerce technology platform. Management believes it will discontinue using its legacy platforms by October 1, 2025. Accordingly, the estimated useful life of its legacy platforms decreased
from
| F-15 |
The following table sets forth the estimated amortization expenses for the next five years:
| Twelve months ended December 31: | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
NOTE 5 DEBTS
The following table presents the details of the principal outstanding:
| December 31, 2025 | December 31, 2024 | APR on December 31, 2025 | Maturity | Collateral | ||||||||||||||
| Convertible Notes (b,c,) | $ | $ | Substantially all Company assets | |||||||||||||||
| Notes payable to financial institutions and others (a) | Substantially all Company assets | |||||||||||||||||
| Total | $ | $ | ||||||||||||||||
| Unamortized debt discount | ( | ) | ( | ) | ||||||||||||||
| Debt, net of Unamortized debt Discount | $ | $ | ||||||||||||||||
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Interest expense | $ | $ | ||||||
As of December 31, 2025, the expected future principal payments for the Company’s debt are due as follows:
| Twelve months ended December 31, 2026 | $ | ||||
| Twelve months ended December 31, 2027 | |||||
| Twelve months ended December 31, 2028 | |||||
| Twelve months ended December 31, 2029 | |||||
| Twelve months ended December 31, 2030 and thereafter | |||||
| Total | $ |
| a) |
During
2023, the Company issued convertible promissory notes. As an inducement to enter the financing transactions, the Company issued
| b) |
Additionally,
the convertible promissory notes include a $
| c) |
| F-16 |
NOTE 6 OPERATING LEASE LIABILITIES
In
April 2022, the Company entered into a
In
September 2022, the Company entered a
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 December 31, 2025, and 2024 respectively:
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for operating lease liabilities | $ | $ | ||||||
| Rights-of-use obtained in exchange for new operating lease liabilities | ||||||||
| Fixed rent payments | ||||||||
| Lease - Depreciation expense | $ | $ | ||||||
| Weighted-average discount rate | % | % | ||||||
| Weighted-average remaining lease term (in months) | ||||||||
Minimum Lease obligation
| Twelve months ended December 31, 2026 | $ | |||
| Twelve months ended December 31, 2027 | ||||
| Twelve months ended December 31, 2028 | ||||
| Twelve months ended December 31, 2029 | ||||
| Twelve months ended December 31, 2030, and thereafter | ||||
| Total | $ |
NOTE 7 ROYALTY OBLIGATIONS
The Company had a license agreement with General Electric (“GE”) which provided, among other things, for rights to market certain of the Company’s products displaying the GE brand in consideration of royalty payments to GE. The agreement expired in 2023.
The
Company owes $
| F-17 |
The
Company owed an additional amount of $
NOTE 8 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
| December 31, 2025 | December 31, 2024 | |||||||
| Accrued interest, convertible notes | $ | $ | ||||||
| Accrued dividends | ||||||||
| Trade payables | ||||||||
| Accrued compensation | ||||||||
| $ | $ | |||||||
NOTE 9 INCOME TAXES
The Company has not paid or incurred any income taxes liabilities during 2025 and 2024 due to its net operating losses. State taxes are apportioned through 47 states. The states in which the apportionment are greatest are California and Florida, which comprise 22% of the effective state and local effective tax rate.
The effects of temporary differences that gave rise to significant portions of deferred tax assets at December 31, 2025, and December 31, 2024 were approximately as follows:
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net operating loss carryforward | $ | |||||||
| Stock-based compensation | ||||||||
| Rights of use assets | ( | ) | ( | ) | ||||
| Operating lease liabilities | ||||||||
| Other | ||||||||
| Less Valuation Allowance | ( | ) | ( | ) | ||||
| Total Deferred Tax Assets - Net | $ | $ | ||||||
The change in valuation allowance is as follows:
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net operating loss | $ | $ | ) | |||||
| Fair value of options | ||||||||
| Other, mostly amortization of intangible assets | ) | |||||||
| Change in valuation allowance | ||||||||
| $ | $ | |||||||
The Company’s tax expense differs from the statutory tax expense for the years ended December 31, 2025, and December 31, 2024 and the reconciliation is as follows.
2025 Amount | 2025 Percent | 2024 Amount | 2024 Percent | |||||||||||||
| $ | % | $ | % | |||||||||||||
| States and local income taxes, net of federal income tax effect | % | |||||||||||||||
| Changes in valuation allowance | ( | ) | ( | )% | ( | ) | ( | )% | ||||||||
| Other | ( | ) | ( | )% | % | |||||||||||
| Effective tax rate | $ | % | $ | % | ||||||||||||
NOTE 10 RELATED PARTY TRANSACTIONS
Convertible Notes Due to Related Parties
Convertible
notes due to related parties represent amounts provided to the Company from a director and the Company’s Chief Executive
Officer as well as the Company’s former Co-Chief Executive Officer. The outstanding principal on the convertible promissory notes, associated with related parties was $
Preferred dividends
The
Company paid and declared dividends to related parties (a director and officer and two officers) amounting to $
| F-18 |
NOTE 11 STOCKHOLDERS’ EQUITY
(A) Common Stock
The Company issued the following common stock during 2025 and 2024:
| Average Value | ||||||||||||
| Transaction Type | Shares Issued | Valuation $ | Per Share | |||||||||
| 2025 Equity Transactions | ||||||||||||
| Common stock issued, pursuant to services provided | $ | $ | ||||||||||
| Common stock issued pursuant to stock at the market offering, net | ||||||||||||
| Common stock issued pursuant to preferred dividends | ||||||||||||
| Common stock issued pursuant to conversion of notes | ||||||||||||
| Common stock issued pursuant to conversion of accrued interest | ||||||||||||
| Common stock issued pursuant to exercise of options | ||||||||||||
| Common stock issued pursuant to conversion of preferred stock | ||||||||||||
| 2024 Equity Transactions | ||||||||||||
| Common stock issued, pursuant to services provided | $ | - | ||||||||||
| Common stock issued pursuant to stock at the market offering, net | – | |||||||||||
| Common stock issued pursuant to exercise of options, net | ||||||||||||
| Common stock issued pursuant to acquisition | ||||||||||||
(B) Preferred Stock
During October 2024, the Company completed its authorization of the issuance of shares of newly authorized Series A Preferred Stock and Series A-1 Preferred Stock. The designations of each class of preferred stock are as follows:
| Transaction Type | Quantity | Carrying Value | Value per Share, gross | |||||||||
| Preferred Stock Balance at January 1, 2024 | $ | $ | ||||||||||
| Preferred Stock Series A | ||||||||||||
| Preferred Stock Series A-1 | ||||||||||||
| Preferred Stock Balance at December 31, 2024 | $ | $ | ||||||||||
During the year ended December 31, 2025, the Company authorized the issuance of shares of a new series of preferred stock Series A-2. Details of activity in Preferred Stock Series A-1 and Series A-2 are as follows:
| Transaction Type | Quantity | Carrying Value | Value per Share, gross | |||||||||
| Preferred Stock Series A-1 Balance at January 1, 2025 | $ | $ | ||||||||||
| Issuance | ||||||||||||
| Conversion to common stock | ( | ) | ( | ) | ||||||||
| Preferred Stock Series A-1 Balance at December 31, 2025 | $ | $ | ||||||||||
| Preferred Stock Series A-2 Balance at January 1, 2025 | $ | $ | ||||||||||
| Issuance | ||||||||||||
| Conversion to common stock | ||||||||||||
| Preferred Stock Series A-2 Balance at December 31, 2025 | $ | $ | ||||||||||
The designations of each class of preferred stock are as follows:
Series A Preferred Stock (temporary equity):
| ● | Cumulative
dividend of | |
| ● | Original issue price of $ per share; | |
| ● | Conversion
option at the holder’s option at $ | |
| ● | Redemption
at the price of $ per share at | |
| ● | Voting rights on as converted basis. |
| F-19 |
Series A-1 and A-2 Preferred Stock (permanent equity):
| ● | Cumulative
dividend of | |
| ● | Original issue price of $ per share; | |
| ● | Conversion
option at the holder’s option at $ | |
| ● | Redemption
at the price of $ per share at | |
| ● | Voting rights on as converted basis. |
(C) Stock Options
| Weighted | ||||||||||||||||
| Average | ||||||||||||||||
| Remaining | ||||||||||||||||
| Weighted | Contractual | Aggregate | ||||||||||||||
| Average | Life | Intrinsic | ||||||||||||||
| Options | Shares | Exercise Price | (In Years) | Value | ||||||||||||
| Outstanding, January 1, 2025 | $ | $ | ||||||||||||||
| Exercised | $ | |||||||||||||||
| Granted | - | - | ||||||||||||||
| Forfeited | ( | ) | ( | ) | - | |||||||||||
| Outstanding, December 31, 2025 | $ | $ | ||||||||||||||
| Exercisable, December 31, 2025 | $ | $ | ||||||||||||||
| Outstanding, January 1, 2024 | $ | - | ||||||||||||||
| Exercised | $ | - | $ | - | ||||||||||||
| Granted | - | - | ||||||||||||||
| Forfeited | ( | ) | - | |||||||||||||
| Outstanding, December 31, 2024 | $ | $ | ||||||||||||||
| Exercisable, December 31, 2024 | $ | $ | ||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Range | ||||||||
| Stock price | - | |||||||
| Exercise price | - | - | ||||||
| Expected life (in years) | - yrs. | - yrs. | ||||||
| Volatility | –% | –% | ||||||
| Risk-fee interest rate | - % | - % | ||||||
| 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 years, and its historical period was 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.
| F-20 |
(D) Warrants Issued
The following is a summary of the Company’s warrant activity during 2025 and 2024:
| Number of Warrants | Weighted Average Exercise Price | |||||||
| Balance, January 1, 2025 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Balance, December 31, 2025 | $ | |||||||
| Balance, January 1, 2024 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Forfeited | ( | ) | ||||||
| Balance, December 31, 2024 | $ | |||||||
During year ended December 31, 2025 and 2024, the Company did not issue any warrants except for warrants issued to a placement agent in connection with its Series A -1 Preferred offerings in the second quarter of 2025.
(E) Restricted stock units
A summary of the Company’s non-vested restricted stock units during 2025 and 2024 are as follows.
| Weighted | ||||||||
| Average Grant | ||||||||
| Shares | Due Fair Value | |||||||
| Non-vested restricted stock units, January 1, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Non-vested restricted stock units, December 31, 2025 | $ | |||||||
| Non-vested restricted stock units, January 1, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Non-vested restricted stock units on December 31, 2024 | $ | |||||||
The weighted-average remaining contractual life of the restricted units as of December 31, 2025, is years.
RSUA give the right to receive one share of the Company’s common stock. RSUAs 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 RSU with a market condition. Compensation with respect to RSUA awards is expensed on a straight-line basis over the vesting period.
The Company recognized compensation expenses of $ , and $, respectively, related to RSUs and RSAs during the year ended December 31, 2025 and 2024, respectively. The Company recognized compensation expenses of $ and $, respectively, related to stock options during the year ended December 31, 2025 and 2024, respectively.
The options and RSUAs 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. The maximum contractual term of the options is up to years. The number of shares available for grant of options, and restricted stock units or awards amounts to at December 31, 2025.
| F-21 |
Unamortized future stock-based compensation expense was $ million as of December 31, 2025.
NOTE 12 CONCENTRATIONS OF RISKS
Major Customers and Accounts Receivable
The
Company had no customers whose revenue individually represented 10% or more of the Company’s total revenue. The Company had two
and three third-party payor accounts receivable balance representing
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 sold primarily in the United States.
Segment and Expense Disaggregation
The
Company operates in
The Company has concluded that consolidated net income or loss is the measure of segment profitability. The following is a reconciliation of the Company’s revenues from external customers and consolidated revenues and the consolidated and segment loss, including significant disaggregated segment expenses.
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues from external customers and consolidated revenues | $ | $ | ||||||
| Cost of revenues | ( | ) | ( | ) | ||||
| Compensation costs, excluding share-based payments | ( | ) | ( | ) | ||||
| Share-based payments | ( | ) | ( | ) | ||||
| Marketing programs | ( | ) | ( | ) | ||||
| Professional fees, excluding share-based payments | ( | ) | ( | ) | ||||
| Depreciation, amortization, and impairment of intangibles | ( | ) | ( | ) | ||||
| Other operating expenses | ( | ) | ( | ) | ||||
| Total operating expenses, net | $ | ( | ) | $ | ( | ) | ||
| Other expenses | ||||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Gain on extinguishment of debt | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
NOTE 13 SUBSEQUENT EVENTS
Management has evaluated subsequent events through March 26 2026, which is the date the consolidated financial statements were available to be issued. There were no significant subsequent events that required adjustment to or disclosure in the consolidated financial statements with the exception of the following:
The
Company generated proceeds of $
| F-22 |